Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

Schedule 14A

 

Proxy Statement pursuantPursuant to Section 14(a)

of the Securities Exchange Act of 1934

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

 

☐ Preliminary Proxy Statement

☐ Confidential for use of the Commission only (as permitted by Rule 14a-6(e)(2))

☒ Definitive Proxy Statement

only (as permitted by Rule 14a-6(e)(2))

☐ Definitive Additional Materials

 

☐ Soliciting Material Pursuant to §240.14a-11(c) of §240.14a-12

 

Orbital Energy Group, Inc.

 

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Not applicable

 

Payment of Filing Fee (Check the appropriate box)all boxes that apply):

 

 

No Fee Requiredfee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)   Title of each class of securities to which transaction applies:

 

 

(2)   Aggregate number of securities to which transaction applies:

(3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (set forth the amount in which the filing fee is calculated and state how it was determined).

(4)   Proposed maximum aggregate value of transaction:

(5)   Total fee paid:

 

Fee paid previously with preliminary materials.materials

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)   Amount Previously Paid:

 

 

 

(2)   Form, Schedule or Registration Statement No.:

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(4)   Date Filed:

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 


 

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October 5, 2020June 2, 2022

 

Dear Stockholders:Fellow Shareholders,

 

We are pleased to invite you to attend our 2020 Annual Meeting of Stockholders to be held at 9:00 am CST on Tuesday, December 8, 2020, at Orbital Energy Group Inc., 1924 Aldine Western, Houston, Texas 77038. The board of directors has fixed the close of business on October 14, 2020 as the record date for determining Stockholders entitledcontinues to receive notice of, and to vote at our Annual Meeting. We are also pleased to offer a live webcast of our Annual Meeting to allow you to view the meeting on the Investor Relations section of our web site at www.OrbitalEnergyGroup.com.

This year was a transitional one for our company as we executedmake steady progress executing on our strategy to become ana premier provider of infrastructure services to the electric power, telecommunications, and renewable industries.  2021 was a year of transformation, positioning the company for significant revenue growth and a move to profitability in 2022.  We entered this year with a record backlog and expect revenues to increase upwards toward 500% for the full year of 2022 compared to last year.  We also expect to achieve positive adjusted EBITDA for 2022 for the first time in the company’s history.

Our transformation in 2021 is largely attributed to completing several accretive strategic acquisitions to enhance our electric power operations and establish our position in the telecommunication industry. Additionally, we reorganized Orbital Solar to become a viable service provider to the utility scale solar industry. At the same time, we moved our legacy Orbital Gas System businesses in both the United Kingdom and in Houston to discontinued operations.  In May of this year, we sold the U.K. operation and are pursuing the same path for Orbital Gas Systems in Houston. 

Orbital Energy Group is now positioned for profitable revenue growth and increasing shareholder value, organized under three operating segments: electric power, telecommunications, and renewables. 

Our electric power segment was significantly enhanced by acquiring Front Line Power Construction (FLP), in November of last year.  FLP, located in Rosharon, Texas, was founded in 2010, and is a proven provider of electric distribution and substation services to investor-owned electric utility customers.  Our electric power segment is now well suited to leverage the favorable, long term market drivers, specifically, increasing demand from grid modernization, storm hardening, the interconnection of renewable energy, centric service company, focused on infrastructureand the electrification of our nation, more specifically electric transportation.

Our telecommunication segment was established with the acquisition of Gibson Technical Services (GTS), last spring. GTS, located outside of Atlanta, Georgia, was founded in 1990 and provides engineering, design, construction, and maintenance primarilyservices to broadband and wireless customers in areas that contributethe telecommunications, healthcare, and entertainment industries.  Subsequent to improving the carbon footprintGTS acquisition, we acquired two synergistic ‘tuck-in’ acquisitions, IMMCO and Full Moon Telecommunications, to expand our service offerings to our telecommunications customers.  During the year, we were awarded several significant projects which, in total, comprise our building an 11,000-mile fiber network to rural communities over a five-state area.  The rollout of the world as we know it today. Our primary objective during 20205G spectrum, enhancement of 4G/LTE networks and the federal and state funded programs to bring fiber to rural Americans is expected to be EBITDA and cash flow positive as we end the year, positioning Orbital Energy Group, Inc. (“the Company”)provide significant growth opportunities for a profitable 2021 and beginning our journey to enhancing stockholder valuetelecommunication segment for years to come. Despite the COVID-19 headwinds and the oil price volatility, we expect to deliver on our 2020 goals.

 

Highlights forFinally, our renewable segment, which began with a small strategic acquisition in April of 2020, transformed during 2021, with the year included:

Forming Orbital Power Services (OPS), a full-service electric power contractor providing engineering, construction, and maintenance services of electric transmission, distribution, substation assets for our customers, as well as emergency response capabilities. OPS was formed in Dallas, TX, in January of this year and has expanded its customer outreach to Oklahoma, Texas, and Georgia. In addition to serving those states, OPS provided emergency storm services along the Eastern Seaboard in response to Hurricane Isaias during 2020 as well. We expect OPS to continue to profitably grow its workforce and revenues for many years to come.

Completed our first infrastructure acquisition of the Reach Construction Group, a full-service engineering, procurement, and construction contractor focused on building utility scale solar projects throughout the United States. Reach profitably expects to execute on $55 million dollars in projects this year and is expected to build on this years’ accomplishments in 2021 and beyond.

Right sized our legacy product and integration service groups in both North America and the U.K. and expanded business development efforts to pursue the renewable gas market. These operations are positioned to be profitable in 2021 and beyond.

Our number-oneprimary objective isof strengthening the health and safetycapabilities of our employees and all stakeholders. We have taken all proper precautionsOrbital Solar Services to protect our employees and customers from COVID-19 by following the Center for Disease Control’s guidelines. We are happy to report that we have had no COVID-19 outbreaks in our operations; however, we have seen several projects delayed due to customer issues with COVID-19.


Environmental, governance, and social issues are of strategic importance to our company. In 2020, we focused our company on acquiring or building companies that contribute to reducing the energy industry carbon footprint. In 2021 and beyond, we intend to expand our focus to include social initiatives that contributebe a viable service provider to the communities in whichutility scale solar industry.  As a result, we are located.

The end markets we serve continue to be robust. A significant portion of the nation’s electric grid is approaching or has exceeded its useful life and needs to be upgraded. Additionally, the electric grid is being reconfigured as generation is shifting from predominately coal and nuclear power generation to reliance on renewables and natural gas. The existing electric grid cannot handle ‘an electrified America’ as more of our nations’ infrastructure, such as transportation, transitions to electric.

Thirty-seven U.S. states have mandatory renewable portfolio standards that require substantially more power generation be supplied by wind andwere awarded two, 100MW+  solar assetsprograms in the coming years. This equatessecond half of last year, that are now under construction with a pipeline of project opportunities, in excess of a billion dollars, to significant utility-scale solar projects that will needpursue and evaluate going forward.  The renewable industry is driven by federal and state mandates to be builtmove the nation to a zero-carbon emission footprint and away from fossil fuel energy generation over the next fiveseveral decades.  Orbital Solar Services is now fully capable of leveraging the opportunity to engineer, procure, and construct utility solar programs across the nation as the country transitions to a renewable generation future. 

Orbital Energy Group is building a successful infrastructure services platform, with strong, multi-year market drivers across all of the industries we serve.  However, we would not be successful without our dedicated, hard-working, highly skilled employees, who represent the OEG brand each and every day, often working in challenging conditions, while providing service excellence to our customers.  I thank each of you for your contributions as well as your family members that support your commitment to our craft.

As a fellow shareholder, I recognize that our share price is below expectations and we need to optimize our capital structure, with a portion of our debt due at the end of the year.  However, I am confident, as we continue to successfully execute our strategy and deliver improving financial results, that we will have the opportunity to restructure our debt to more favorable terms and generate improved shareholder value going forward. 

In closing, the infrastructure company I envisioned building when joining the company two- and one-half years ago is materializing, as we made the necessary acquisitions and internal organizational restructuring last year to create a solid foundation to build from. Our priorities at Orbital Energy Group are clear: enhance shareholder value by increasing profitable revenues through safe and solid execution by our skilled workforce, while building our backlog of business, in a robust end market environment in the industries we serve. 

I thank our investors for their continued confidence in the management team and look forward to a successful 2022 and beyond.

 

All said, we have positioned Orbital Energy Group in the energy infrastructure markets we serve to generate profitable growth for years to come, equating to adding significant shareholder value over the long term.Respectfully,

/s/ Jim O'Neil

Jim O’Neil

 

 

Sincerely,
Jim O’Neil

 


 

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Notice of Annual Meeting of Stockholders

July 21, 2022

 

To: The Stockholders of Orbital Energy Group, Inc.

 

We will hold our 2020a 2022 Annual Meeting of Stockholders at 9:00 am CST on Tuesday, December 8, 2020,Thursday, July 21, 2022, at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038 (the “Annual Meeting”) for the following purposes:

 

1.

Election of seveneight directors to hold office until the 20212023 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified;

 

2.

Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020;2022;

 

3.

Advisory approval of the Company’s executive compensation (Say-on-Pay);

 

4.

To approve an amendment to paragraph 11.27 of the adoption of Orbital Energy Group 2020 Incentive Award Plan;Plan by increasing the number of shares for issuance by 5,000,000 shares;

 

5.

To approve the conversion of the Company’s domicile state from Colorado to Texas which conversion shall include changing the corporate name from Orbital Energy Group, Inc. to Orbital Infrastructure Group, Inc. and

6.

To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

 

Our board of directors recommends that you vote FOR the election of each of the directors and Proposals 2, 3, 4 and 5.

These items of business are more fully described in the Proxy Statementproxy statement accompanying this notice. The board of directors has fixed the close of business on October 14, 2020May 27, 2022, as the record dateRecord Date for the determination of stockholders entitled to receive notice of, and to vote at, the Annual Meeting of Stockholders. For a period of at least ten days prior to the Annual Meeting, a complete list of stockholders entitled to vote at the Annual Meeting will be open to examination by any stockholder during ordinary business hours at the offices of the Company, 1924 Aldine Western, Houston, Texas 77038.

 

Your vote is especially important. All stockholders are cordially invited to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statementproxy statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials (the “Notice”) you received in the mail, the section entitled General Information about the Annual Meeting beginning on page 1 of the Proxy Statementproxy statement or, if you requested to receive printed proxy materials, your enclosed proxy card.

 

To assure your representation at the Annual Meeting of Stockholders, we ask that you vote as promptly as possible.

 

Your stock will be voted in accordance with the instructions you provide in your proxy. You may revoke your proxy at any time before it is voted by signing and returning a proxy bearing a later date for the same shares, by filing with the Secretary of the Company a written revocation bearing a later date or by attending and voting in person at the Annual Meeting.

By Order of the Board of Directors

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James F. O’Neil, CEO


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Proxy Statement

Introduction

This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors of Orbital Energy Group, Inc. (the “Company") for use at the Annual Meeting of Stockholders to be held at 9:00 am CST on Tuesday, December 8, 2020, at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038 and for any postponements or adjournments thereof. Please vote your shares of Orbital Energy Group common stock. Your vote at the Annual Meeting is important to us. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement

Introduction

This proxy statement is furnished in connection with the solicitation of proxies by the board of directors of Orbital Energy Group, Inc. (the “Company", “we”, “us”, “OEG”) for use at the Annual Meeting of Stockholders to be held at 9:00 am CST on Thursday, July 21, 2022, at the Orbital Energy Group, Inc. offices located at 1924 Aldine Western, Houston, Texas 77038 and for any postponements or adjournments thereof. Please vote your shares of Orbital Energy Group common stock. Your vote at the Annual Meeting is important to us. Whether or not you plan to attend the Annual Meeting, we encourage you to read this proxy statement and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice of Internet Availability of Proxy Materials (the “Notice”) you received in the mail, the section entitled General Information about the Annual Meeting beginning below in this proxy statement or, if you requested to receive printed proxy materials, your enclosed proxy card. The proxy statement and the accompanying materials are being made available to the stockholders on or about June 2, 2022. This solicitation of proxies is made on behalf of our board of directors.

WE URGE YOU TO VOTE AS SOON AS POSSIBLE, EVEN IF YOU ARE CURRENTLY INTENDING TO ATTEND THE MEETING.THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON, BUT WILL ASSURE THAT YOUR VOTE IS COUNTED IF YOU ARE UNABLE TO ATTEND THE MEETING.IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING IN PERSON OR BY PROXY. IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD (WHICH WILL BE MADE AVAILABLE TO YOU SEPARATELY) OR PROVIDE VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE INTERNET.

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Contents

General Information about the Annual Meeting beginning below in this Proxy Statement or, if you requested to receive printed proxy materials, your enclosed proxy card. The Proxy Statement and the accompanying materials are being made available to the stockholders on or about October 14, 2020.

WE URGE YOU TO VOTE AS SOON AS POSSIBLE, EVEN IF YOU ARE CURRENTLY INTENDING TO ATTEND THE MEETING.  THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON, BUT WILL ASSURE THAT YOUR VOTE IS COUNTED IF YOU ARE UNABLE TO ATTEND THE MEETING.  IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING IN PERSON OR BY PROXY. IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD (WHICH WILL BE MADE AVAILABLE TO YOU SEPARATELY) OR PROVIDE VOTING INSTRUCTIONS BY TELEPHONE OR VIA THE INTERNET.

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6

Table of Contents

Contents

PROXY STATEMENT

6

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

8

PROPOSALS TO BE CONSIDERED

14

Election of Directors

14

Ratification of the Appointment of Grant Thornton LLP

18

Advisory Approval of the Company's Executive Compensation

19

To Approve the Adoption of the Orbital Energy Group 2020 Incentive Award Plan

20

SUMMARY OF THE ORBITAL ENERGY GROUP 2020 INCENTIVE AWARD PLAN

22

OTHER BUSINESS

27

DIRECTORS AND EXECUTIVE OFFICERS

28

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS MATTERS

29

COMMITTEES OF THE BOARD OF DIRECTORS

31

Audit Committee

31

Nominating Committee

32

Disclosure Committee

33

Compensation Committee

34

COMPENSATION DISCUSSION AND ANALYSIS

36

Elements of Executive Compensation

38

Director Compensation

50

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

51

RELATED PARTY TRANSACTIONS OF DIRECTORS AND EXECUTIVE OFFICERS

53

DESCRIPTION OF ORBITAL ENERGY GROUP’S CAPITAL STOCK

54

Shares Eligible for Future Sale

56

Issuer Purchases of Equity Securities

56

SHAREHOLDER PROPOSALS FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS

59

General Information about the Annual Meeting

Q: Why am I receiving these materials?

A: Our board of directors has made these materials available to you on the internet or, upon your request, delivered printed proxy materials to you in connection with the solicitation of proxies for use at the Orbital Energy Group Annual Meeting of Stockholders, which will take place at 9:00 am CST on Tuesday, December 8, 2020 at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038. As a stockholder, you are invited to attend the Annual Meeting and you are requested to vote on the items of business described in this Proxy Statement.

Q: Why did I receive this Notice from Orbital Energy Group, Inc.? I thought I owned stock in CUI Global, Inc.?

A: Effective May 8, 2020, the corporate name, CUI Global, Inc., was changed to Orbital Energy Group, Inc.

Q: What information is contained in this Proxy Statement?

A: The information in this Proxy Statement relates to the proposalsProposals to be voted onConsidered

11
PROPOSAL I11
PROPOSAL II17
PROPOSAL III18
PROPOSAL IV19
PROPOSAL V23
Comparison of Shareholder Rights Before and After the Conversion27
Corporate Overview43
Directors and Executive Officers44
Environmental, Social and Governance (ESG)46
Corporate Governance and Board of Directors Matters47
Committees of the Board of Directors51
Compensation Discussion and Analysis57
Compensation Setting Process58
Outstanding Equity Awards at the Annual Meeting, the voting process, the compensation award processFiscal Year End66
Director Compensation67
Security Ownership of our directorsCertain Beneficial Owners and most highly paid executive officers, a description of ourManagement68
Related Party Transactions69
Appendix74
Annex A (“Excerpt from Orbital Energy Group 2020 Incentive Award Plan”)1
Annex B (“Plan corporate governance and information on our board of directors and certain other required information.

Q: Why did I receive a notice in the mail regarding the internet availabilityConversion”)

2
Annex C (“Colorado Statement of proxy materials insteadConversion”)7
Annex D (“Texas Certificate of a full setConversion”)9
Annex E (the “Certificate of proxy materials?

A: In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”Formation”), we may furnish proxy materials, including this Proxy Statement and our 2019 Annual Report on Form 10-K and Form 10-Q for the first six months of 2020, to our stockholders by providing access to such documents on the internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice, which was mailed to most of our stockholders, will instruct you as to how you may access and review all the proxy materials on the internet. The Notice also instructs you as to how you may submit your proxy on the internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions in the Notice for requesting such materials.

Q: I share an address with another stockholder and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?

A: We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, the proxy materials and the Annual Report to Stockholders to multiple stockholders who share the same address unless we received contrary instructions from one or more of the stockholders. This procedure reduces environmental impact as well as our printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written request, we will promptly deliver a separate copy of the Notice and, if applicable, the proxy materials and the Annual Report to Stockholders to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, these proxy materials or the 2019 Annual Report on Form 10-K and the Form 10-Q for the first six months of 2020, stockholders may telephone, write or email us as follows: (832) 467-1420,

10
Annex F (“Texas Bylaws”)16
Annex G (“Texas Indemnification Agreement”)58

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General Information about the Annual Meeting

Q: Why am I receiving these materials?

A: Our board of directors has made these materials available to you on the internet or, upon your request, delivered printed proxy materials to you in connection with the solicitation of proxies for use at the Orbital Energy Group Annual Meeting of Stockholders, which will take place at 9:00 am CST on Thursday, July 21, 2022, at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038. As a stockholder, you are invited to attend the Annual Meeting and you are requested to vote on the items of business described in this proxy statement.

Q: What information is contained in this proxy statement?

A: The information in this proxy statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation award process of our directors and most highly paid executive officers, a description of an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan to increase the Overall Share Limit by 5,000,000 shares, ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022, conversion of the Company’s domicile state from Colorado to Texas, change of the corporate name from Orbital Energy Group, Inc. to Orbital Infrastructure Group, Inc., corporate governance and information on our board of directors and certain other required information.

Q: Why did I receive a notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?

A: In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), we may furnish proxy materials, including this proxy statement and our 2021 Annual Report on Form 10-K and 10-K/A and our most recent Form 10-Q, to our stockholders by providing access to such documents on the internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice, which was mailed to most of our stockholders, will instruct you as to how you may access and review all the proxy materials on the internet. The Notice also instructs you as to how you may submit your proxy on the internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions in the Notice for requesting such materials.

Q: I share an address with another stockholder and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?

A: We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, the proxy materials and the Annual Report to Stockholders to multiple stockholders who share the same address unless we received contrary instructions from one or more of the stockholders. This procedure reduces environmental impact as well as our printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written request, we will promptly deliver a separate copy of the Notice and, if applicable, the proxy materials and the 2021 Annual Report on Form 10-K and 10-K/A and the most recent Form 10-Q to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the Notice and, if applicable, these proxy materials or the 2021 Annual Report on Form 10-K and 10-K/A and the most recent Form 10-Q, stockholders may telephone, write or email us as follows: (832) 467‑1420, Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038; Investors@OrbitalEnergyGroup.com.

 

Stockholders who hold shares in street name (as described below) may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding.

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Q: How do I get electronic access to the proxy materials?

A: The Notice will provide you with instructions regarding how to:

View our proxy materials for the Annual Meeting on our website, www.OrbitalEnergyGroup.com and

Instruct us to send our future proxy materials to you electronically by email.

Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact on the environment of printing and mailing these materials. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

Q: Is the Annual Meeting going to be webcast?

A: For your convenience, we are pleased to offer a live webcast of our Annual Meeting on the Investor Relations section of our website at www.OrbitalEnergyGroup.com.

Q: Can I participate in the question-and-answer portion of the Annual Meeting without attending the Annual Meeting?

A: No. The live webcast will be only visual and audio; there will be no opportunity to participate in the question-and-answer portion of the Annual Meeting unless you are present at the meeting.

Q: What items of business will be voted on at the 2022 Annual Meeting?

A: The items of business scheduled to be voted on at the Annual Meeting are:

View our proxy materials for the Annual Meeting on our website, www.OrbitalEnergyGroup.com and

 

Instruct us to send our future proxy materials to you electronically by email.

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Choosingeight directors to receive your future proxy materials by email will save ushold office until the cost of printing and mailing documents to you and will reduce the impact on the environment of printing and mailing these materials. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

Q: Is the Annual Meeting going to be webcast?

A: For your convenience, we are pleased to offer a live webcast of our Annual Meeting on the Investor Relations section of our website at www.OrbitalEnergyGroup.com.

Q: Can I participate in the question-and-answer portion of the Annual Meeting without attending the Annual Meeting?

A: No. The live webcast will be only visual and audio; there will be no opportunity to participate in the question-and-answer portion of the Annual Meeting unless you are present at the meeting.

Q: What items of business will be voted on at the 2020 Annual Meeting?

A: The items of business scheduled to be voted on at the Annual Meeting are:

The election of seven directors to hold office until the 20212023 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified;

Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020;

Advisory approval of the Company’s executive compensation (Say-on-Pay).

To approve the adoption of the Orbital Energy Group 2020 Incentive Award Plan.

Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022;

We will also consider anyAdvisory approval of the Company’s executive compensation (Say-on-Pay);

To approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the number of shares for issuance by 5,000,000 shares;

To approve the conversion of the Company’s domicile state from Colorado to Texas which conversion shall include changing the corporate name from Orbital Energy Group, Inc. to Orbital Infrastructure Group, Inc. and

To transact such other business thatas may properly comescome before the Annual Meeting.Meeting or any adjournments or postponements thereof.

 

Q: How can I vote my shares in person at the Annual Meeting?

A: Shares held in your name as the stockholder of record may be voted by you in person at the Annual Meeting. Shares held beneficially in street name may be voted by you in person at the Annual Meeting only if you obtain a legal proxy from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions as described herein so that your vote will be counted if you later decide not to attend the meeting.

4

 

Q: How shall I sign my name on the proxy card?

A: The following general rules for signing proxy cards may be of assistance to you and avoid the time and expense to Orbital Energy Group in validating your vote if you fail to sign your proxy card properly.

Individual Accounts: Sign your name exactly as it appears in the registration on the proxy card.

Joint Accounts: Either party may sign, but the name of the party signing should conform exactly to a name shown in the registration on the proxy card.

All Other Accounts: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the form of registration.

Q: How can I vote my shares without attending the Annual Meeting?

A: Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the Annual Meeting. If you are a stockholder of record, you may vote by proxy. You can vote by proxy over the internet by following the instructions provided in the Notice or, if you requested to receive printed proxy materials, you can also vote by mail or telephone pursuant to instructions provided on the proxy card. If you hold shares beneficially in street name, you may also vote by proxy over the internet by following the instructions provided in the Notice or, if you requested to receive printed proxy materials, you can also vote by telephone or mail by following the voting instruction card provided to you by your broker, bank, trustee or nominee.

Q: May I change my vote?

A: You may change your vote at any time prior to the taking of the vote at the Annual Meeting. If you are the stockholder of record, you may change your vote by: (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (2) providing a written notice of revocation to Orbital Energy Group’s Corporate Secretary at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038 prior to your shares being voted or (3) attending the Annual Meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee following the instructions they provided or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the Annual Meeting and voting in person.

Q: Is my vote confidential?

A: Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Orbital Energy Group or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the votes and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide on their proxy card written comments, which are then forwarded to Orbital Energy Group management.

Q: How many shares must be present or represented to conduct business at the Annual Meeting?

A: The presence at the Annual Meeting, in person or by proxy, of the holders of one third of the aggregate voting power of the common stock outstanding on the Record Date will constitute a quorum. Each share of common stock is entitled to one vote. As of the Record Date for this Annual Meeting, approximately 86,876,540 shares of common stock were outstanding and entitled to vote at the Annual Meeting. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum. Unless otherwise indicated, all references herein to percentages of outstanding shares of stock are based on such numbers of shares outstanding. Shares entitled to vote are referred to hereafter as “Voting Shares.”

Q: What shares can I vote?

A: Each share of Orbital Energy Group common stock issued and outstanding as of the close of business on the Record Date for the Annual Meeting is entitled to be voted on all items being voted on at the Annual Meeting. You may vote all shares owned by you as of the Record Date, including: (1) shares held directly in your name as the stockholder of record and (2) shares held for you as the beneficial owner in street name through a broker, bank, trustee or other nominee.

Q: How many votes am I entitled to per share?

A: Each holder of shares of common stock is entitled to one vote for each share held as of the Record Date.

Q: What is the Record Date?

A: Record Date, in the context of voting at the Annual Meeting, is the date on which our stock ledger is closed for the purpose of determining which stockholders officially own voting shares in order to be entitled to vote at the Annual Meeting. The Record Date for the 2022 Annual Meeting of Stockholders is May 27, 2022.

Q: How may I vote?

A: Regarding the election of directors, you may vote “FOR” all or some of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees.

A: Regarding the following proposals, you may vote “FOR” or “AGAINST” or “ABSTAIN”:

Individual Accounts: Sign your name exactly as it appears in the registration on the proxy card.

 

Joint Accounts: Either party may sign, but the name of the party signing should conform exactly to a name shown in the registration on the proxy card.

All Other Accounts: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the form of registration.

Q: How can I vote my shares without attending the Annual Meeting?

A: Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the Annual Meeting. If you are a stockholder of record, you may vote by proxy. You can vote by proxy over the internet by following the instructions provided in the Notice or, if you requested to receive printed proxy materials, you can also vote by mail or telephone pursuant to instructions provided on the proxy card. If you hold shares beneficially in street name, you may also vote by proxy over the internet by following the instructions provided in the Notice or, if you requested to receive printed proxy materials, you can also vote by telephone or mail by following the voting instruction card provided to you by your broker, bank, trustee or nominee.

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Q: May I change my vote?

A: You may change your vote at any time prior to the taking of the vote at the Annual Meeting. If you are the stockholder of record, you may change your vote by: (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (2) providing a written notice of revocation to Orbital Energy Group’s Corporate Secretary at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038 prior to your shares being voted or (3) attending the Annual Meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee following the instructions they provided or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the Annual Meeting and voting in person.

Q: Is my vote confidential?

A: Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Orbital Energy Group or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the votes and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide on their proxy card written comments, which are then forwarded to Orbital Energy Group management.

Q: How many shares must be present or represented to conduct business at the Annual Meeting?

A: The presence at the Annual Meeting, in person or by proxy, of the holders of one third of the aggregate voting power of the common stock outstanding on the record date will constitute a quorum. Each share of common stock is entitled to one vote. As of the Record Date for this Annual Meeting, approximately 30,420,683 shares of common stock were outstanding and entitled to vote at the Annual Meeting. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum. Unless otherwise indicated, all references herein to percentages of outstanding shares of stock are based on such numbers of shares outstanding. Shares entitled to vote are referred to hereafter as “Voting Shares.”

Q: What shares can I vote?

A: Each share of Orbital Energy Group common stock issued and outstanding as of the close of business on the Record Date for the Annual Meeting is entitled to be voted on all items being voted on at the Annual Meeting. You may vote all shares owned by you as of the Record Date, including: (1) shares held directly in your name as the stockholder of record and (2) shares held for you as the beneficial owner in street name through a broker, bank, trustee or other nominee.

Q: How many votes am I entitled to per share?

A: Each holder of shares of common stock is entitled to one vote for each share held as of the Record Date.

Q: What is the Record Date?

A: Record Date, in the context of voting at the Annual Meeting, is the date on which our stock ledger is closed for the purpose of determining which stockholders officially own voting shares in order to be entitled to vote at the Annual Meeting. The Record Date for the 2020 Annual Meeting of Stockholders is October 14, 2020.

Q: How may I vote?

A: Regarding the election of directors, you may vote “FOR” all or some of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees.

A: Regarding the following proposals, you may vote “FOR” or “AGAINST” or “ABSTAIN”:

Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020,

Advisory approval of the Company’s executive compensation (Say-on-Pay),

Approval of the Orbital Energy Group 2020 Incentive Award Plan.

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Q: If I check the box for “ABSTAIN” or “WITHHOLD,” what happens to my vote?

A: If you check the box for “ABSTAIN” or “WITHHOLD,” your vote will not be counted in favor of the matter on which you voted; however, it will be counted for the purpose of determining the presence of a quorum.

Q: What vote is required to approve each item?

A: Election of directors

The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required for the election of each director. A properly executed proxy marked "WITHHOLD" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated or the other items to be voted on; however, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” election of the nominee for director.

A: Ratification of Grant Thornton LLP as our independent registered public accounting firm.

The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required for the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2020. A properly executed proxy marked “ABSTAIN” regarding this issue will not be voted with respect to the item to be voted on; although, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” these issues.2022;

A: Advisory vote on the approval of the Company’s executive compensation (Say-on-Pay).;

While we intend

To approve an amendment to carefully consider the voting results of this proposal, in accord with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the final vote is advisory in nature, therefore, not binding on us, our board or the Compensation Committee. Our executive compensation will be approved, on an advisory basis, if the votes cast by stockholders in favor of advisory approval exceed those votes cast in opposition of advisory approval.

A: Approvalparagraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan

The affirmative vote “FOR” by increasing the number of a simple majorityshares for issuance by 5,000,000 shares;

To approve the conversion of the votes cast atCompany’s domicile state from Colorado to Texas which conversion shall include changing the Annual Meeting is required for the approval of thecorporate name from Orbital Energy Group, 2020 Incentive Award Plan.Inc. to Orbital Infrastructure Group, Inc

Q: If I check the box for “ABSTAIN” or “WITHHOLD,” what happens to my vote?

A: If you check the box for “ABSTAIN” or “WITHHOLD,” your vote will not be counted in favor of the matter on which you voted; however, it will be counted for the purpose of determining the presence of a quorum.

Q: What vote is required to approve each item?

A: Election of directors

The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required for the election of each director. A properly executed proxy marked "WITHHOLD" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated or the other items to be voted on; however, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” election of the nominee for director.

A: Ratification of Grant Thornton LLP as our independent registered public accounting firm.

The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required for the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2022. A properly executed proxy marked “ABSTAIN” regarding this issue will not be voted with respect to the item to be voted on; although, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” these issues.

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A: Advisory vote on the approval of the Company’s executive compensation (Say-on-Pay).

While we intend to carefully consider the voting results of this proposal, in accord with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the final vote is advisory in nature, therefore, not binding on us, our board or the Compensation Committee. Our executive compensation will be approved, on an advisory basis, if the votes cast by stockholders in favor of advisory approval exceed those votes cast in opposition of advisory approval.

A: To approve the conversion of the Company’s domicile state from Colorado to Texas.

The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required to approve the conversion of the Company’s domicile state from Colorado to Texas. A properly executed proxy marked "WITHHOLD" with respect to this proposal will not be voted with respect to approval of this proposal; however, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” approval of the conversion of the Company’s domicile state from Colorado to Texas.

A: To approve the change of the corporate name from Orbital Energy Group, Inc. to Orbital Infrastructure Group, Inc.

The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required to approve the company name change. A properly executed proxy marked "WITHHOLD" with respect to this proposal will not be voted with respect to approval of this proposal; however, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” approval of the company name change.

A: To approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit by 5,000,000 shares.

The affirmative vote “FOR” of a simple majority of the votes cast at the Annual Meeting is required to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit. A properly executed proxy marked "WITHHOLD" with respect to this proposal will not be voted with respect to approval of this proposal; however, it will be counted for purposes of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” approval of an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit.

Q: Why am I asked to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit to 5,000,000?

A: Nasdaq Stock Market Listing Rule 5635(c) requires shareholder approval prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement is made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.

We had two previous equity incentive plans, 2008 Equity Incentive Plan and the Company’s 2009 Equity Incentive Plan (Executive), which have both expired.

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Q: What is the purpose of the Orbital Energy Group 2020 Incentive Award Plan and what is in it?

A: Orbital Energy Group is requesting its stockholders to approve an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan (the “Plan”) by increasing the Overall Share Limit from 5,000,000 to 10,000,000 shares of which 1,476,450 have been granted. The Overall Share Limit is the total number of shares reserved and available for grant and issuance pursuant to the Plan. By the terms of the Plan, the Company shall reserve and keep available a sufficient number of shares as shall be required to satisfy the requirements of all outstanding awards granted under the Plan. This increase will become effective upon stockholder approval.

The purpose of the Orbital Energy Group 2020 Incentive Award Plan is to enhance our ability to attract, retain and motivate persons who make (or are expected to make) important contributions to Orbital Energy Group by providing these individuals with equity ownership opportunities. Equity awards are intended to motivate high levels of performance and align the interests of our directors, employees and consultants with those of our stockholders by giving directors, employees and consultants the perspective of an owner with an equity stake in Orbital Energy Group and providing a means of recognizing their contributions to the success of the Company. Our board of directors and management believe that equity awards are necessary to remain competitive in the Company’s industry and are essential to recruiting and retaining the highly qualified employees who help Orbital Energy Group meet its goals.

Q: What is the effect of the proposal to ratify the Audit Committee’s appointment of Grant Thornton LLP as our independent registered public accounting firm?

A: Selection of our independent registered public accounting firm is not required to be submitted to a vote of stockholders. The Sarbanes-Oxley Act of 2002 requires the Audit Committee of our board of directors to be responsible for the appointment, compensation and oversight of the audit work of the independent registered public accounting firm. However, the board of directors has elected to submit the selection of Grant Thornton LLP as our independent registered public accounting firm to stockholders for ratification as a matter of corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain Grant Thornton LLP and may retain that firm or another firm without resubmitting the matter to our stockholders. Even if the appointment is ratified, the Audit Committee may, at its discretion, appoint a different independent registered public accounting firm at any time during the year.

Q: What is the reason for and the effect of the proposal to approve the conversion of the Company’s domicile state from Colorado to Texas?

A: The primary reason that the Board has approved and recommended the Conversion is because the corporate executive offices and core of operations are located in Houston, Texas and the corporate laws of the State of Texas are more conducive to our method of operation. The principal effects of the Conversion will be that:

The corporate name will change from Orbital Energy Group, 2020 Incentive Award Plan will not be voted with respectInc. to approvalOrbital Infrastructure Group, Inc.

The affairs of the Company will cease to be governed by the Colorado Corporations and Associations Act (the “CCAA”) and its existing articles of incorporation and bylaws (the "Colorado Articles" and the "Colorado Bylaws") will become subject to the Texas Business Organizations Code (the “TBOC”).

The resulting Texas corporation (“Orbital Infrastructure Group, Inc.”) will be the same entity of the Company as currently incorporated in Colorado (“Orbital Energy Group, 2020 Incentive Award Plan; however, itInc.”), will be counted for purposespossess all of determining whether there is a quorum. Voting Shares represented by properly executed proxies for which no instruction is given will be voted “FOR” approvalthe properties of the Orbital Energy Group, 2020 Incentive Award Plan.

Q: Why am I asked to vote onInc., will continue with all of the debts, liabilities and obligations of Orbital Energy Group, 2020 Incentive Award Plan?

A: Nasdaq Stock Market Listing Rule 5635(c) requires shareholder approvalInc. and will continue with the same officers and directors of Orbital Energy Group, Inc. immediately prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement is made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.Conversion, as more fully described below. 

We had two previous equity incentive plans, 2008 Equity Incentive Plan and the Company’s 2009 Equity Incentive Plan (Executive), which have both expired.

Q: What is the purpose of the Orbital Energy Group 2020 Incentive Award Plan and what is in it?

A: The purpose of the Orbital Energy Group 2020 Incentive Award Plan is to enhance our ability to attract, retain and motivate persons who make (or are expected to make) important contributions to Orbital Energy Group by providing these individuals with equity ownership opportunities. We believe the Orbital Energy Group 2020 Incentive Award Plan is essential to the Company’s success. Equity awards are intended to motivate high levels of performance and align the interests of our directors, employees and consultants with those of our stockholders by giving directors, employees and consultants the perspective of an owner with an equity stake in Orbital Energy Group and providing a means of recognizing their contributions to the success of Orbital Energy Group. The Orbital Energy Group board of directors and management believe that equity awards are necessary to remain competitive in the Company’s industry and are essential to recruiting and retaining the highly qualified employees who help Orbital Energy Group meet its goals.

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8

 

The

When the conversion becomes effective, all of the issued and outstanding shares of common stock of Orbital Energy Group, 2020 Incentive Award Plan providesInc. will be automatically converted into issued and outstanding shares of common stock of Orbital Infrastructure Group, Inc., on a one for one basis, without any action on the grantpart of our shareholders. The Conversion will have no effect on the trading of our stock options, including ISOs and nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock, dividend equivalent, restricted stock units (“RSUs”)on the Nasdaq Capital Market tier of The Nasdaq Stock Market under the new symbol “OIG”. Orbital Infrastructure Group, Inc. will continue to file periodic reports and other documents as and to the extent required by the rules and regulations of the SEC. Shares of our common stock or cash-based awards. Certain awards underthat are freely tradeable prior to the Conversion will continue to be freely tradeable as shares of Orbital Infrastructure Group, Inc. common stock, and shares of our common stock that are subject to restrictions prior to the Conversion will continue to be subject to the same restrictions as shares of Orbital Infrastructure Group, Inc. common stock. The Conversion will not change the respective positions of Orbital Energy Group 2020 Incentive Award Plan may constitute or provide for payment of “nonqualified deferred compensation”our shareholders under Section 409Afederal securities laws. 

Upon effectiveness of the Internal Revenue Code. All awardsconversion, all of our employee benefit and incentive plans will become Orbital Infrastructure Group, Inc. plans, and each option, restricted stock unit, equity award or other right issued under such plans will automatically be converted into an option, restricted stock unit, equity award or right to purchase or receive the same number of shares of Orbital EnergyInfrastructure Group, 2020 Incentive Award PlanInc. common stock, at the same price per share, upon the same terms and subject to the same conditions as before the Conversion. In addition, our employment contracts and other employee benefit arrangements also will be set forth in award Agreements, which will detailcontinued by Orbital Infrastructure Group, Inc. upon the same terms and subject to the same conditions of awards, including any applicable vesting and payment terms and post-termination exercise limitations.

The Orbital Energy Group 2020 Incentive Award Plan is intended to conform to all provisionsin effect at the time of the Securities ActConversion.

Q: Is cumulative voting permitted for the election of directors?

A: No. You may not cumulate your votes for the election of directors.

Q: What is cumulative voting?

A: A system of voting in which each voter is given as many votes as there are positions to be filled and allowed to cast those votes for one candidate or distribute them in any way among the candidates.

Q: What happens if additional matters are presented at the Annual Meeting?

A: Other than:

Election of 1933, as amended, and the Exchange Act, and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation Rule 16b-3.

Q: What is the effect of the proposal to ratify the Audit Committee’s appointment of Grant Thornton LLP as our independent registered public accounting firm?

A: Selection of our independent registered public accounting firm is not required to be submitted to a vote of stockholders. The Sarbanes-Oxley Act of 2002 requires the Audit Committee of our board ofeight directors to be responsible forhold office until the appointment, compensation and oversight of the audit work of the independent registered public accounting firm. However, the board of directors has elected to submit the selection of Grant Thornton LLP as our independent registered public accounting firm to stockholders for ratification as a matter of corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain Grant Thornton LLP and may retain that firm or another firm without resubmitting the matter to our stockholders. Even if the appointment is ratified, the Audit Committee may, at its discretion, appoint a different independent registered public accounting firm at any time during the year.

Q: Is cumulative voting permitted for the election of directors?

A: No. You may not cumulate your votes for the election of directors.

Q: What is cumulative voting?

A: A system of voting in which each voter is given as many votes as there are positions to be filled and allowed to cast those votes for one candidate or distribute them in any way among the candidates.

Q: What happens if additional matters are presented at the Annual Meeting?

A: Other than:

1.

Election of seven directors to hold office until the 20212023 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified;

2.

Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020;

Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022;

3.

Advisory approval of the Company’s executive compensation (Say-on-Pay);

4.

To approve an amendment to paragraph 11.27 of the adoption of Orbital Energy Group 2020 Incentive Award Plan;

As described in this Proxy Statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you submit a signed proxy, the persons named as proxy will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting.

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A: Many Orbital Energy Group stockholders hold their shares as a beneficial owner through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held as a stockholder of record and those owned beneficially.

Stockholder of Record

If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the Notice was sent directly to you2020 Incentive Award Plan by Orbital Energy Group. As the stockholder of record, you have the right to grant your voting proxy directly to Orbital Energy Group or to vote in person at the Annual Meeting. If you requested to receive printed proxy materials, Orbital Energy Group has enclosed or sent a proxy card for you to use. You may also vote on the internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the Annual Meeting?”

Beneficial Owner

If your shares are held in an account at a brokerage firm, bank, broker-dealer, trust or other similar organization, like most of our stockholders, you are considered the beneficial owner of shares held in street name, and the Notice was forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, trustee or nominee how to vote your shares and you are also invited to attend the Annual Meeting.

Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares at the meeting. If you do not wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. You may vote by proxy over the internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the Annual Meeting?”

If you hold your shares in "street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determiningincreasing the number of shares necessary for approval. Shares representedissuance by such "broker non-votes" will, however, be counted in determining whether there is a quorum.5,000,000 shares;

Q: Who will bearTo approve the costconversion of soliciting votes for the Annual Meeting?

A:Company’s domicile state from Colorado to Texas which conversion shall include changing the corporate name from Orbital Energy Group, will pay the entire cost of preparing, assembling, printing, mailingInc. to Orbital Infrastructure Group, Inc. and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the internet, you are responsible for internet access charges you

To transact such other business as may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities.

Q: Where can I find the voting results of the Annual Meeting?

A: We intend to announce preliminary voting results atproperly come before the Annual Meeting and to disclose the vote results on Form 8-K as well as on our website at www.OrbitalEnergyGroup.com as soon as possible after the Annual Meeting.or any adjournments or postponements thereof.

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9

As described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you submit a signed proxy, the persons named as proxy will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting.

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A: Many Orbital Energy Group stockholders hold their shares as a beneficial owner through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held as a stockholder of record and those owned beneficially.

Stockholder of Record

If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the Notice was sent directly to you by Orbital Energy Group. As the stockholder of record, you have the right to grant your voting proxy directly to Orbital Energy Group or to vote in person at the Annual Meeting. If you requested to receive printed proxy materials, Orbital Energy Group has enclosed or sent a proxy card for you to use. You may also vote on the internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the Annual Meeting?”

Beneficial Owner

If your shares are held in an account at a brokerage firm, bank, broker-dealer, trust or other similar organization, like most of our stockholders, you are considered the beneficial owner of shares held in street name, and the Notice was forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, trustee or nominee how to vote your shares and you are also invited to attend the Annual Meeting.

Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares at the meeting. If you do not wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. You may vote by proxy over the internet or by telephone, as described in the Notice and below under the heading “How can I vote my shares without attending the Annual Meeting?”

If you hold your shares in "street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to non-routine matters to be acted upon which includes Proposals 1, 2, 3, 4, and 5. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval. Shares represented by such "broker non-votes" will, however, be counted in determining whether there is a quorum.

Q: Who will bear the cost of soliciting votes for the Annual Meeting?

A: Orbital Energy Group will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the internet, you are responsible for internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities.

Q: Where can I find the voting results of the Annual Meeting?

A: We intend to announce preliminary voting results at the Annual Meeting and to disclose the vote results on Form 8-K as well as on our website at www.OrbitalEnergyGroup.com as soon as possible after the Annual Meeting.

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Proposals to be Considered

 

PROPOSAL I

 

Election of Directors

 

Issued and outstanding shares of our Common Stock are entitled to one vote per share for each Director for a one-year term or until a successor has been elected and qualified or the Director’s earlier resignation or removal. Cumulative voting is not permitted.

 

Unless stated to be voted otherwise, each proxy will be voted for the election of the nominees named. The nominees have consented to serve as director if elected. If any nominee becomes unavailable for election before the Annual Meeting of Stockholders, the board of directors may name a substitute nominee and proxies will be voted for such substitute nominee unless an instruction to the contrary is written on the proxy card.

 

Information about Director Nominees

Board of Directors Independence

The board of directors has determined that each of the director nominees standing for election has no relationship that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Additionally, several of the director nominees standing for election are “independent directors” as defined by Rule 5605(a)(2) of The Nasdaq Stock Market (“Nasdaq”). In determining the independence of our directors, the board of directors has adopted independence standards that mirror exactly the criteria specified by applicable laws and regulations of the SEC and the Rules of The Nasdaq Stock Market. In determining the independence of our directors, the board of directors considered all transactions in which Orbital Energy Group and any director had any interest, including those discussed below under Transactions with Related Persons, Promoters and Certain Control Persons.Party Transactions.

 

Chief Executive Officer Change

Effective October 1, 2019, William J. Clough resigned as the Company CEO and James F. O’Neil was appointed as CEO of the Company and subsidiaries and Vice-Chairman ofPaul D. White Retired from the Board

Paul D. White, has elected to retire from our board of Directors. Mr. Clough was appointed Company Chief Legal Officerdirectors when his term expires and Executive Chairman ofwill not stand for reelection at the Board of Directors.Company’s annual meeting in 2022.

 

Following is a brief description of the business experiences, ages as of September 30, 2019December 31, 2022, and positions and offices with the Company for each of the director nominees.

 

William J. Clough, Esq., Executive Chairmanand General Counsel of Orbital Energy Group, Inc. Mr. Clough is also a Director and Executive Chairman of the Company’s board of directors and Chief Legal Officer of the Company and its wholly owned subsidiaries, age 69

71. Mr. Clough has served on the board of directors since 2006. Mr. Clough2006 and was reelected at the 20192021 Annual Meeting of Stockholders to serve a one-year term.

 

DuringA seasoned executive and entrepreneur, Mr. Clough joined the company’s Board in 2006 and was subsequently appointed chief executive officer in 2008. In his tenure,role as CEO, a position he hasheld until 2019 with the appointment of Jim O’Neil, he led several strategic initiatives, including the Company’s acquisitionestablishment of Orbital Gas Systems Limited and the Company’s natural gas technology line; the opening of Orbital Gas Systems,company’s Energy division, formed its Energy operations in North America, Inc.;and guided the successfulcompany to its largest Energy contract award by Snam Rete Gas ofin its history while concurrently managing the ~€60,000,000 re-metering projectcompany’s Power & Electro-Mechanical division to Orbital-UK;greater than average electronics industry growth rates in addition, Mr. Clough steeredrecent years. As CEO, he directed company’s capital markets strategy, including leading several equity offerings to institutional investors and spearheaded the Company through its 2012, 2013, and 2017 equity raises and its listing oncompany’s uplist to the Nasdaq Capital Market in 2012.

 

Before joining the Company, Clough, an attorney, operated his own law firm for 14 years, with offices in Los Angeles, San Francisco and Honolulu. In that capacity, he successfully represented leading movie studios and media conglomerates.

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Mr. Clough previously founded and operated a multi-state, multi-office law firm for 14 years. He received hisa Juris Doctorate, cum laude,Cum Laude, from the University of California’s Hastings College of the Law in 1990. He obtained one of the largest ever non-wrongful death jury verdicts in Los Angeles County Superior Court in 2000is a former law enforcement officer and successfully represented parties in multi-million-dollar cases throughout the United States.U.S. Federal Air Marshal. Mr. Clough is certified to practice lawserves on the board of directors of privately-held Virtual Power Systems, creator of Software Defined Power®, in state and federal courts in California, Illinois, Hawaii, and before the United States Supreme Court. Mr. Clough worked aswhich Orbital Energy Group holds a police officer for 16 years at the local, state, and federal level including as a Federal Air Marshall flying in Southern Europe and the Middle East.minority equity investment.

James F. OO’NeilNeil III, Chief Executive Officer, Vice Chairman of the Boardboard of Directors, Director, as well asdirectors and Chief Executive Officer of the Company’sCompany and its wholly owned subsidiaries, age 6264. Mr. O’Neil was appointed to the Board of Directors in July 2019 and reelected at the 2021 Annual Meeting of Stockholders to serve a one-year term.

 

James Francis(Jim) O'Neil III,joined Orbital Energy Group as vice chairman in July 2019 and was subsequently appointed chief executive officer in October 2019. He is a veteran executive of the power industry earnedand has been instrumental in formulating and is overseeing execution on Orbital Energy Group’s transformation plan that reshapes the company into a B.S.diversified energy services platform.

Mr. O’Neil was previously chief operating officer, chief executive officer and president of Quanta Services, Inc. (Quanta) from 2008 to 2016, an infrastructure solutions provider for the electric power, oil and natural gas, telecommunications and renewable industries. During this period, he grew the company into a Fortune 500 enterprise with $7+ billion in Civil Engineering from Tulane University in 1980. He is the principal ownerannual revenue at its peak through a combination of Forefront Solutions, LLC. since October 2017.both organic growth and many strategic acquisitions.

 

Mr. O’Neil joined Quanta Services, Inc. in 1999 as Vice President of Operations Integration and in 2002 advanced to Senior Vice President of Operations Integration & Audit. He continued to advance to Chief Operating Officer from October 2008 to 2011, then as the Chief Executive Officer from May 2011 to March 2016 and President from October 2008 to March 2016. Throughoutover his tenure at Quanta, he was responsible for various initiatives including the Company’scompany’s growth strategy, internal audit, and merger and acquisition initiatives.

Mr. O’Neil currently serves on the board of Hennessy Capital Acquisition Corp. IV (Independent Director since February 2019), FirstEnergy Corp. (Independent Director since 2017) and NRC Group Holdings Corp. (NYSE American: NRCG) (director since 2017).

From He began his career at Halliburton Company in 1980 to 1999, Mr. O'Neilwhere he held various positions, with Halliburton Company, lastly as Director, Global Deepwater Development.

 

Mr. O’Neil and his wife, Tracey, are personally active and loyal financial supporters of Waller/Austin Counties, Texas non-profit programs devoted to providing scholarship funds to students who participateholds a B.S. in the 4H Club and fair programs throughout the year.Civil Engineering from Tulane University.

C. Stephen Cochennet, Director, age 64

65

Mr. Cochennet was elected to serve as a director at the 2018 Annual Meeting of Stockholders and continues to serve on the board of directors as an independent director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Mr. Cochennet was reelected at the 20192021 Annual Meeting of Stockholders to serve a one-year term.

 

Mr. Cochennet, as an independent director, serves as one of four independent directors on the nominating committee along with Messrs. Rooney, Lambrecht, Addison, Williams, Ms. Thornton and Ms. Tucker. Mr. Cochennet is also a member of our Audit Committee, Compensation Committee and CompensationInvestment Committee.

 

Mr. Cochennet has served as CEO/President, of Kansas Resource Development Company, a private oil and gas exploration company since 2011. From 2011 through 2015 he was also the CEO and president of Guardian 8 Corporation. From 2005 to 2010 Mr. Cochennet was the Chairman, President, and Chief Executive Officer of EnerJex Resources, Inc., a publicly traded SEC registered Oil and Gas Company. Prior to joining EnerJex, Mr. Cochennet was President of CSC Group, LLC.LLC in which he supported several Fortune 500 corporations, international companies, and natural gas/electric utilities as well as various startup organizations. The services provided included strategic planning, capital formation, corporate development, executive networking and transaction structuring. From 1985 to 2002, he held several executive positions with UtiliCorp United Inc. (Aquila) in Kansas City, Missouri. His responsibilities included finance, administration, operations, human resources, corporate development, natural gas/energy marketing, and managing several new startup operations. Prior to his experience at Aquila Mr. Cochennet served 6 years with the Federal Reserve System managing problem and failed banking institutions primarily within the oil and gas markets.

 

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Mr. Cochennet graduated from the University of Nebraska with a B.A. in Finance and Economics.

 

Sean P. RooneyCorey A. Lambrecht, Director, age 49

Mr. Rooney was elected to serve as a director at the 2008 Annual Meeting of Stockholders and continues to serve on the board of directors as an independent director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Mr. Rooney was reelected at the 2019 Annual Meeting of Stockholders to serve a one-year term.

Mr. Rooney, as an independent director, serves as one of four independent directors on the nominating committee along with Messrs. Cochennet, Lambrecht, and Ms. Tucker. Mr. Rooney is also Chairman of our Audit Committee.

Mr. Rooney is a veteran of the financial markets and has served on the board of directors of Orbital Energy Group since 2008. He brings over 20 years of financial management experience to the board of directors. Mr. Rooney currently is a Financial Advisor at the Pinnacle Financial Group, which is part of LPL Financial, the largest independent broker dealer in the United States. Prior to working with LPL, Mr. Rooney served as Senior Director of Investments at Oppenheimer & Co., a full-service investment banking, securities and wealth management firm. He has also worked in similar capacity at Investec Ernst & Company, an international specialist bank headquartered in South Africa and the U.K. Mr. Rooney currently advises a clientele of high net worth investors, institutions and foundations. He is an active member of various industry and charitable organizations.

Mr. Rooney graduated from C.W. Post University in 1993 with a Bachelor of Arts degree in Business Administration and holds Series 7 (General Securities Representative), Series 63 (Uniform Securities Law), Series 24 (General Securities Principal) and Series 65 (Uniform Investment Adviser) licenses.

Paul D. White, Employee and Director, age 59

Mr. White was appointed in April 2014 as a director to fill a vacancy and continues to serve on the board of directors. Mr. White was reelected at the 2019 Annual Meeting of Stockholders to serve a one-year term.

Mr. White is a graduate of Humboldt State University and brings to the Orbital Energy Group board of directors over 25 years of upper-level business management skills. Mr. White served for two years as the President of Orbital Gas Systems, Ltd. Prior to working for the Company, Mr. White served as Vice President of the Healthcare Division for North America of a global security company. His responsibilities included direct responsibility for profit and loss statements with approximately $120 million in revenues, along with management, control, and supervision of approximately 3,000 employees working at 44 medical centers & hospitals and over 600 medical office buildings throughout the United States. He previously served in the Office of the General Counsel and Risk Services, as an Environmental Risk Consultant with Sutter Health Support Services - Corporate Services. His key responsibilities included: formulating best practice solutions to minimize/eliminate existing and potential employee health & safety and security exposures as well as consultations of state, federal, and professional standards for Risk Control/Environmental Health & Safety programs such as OSHA, TJC, DHS, EPA, NFPA, and DOT.

As a results-oriented business leader, Mr. White has skills in developing, managing and expanding business portfolios. Mr. White has senior management experience in contract management, public relations, program strategy and design and has been consistently recognized for effective financial management, leadership, integrity, teambuilding, and program management skills.

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Corey A. Lambrecht, Director, age 51

53

Mr. Lambrecht was elected to serve as a director at the 2007 Annual Meeting of Stockholders and continues to serve on the board of directors as an independent director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Mr. Lambrecht was reelected at the 20192021 Annual Meeting of Stockholders to serve a one-year term.

 

Mr. Lambrecht, as an independent director, serves as one of four independent directors on the nominating committee along with Messrs. Cochennet, Rooney,Addison, Williams, Ms. Thornton and Ms. Tucker. Mr. Lambrecht is also Chairman of our Compensation Committee and Investment Committee and a member of our Audit Committee.

 

Mr. Lambrecht is a 20+ year public company executive with broad experience in strategic acquisitions, corporate turnarounds, new business development, pioneering consumer products, corporate licensing, and interactive technology services. In addition, Mr. Lambrecht has held public company executive roles with responsibilities including day-to-day business operations, management, raising capital, board of directors’directors' communication and investor relations. Mr. Lambrecht holds a certificate as a Certified Director from the UCLA Anderson Graduate School of Management Accredited Directors program.

Mr. Lambrecht, as an independent director, serves as one of six independent directors on the nominating committee along with Messrs. Cochennet, Williams, Ms. Thornton and Ms. Tucker. Mr. Lambrecht is also Chairman of our Compensation Committee.

 

Mr. Lambrecht is a director of ORHub, a SaaS company as well as a strategic consultant for American Rebel Holdings, Inc. He served as Director of Sales for Leveraged Marketing Associates, the worldwide leader in licensed brand extension strategies. While Executive Vice President for Smith & Wesson Holding Corporation, he was responsible for Smith & Wesson Licensing, Advanced Technologies and Interactive Marketing divisions. Previously, Mr. Lambrecht served as an independent director of Guardian 8 Holdings. He was the former President of A For Effort, an interactive database marketing company specializing in online content (advergaming) for clients such as the National Hockey League. Mr. Lambrecht's prior experience also includes Pre-IPO founder for Premium Cigars International and VP Sales/Marketing for ProductExpress.com.

 

Sarah Tucker, Director, age 75

77

Sarah Tucker was appointed to the Board of Directors effectivein October 1, 2019, and was elected at the 2020 Annual Meeting to serve a one-year term as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market.

Ms. Tucker was reelected at the 2021 Annual Meeting to serve a one-year term. Ms. Tucker, as an independent director, serves as one of four independent directors on the nominating committee along with Messrs. Cochennet, RooneyLambrecht, Williams, Addison and Lambrecht.Ms. Thornton.

 

Sarah Tucker is a veteran executive for the business strategy/development, risk management, planning, engineering, procurement and construction of oil and gas projects globally. She has led projects with budgets from $5 million to over $3 billion in refining, petrochemicals, power, and offshore (both shallow and deep-water) for oil and liquified natural gas in Angola, Brazil, China, India, Italy, Korea, Mexico, Nigeria, Oman, Qatar, Spain, the United Kingdom and the United States.

 

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She has served as an operations executive and managing director for major engineering, construction and petrochemical technology companies including Kellogg, KBR, Kellogg-Mitsubishi Development Company, Raytheon Engineers and Constructors, Kvaerner Engineering and Construction of Norway.Norway and Silvertech of United Kingdom, a Process Control and High Integrity Safety System Solutions.

Sarah headed the Pollution Prevention Task Force Committee with eight Oil Companies' representatives participating and contributing to the Study for "Refinery Crude Unit Pollution Prevention Project" which is now an American Petroleum Institute DC Publication number 31101. 

 

Over the past several years, she has worked closely with Mexican national oil company PEMEX to establish the country’s first deep water project valued at $14 billion.

 

According to her personal and professional philosophy, Sarah believes in developing strong relationships and respecting diverse cultures. As part of her philosophy, she led in 1992 a program to author a 51-page report which became the American Petroleum Institute publication, Environmental Design Considerations for Petroleum Refining Crude Processing Units.Units.

 

Her parallel and subsequent effort with the World Bank was successful in striking a balance between the interests of indigenous people and major oil companies allowing projects to proceed in Africa. The publication became an influential guide for doing business in the developing world.

 

Paul T. Addison, Director, age 75

Paul T. Addison was appointed to the Board of Directors in June 2021, as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. Mr. Addison was reelected at the 2021 Annual Meeting to serve a one-year term. Mr. Addison, as an independent director, serves as chairman of the Audit Committee and serves on the nominating committee along with Messrs. Cochennet, Lambrecht, Williams, Ms. Thornton and Ms. Tucker.

Paul T. Addison earned a B. A. in political science and economics from Howard University in 1969 and a M.B.A. from Harvard University in 1972.

He began his career as a loan specialist for The Economic Development Administration of the US Department of Commerce in 1972 providing loan assistance for companies that agreed to expand operations in areas of high unemployment before moving to New York in 1974 to join a Chase Manhattan subsidiary as Vice President and Treasurer that provided financing and startup capital for minority small business enterprises (a MESBIC). In 1978, he joined Citibank/Citicorp as a banker in the firm’s energy and utilities department rising to the level of a senior credit officer and Managing Director.

In this capacity, he managed the bank’s significant exposure to a large segment of the gas and electric utility industry. He also provided financial advice to the firm’s clients and on numerous occasions provided testimony before state and federal regulatory commissions. He also developed financing structures which allowed a number of utilities to rate base large nuclear projects without which a number of utilities would have suffered significant losses. This was a particular issue during the last significant construction cycle for the industry.

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SarahHe also approved and structured a number of large energy project financings for the firm.

Mr. Addison continued his work in the utility industry when he joined Solomon Smith Barney (Citigroup) in 1997 as a Managing Director in the electric and gas utility space until his retirement from the firm in 2002.

Upon retirement from Citigroup, Mr. Addison became an independent director of First Energy Corporation of Akron, Ohio, serving until his mandatory retirement in 2019. In his capacity as independent director, he served as Chair of the Finance Committee, and member of the Audit Committee as a designated financial expert. He was heavily involved in numerous financings over his term on the board and significantly participated in the company’s $4.7 billion acquisition of Allegheny Energy in 2010.

Mr. Addison is also a Trustee of the Maimonides Medical Center in Brooklyn New York, where he resides. Maimonides is the largest nonprofit hospital in Brooklyn with revenues approaching $1.5 billion and serves an extremely diverse population where over 60 languages are spoken. In his capacity as Trustee, Mr. Addison serves as Chair of the Budget and Finance Committee, member of the Legal and Audit Committee, member of the Quality and Safety Committee, and member of the Executive Committee. Mr. Addison also has studiedserved as the hospital’s representative on their self-insurance malpractice company, Hospital Insurance Company (HIC). Mr. Addison also served as Chair of the Audit Committee of HIC’s parent, the Federation of Jewish Philanthropies (FOJP), until its dissolution in 2019.

Jerry Sue Thornton, Director, age 74

Dr. Thornton was appointed to the Board of Directors in July 2021, as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market and was reelected at the 2021 Annual Meeting to serve a one-year term. Dr. Thornton, as an independent director, serves on the nominating committee along with Messrs. Cochennet, Lambrecht, Williams, Addison, and Ms. Tucker.

Dr. Jerry Sue Thornton earned her B.A. and M. A. in Communications from Murray State University (Kentucky) and Ph.D. in Higher Education Leadership/Administration from The University of Kansas, Rice UniversityTexas (Austin). She earned a post-doctorate certificate from Harvard University.

Dr. Thornton is President of DreamCatcher Education Consulting providing professional development, coaching and Lamar University.mentoring for newly appointed presidents of colleges. She is President Emeritus of the Cuyahoga Community College District serving from 1992 to 2013 which is headquartered in Cleveland, Ohio. The College serves over 30,000 students on four campuses with a licensedbudget over $300 million. She brings over 45 years of experience in leading and managing higher education institutions in Chicago, Minnesota and Ohio with a focus on workforce training and professional engineer and holds a bachelor’s degree in Civil/Structural Engineering from Lamar.education.

 

She also has extensive corporate board service beginning in 1992 with National City Bank/Corporation, Office Max, American Greetings and Bridgestreet Worldwide, Inc. until those companies had a change of control. She later served on the Rice University EngineeringBoards of American Family Insurance, Applied Industrial Technologies, Inc., Republic Powdered Metals, (RPM, Inc.) and Construction Global Forum from 2008 - 2016,First Energy. She is currently serving as chair from 2008 - 2010.on the Boards of Barnes and Noble Education (BNED) and Parkwood LLC (an Ohio financial planning company).

 

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As a leading woman in

Gaining extensive business experience through her industry,board director services of public and private companies, she has been the first woman to hold several positions includinga member of compensation, nominating and governance and audit committees. From manufacturing through distribution; industrial through commercial; financial through merchandizing and energy, Dr. Thornton has amassed over 29 years of business experience. During that of vice president of operations.  Sarah is a recipienttenure, she has served on Special Committees of the 2015 National Women’s Council Award. She isBoard of Directors involved in acquisition.

Dr. Thornton brings to the Board of Directors broad leadership and business skills as well as an Executive Member of Women’s Energy Networkextensive background in workforce/talent acquisition, development and a Member of Executive Businesswomen’s Council in Mexico City.evaluation/assessment.

 

La Forrest V. Williams, Director, age 71

Mr. Williams was appointed to the Board of Directors in July 2021, as an Independent Director within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market and was reelected at the 2021 Annual Meeting to serve a one-year term. Mr. Williams, as an independent director, serves on the nominating committee along with Messrs. Cochennet, Lambrecht, Addison, Ms. Thornton and Ms. Tucker.

Mr. Williams is a veteran executive of the communications, computer and information assurance business of the Department of Defense and Intelligence community. He served in the civilian Defense Intelligence Senior Executive Service and the United States Air Force senior officer corps as a communication/computer intelligence and information assurance strategist for more than 40 years. His activity in information assurance became a nexus with the vulnerabilities of the energy grid.

His accomplishments include serving as a leader in the original merging of communications and computer systems technology into one management structure for the United States Air Force. His energy focus evolved through his engagement in studying cybersecurity threats to our energy grid during his career at the National Security Agency. Mr. Williams has a history of leadership positions which includes, Chief Information Officer (CIO) of the National Security Agency (NSA), Director of Information Assurance for the U.S. European Command and Director of Legislative Affairs for the National Security Agency. Mr. Williams' experience includes leading a military Communications Group of more than 500 technicians and staff, supporting Nellis Air Force Base Nevada networks. He has installed, managed, upgraded and secured communication cable and space networks worldwide; to include the United States, Europe and South Pacific.

Mr. Williams holds a B.S. degree in Business Administration from San Jose State University and an M.S. Degree in Technology of Management Information Systems from the American University, Washington D.C. He has served at the forefront in the Information Age and was an early leader at NSA in advocating concern about the vulnerability of our nation's energy grid. His advocacy led to the formation of customer assistance teams that he established to advise on the survivability of energy systems of national security concern. He later joined the National War College faculty in 2010 to teach National Security Strategy as a visiting Professor until 2013.  

He is a proven results-oriented leader with broad experience as an Air Force Colonel and three years of Board of Director experience with The Government Employees Benefit Association for federal employees. In his spare time, he is a volunteer Docent at the Smithsonian Institute in Washington D.C. and gives tours through the National Museum of American History.

All seveneight directors are nominated for election to a one-year term on the Board of DirectorsDirectors.

 

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Vote Required

In compliance with our corporate bylaws, the electionIf a quorum is present, approval of each director nomineethis proposal requires the affirmative vote “FOR” of a majority of the outstanding shares present in person or by proxyof the Company’s common stock entitled to vote on this proposal at the Annual Meeting.  Because matters considered “routine” by the applicable regulations, such as ratification of auditors, are under consideration at the Annual Meeting, abstentions and broker non-votes will be counted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not voted will have the effect of a vote “AGAINST” the proposal.

 

The Board of Directors recommends that Stockholders vote “FOR”FOR election of the nominees for director named above.

 

PROPOSAL II

 

Ratification of the Appointment of Grant Thornton LLP

as the Company’sCompanys Independent Registered Public Accounting Firm

for the Year Ending December 31, 20202022

 

The Audit Committee has selected Grant Thornton LLP to serve as independent registered public accounting firm for the fiscal year ending December 31, 2020.2022. The board is submitting the appointment of the independent registered public accounting firm to the stockholders for ratification at the Annual Meeting.

 

Representatives of Grant Thornton LLP are expected to be available by teleconference at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

 

Shareholder ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm is not required by the Company’s Restated Articles of Incorporation, bylaws or otherwise; however, the board of directors is submitting the selection of Grant Thornton LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will review its future selection of an independent registered public accounting firm considering that vote result. Your ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020,2022, does not preclude us from terminating our engagement of Grant Thornton LLP and retaining a new independent registered public accounting firm, if we determine that such an action would be in the best interests of the Company and its stockholders.

 

Vote Required

RatificationIf a quorum is present, approval of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020this proposal requires the affirmative vote of a majority of the outstanding shares present in person orof the Company’s common stock entitled to vote on this proposal at the Annual Meeting.  Because matters considered “routine” by proxythe applicable regulations, such as ratification of auditors, are under consideration at the Annual Meeting, abstentions and voting forbroker non-votes will be counted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not voted will have the effect of a vote “AGAINST” the proposal.

 

The Board of Directors recommends a vote “FOR”FOR the ratification of the appointment of Grant Thornton LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2020.2022.

 

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PROPOSAL III

 

Advisory Approval of the Company’sCompanys Executive Compensation

(Say-on-Pay)

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and related SEC regulations require that, at least once every three years, we provide our stockholders with the opportunity to express their views on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement.proxy statement. We first held this vote, which is often referred to as the Say-on-Pay vote, at our annual meeting of stockholders held in 2013.2019. At suchthe meeting, our stockholders voted to hold the frequency of our Say-on-Pay vote on an annual basis. Our board of directors agreed to support the stockholder decision; therefore, the Company will hold future non-binding advisory votes on the compensation of our named executive officers every year, at least until the next required vote of frequency of stockholder votes on the compensation of our named executive officers. Such Say-on-Frequency vote must occur no later than the annual or other meetingmeetings of stockholders held in the sixth calendar year after the immediately preceding Say-on-Frequency vote (2019which was the 2019 Annual Meeting of Stockholders). The 2019 vote reaffirmed the frequency of our say-on-pay vote to be held on an annual basis.Stockholders. The Company could hold a Say-on-Frequency vote more frequently than every six years if it elects to do so.

 

The compensation of our named executive officers for the past three fiscal years is set forth in the Elements of Executive Compensation Section. The Compensation Discussion and Analysis, or CD&A Section, describes our executive compensation policies and practices and analyzes the compensation received by our named executive officers in fiscal year 2019.2021. As described in the CD&A, our executive compensation philosophy is to reward performance and motivate collective achievement of strategic objectives that will contribute to our company’s success. Our board of directors believes the compensation programs for our named executive officers effectively meet the primary objectives of attracting and retaining highly qualified executives, motivating our executives to achieve our business objectives, rewarding our executives appropriately for their individual and collective contributions and aligning our executives’ interests with the long-term interests of our stockholders, and our board believes our programs are reasonable when compared to compensation at similar companies.

 

The vote on this resolution is not intended to address any specific element of executive compensation. Instead, the vote relates to the executive compensation of our named executive officers, as set forth in this Proxy Statementproxy statement pursuant to the rules of the SEC. This vote provides stockholders with the opportunity to endorse or not endorse the compensation of our named executive officers, but is advisory and not binding on our company or our board of directors.

Accordingly, the board of directors believes the Company’s executive compensation achieves these objectives, therefore, unanimously recommends that stockholders vote “FOR” the proposal.

RESOLVED, that the stockholders of Orbital Energy Group, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the compensation tables and related material in the Proxy Statement for the 2020 Annual Meeting of stockholders.

 

This vote will not be binding on the board of directors or the Compensation Committee and may not be construed as overruling a decision by the board or the Compensation Committee or create or imply any additional fiduciary duty on the board. It will also not affect any compensation paid or awarded to any executive. The approval or disapproval of this proposal by stockholders will not require the board of directors or the Compensation Committee to take any action regarding the Company’s executive compensation practices. The final decision on the compensation and benefits of the Company’s executive officers and on whether, and if so, how to address shareholder disapproval remains with the board and the Compensation Committee. Although the Say-on-Pay resolution is non-binding, the board of directors will review and consider the voting results when making future executive compensation decisions.

 

The board of directors welcomes and invites stockholder opinions, comments and recommendations relating to executive compensation and will consider all stockholder comments when making executive compensation awards. Stockholders may communicate with the board of directors by writing to the Company at Orbital Energy Group, 1924 Aldine Western, Houston, Texas 77038 or phone (832) 467‑1420. Stockholders who would like their submission directed to a member of the board may so specify and the communication will be forwarded as appropriate.

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Vote Required

Our executive compensationIf a quorum is present, approval of this proposal requires the affirmative vote of a majority of the outstanding shares of the Company’s common stock entitled to vote on this proposal at the Annual Meeting.  Because matters considered “routine” by the applicable regulations, such as ratification of auditors, are under consideration at the Annual Meeting, abstentions and broker non-votes will be approved, on an advisory basis, ifcounted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not voted will have the votes cast by stockholders in favoreffect of advisory approval exceed those votes cast in opposition ofa vote “AGAINST” the advisory approval.proposal.

 

The Board of Directors recommends a vote “FOR”FOR Advisory Approval of the Company’sCompanys Executive Compensation (Say-on-Pay).

as disclosed in the compensation tables in the Proxy Statement.

 

PROPOSAL IVIV

 

To approve the adoptionApprove an Amendment to Paragraph 11.27 of the

Orbital Energy Group 2020 Incentive Award Plan

by Increasing the Overall Share Limit by 5,000,000 Shares

 

In this Proposal, Orbital Energy Group is requesting Orbital Energy Groupits stockholders to approve and adoptan amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan (the “Orbital Energy Group 2020 Incentive Award Plan”“Plan”) by increasing the Overall Share Limit from 5,000,000 to 10,000,000 shares. The Overall Share Limit is the total number of shares reserved and available for grant and issuance pursuant to the materialPlan, as adopted by the Stockholders. Currently, the Overall Share Limit is five million (5,000,000) shares of which equity awards for 1,547,941 shares have been granted. By the terms thereunder. The Orbital Energy Group board of directors has approved the Orbital Energy Group 2020 Incentive Award Plan, subjectthe Company shall reserve and keep available a sufficient number of shares as shall be required to stockholder approval atsatisfy the Orbital Energy Group Stockholder Meeting. The Orbital Energy Group 2020 Incentive Award Planrequirements of all outstanding awards granted under the Plan. This increase will become effective upon stockholder approval.

 

The Orbital Energy Group 2020 Incentive Award Plan is described in more detail below. A copyBrief Description of the Orbital Energy Group 2020 Incentive Award Plan is attached to this Proxy Statement as Annex A.

The Orbital Energy Group 2020 Incentive Award Plan

The purpose of the Orbital Energy Group 2020 Incentive Award Plan is to enhance our ability to attract, retain and motivate persons who make (or are expected to make) important contributions to Orbital Energy Group by providing these individuals with equity ownership opportunities. We believe that the Orbital Energy Group 2020 Incentive Award Plan is essential to the Company’s success. Equity awards are intended to motivate high levels of performance and align the interests of our directors, employees and consultants with those of our stockholders by giving directors, employees and consultants the perspective of an owner with an equity stake in Orbital Energy Groupthe Company and providing a means of recognizing their contributions to the success of Orbital Energy Group. Our board of directors and management believe that equity awards are necessary to remain competitive in its industry and are essential to recruiting and retaining the highly qualified employees who help Orbital Energy Group meet its goals.

 

Employee Equity Incentive PlansThe Plan Share Limit

AsIn determining whether to approve the amendment to paragraph 11.27 of December 31, 2019, the Company had outstandingPlan by increasing the followingOverall Share Limit by 5,000,000 shares, our board of directors considered, among other factors, the following:

Both of our prior equity compensation plan information:incentive plans have expired.

Plan Category

 

Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a)

  

Weighted-average exercise price of outstanding options, warrants and rights (b)

  

Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a) (c)

 

Equity compensation plans approved by security holders

  10,167  $5.42   - 

Equity compensation plans not approved by security holders

  839,468  $6.25   - 

Total

  849,635  $6.24   - 

 

2019

 

Prior Incentive Plans, Now Expired

We had two previous equity incentive plans, which have both expired. The table below presents information aboutShare Limit means the total number of outstandingshares reserved and available for grant and issuance pursuant to this Plan. As of the date of the proxy statement, the Share Limit is five million (5,000,000) shares of which equity awards under these previous plans. The outstanding equity awards under the prior plans will remain subject tofor 1,547,941 shares have been granted. By the terms of the applicable prior planPlan, the Company shall reserve and willkeep available a sufficient number of shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

Share Limit may not be recycled intoincreased without stockholder approval.

A primary purpose of the Share Reserve under the Plan is to provide Orbital Energy Group 2020 Incentive Award Plan. The onlywith appropriate capacity to issue equity incentive plan we will currently have is the Orbital Energy Group 2020 Incentive Award Plan, if it is approved by our stockholders:

  

Number of Shares

  

As a % of Shares Outstanding(1)

  

Intrinsic

Value

 

2008 Employee Incentive Plan (ISO)

            

Options outstanding

  10,167   0.036% $- 

Weighted-average exercise price of outstanding options

 $5.42         

Shares remaining available for grant

  -         
             

2009 Equity Incentive Plan (Executive) (NSO)

         

Options outstanding

  839,468   2.958%  - 

Weighted-average exercise price of outstanding options

 $6.25         

Shares remaining available for grant

  -         

(1)

Based on 28,383,373 shares of common stock outstanding at December 31, 2019.

The Orbital Energy Group 2020 Incentive Award Plan Share Limit

compensation in anticipation of future acquisitions. In determining whether to approve the Orbital Energy Group 2020 Incentive Award Plan, includingsize of the proposed share reserveShare Reserve under the Orbital Energy Group 2020 Incentive Award Plan, our board of directors considered, among other factors,will consider the following:substantial changes to the capitalization structure of the Company that has occurred as a result of completed acquisitions as well as future anticipated acquisitions.

Both of our prior equity incentive plans have expired.

Share Limit means the total number of shares reserved and available for grant and issuance pursuant to this Plan. As of the date of adoption of the Plan by the Stockholders, the Share Limit is two million (2,000,000) shares. At all times the Company shall reserve and keep available a sufficient number of shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

Share Limit may not be increased without stockholder approval.

A primary purpose of the Share Reserve under the Orbital Energy Group 2020 Incentive Award Plan is to provide Orbital Energy Group with appropriate capacity to issue equity compensation in anticipation of future acquisitions. In determining the size of the Share Reserve under the Orbital Energy Group 2020 Incentive Award Plan, the Orbital Energy Group board of directors will consider the substantial changes to the capitalization structure of Orbital Energy Group that will occur as a result of future acquisitions, if any.

Orbital Energy Group expects the proposed aggregate Share Reserve under the Orbital Energy Group 2020 Incentive Award Plan to provide Orbital Energy Group with enough shares for awards for at least two years, assuming Orbital Energy Group continues to grant awards consistent with our current practices, and further dependent on the price of our shares and hiring activity during the next few years, forfeitures of outstanding awards, and future circumstances, which may require Orbital Energy Group to change its current equity grant practices. Orbital Energy Group cannot predict its future equity grant practices, the future price of our shares or future hiring activity with any degree of certainty at this time, and the share reserve under the Orbital Energy Group 2020 Incentive Award Plan could last for a shorter or longer time.

Orbital Energy Group expects the proposed aggregate Share Reserve under the Plan to provide enough shares for awards for at least the next year, assuming we continue to grant awards consistent with our current practices, and further dependent on the price of our shares and hiring activity during the next few years, forfeitures of outstanding awards, and future circumstances, which may require Orbital Energy Group to change its current equity grant practices. Orbital Energy Group cannot predict its future equity grant practices, the future price of our shares or future hiring activity with any degree of certainty at this time, and the share reserve under the Plan could last for a shorter or longer time.

 

In light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to Orbital Energy Group’s ability to continue to attract and retain employees in the extremely competitive labor markets in which it competes, the Orbital Energy Groupour board of directors believes it has approved a share reserve underrecommendation for the Orbital Energy Group 2020 Incentive Awardstockholders to approve an amendment to paragraph 11.27 of the Plan by increasing the Overall Share Limit by 5,000,000 shares that is reasonable and appropriate at this time. The Orbital Energy Group board of directors willdoes not intend to create a subcommittee to evaluate the risk and benefits for issuing shares under the Orbital Energy Group 2020 Incentive Award Plan.

 

21

paragraph 11.27 of the Plan is attached to this proxy statement asAnnex A.

 

Vote Required

TheIf a quorum is present, approval of this proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Orbital Energy Group’sthe Company’s common stock present in person or represented by proxy and entitled to vote on such mattersthis proposal at the stockholder meeting is required for approvalAnnual Meeting.  Because matters considered “routine” by the applicable regulations, such as ratification of this Proposal.auditors, are under consideration at the Annual Meeting, abstentions and broker non-votes will be counted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not voted will have the effect of a vote “AGAINST” the proposal.

 

The Board of Directors recommends a vote “FOR” the adoptionFOR approval of an amendment to paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by increasing the Overall Share Limit by 5,000,000 shares.

 

Summary of the Orbital Energy Group 2020 Incentive Award Plan

 

This section summarizes certain principal features of the Orbital Energy Group 2020 Incentive Award Plan. The summary is qualified in its entirety by reference to the complete textPlan (the “Plan”).

 

Eligibility and Administration

Orbital Energy Group’s employees, consultants and directors, and employees and consultants of Orbital Energy Group’s subsidiaries, will be eligible to receive awards under the Orbital Energy Group 2020 Incentive Award Plan. As of December 31, 2019, Orbital Energy Group had 257 employees, including 112 employees at its discontinued operations in Canada and Japan.

 

The Orbital Energy Group 2020 Incentive Award Plan will beis administered by the Orbital Energy Group board of directors, which may delegate its duties and responsibilities to one or more committees of Orbital Energy Group’s directors and/or officers (referredreferred to collectively as the plan administrator),administrator, subject to the limitations imposed under the Orbital Energy Group 2020 Incentive Award Plan, Section 16 of the Exchange Act, stock exchange rules and other applicable laws, thelaws. The plan administrator will havehas the authority to take all actions and make all determinations under the Orbital Energy Group 2020 Incentive Award Plan, to interpret the Orbital Energy Group 2020 Incentive Award Plan and Award Agreement and to adopt, amend and repeal rules for the administration of the Orbital Energy Group 2020 Incentive Award Plan as it deems advisable. The plan administrator will also have the authority to determine which eligible service providers receive awards, grant awards and set the terms and conditions of all awards under the Orbital Energy Group 2020 Incentive Award Plan, including any vesting provisions, subject to the conditions and limitations in the Orbital Energy Group 2020 Incentive Award Plan.

 

Lapsed or Terminated Shares

If all or any part of an Award expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will not become or again be available for Award grants under the Plan. Further, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award and/or to satisfy any applicable tax withholding obligation (including Shares retained by the Company from the Award being exercised or purchased and/or creating the tax obligation) will not become or again be available for Award grants under the Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not count against the Overall Share Limit.

 

Awards

The Orbital Energy Group 2020 Incentive Award Plan provides for the grant of stock options, including ISOs and nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards. Certain awards under the Orbital Energy Group 2020 Incentive Award Plan may constitute or provide for payment of “nonqualified deferred compensation” under Section 409A of the Code. All awards under the Orbital Energy Group 2020 Incentive Award Plan will be set forth in the award agreement, which will detail the terms and conditions of awards, including any applicable vesting and payment terms and post termination exercise limitations. All Awards shall be subject to a minimum vesting of one year from the Grant Date. A brief description of each award type follows.

Stock Options and SARs. Stock options provide for the purchase of shares of common stock of Orbital Energy Group in the future at an exercise price set on the grant date. ISOs, in contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. SARs entitle their holder, upon exercise, to receive from Orbital Energy Group an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. The plan administrator will determine the number of shares covered by each option and SAR, the exercise price of each option and SAR and the conditions and limitations applicable to the exercise of each option and SAR. The exercise price of a stock option or SAR will not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute awards granted in connection with a corporate transaction. The term of a stock option or SAR may not be longer than five years.

Restricted Stock. Restricted stock is an award of nontransferable shares of common stock of Orbital Energy Group that remain forfeitable unless and until specified conditions are met and which may be subject to a purchase price. Upon issuance of restricted stock, recipients generally have the rights of a stockholder with respect to such shares, which generally include the right to receive dividends and other distributions in relation to the award. The terms and conditions applicable to restricted stock will be determined by the plan administrator, subject to the conditions and limitations contained in the Orbital Energy Group 2020 Incentive Award Plan.

RSUs. RSUs are contractual promises to deliver shares of common stock of Orbital Energy Group in the future, which may also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid on shares of common stock of Orbital Energy Group prior to the delivery of the underlying shares (i.e., dividend equivalent rights). The plan administrator may provide that the delivery of the shares underlying RSUs will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to RSUs will be determined by the plan administrator, subject to the conditions and limitations contained in the Orbital Energy Group 2020 Incentive Award Plan.

Other Stock or Cash Based Awards. Other stock or cash-based awards are awards of cash, shares of common stock of Orbital Energy Group and other awards valued wholly or partially by referring to, or otherwise based on, shares of common stock of Orbital Energy Group or other property. Other stock or cash-based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is otherwise entitled. The plan administrator will determine the terms and conditions of other stock or cash-based awards, which may include any purchase price, performance goal, transfer restrictions and vesting conditions, subject to the conditions and limitations in the Orbital Energy Group 2020 Incentive Award Plan.

 

Certain Transactions

In connection with certain corporate transactions and events affecting the common stock of Orbital Energy Group, including a change in control, or change in any applicable laws or accounting principles, the plan administrator has broad discretion to take action under the Orbital Energy Group 2020 Incentive Award Plan to prevent the dilution or enlargement of intended benefits, facilitate the transaction or event or give effect to the change in applicable laws or accounting principles. This includes providing for the assumption or substitution of awards by a successor entity, adjusting the number and type of shares subject to outstanding awards and/or with respect to which awards may be granted under the Orbital Energy Group 2020 Incentive Award Plan. You are encouraged to read the Orbital Energy Group 2020 Incentive Award Plan that is attached to this proxy statement as Annex A. Article VIII Adjustments for Changes in Common Stock and Certain Other Events describes in detail the alternatives available for Participants in the event of certain transactions, including change in control.

 

Provisions of the Orbital Energy Group 2020 Incentive Award Plan Relating to Director Compensation

The Orbital Energy Group 2020 Incentive Award Plan provides that the plan administrator may establish compensation for non-employee directors from time to time subject to the Orbital Energy Group 2020 Incentive Award Plan’s limitations. The plan administrator will from time to time determine the terms, conditions and amounts of all non-employee director compensation in its discretion and pursuant to the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time, provided that, the sum of any cash compensation or other compensation and the grant date fair value of any equity awards granted under the Orbital Energy Group 2020 Incentive Award Plan as compensation for services as a non-employee director during any fiscal year may not exceed $250,000 per year of a non-employee director’s service as a non-employee director. The non-employee Director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving the non-employee Director.

 

Plan Amendment and Termination

The Orbital Energy Group board of directors may amend or terminate the Orbital Energy Group 2020 Incentive Award Plan at any time; however, an amendment that increases the number of shares available under the Orbital Energy Group 2020 Incentive Award Plan requires stockholder approval. The Orbital Energy Group 2020 Incentive Award Plan will remain in effect until the fifth anniversary of the date the Orbital Energy Group board of directors adopted the Orbital Energy Group 2020 Incentive Award Plan, unless earlier terminated by the Orbital Energy Group board of directors. No awards may be granted under the Orbital Energy Group 2020 Incentive Award Plan after its termination.

 

Foreign Participants and Transferability

The plan administrator may modify awards granted to participants who are foreign nationals or employed outside the United States or establish subplans or procedures to address differences in laws, rules, regulations or customs of such foreign jurisdictions. Except as the plan administrator may determine or provide in an award agreement, awards under the Orbital Energy Group 2020 Incentive Award Plan are generally non-transferrable, except by will or the laws of descent and distribution or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding obligations arising in connection with awards under the Orbital Energy Group 2020 Incentive Award Plan, and exercise price obligations arising in connection with the exercise of stock options under the Orbital Energy Group 2020 Incentive Award Plan, the plan administrator may, in its discretion, accept cash, wire transfer or check, shares of common stock of Orbital Energy Group that meet specified conditions, a promissory note, a “market sell order,” such other consideration as the plan administrator deems suitable or any combination of the foregoing.

 

Internal Revenue Code

Income Tax Effects for the Company. The Company generally will be entitled to a tax deduction in connection with an award under the 2020 Incentive Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes such income (for example, upon the exercise of an NSO). As described herein, Code Section 162(m) may limit the deductibility of awards granted under the 2020 Incentive Plan.

Internal Revenue Code Section 162(m) Considerations. Code Section 162(m) generally disallows a tax deduction to public companies for compensation in excess of $1,000,000 paid to a company's principal executive officer and each of the other three most highly compensated officers (other than the principal financial officer) ("Covered Employees") in any one fiscal year. Stock options and stock appreciation rights are exempt from this limitation if (a) the exercise price is at least 100% of the fair market value of the underlying stock on the date the option or stock appreciate right is granted and (b) the plan under which the options are granted is approved by the shareholders and contains a limit on the number of options or stock appreciation rights granted to any' one individual under the plan during a specific period. Various other rules apply with regard to compensation committee independence and the procedures that must be followed by the committee in connection with performance-based awards that may be fully deducted under Code Section 162(m). Among other requirements, stock awards such as restricted stock and stock units, and performance cash awards such that vest contingent upon the achievement of performance goals, the material terms of which have been approved by the shareholders, in order to be exempt from this limitation. The 2020 Incentive Plan includes certain fiscal year limits, as described above, on the number of shares or total dollars that may be granted to an individual under options, stock appreciation rights, restricted stock, stock units and performance-based cash awards in order to comply with the Code Section 162(m) requirements. The above description is subject to proposed changes in Section 162(m) that would eliminate the exception from the general rule for performance-based compensation. If that proposed statutory' change is enacted, we would not expect to be able to deduct compensation in excess of $1 million paid during a single year to a Covered Employee.

Internal Revenue Code Section 409A.Code Section 409A governs that the federal income taxation of certain types of nonqualified deferred compensation arrangements. A violation of Code Section 409A generally results in an acceleration of the recognition of income of amounts intended to be deferred and the imposition of a federal excise tax of 20% on the employee over and above the income tax owned plus possible penalties and interest. The types of arrangements covered by Code Section 409A are broad and may apply to certain awards available under the 2020 Incentive Plan (such as stock units). The intent is for the 2020 Incentive Plan, including any awards available thereunder, to comply with the requirements of Code 409A to the extent applicable. As required by Code Section 409A, certain nonqualified deferred compensation payments to specific employees may be delayed to the seventh month after such employee's separation from service.

Securities Laws

The Orbital Energy Group 2020 Incentive Award Plan is intended to conform to all provisions of the Securities Act of 1933, as amended, and the Exchange Act, and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation Rule 16b-3. The Orbital Energy Group 2020 Incentive Award Plan will be administered, and options will be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations.

 

Material U.S. Federal Income Tax ConsequencesPROPOSAL V

To Approve the Conversion of the Company's Domicile State

from Colorado to Texas, Which Conversion Shall Include

Changing the Corporate Name

from Orbital Energy Group, Inc. to Orbital Infrastructure Group, Inc.

For the reasons discussed below, the Board has unanimously approved and declared it is advisable and in the best interests of Orbital Energy Group, Inc. and its shareholders to convert the domicile state of Orbital Energy Group, Inc. from the State of Colorado to the State of Texas (the “Conversion”), which includes adopting a new Texas Certificate of Formation (the “Texas Certificate”) and bylaws (the “Texas Bylaws”).

Summary

The following summary is based on an analysisprincipal effects of the Conversion will be that:

The corporate name will change from Orbital Energy Group, Inc. (the "Colorado Entity") to Orbital Infrastructure Group, Inc. (the "Texas Entity") AND the par value of our common stock will change from $0.001 to $0.0001.

The affairs of the Colorado Entity will cease to be governed by the Colorado Corporations and Associations Act (the “CCAA”) and its existing articles of incorporation and bylaws (the “Colorado Articles” and the “Colorado Bylaws," respectively) and will become subject to the Texas Business Organizations Code (the “TBOC”).

The Texas Entity (the resulting Texas corporation) will be the same entity as the Colorado Entity (currently incorporated in Colorado), will possess all of the properties, rights and privileges of the Colorado Entity, will continue with all of the debts, liabilities and obligations of the Colorado Entity and will continue with the same officers and directors of the Colorado Entity immediately prior to the Conversion, as more fully described below. 

When the Conversion becomes effective, all of the issued and outstanding shares of common stock of the Colorado Entity will be automatically converted into issued and outstanding shares of common stock of the Texas Entity, without any further action on the part of our shareholders. The Conversion will have no effect on the trading of our stock on the Nasdaq Capital Market tier of The Nasdaq Stock Market under the new symbol “OIG.” The Texas Entity will continue to file periodic reports and other documents as and to the extent required by the rules and regulations of the Securities and Exchange Commission (the “SEC”). Shares of our common stock that are freely tradeable prior to the Conversion will continue to be freely tradeable as shares of the Texas Entity common stock, and shares of our common stock that are subject to restrictions prior to the Conversion will continue to be subject to the same restrictions as shares of the Texas Entity common stock. The Conversion will not change the respective status of the Colorado Entity or our shareholders under federal securities laws. 

Upon effectiveness of the Conversion, all of our employee benefit and incentive plans will become plans of the Texas Entity, and each option, restricted stock unit, equity award or other right issued under such plans will automatically be converted into an option, restricted stock unit, equity award or right to purchase or receive the same number of shares of the Texas Entity common stock, at the same price per share, upon the same terms and subject to the same conditions as before the Conversion. In addition, our employment contracts and other employee benefit arrangements also will be continued by the Texas Entity upon the same terms and subject to the same conditions in effect at the time of the Conversion.

Reasons for the Conversion

The primary reason for the Conversion is that the corporate executive offices and core of operations are located in Houston, Texas[, the Colorado Entity has no present nexus within the State of Colorado] and the corporate laws of the State of Texas are more developed. As a result of the corporate tax structure and reasonable annual franchise fee (or “margin” tax) of Texas, many major corporations have incorporated in Texas or have changed their corporate domiciles to Texas in a manner similar to the Conversion. The Texas judiciary has become particularly familiar with corporate law matters and a substantial body of court decisions has developed construing the corporate laws of Texas, thus providing clarity and predictability with respect to corporate legal and governance affairs.  The Board believes any benefits provided to the Texas Entity by Texas law directly benefit our shareholders.

The Board is not proposing the Conversion to prevent a change in control of the Colorado Entity and is not aware of any present attempt by any person to acquire control of the Colorado Entity or to obtain representation on the Board.

Plan of Conversion and Adoption of Texas Certificate of Formation and Bylaws

To accomplish the Conversion, the Board has adopted a plan of conversion substantially in the form appended to this proxy statement as currently in effect, existing laws, judicial decisions, administrative rulings, regulationsAnnex B (the “Plan of Conversion”). The Plan of Conversion provides that we will convert into a Texas corporation and proposed regulations,will thereafter be subject to all of which are subject to change. Moreover, the following is only a summaryprovisions of United States federal income tax consequences. Actual tax consequences to participants may be either more or less favorable than those described below depending on the participant’s particular circumstances.TBOC, the Texas Certificate and the Texas Bylaws.

 

ISOs.

No incomeAssuming that our shareholders approve this proposal, we will cause the Conversion to be recognizedeffected as soon as practicable thereafter by a participant for federal income tax purposes uponfiling with the grant or exerciseSecretary of an ISO. The basis of shares transferred to a participant upon exercise of an ISO is the price paid for the shares. If the participant holds the shares for at least one year after the transferState of the sharesState of Colorado a Statement of Conversion substantially in the form appended to this proxy statement as Annex C (the “Colorado Statement of Conversion”) and will file with the Secretary of State of the State of Texas (i) a Certificate of Conversion substantially in the form appended to this proxy statement as Annex D (the “Texas Certificate of Conversion”); and (ii) the Texas Certificate, which will govern the Texas  Entity as a Texas corporation, substantially in the form appended to this proxy statement as Annex E. In addition, assuming that our shareholders approve this proposal, the Board has adopted the Texas Bylaws, substantially in the form appended to this proxy statement as Annex F, and we will enter into a new indemnification agreement with each director and executive officer of the Texas Entity based upon provisions of the TBOC, substantially in the form appended to this proxy statement as Annex G (the “Texas Indemnification Agreement”). Approval of this proposal by our shareholders will constitute approval of the Plan of Conversion, the Colorado Statement of Conversion, the Texas Certificate of Conversion, the Texas Certificate, the Texas Bylaws and the Texas Indemnification Agreement. Shareholders should also note that approval of the Conversion will also constitute approval of the Colorado Entity’s equity and other employee benefit and incentive plans continuing as plans of the Texas Entity.

Notwithstanding the foregoing, the Conversion may be delayed by the Board or the Plan of Conversion may be terminated and abandoned by action of the Board at any time prior to the participant and two years after the grant of the option, the participant will recognize capital gain or loss upon sale of the shares received upon exercise equal to the difference between the amount realized on the sale and the basis of the stock. Generally, if the shares are not held for that period, the participant will recognize ordinary income upon disposition in an amount equal to the excess of the fair market value of the shares on the date of exercise over the amount paid for the shares, or if less, the gain on disposition. Any additional gain realized by the participant upon the disposition will be a capital gain. The excess of the fair market value of shares received upon the exercise of an ISO over the option price for the shares is generally an item of adjustment for the participant for purposes of the alternative minimum tax. Therefore, although no income is recognized upon exercise of an ISO, a participant may be subject to alternative minimum tax as a result of the exercise.

NSOs.

No income is expected to be recognized by a participant for federal income tax purposes upon the grant of an NSO. Upon exercise of an NSO, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the amount paid for the shares. Income recognized upon the exercise of an NSO will be considered compensation subject to withholding at the time the income is recognized, and, therefore, the participant’s employer must make the necessary arrangements with the participant to ensure that the amount of the tax required to be withheld is available for payment. NSOs are designed to provide the employer with a deduction equal to the amount of ordinary income recognized by the participant at theeffective time of the recognitionConversion, whether before or after approval by our shareholders, if the Board determines for any reason that such delay or termination would be in the best interests of the Colorado Entity and our shareholders. If the Conversion is approved by our shareholders, the Conversion would become effective upon the filing (and acceptance thereof by the participant, subjectSecretary of State of Colorado and the Secretary of State of Texas, as applicable) of the Colorado Statement of Conversion, the Texas Certificate of Conversion and the Texas Certificate.

No Change in Business, Management or Members of the Board of Directors

The Conversion will not (i) result in any change in the Colorado Entity’s business, management, employees, fiscal year, assets, liabilities or federal tax identification number; (ii) cause the principal executive offices or other facilities of the Colorado Entity to be moved; or (iii) result in any relocation of management or other employees. The mailing address of the principal offices and the telephone number of the Texas Entity will be the same as the Colorado Entity’s current address and telephone number.

The individuals serving as directors of the Colorado Entity as of immediately prior to the deduction limitations described below.

SARs.

There is expectedConversion will continue to be no federal income tax consequencesthe directors of the Texas Entity immediately following the Conversion, and will continue to eitherserve for their respective terms. The individuals serving as executive officers of the participant or the employer upon the grantColorado Entity as of SARs. Generally, the participant will recognize ordinary income subject to withholding upon the receipt of payment pursuant to SARs in an amount equalimmediately prior to the aggregate amountConversion will continue to serve as executive officers of cash and the fair market valueTexas Entity as of immediately following the Conversion, without a change in their title or responsibilities. In addition, the Conversion will not affect any common stock received. Subject toof the deduction limitations described below,Colorado Entity’s contracts with third parties. However, the employer generallyTexas Entity will be entitleddeemed to a corresponding tax deduction equal tobe the amount includible in the participant’s income.

Restricted Stock.

If the restrictions on an award of shares of restricted stock are of a nature that the shares are both subject to a substantial risk of forfeiture and are not freely transferable (within the meaning of Section 83 of the Code), the participant will not recognize income for federal income tax purposes at the time of the award unless the participant affirmatively elects to include the fair market value of the shares of restricted stock on the date of the award, less any amount paid for the shares, in gross income for the year of the award pursuant to Section 83(b) of the Code. In the absence of this election, the participant will be required to include in income for federal income tax purposes on the date the shares either become freely transferable or are no longer subject to a substantial risk of forfeiture (within the meaning of Section 83 of the Code), the fair market value of the shares of restricted stock on such date, less any amount paid for the shares. The employer will be entitled to a deduction at the time of income recognition to the participant in an amount equal to the amount the participant is required to include in incomeColorado Entity’s successor with respect to the shares, subjectColorado Entity’s current contracts and agreements and will succeed to the deduction limitations described below. If a Section 83(b) election is made within 30 days after the date the restricted stock is received, the participant will recognize ordinary income at the timeall of the receipt ofColorado Entity’s rights and obligations under these contracts and agreements.

Immediately following the restricted stock, andConversion, the employerTexas Entity Common Stock will continue to be entitled to a corresponding deduction, equal to the fair market value of the shares at the time, less the amount paid, if any, by the participant for the restricted stock. If a Section 83(b) election is made, no additional income will be recognized by the participant upon the lapse of restrictionstraded on the restrictedNasdaq Capital Market, but under the new stock but, if the restricted stock is subsequently forfeited, the participant may not deduct the income that was recognized pursuant to the Section 83(b) election at the time of the receipt of the restricted stock.symbol, “OIG.”

 

 

Dividends paid to a participant holding restricted stock before the expirationFederal Income Tax Consequences of the restriction period will be additional compensation taxable as ordinary income to the participant subject to withholding, unless the participant made an election under Section 83(b). Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the dividends includible in the participant’s income as compensation. If the participant has made a Section 83(b) election, the dividends will be dividend income, rather than additional compensation, to the participant.Conversion

If the restrictions on an awardThe discussion of restricted stock are not of a nature that the shares are both subject to a substantial risk of forfeiture and not freely transferable, within the meaning of Section 83 of the Code, the participant will recognize ordinary income forU.S. federal income tax purposesconsequences set forth below is for general information only and does not purport to be a complete discussion or analysis of all potential tax consequences that may apply to a shareholder. The discussion does not deal with all of the tax considerations that may be relevant to particular shareholders, such as shareholders who are dealers in securities, foreign persons, tax exempt entities or shareholders who received their stock in the Colorado Entity in connection with stock option or stock purchase plans or in other compensatory transactions. In addition, this discussion does not address any state, local or foreign tax considerations nor does it address any federal estate, gift, employment, excise or other non-income tax considerations. This discussion also does not address the tax consequences of transactions effected prior to or after the Conversion (whether or not such transactions are in connection with the Conversion) including, without limitation, the exercise of options, warrants or similar rights to purchase the Colorado Entity’s stock. The following discussion is based upon provisions of the Internal Revenue Code (the “Code”), regulations, administrative rulings and judicial decisions presently in effect, all of which are subject to change (possibly with retroactive effect) or to different interpretations. Shareholders are urged to consult their tax advisors to determine the particular tax consequences of the Conversion, including the applicability and effect of federal, state, local, foreign and other tax laws.

The Conversion provided for in the Plan of Conversion is intended to be a tax-free reorganization under Section 368(a) of the Code. Assuming the Conversion qualifies as a tax-free reorganization, no gain or loss should be recognized to the holders of our capital stock as a result of consummation of the Conversion. Shareholders should have the same basis in the Texas Entity common stock received pursuant to the Conversion as they had in the shares of the Colorado Entity common stock held immediately prior to the time the Conversion is consummated. The holding period with respect to the Texas Entity common stock should include the period during which corresponding shares of the Colorado Entity common stock were held, provided the latter was held as a capital asset at the time of the transferconsummation of the sharesConversion.

Accounting Treatment

We expect that the Conversion will have no effect from an accounting perspective because there is no change in an amount equal to the fair market valueentity as a result of the Conversion. As such, the financial statements of the Colorado Entity previously filed with the SEC will remain the financial statements of the Texas Entity following the Conversion.

Dissenters Rights

Under the Colorado Business Corporation Act, as amended (the “CBCA”) and the Colorado Corporations and Associations Act, as amended (the "CCAA"), shareholders are not entitled to dissenters’ rights in connection with a Conversion if the shares held by the shareholder are listed on a national securities exchange registered under the federal Securities Exchange Act of restricted1934, as amended, (the "Act") or if the common stock of the company are held of record by more than two thousand shareholders.  Because the Colorado Entity’s common stock is currently listed on the date of the transfer, less any amount paid therefore. The employerNasdaq Global Market, shareholders will therefore not be entitled to a deduction at that timedissenters’ rights in an amount equal to the amount the participant is required to include in income with respect to the shares, subject to the deduction limitations described below.

RSUs.

There will be no federal income tax consequences to either the participant or the employer upon the grant of RSUs. Generally, the participant will recognize ordinary income subject to withholding upon the receipt of cash and/or transfer of shares of common stock in payment of the RSUs in an amount equal to the aggregate of the cash received and the fair market value of the common stock so transferred. Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income.

Generally, a participant will recognize ordinary income subject to withholding upon the payment of any dividend equivalents paid with respect to an award in an amount equal to the cash the participant receives. Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income.

Excess Parachute Payments.

Section 280G of the Code limits the deduction that the employer may take for otherwise deductible compensation payable to certain individuals if the compensation constitutes an “excess parachute payment.” Excess parachute payments arise from payments made to disqualified individuals that are in the nature of compensation and are contingent on changes in ownership or control of the employer or certain affiliates. Vesting or payment of awards under the Orbital Energy Group 2020 Incentive Award Plan upon a change in ownership or control of the employer or its affiliates could result in excess parachute payments. In addition to the deduction limitation applicable to the employer, a disqualified individual receiving an excess parachute payment is subject to a 20% excise tax on the amount thereof.

Application of Section 409A of the Code.

Section 409A of the Code imposes an additional 20% tax and interest on an individual receiving non-qualified deferred compensation under a plan that fails to satisfy certain requirements. For purposes of Section 409A, “non-qualified deferred compensation” includes equity-based incentive programs, including some stock options, SARs and RSU programs. Generally speaking, Section 409A does not apply to ISOs, non-discounted NSOs and appreciation rights if no deferral is provided beyond exercise, or restricted stock.

The awards made pursuant to the Orbital Energy Group 2020 Incentive Award Plan are expected to be designed in a manner intended to complyconnection with the requirements of Section 409A of the Code to the extent the awards granted under the Orbital Energy Group 2020 Incentive Award Plan are not exempt from coverage. However, if the Orbital Energy Group 2020 Incentive Award Plan fails to comply with Section 409A in operation, a participant could be subject to the additional taxes and interest.

State and local tax consequences may in some cases differ from the federal tax consequences. The foregoing summary of the income tax consequences in respect of the Orbital Energy Group 2020 Incentive Award Plan is for general information only. Interested parties should consult their own advisors as to specific tax consequences of their awards. The Orbital Energy Group 2020 Incentive Award Plan is not subject to the Employee Retirement Income Security Act of 1974, as amended, and is not intended to be qualified under Section 401(a) of the Code.Conversion.

 

 

Plan BenefitsComparison of Shareholder Rights Before and After the Conversion

Although the Texas Certificate and the Texas Bylaws are substantially similar to provisions from the current Colorado Articles and the Colorado Bylaws, they also include certain provisions that are different from the provisions contained in the Colorado Articles and the Colorado Bylaws. The following discussion briefly summarizes some of the changes resulting from the Conversion and the significant differences between the CBCA, CCAA and the Colorado Articles and the Colorado Bylaws and the TBOC, the Texas Certificate and the Texas Bylaws. 

Authorized Capital Stock

Colorado

Texas

The Colorado Articles authorize 335,000,000 shares of capital stock, par value $0.001 per share, comprised of 325,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. As of immediately prior to the Conversion, approximately 95,948,031 shares of the Colorado Entity Common Stock and no shares of preferred stock of the Colorado Entity will be outstanding.

Other than changing the par value from $0.001 to $0.0001 and the corporate name from the Colorado Entity to the Texas Entity, there are no changes. The number of outstanding shares will not change.

Blank Check Preferred

Colorado

Texas

Under the CCAA, if the articles of incorporation so provide, a corporation may issue one or more classes of stock or one or more series of stock within any class, with such preferences, limitations and relative rights as determined by the board of directors without shareholder approval (“Blank Check Preferred Stock”).

The Colorado Articles authorize 10,000,000 shares of preferred stock. As of immediately prior to the conversion, the authorized preferred stock will constitute undesignated Blank Check Preferred Stock.

The Texas Entity will authorize 10,000,000 shares of undesignated Blank Check Preferred Stock. The TBOC provides authority similar to the CCAA.

Business Combinations Statute

Colorado

Texas

The board of directors must recommend the plan of conversion, plan of merger, or plan of exchange to the shareholders unless the board of directors determines that, because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders with the plan and the shareholders entitled to vote on the plan of conversion, plan of merger, or plan of exchange must approve the plan. CCAA 7-111-103

Under Texas law, any merger with a third party requires approval by 2/3 of the outstanding shares of the Texas corporation unless a different threshold, not less than a majority, is specified in the certificate of formation. TBOC Section 21.954(a) 

The proposed Texas Certificate modifies the statutory vote requirement and requires the approval of such transactions by affirmative vote of the holders of only a majority of the outstanding shares entitled to vote thereon, unless any class or series of shares is entitled to vote as a class thereon, in which event the vote required shall be the affirmative vote of the holders of a majority of the outstanding shares within each class or series of shares entitled to vote thereon as a class and at least a majority of the outstanding shares otherwise entitled to vote thereon.

Sales, Leases, Exchanges or Other Dispositions

Colorado

Texas

A corporation may, as authorized by its bylaws or by the board of directors sell, lease, exchange, or otherwise dispose of any or all of its property whether or not in the usual and regular course of business with approval by the shareholders of the transaction. CCAA 7-112-101.

Generally, the sale, lease, exchange or other disposition of all, or substantially all, of the property and assets of a Texas corporation requires the approval of the holders of at least 2/3 of the outstanding shares of the corporation entitled to vote. No such approval is required, however, if the transaction is made in the usual and regular course of the corporation’s business. Under Texas law, the transfer of substantially all of a corporation’s assets in such a manner that the corporation continues directly or indirectly to engage in one or more businesses is deemed to be in the usual and regular course of its business.

The proposed Texas Certificate overrides the default statutory vote requirement and requires the approval of such transactions by affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon.

Shareholder Consent to Action Without a Meeting
ColoradoTexas

The CCAA provides that, unless the articles of incorporation require such action be taken at a shareholder meeting or expressly authorize that such action can be taken by less than unanimous written consent, any action required or permitted to be taken at a shareholder meeting may be taken without a meeting if all of the shareholders entitled to vote consent to such action in writing. The CCAA provides that, unless the articles of incorporation require such action be taken at a shareholder meeting or expressly authorize that such action can be taken by less than unanimous written consent, any action required or permitted to be taken at a shareholder meeting may be taken without a meeting if all of the shareholders entitled to vote consent to such action in writing.

Under Texas law, the certificate of formation may authorize the owners or members of the entity to take action without holding a meeting, providing notice, or taking a vote if owners or members of the entity having at least the minimum number of votes that would be necessary to take the action that is the subject of the consent at a meeting, in which each owner or member entitled to vote on the action is present and votes, sign a written consent or consents stating the action taken.

The proposed Texas Certificate allows action by one or more written consents if such consent or consents are signed by the holders having not less than the minimum number of votes that would be necessary to take such action, as described above. 

Such action must include the date each shareholder signed the consent and the date of signing of the latest dated consent satisfying the minimum number of shareholders necessary to approve the action that is the subject of the consent. The described must not be later than the 60th day after the date of the signing of the earliest dated consent of the shareholders signing the consent. If a consent does not contain the date that a shareholder, the date that date that the shareholder signed the consent is considered to be the date that the consent is received by the filing entity. The entity shall promptly notify shareholder who did not sign a consent described above of the action that is the subject of the consent.

Special Meetings of Shareholders

Colorado

Texas

Under the CCAA, a special meeting of shareholders shall be held if: (i) called by the board of directors or any person authorized by the bylaws or a resolution of the board of directors to call such a meeting; or (ii) if the corporation receives one or more written demands for a special meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing at least 10% of all of the votes entitled to be cast on any issue proposed to be considered at the special meeting. The Colorado Bylaws provide that a special meeting of the Colorado Entity’s shareholders may be called by the Board, by the Colorado Entity’s Chief Executive Officer or at the request of the holders of not less than 10% of the shares of the Colorado Entity Common Stock entitled to vote at the special meeting.

Under Texas law, shareholders are guaranteed the right to call special meetings. Unless otherwise specified in the corporation’s certificate of formation, holders of not less than 10% of all of the shares entitled to vote at the proposed meeting have the right to call a special shareholders’ meeting. The certificate of formation may allow for special meetings to be called by a number of shares greater than or less than 10%, but it may not set the required number of shares above 50%. The president, board of directors, or any other person authorized to call special meetings by the certificate of formation or bylaws of the corporation may also call special shareholders’ meetings.

The proposed Texas Certificate and the Texas Bylaws require 35% of all of the shares entitled to vote at the proposed meeting to call a special shareholders meeting.

Anti-Takeover Statutes

Colorado

Texas

The CCAA does not contain provisions designed to deter takeovers of public companies, such as a “fair price” statute, “business combination” statute, “control share acquisition” statute or “cash-out” statute. However, a company’s articles of incorporation may include such provisions.

The Colorado Articles are silent on this issue

The TBOC is silent on this issue.[1]
Procedure for Filling Vacant Directorships

Colorado

Texas

Unless otherwise provided in the articles of incorporation, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors:

(a) The shareholders may fill the vacancy;

(b) The board of directors may fill the vacancy; or

(c) If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.

CCAA 7-108-110.

Under Texas law, any vacancy occurring in the board of directors may, unless otherwise authorized by a corporation’s certificate of formation, fill a vacancy or a newly created vacancy in a director position only: (i) by the affirmative vote of the majority of the directors then in office, even if less than a quorum, (ii) by the sole remaining director, or (iii) by the affirmative vote of the shareholders.

A directorship to be filled because of an increase in the number of directors may be filled by the shareholders or by the board of directors for a term of office continuing only until the next election of one or more directors by the shareholders. The board of directors may not fill more than two such directorships during the period between any two successive annual meetings of shareholders.

The proposed Texas Bylaws require the affirmative vote of the majority of directors then in office, even if less than a quorum, to fill any vacancy in the board of directors.

Proxy

Colorado

Texas

A shareholder may vote the shareholder’s shares in person or by proxy by signing an appointment form, either personally or by the shareholder’s attorney-in-fact or by an electronic transmission to the person who will be the holder of the proxy. CCAA 7-107-203.

Under Texas law, a shareholder may authorize another person or persons to act for such shareholder by proxy. A proxy is only valid for 11 months from its date unless otherwise provided in the proxy.

Charter/Articles Amendments

Colorado

Texas

Under the CCAA, amendments to the articles of incorporation, other than ministerial amendments authorized by the board of directors without shareholder action, may be proposed by the board of directors or by the holders of shares representing at least 10% of all of the shares entitled to vote upon the amendment. The board of directors must recommend the amendment to the shareholders unless the amendment is proposed by the shareholders or the board of directors determines that because of a conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the amendment.

The Colorado Articles provide that the Colorado Entity reserves the right to amend or repeal any provision contained in the Colorado Articles in any manner permitted under the CCAA. Under the Colorado Articles all rights and powers conferred upon directors and shareholders are granted subject to the reservation.

Under Texas law, an amendment to the certificate of formation requires the approval of the holders of at least 2/3 of the outstanding shares of the corporation, unless a different threshold, not less than a majority, is specified in the Texas Certificate.

The proposed Texas Certificate alters the default statutory approval requirements and requires an amendment to the certificate of formation to be approved by holders of a majority of the outstanding shares entitled to vote thereon, unless any class or series of shares is entitled to vote as a class thereon, in which event the vote required shall be the affirmative vote of the holders of a majority of the outstanding shares within each class or series of shares entitled to vote thereon as a class and at least a majority of the outstanding shares otherwise entitled to vote thereon.

Bylaw Amendments

Colorado

Texas

Under the CCAA, shareholders may amend the corporation’s bylaws. Unless otherwise specified in the corporation’s articles of incorporation or bylaws, directors also are permitted to amend the bylaws, other than bylaws establishing greater quorums or voting requirements for shareholders or directors. Directors may not amend the bylaws to change the quorum or voting requirements for shareholders, and directors may amend the bylaws to change the quorum or voting requirements for directors only if such provision was originally adopted by the directors or if such provision specifies that it may be amended by the directors.

The Colorado Bylaws provide that the Colorado Bylaws may at any time and from time to time be amended, supplemented, or repealed by the Board or the shareholders

Generally, under Texas law, the board of directors may amend, repeal or adopt a corporation’s bylaws. However, a corporation’s certificate of formation may reserve this power exclusively to a majority of the shareholders. Similarly, the shareholders, in amending, repealing or adopting a particular bylaw, may expressly provide that the board of directors may not amend, readopt or repeal that bylaw. Texas case law permits the corporation to increase the required threshold of shareholders necessary to amend the Texas Bylaws.

The proposed Texas Certificate allows amendments to the Texas Bylaws by the vote of at least 2/3 of the members of the board of directors or by 2/3 of the holders of the outstanding shares entitled to vote, provided that any amendment to the Bylaw Anti-takeover Provisions requires approval by either (i) a majority of the continuing and unaffiliated directors and holders of a majority of the Texas Entity’s outstanding shares; or (ii) a majority of all of the Texas Entity’s directors and holders of at least 66 and 2/3% of the Texas Entity’s outstanding shares not held by the “affiliated shareholder.”

Removal of Director

Colorado

Texas

Under the CCAA, one or more directors may be removed from office by the shareholders with or without cause, unless a corporation’s articles of incorporation provide that directors may be removed only for cause, and only if the number of votes cast in favor of removal exceeds the number of votes cast against removal.

The Colorado Articles do not prohibit shareholders from removing a director without cause. The Colorado Bylaws provide that shareholders may remove directors from office with or without cause at a shareholder meeting duly called for such purpose, only if the number of votes cast in favor of removal exceeds the number of votes cast against such removal.

Under Texas law, subject to the exceptions discussed below or as otherwise provided by the certificate of formation or bylaws of a corporation, the shareholders may remove a director, with or without cause, by a vote of the holders of a majority of the shares entitled to vote at an election of the directors.

If the corporation’s directors serve staggered terms, a director may not be removed, except for cause unless the certificate of formation provides otherwise.

The proposed Texas Bylaws are consistent with the TBOC regarding mechanics for removal of directors.

Number of Directors

Colorado

Texas

Under the CCAA, the number of directors must be specified in the corporation’s bylaws.

The Colorado Articles provide that the number of directors may be stated in or fixed in accordance with the Colorado Bylaws. The Colorado Bylaws provide that the number of directors of the Colorado Entity shall be fixed from time to time by the Board, but no decrease shall have the effect of shortening the term of any incumbent director.

The TBOC provides that, after specifying the initial number of directors in the certificate of formation, the number of directors will be set by or in the manner provided in the certificate of formation or the bylaws.

The proposed Texas Bylaws provide that the size of the board will be determined by the board of directors.

Director Term of Office

Colorado

Texas

The CCAA permits (but does not require) classifications of a corporation’s board of directors.

The Colorado Bylaws provide that the Colorado Entity's directors be elected annually. All directors hold office until the next annual meeting of shareholders following their election or until their successors are elected and qualified, or until their earlier death, resignation or removal.

The TBOC does not specify a term of office for the directors; however, the proposed Texas Bylaws provide that the number of directors of the corporation shall be set from time to time by resolution of the Board of Directors, but in no instance shall there be less than one director. Each director shall hold office until the next annual meeting of shareholders or until his or her successor shall have been elected and qualified. Directors need not be residents of the State of Texas or shareholders of the corporation.

Board of Directors Vacancies

Colorado

Texas

Under the CCAA, unless otherwise provided in the articles of incorporation, any vacancy on the board of directors, including a vacancy resulting from an increase in the number of directors, may be filled by the shareholders or the board of directors, except that if the directors remaining in office constitute fewer than a quorum, the board of directors may fill the vacancy by the affirmative vote of a majority of the remaining directors.

The Colorado Articles do not alter the procedures specified in the CCAA. The Colorado Bylaws provide that any vacancy on the Board may be filled by a majority of the remaining directors in office or by the shareholders at the next annual meeting or at a special meeting called for that purpose.

The TBOC does not specify a procedure to fill a vacancy on the Board of Directors; however, the proposed Texas Bylaws provide that any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the shareholders or the Board of Directors. If the directors remaining in office constitute less than a quorum of the Board, the directors may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.

Cumulative Voting; Vote Required for the Election of Directors

Colorado

Texas

Under the CCAA, shareholders have the right to cumulate their votes in the election of directors unless otherwise provided in the articles of incorporation. In addition, the CCAA provides that, absent a provision to the contrary in a corporation’s articles of incorporation, the election of directors will be by a plurality vote of the shareholders entitled to vote.

The Colorado Articles expressly prohibit cumulative voting for the election of directors. The Colorado Articles do not alter the default plurality voting standard for the election of directors and the Colorado Bylaws specifically adopt a plurality voting standard for the election of the Colorado Entity’s directors.

The TBOC provides that a shareholder does not have the right to cumulate the shareholder's vote in the election of directors, unless expressly authorized by a corporation’s certificate of formation. The proposed Texas Certificate does not authorize cumulative voting and instead expressly prohibits cumulative voting.
Shareholders Rights to Examine Books and Records

Colorado

Texas

Under the CCAA, any record or beneficial shareholder of a corporation may, upon five days’ written demand, inspect certain records, including shareholder actions, minutes of shareholder meetings, communications with shareholders and recent financial statements. In addition, upon five days’ written demand, any such shareholder may inspect the list of shareholders and certain other corporate records, including minutes of the meetings of the board of directors of the corporation, if the shareholder either (i) has been a shareholder for at least three months; or (ii) is a holder of at least 5% of all outstanding shares of any class of shares when the demand is made, provided that the demand is made in good faith for a proper purpose reasonably related to such person’s interests as a shareholder.

Neither the Colorado Articles nor the Colorado Bylaws contains a provision regarding examination rights.

Under Texas law, a shareholder may, upon written demand stating a proper purpose, inspect the books and records of a corporation if such shareholder holds at least 5% of the outstanding shares of stock of the corporation or has been a holder of shares for at least six months prior to such demand.

Dividends, Distributions and Repurchases of Shares

Colorado

Texas

Unlike the Delaware General Corporate Law ("DGCL"), the CCAA does not utilize the concept of par value of shares or contain statutory definitions of capital, surplus and the like. The CCAA permits a corporation to declare and pay cash or in-kind property dividends or to repurchase shares unless, after giving effect to the transaction: (i) the corporation would not be able to pay its debts as they become due in the usual course of business; or (ii) the corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

The Colorado Articles permit the Board to declare and pay dividends upon the Colorado Entity Common Stock out of any funds legally available therefor at such times and in such amounts as the Board shall determine, subject to preferential dividend rights, if any, of the holders of the Colorado Entity's preferred stock.

Under Texas law, a distribution is defined as a transfer of cash or other property (except a corporation’s own shares or rights to acquire its shares), or an issuance of debt, by a corporation to its shareholders in the form of: (i) a dividend on any class or series of the corporation’s outstanding shares; (ii) a purchase or redemption, directly or indirectly, of its shares; or (iii) a payment in liquidation of all or a portion of its assets.

Under Texas law, a corporation may not make a distribution if such distribution violates its certificate of formation or, unless the corporation is in receivership, if it either renders the corporation unable to pay its debts as they become due in the course of its business or affairs, or exceeds, depending on the type of distribution, either the net assets or the surplus of the corporation.

The proposed Texas Bylaws provide that dividends may be declared as provided by law.

Stock Redemption and Repurchase

Colorado

Texas

The CCAA permits a corporation to declare and pay cash or in-kind property dividends or to repurchase shares unless, after giving effect to the transaction: (i) the corporation would not be able to pay its debts as they become due in the usual course of business; or (ii) the corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

The Colorado Articles permit the Board to declare and pay dividends upon the Colorado Entity Common Stock out of any funds legally available therefor at such times and in such amounts as the Board shall determine, subject to preferential dividend rights, if any, of the holders of the Colorado Entity’s preferred stock.

As noted above, under Texas law, the purchase or redemption by a corporation of its shares constitutes a distribution. Accordingly, any such purchase or redemption is subject to the restrictions on distributions discussed above.

Transactions with Officers and Directors

 Colorado

Texas

The CCAA contains a provision regarding interested transactions between a corporation and its directors (and not officers of a corporation).

Neither the Colorado Articles nor the Colorado Bylaws modify the CCAA provisions with respect to transactions with directors.

The TBOC is silent on this issue; however, Texas case law imposes fiduciary duties where officers and directors have a duty of loyalty and such officers and directors may not usurp corporate opportunities. Moreover, the Texas Entity’s Code of Ethics provides: our Insiders and their Family Members must not profit, directly or indirectly, due to their position in the Texas Entity to the detriment, or at the expense, of the Texas Entity or any business associate.  No insider shall take for his or her own advantage any corporate opportunity for profit, which he or she learns about in his or her position with the Texas Entity.
Limitation of Liability of Directors

Colorado

Texas

The CCAA permits a corporation to include a provision in its articles of incorporation eliminating the liability of a director to the corporation or its shareholders for monetary damages for breach of the director’s fiduciary duty in certain cases. Under the CCAA, a provision eliminating the liability of a director to the corporation or its shareholders for monetary liability for breach of the director’s fiduciary duty in certain cases must be contained in the corporation’s articles of incorporation. In addition, a director may not be exculpated from liability: (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders; (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (iii) arising from transactions relating to certain unlawful distributions; or (iv) for any transaction from which the director derived an improper personal benefit.

The Colorado Articles exculpates directors of the Colorado Entity from personal liability for all monetary damages for breach of fiduciary duty as a director to the fullest extent allowed under the CCAA, except that the Colorado Articles do not eliminate or limit the liability of the Colorado Entity’s directors for monetary damages otherwise existing for: (i) any breach of the director’s duty of loyalty to the Colorado Entity’s or to its shareholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) certain acts specified in the CCAA relating to any unlawful distribution; or (iv) any transaction from which the director directly or indirectly derived any improper personal benefit.

Texas law permits a corporation to eliminate in its certificate of formation all monetary liability of a director to the corporation or its shareholders for conduct in the performance of such director’s duties.

Texas law does not, however, permit any limitation of the liability of a director for: (i) a breach of the duty of loyalty to the corporation or its shareholders; (ii) an act or omission not in good faith that constitutes a breach of duty of the person to the corporation or involves intentional misconduct or a knowing violation of law; (iii) a transaction from which the director obtains an improper benefit; or (iv) a violation of applicable statutes which expressly provide for the liability of a director. 

The proposed Texas Certificate eliminates the monetary liability of a director to the fullest extent permitted by applicable law.

Indemnification of Directors and Officers

Colorado

Texas

The CCAA provisions regarding indemnification rights are substantially similar to the provisions contained in the DGCL, except as noted below.

In addition to the limitations of the DGCL, the CCAA prohibits a corporation from indemnifying a director, officer, employee or agent of a corporation (each, an “Indemnitee”) adjudged liable of receiving an improper personal benefit.

The CCAA also allows a corporation to indemnify an Indemnitee who is not a director to a greater extent than specified in the CCAA, if not inconsistent with public policy. However, a corporation may only indemnify a director as specified in the CCAA.

The CCAA requires a corporation to provide its shareholders with written notice of any indemnification payments or expense advancements paid to a director on or before the notice of the next shareholders meeting after making such payments.

Under the CCAA, the specified “Standard of Conduct” requires that an Indemnitee acted (i) in good faith; (ii) in a manner the Indemnitee reasonably believed to be, in the case of conduct in the Indemnitee’s official capacity, in the best interests of the corporation, and, for all other conduct, at least not opposed to the best interests of the corporation; and (iii) with respect to any criminal action or proceeding, with no reasonable cause to believe the Indemnitee’s conduct was unlawful.

The Colorado Articles require the Colorado Entity to indemnify any person who is or was a director of the Colorado Entity to the fullest extent allowed by the laws of Colorado, or while serving as a director or officer, also served at the request of the Colorado Entity as a director, officer, partner, trustee, employee, fiduciary or agent of another entity or employee benefit plan. The Colorado Articles also require the Colorado Entity to indemnify any person who is or was an officer, employee or agent of the Colorado Entity to the fullest extent allowed by the laws of Colorado or to a greater extent if consistent with law and if provided in the Colorado Bylaws, by resolution of the Colorado Entity’s shareholders or directors or in a contract.

Additionally, the Colorado Bylaws provide that the Colorado Entity may indemnify a director, officer or agent or former director, officer or agent against liability in the proceeding if such person acted with the required Standard of Conduct.

Further, the Colorado Bylaws provide that the Colorado Entity must indemnify a director or former director for reasonable expenses if such person is successful in the defense of any proceeding to which such person was a party because such person was or is a director.

Texas law permits a corporation to indemnify a director or former director, against judgments and expenses reasonably and actually incurred by the person in connection with a proceeding if the person: (i) acted in good faith, (ii) reasonably believed, in the case of conduct in the person’s official capacity, that the person’s conduct was in the corporation’s best interests, and otherwise, that the person’s conduct was not opposed to the corporation’s best interests, and (iii) in the case of a criminal proceeding, did not have a reasonable cause to believe the person’s conduct was unlawful.

If, however, the person is found liable to the corporation, or is found liable on the basis he received an improper personal benefit, then indemnification under Texas law is limited to the reimbursement of reasonable expenses actually incurred and no indemnification will be available if the person is found liable for: (i) willful or intentional misconduct in the performance of the person’s duty to the corporation; (ii) breach of the person’s duty of loyalty owed to the enterprise; or (iii) an act or omission not committed in good faith that constitutes a breach of a duty owed by the person to the corporation. 

The proposed Texas Bylaws provide for indemnification of directors and officers (including advancement of expenses) to the fullest extent permitted by applicable law.

Procedure for Indemnification

Colorado

Texas

Colorado statutes do not provide a specific procedure for indemnification.

Texas law provides that a determination that indemnification is appropriate must be made: (i) by a majority vote of the directors who, at the time of the vote, are disinterested and independent, regardless of whether such directors constitute a quorum; (ii) by a majority vote of a special committee of the board of directors if the committee is designated by a majority vote of the directors who at the time of the vote are disinterested and independent and is composed solely of one or more directors who are disinterested and independent; (iii) by special legal counsel selected by majority vote under (i) or (ii) above; (iv) by the shareholders in a vote that excludes those shares held by directors who, at the time of the vote, are not disinterested and independent; or (v) by a unanimous vote of the shareholders of the corporation.

Advancement of Indemnification Expenses

Colorado

Texas

Under the CCAA, a corporation may advance reasonable expenses to the Indemnitee in advance of the final disposition of a proceeding upon (i) a written affirmation of the Indemnitee’s good faith belief that the Indemnitee met the specified Standard of Conduct; and (ii) a written undertaking by or on behalf of the Indemnitee to repay such amount to the corporation if it is ultimately determined that the Indemnitee did not meet the specified Standard of Conduct.

The Colorado Bylaws provide that reasonable expenses (including attorneys’ fees) incurred in defending an action, suit or proceeding may be paid by the Colorado Entity to any Indemnitee in advance of the final disposition of such action, suit or proceeding upon receipt of (i) a written affirmation of such Indemnitee’s good faith belief that he or she has met the Standard of Conduct; (ii) a written undertaking to repay such advances if it is ultimately determined that he or she did not meet the prescribed Standard of Conduct; and (iii) a determination is made by the Colorado Entity that the facts as then known to the Colorado Entity would not prohibit indemnification.

Texas law permits a corporation to indemnify a director or former director, against judgments and expenses reasonably and actually incurred by the person in connection with a proceeding if the person: (i) acted in good faith; (ii) reasonably believed, in the case of conduct in the person’s official capacity, that the person’s conduct was in the corporation’s best interests, and otherwise, that the person’s conduct was not opposed to the corporation’s best interests; and (iii) in the case of a criminal proceeding, did not have a reasonable cause to believe the person’s conduct was unlawful.

If, however, the person is found liable to the corporation, or is found liable on the basis he received an improper personal benefit, then indemnification under Texas law is limited to the reimbursement of reasonable expenses actually incurred and no indemnification will be available if the person is found liable for: (i) willful or intentional misconduct in the performance of the person’s duty to the corporation; (ii) breach of the person’s duty of loyalty owed to the enterprise; or (iii) an act or omission not committed in good faith that constitutes a breach of a duty owed by the person to the corporation.

The proposed Texas Bylaws provide for indemnification of directors and officers (including advancement of expenses) to the fullest extent permitted by applicable law.

Mandatory Indemnification

Colorado

Texas

Unless limited by its articles of incorporation, a corporation shall indemnify an individual who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the individual was a party because the individual is or was a director, against reasonable expenses incurred by the individual in connection with the proceeding. CCAA 7-109-103.

Under Texas law, indemnification by the corporation for reasonable expenses actually incurred is mandatory only if the director is wholly successful on the merits or otherwise, in the defense of the proceeding.

Insurance

Colorado

Texas

A corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the corporation, or who, while a director, officer, employee, fiduciary, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, agent, associate, employee, fiduciary, manager, member, partner, promoter, or trustee of, or in any other capacity with, another person or an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from the person’s status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have power to indemnify the person against the same liability. CCAA 7-109-108.

Texas law is substantially the same as the Colorado statute on this issue.

Persons Covered

Colorado

Texas

The persons covered by indemnification and insurance shall include a person who is or was a director, officer, employee, fiduciary, or agent of the corporation, or who, while a director, officer, employee, fiduciary, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, agent, associate, employee, fiduciary, manager, member, partner, promoter, or trustee of, or in any other capacity with, another person or an employee benefit plan, CCAA 7-109-108.

Texas law expressly and separately addresses the indemnification of officers, employees and agents. The corporation may indemnify and advance expenses to an officer, employee or agent as provided by the corporation’s governing documents, general or specific action of the board of directors, resolution of the shareholders, contract, or common law. The corporation must indemnify an officer to the same extent as a director. The procedure for indemnification under Texas law summarized above need not be followed for officers, employees or agents.

Standard of Care

Colorado

Texas

A director is liable, as a director, to the corporation or to its shareholders for money damages for any act, omission to act, or decision only if the party asserting liability establishes in a proceeding that the challenged act, omission, or decision:

(a) Was not in good faith;

(b) Was one that the director did not rationally believe to be in the best interests of the corporation;

(c) Was one as to which the director was at least grossly negligent, unless the articles of incorporation change the standard of liability to knowing misconduct, knowing violation of law, or negligence;

(d) Was one as to which the director failed to make or cause to be made appropriate inquiry, when particular facts or circumstances of significant concern came to the attention of the director that would have alerted a reasonably attentive director to the need for inquiry;

(e) Consisted of or resulted from a sustained or systematic failure by the director to exercise oversight of the business and affairs of the corporation;

(f) Was a breach of the director’s duty of loyalty to the corporation, including by directly or indirectly receiving an improper personal benefit; or

(g) Consisted of or resulted from an unlawful distribution.

CCAA 7-108-402.

Texas law imposes duties of loyalty, care and obedience on directors of Texas corporations, but will generally not, absent fraud, impose liability upon a non-interested director unless the action challenged is outside of the expressed purpose of the corporation or inconsistent with an express limitation on authority.

Directors of a Texas corporation owe fiduciary duties only to the corporation.

Shareholder Rights Plans

Colorado

Texas

Colorado statutes has no statute relating to this issue.

Texas law statutorily approves shareholder rights plans.

Considerations of Directors

Colorado

Texas

Unless otherwise provided in the bylaws, the board of directors may fix the compensation of directors. CCAA 7-108-111.

Texas corporate law includes statutory approval of directors considering both the long-term and short-term interests of the corporation and the shareholders.

Shareholder Actions

Colorado

Texas

(1) No action shall be commenced by a shareholder in the right of a domestic or foreign corporation by a shareholder unless the plaintiff was a shareholder of the corporation at the time of the transaction of which the plaintiff complains.

(2) In any action in the right of any domestic or foreign corporation by a shareholder, upon final judgment and a finding that the action was commenced without reasonable cause, shall require the plaintiff to pay to the defendants the costs and reasonable expenses directly attributable to the defense of such action.

(3) In any action in the right of any domestic or foreign corporation by a shareholder holding less than five percent of the outstanding shares of any class, unless the shares so held have a market value in excess of $25,000, the corporation in whose right such action is commenced shall be entitled, at any time before final judgment, to require the plaintiff to give security for the costs and reasonable expenses which may be directly attributable to and incurred by it in the defense of such action or may be incurred by other parties named as defendant for which it may become legally liable, but not including fees of attorneys.  CCAA  7-107-402.

Texas generally requires that lawsuits against directors be brought derivatively by the corporation only after making demand on the corporation’s board setting out the contours of the demand. A proceeding may not be commenced until the 91st day after the written demand was filed with the corporation. Texas law may, in certain circumstances, such as in a proceeding determining liability of directors, allow for a jury trial.

.

Dissenters Rights of Appraisal; Appraisal Rights

Colorado Texas

Under the CCAA, a properly dissenting shareholder is entitled to receive the appraised value of the shares owned by the shareholder when the corporation votes to: (i) sell, lease or exchange all or substantially all of its property and assets other than in the regular course of the corporation’s business; (ii) merge or consolidate with another corporation; (iii) participate in a share exchange; or (iv) convert into another entity, subject to certain exceptions, including, in certain circumstances, with respect to a company listed on a national securities exchange or that has more than 2,000 shareholders. Dissenters’ rights under the CCAA are available to both record holders and beneficial holders.

Neither the Colorado Articles nor the Colorado Bylaws modify the CCAA provisions relating to dissenters’ rights. CCAA 7-113-102.

Except for the limited classes of mergers, consolidations, sales and asset dispositions for which no shareholder approval is required under Texas law, shareholders of Texas corporations with voting rights have dissenters’ rights in the event of a merger, consolidation, conversion, sale, lease, exchange or other disposition of all, or substantially all, the property and assets of the corporation. However, a shareholder of a Texas corporation has no dissenters’ rights with respect to any plan or merger or conversion in which there is a single surviving or new domestic or foreign corporation, or with respect to any plan of exchange if:

(1) the ownership interest, or a depository receipt in respect of the ownership interest, held by the owner is part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are, on the record date set for purposes of determining which owners are entitled to vote on the plan of merger, conversion, or exchange, as appropriate:

(A)  listed on a national securities exchange (the Texas Entity currently meets this condition by virtue of its listing on the NASDAQ market); or

(B)  held of record by at least 2,000 owners;

(2) the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner’s ownership interest any consideration that is different from the consideration to be provided to any other holder of an ownership interest of the same class or series as the ownership interest held by the owner, other than cash instead of fractional shares or interests the owner would otherwise be entitled to receive; and

(3) the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner’s ownership interest any consideration other than:

(A)  ownership interests, or depository receipts in respect of ownership interests, of another entity of the same general organizational type that, immediately after the effective date of the merger, conversion, or exchange, as appropriate, will be part of a class or series of ownership interests, or depository receipts in respect of ownership interests, which are:

(i) listed on a national securities exchange or authorized for listing on the exchange on official notice of issuance; and

(ii) held of record by at least 2,000 owners;

(B)  cash instead of fractional ownership interests the owner would otherwise be entitled to receive; or

(C)  any combination of the ownership interests and cash above.

Forum Selection

Colorado

Texas

(1) The articles of incorporation or the bylaws may require that any or all internal corporate claims must be brought exclusively in any specified court of this state and, if so specified, in any additional courts in this state or in any other jurisdiction with which the corporation has a reasonable relationship.

(2) No provision of the articles of incorporation or the bylaws may prohibit bringing an internal corporate claim in the courts of this state or require the claims to be determined by arbitration.

CCAA 7-102-108.

Texas law does not have an authorizing statutory provision similar to the forum selection provision in the Colorado statutes.

The proposed Texas Bylaws that contain references to the TBOC and Texas law and provide that the exclusive forum shall be the United States District Court for the Southern District of Texas, or if that court lacks jurisdiction, state district courts of Harris County, Texas

Franchise Tax

Colorado

Texas

There is no franchise tax.

Texas has no corporate income tax; however, Texas does impose a franchise tax on taxable entities doing business in the state.

 A taxable entity’s Franchise tax liability is calculated by  

(I) first, determining the entity’s “margin,” which equals the lowest of (a) 70% of its total revenue, (b) its total revenue minus $1 million, (c) its total revenue minus COGS, or (d) its total revenue minus certain compensation expenses, and  

(II) second, determining the entity’s “taxable margin” by multiplying its “margin” by an apportionment percentage equal to its gross receipts only from its business in Texas divided by its gross receipts from its business everywhere, and (III) last, multiplying the entity’s “taxable margin” by a tax rate of 0.75% (unless it is primarily engaged in retail or wholesale trade, in which case the tax rate is 0.375%). 

The discussion of the Texas franchise tax set forth above is for general information only and does not purport to be a complete discussion or analysis of all potential franchise tax consequences that may apply to the Texas Entity.  For a more detailed description explanation, see the Texas Comptroller’s office website.

41

The benefits or amounts that mayforegoing summary does not purport to be received or allocateda complete statement of the respective rights of holders of our common stock and the Texas Entity common stock, and is qualified in its entirety by reference to participantsthe CCAA and the TBOC, respectively, and to the Colorado Articles and the Colorado Bylaws and to the Texas Certificate and the Texas Bylaws, respectively.

Required Vote

If a quorum is present, approval of this proposal requires the affirmative vote of a majority of the outstanding shares of the Colorado Entity’s common stock entitled to vote on this proposal at the Annual Meeting.  Because matters considered “routine” by the applicable regulations, such as ratification of auditors, are under consideration at the Orbital Energy Group 2020 Incentive Award PlanAnnual Meeting, abstentions and broker non-votes will be determined at the discretion of the plan administratorcounted towards a quorum, but these abstentions, broker non-votes, and any other outstanding shares that are not currently determinable.voted will have the effect of a vote “AGAINST” the proposal.

 

The Board of Directors recommends a vote FOR approval of the conversion of the Colorado Entitys domicile state from the State of Colorado to the State of Texas.

Other Business

Management does not presently know of any matter that may be presented for action at this Annual Meeting other than as set forth herein. However, if any other matters properly come before this Annual Meeting, it is the intention of the persons named in the proxies solicited by management to exercise their discretionary authority to vote the shares represented by all effective proxies on such matters in accordance with their best judgment.judgment or as instructed by the shareholder.

 

 

Corporate Overview

Orbital Energy Group, Inc. and its subsidiaries (Nasdaq: OEG), formerly known as CUI Global Inc., are collectively referred to as ‘‘Orbital Energy Group,’’ the “Company,” or “OEG.” Orbital Energy Group is a Colorado corporation incorporated on April 21, 1998, with its principal place of business located at 1924 Aldine Western, Houston, Texas 77038, phone (832) 467-1420. The Company is a diversified infrastructure services company serving customers in the electric power, telecommunications, and renewable markets. Our website address is www.OrbitalEnergyGroup.com. Information contained in our website is not incorporated by reference into this prospectus supplement and should not be considered to be a part of this prospectus supplement. You should not rely on our website or any such information in making your decision whether or not to purchase our common stock.

In the fourth quarter of 2021, the Company's continuing operations were reclassified into three reportable segments, which include the Electric Power segment, the Telecommunications segment, and the Renewables segment. The Company’s corporate overhead activities are included in the “Other” segment category. Orbital Energy Group has continuing operations in two countries, including the United States and India.

In December 2021, the Company substantially reduced operations of its Integrated Energy Infrastructure Solutions and Services segment comprised of Orbital Gas Systems, North America, and Orbital Gas Systems, Ltd. (Orbital-UK). The Company considered these two subsidiaries discontinued operations in December 2021.

Electric PowerSegment

Front Line Power Construction, LLC, and Subsidiary (Eclipse Foundation Group, Inc.) and Orbital Power, Inc.

The Electric Power segment consists of Front Line Power Construction, LLC based in Houston, Texas, Orbital Power, Inc. based in Dallas, Texas, and Eclipse Foundation Group based in Gonzales, Louisiana. The segment provides comprehensive network solutions to customers in the electric power industry. Services performed by Front Line Power and Orbital Power, Inc. generally include the design, installation, upgrade, repair and maintenance of electric power transmission and distribution infrastructure and substation facilities as well as emergency restoration services.. Eclipse Foundation Group, which began operations in January 2021, is a drilled shaft foundation construction company that specializes in providing services to the electric transmission and substation, industrial, telecommunication and disaster restoration market sectors, with expertise performing services in water, marsh and rock terrains.

Telecommunications Segment

Gibson Technical Services, LLC and Subsidiaries (IMMCO, Inc. and Full Moon Telecom, LLC)

The Telecommunications segment consists of Gibson Technical Services (GTS) along with its subsidiaries IMMCO, Inc., based in Atlanta, Georgia and Full Moon Telecom, LLC based in Florida. GTS provides engineering, design, construction, and maintenance services to the broadband and wireless telecommunication industries and was acquired by the Company effective April 13, 2021. IMMCO, Inc. provides enterprise solutions to the cable and telecommunication industries and was acquired by the Company effective July 28, 2021. Full Moon Telecom, LLC provides telecommunication services including an extensive array of wireless service capabilities and was acquired by the Company effective October 22, 2021.

Renewables Segment

Orbital Solar Services, LLC.

Orbital Solar Services, LLC (OSS), based in Raleigh, North Carolina, makes up the Renewables segment. OSS provides engineering, procurement and construction (“EPC”) services that support the development of renewable energy generation focused on utility-scale solar construction. 

Discontinued Operations

On December 28, 2021, the Orbital Energy Group, Inc. Board of Directors approved management’s recommendation for certain restructuring and costs reduction actions to strategically reposition the Company’s business to focus on a strategy to build an infrastructure services company serving the electric power, telecommunications and renewable markets by authorizing divestment of two (2) Orbital Gas subsidiaries, Orbital Gas Systems, North America, Inc. (“OGSNA”) and Orbital Gas Systems, Ltd. (“Orbital UK”). These two subsidiaries provide proprietary gas measurement and sampling technologies and integration of process control and measuring/sampling systems.

Directors and Executive Officers

 

Our Bylawsbylaws permit the number of directors to be fixed by resolution of the board of directors, but to be no less than one. The board of directors has set the maximum number of members to no more than eighttwelve members. Directors are elected by a majority of the votes cast by the stockholders and serve a one-year term or until their successors have been elected and qualified or their earlier resignation or removal. Currently, we have sevenDuring 2021 the board of directors four of whom are ‘‘independent’’ in accordance withappointed three additional directors (Paul T. Addison, Jerry Sue Thornton, La Forrest V. Williams) who qualify as “independent director” as defined by applicable rules promulgated by the Securities and Exchange Commission and within the meaning of Rule 5605(a)(2) of Thethe Nasdaq Stock Market. Two independent directors were appointed to the board: July 9, 2019 and October 1, 2019, one of whom has been appointed Chief Executive Offices and is no longer independent.

 

The board of directors has fourfive standing committees: Audit Committee, Disclosure Committee, Compensation Committee, Investment Committee and Nominating Committee, each of which has a written charter and/or statement of policy approved by our board. Our board currently appoints the members of each committee. Copies of the current committee charters and/or statement of policy for each committee are posted on our website at www.OrbitalEnergyGroup.com. Except for a singleDuring 2021, two directors missed one board meeting no incumbent directoreach. In each of those instances, the board members were informed of the meeting agenda and results. All directors attended, either in person or electronically, fewer than 100%all of the total number of meetings held by the committees this year on which such director served.

 

The following are executive officers and directors of the Company with their ages as of December 1, 2020,31, 2021, and a list of the members of our fourfive standing committees: Audit Committee, Compensation Committee, Disclosure Committee. Investment Committee, and Nominating Committee.

 

Name

Age

Position

James F. O'Neil III (3)

6263

Director (Vice Chairman), Chief Executive Officer

William J. Clough(2)

6970

Executive Chairman, General Counsel, Director (Executive Chairman), Chief Legal Officer

C. Stephen Cochennet (1)

64

Director

Sean P. Rooney (1)

4965

Director

Paul D. White(7)

5961

Director

Corey A. Lambrecht (1)

5152

Director

Sarah Tucker (1)(4)

7576

Director

Daniel N. FordPaul T. Addison (1)(4)

4174

Director

Jerry Sue Thornton (1)(5)

74

Director

LaForrest Williams (1)(6)

70

Director

Nick Grindstaff (8)

59

Chief Financial Officer of Orbital Energy Group, Inc. and subsidiaries

 

Audit Committee:

Sean P. Rooney,Paul T. Addison Committee Chairman (1)

Corey A. Lambrecht, Committee Member (1)

C. Stephen Cochennet, Committee Member (1)

 

Compensation Committee

Cory A. Lambrecht, Chairman (1)

C. Stephen Cochennet, Committee Member (1)

 

Disclosure Committee

The Disclosure Committee consists of our Principal Officers, the individual or representative of the third-party firm primarily charged with investor/public relations, the Audit Committee Chairman and outside SEC counsel.

 

Investment Committee

Nick Grindstaff, Chairman

Cory A. Lambrecht, Committee Member (1)

C. Stephen Cochennet, Committee Member (1)

Nominating Committee

The Nominating Committee consists of the independent directors of the board of directors.

 

(1) "Independent director" within the meaning of Rule 5605(a)(2) of The Nasdaq Capital Market.Notes

(1)

"Independent director" within the meaning of Rule 5605(a)(2) of The Nasdaq Capital Market.

(2)

(2)Mr. Clough stepped down as Chief Executive Officer effective October 1, 2019.

(3) Mr. O’Neil was appointed Director July 9, 2019 and was appointed Chief Executive Officer effective October 1, 2019.

(4) Ms. Tucker was appointed Director effective October 1, 2019.

(3)

Mr. O’Neil was appointed Chief Executive Officer effective October 1, 2019.

(4)

Mr. Addison was appointed as a director June 3, 2021.

(5)

Dr. Thornton was appointed to the board of directors August 1, 2021.

(6)

Mr. Williams was appointed to the board of directors August 1, 2021.

(7)

Mr. White chose to retire from the Board and will not stand for re-election at the 2022 Annual Meeting.

(8)

Effective November 16, 2021, Nicholas M. Grindstaff was appointed to the position of Chief Financial Officer.

Nicholas M. Grindstaff served as Vice President – Finance since May 2011 and Treasurer since October 1999 for Quanta Services, Inc. (“Quanta”), a leading provider of specialty contracting services, delivering comprehensive infrastructure solutions for the electric and gas utility, communications, pipeline and energy industries primarily in the United States, Canada and Australia. Mr. Grindstaff holds a Master of Science degree in accounting.

As an executive officer at Quanta, he was responsible for numerous capital raises across various markets, managing acquisitions, financial planning and analysis, internal and SOX control compliance, procurement, working capital allocation, treasury operations as well as numerous other strategic initiatives. 

 

Environmental, Social and Governance (ESG)

Orbital Energy Group’s Mission:

Orbital Energy Group is dedicated to maximizing shareholder value through greenfield development and the acquisition of, and investment in successful, entrepreneurial led companies, to profitably grow revenues by providing end-to-end solutions to customers, primarily in the renewable, electric power, and telecommunications infrastructure markets.  OEG is committed to the safety of all of its employees and leading the expansion of environmental and social initiatives through ethnic diversification and equality of our workforce and people development within the communities we serve.

We are committed to:

The health and safety of our personnel.

Delivering quality differentiated solutions to energy infrastructure customers.

Diversity, equity and inclusion across our skilled workforce.

Building stockholder value.

OEG is committed to the health and well-being of our employees:

Orbital Energy Group regularly reviews its medical benefits plan offering against a peer group of more than one thousand participants to determine an average benchmark comparison for its employee medical plan benefit offering.  This review has shown that OEG offers at least one plan that is richer than the peer group average, one plan that is lower priced than the peer group average for singles and families and at least one plan with an overall value better than the peer group for singles and families.

The Company has a 401(k) retirement savings plan that allows employees to contribute to the plan after they have completed 60 days of service and are 18 years of age which is more generous than a third of other plans in our industry and size. In addition, the Company matches the employee's contribution up to 6% of total compensation.

OEG is committed to delivering quality differentiated solutions to energy infrastructure customers by:

Creating a meaningful workplace, with motivated employees, which are dedicated to providing superior performance.

Providing end-to-end solutions, including the design, engineering, construction, and maintenance infrastructure services.

OEG is committed to building a diverse, equitable, and inclusive skilled workforce:

In 2021, we appointed a Chief Diversity Officer (CDO) to oversee our DEI strategy.

Recruiting and appointing qualified employees of color at all levels of the organization, including recent appointments to the Board of Directors, which is 67% ethnically and gender diverse.

Investing in training and career development for underrepresented and underserved employees throughout North America.

OEG is committed to building stockholder value:

In Fall 2019, we appointed James O’Neil as CEO to transform the company into an infrastructure service provider to the electric power transmission and distribution, telecommunications, and renewable industries.

We completed the pivot of the company from Power and Electronics to focus on building a diversified infrastructure solutions company.

In 2020 acquired what is now Orbital Solar Services providing EPC solutions for the utility-scale solar industry.

In 2021 acquired Gibson Technical Services providing solutions for the telecommunications industry.

In 2022 Gibson Technical Services acquired Immco, Full Moon Telecom, Coax Fiber Solutions, V-Tac communications and PON Communications.

In 2022 acquired Front Line Power Constructure, an electric power infrastructure construction provider.

In 2020 and 2021, developed greenfield operations serving power and utilities with transmission, distribution, substation, foundation, and emergency response capabilities.

Enhanced independent directors of the board with industry veterans.

 

Corporate Governance and Board of Directors Matters

 

We are committed to maintaining the highest standards of business conduct and corporate governance, which we believe are essential to running our business efficiently, serving our stockholders well and maintaining our integrity in the marketplace. We have adopted a Corporate Code of Ethics and Business Conduct, including our Whistleblower Policy, for employees, directors and officers (including our principal executive officer and principal financial and accounting officer). We have also adopted the following governance guides: Charter of the Audit Committee, Charter of the Compensation Committee, Investment Committee Charter, Policy for Director Independence, Nominating Committee Charter, Whistleblower Policy, Disclosure Controls and Procedures and Corporate Social Responsibility Policy, all of which, in conjunction with our Articles of Incorporation and bylaws, form the framework for our corporate governance. These corporate governance documents are available on the internet and our website at www.OrbitalEnergyGroup.com.

 

Board Diversity

Although Orbital Energy Group does not presently have a formal Board Diversity Policy, we believe in diversity and value the benefits that diversity can bring to our board of directors. Diversity promotes the inclusion of different perspectives and ideas, mitigates against group think and ensures that the Company has the opportunity to benefit from all available talent. The promotion of a diverse Board makes prudent business sense and makes for better corporate governance. Of our sevennine board members, one istwo are female, one is African American and one is Asian.four are minorities.

 

The Company seeks to maintain a Board comprised of talented and dedicated directors with a diverse mix of expertise, experience, skills and backgrounds. The skills and backgrounds collectively represented on the Board should reflect the diverse nature of the business environment in which the Company operates. For purposes of Board composition, diversity includes, but is not limited to, business experience, geography, age, gender, and ethnicity and aboriginal status. In particular, the Board should include an appropriate number of womenfemale directors.

 

The Company is committed to a merit-based system for Board composition within a diverse and inclusive culture which solicits multiple perspectives and views and is free of conscious or unconscious bias and discrimination. When assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, the Company will consider candidates on merit against objective criteria having due regard to the benefits of diversity and the needs of the Board.

 

Board Diversity Matrix

Board Diversity Matrix for Orbital Energy Group, Inc.

As of   5/18/2022

     

Total Number of Directors

9

Part I: Gender Identity

Female

Male

Non-Binary

Did Not

Disclose Gender

Directors

2

7

0

9

Part II: Demographic Background

African American or Black

1

3

0

0

Alaskan Native or American Indian

0

0

0

0

Asian

0

0

0

0

Hispanic or Latinx

0

0

0

0

Native Hawaiian or Pacific Islander

0

1

0

0

White

0

3

0

0

Two or More Races or Ethnicities

0

0

0

0

LGBTQ+

 

0

Did Not Disclose Demographic Background

 

9

Companywide Diversity

At Orbital Energy Group, diversity, equity, and inclusion is the foundation for our success.  This foundation is critical to our mission to foster an inclusive culture that encourages and supports the diverse voices of all our employees.  Diverse companies are more innovative and better positioned to succeed.  More importantly, diversity creates an environment that respects the uniqueness of an employee’s characteristics, experiences, and perspectives.

Orbital Energy Group and its employees are committed to systematically change energy infrastructure in North America by opening up significant opportunities for people of color entrepreneurs and people of color led or owned companies.  Further, OEG commits to diversifying the energy industry by increasing the opportunities and quality of life for underrepresented and underserved people throughout North America. 

In March 2021, the board of directors authorized the appointment of a Chief Diversity Officer (CDO), charged with the responsibility to create a  strategy and lead execution of company-wide programs to support diversity, equity and inclusion (DE&I) ensuring an end-to-end inclusive recruiting, screening, hiring, onboarding and employee experience with action and to ensures compliance with employment, benefits, insurance, safety, regulatory laws and requirements.  This responsibility provides for the enhancement of DE&I in our current recruitment and retention programs and ensure that employees have a comfortable place to work and learn, regardless of their race, gender, age, ethnicity, socioeconomic status, sexual orientation, or disability.

Our Corporate Governance Practices

We have always believed in strong and effective corporate governance procedures and practices. In that spirit, we have summarized several of our corporate governance practices below.

 

The Board of Director’sDirectors Role in Risk Oversight

The board of directors and its committees have an important role in the Company’s risk oversight, management and assessment process. The board regularly reviews with management, the Company’s financial and business strategies, which include a discussion of relevant material risks as appropriate. The board discusses with the Company’s outside general counsel, as appropriate, its risk oversight and assessment as well as any material risks to the Company. In addition, the board delegates risk management responsibilities to the Audit Committee and Compensation Committee, which are each comprised of only independent directors.

 

The Audit Committee, as part of its charter, oversees the Company’s risk oversight, management and assessment of the Company and oversees and assesses the risks associated with the corporate governance and ethics of the Company. Risk considerations are a material aspect of the Compensation Committee. The Compensation Committee is responsible for overseeing the management of risks relating to executive compensation. In addition, the Compensation Committee also, as appropriate, assesses the risks relating to the Company’s overall compensation programs.

 

the investment strategies.

 

While the Audit Committee and Compensation Committee oversee the management of the risk areas identified above, the entire board is regularly informed through committee reports about such risks. This enables the board and its committees to coordinate the risk management, assessment and oversight roles.

 

Adopting Governance Guidelines

Our board of directors has adopted a set of corporate governance guidelines to establish a framework within which it will conduct its business and to guide management in its running of our Company. The governance guidelines can be found on our website at www.OrbitalEnergyGroup.com and are summarized below.

 

Providing Transparency

We believe that it is important that stockholders understand our governance practices. To help ensure transparency of our practices, we have posted information regarding our corporate governance procedures on our website at www.OrbitalEnergyGroup.com.

 

Communications with the Board of Directors

Stockholders may communicate with the board of directors by writing to the Company at Orbital Energy Group, 1924 Aldine Western, Houston, Texas 77038 or phone (832) 467-1420.467‑1420. Stockholders who would like their submission directed to a member of the board may so specify and the communication will be forwarded as appropriate.

 

Monitoring Board Effectiveness

It is important that our board of directors and its committees are performing effectively and in the best interest of the Company and its stockholders. The board of directors and each committee are responsible for annually assessing their effectiveness in fulfilling their obligations.

 

Conducting Formal Independent Director Sessions

On a regular basis, many times at the conclusion of regularly scheduled board meeting,meetings, the independent directors are encouraged to meet privately, without our management or any non-independent directors.

 

Hiring Outside Advisors

The board and each of its committees may retain outside advisors and consultants of their choosing at company expense, without management's consent.

 

Avoiding Conflicts of Interest

We expect our directors, executives and employees to conduct themselves with the highest degree of integrity, ethics and honesty. Our credibility and reputation depend upon the good judgment, ethical standards and personal integrity of each director, executive and employee. To provide assurances to the Company and its stockholders, we have implemented standards of business conduct which provide clear conflict of interest guidelines to our employees and directors, as well as an explanation of reporting and investigatory procedures.

 

Corporate Social Responsibility

Our board adopted a companywide Corporate Social Responsibility Policy (CSR). As a responsible member of society, we believe that the long-term future of our business is best served by respecting the interests of our employees, customers, contractors, suppliers and the wider global community. We look for opportunities to reduce our impact on the environment and to contribute to the wellbeing of those less fortunate than ourselves. Our CSR policy sets out the principles we follow with a view to supporting our CSR ethos. Demonstrating our commitment to Corporate Social Responsibility is an objective toward which we aim to align our business values, purpose and strategy with the social and economic needs of our stockholders, while embedding responsible and ethical business policies and practices into everything we do. The CSR is available for review in the governance section of our website: www.OrbitalEnergyGroup.com.

 

Accuracy of All Public Disclosure

It is the Company's policy that all public disclosure made by the Company should be accurate, complete, and present fairly, in all material respects, the Company's financial condition and results of operations, and be made on a timely basis as required by applicable laws and securities exchange requirements. To oversee this policy, a Disclosure Committee Charter has been adopted by the Chief Executive Officer and Chief Financial Officer and ratified by our Audit Committee. A copy of this document is posted on our website at www.OrbitalEnergyGroup.com or a copy is available by making a written request to the Company at www.OrbitalEnergyGroup.com, Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038, phone (832) 467-1420.467‑1420.  

 

Standards of Business Conduct

The board of directors has adopted a Corporate Code of Ethics and Business Conduct, including our Whistleblower Policy, for all employees and directors, including the Company's principal executive and senior financial officers. The Code of Ethics and Business Conduct can be viewed on our website at www.OrbitalEnergyGroup.com.

 

You can obtain a copy of these documents on our website at www.OrbitalEnergyGroup.com or by making a written request to the Company at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038, phone (832) 467-1420.467‑1420. We will disclose any amendments to the Code of Ethics and Business Conduct or waiver of a provision on our website at www.OrbitalEnergyGroup.com.website.

 

Internal Auditor

The board of directors adopted a Charter of Internal Audit that authorizes and outlines the function of an Internal Audit as an independent and objective assurance activity that is guided by a philosophy of adding value to improve the operations of Orbital Energy Group. A copy of this charter is posted on our website, www.OrbitalEnergyGroup.com..www.OrbitalEnergyGroup.com. It is designed to assist Orbital Energy Group in accomplishing objectives by bringing a systematic and disciplined approach to evaluate and improve the design and operating effectiveness of Orbital Energy Group’s governance, risk management, and internal control over financial reporting.

 

Ensuring Independent Registered Public Accounting Firm Independence

We have taken several steps to ensure the continued independence of our independent registered public accounting firm. That firm reports directly to the Audit Committee, which also has the ability to pre-approve or reject any non-audit services proposed to be conducted by our independent registered public accounting firm. For further information on independent registered public accounting firm independence see the section hereafter entitled Audit Committee.

 

Whistleblower Policy

In furtherance of our governance transparency and ethical standards, we adopted a comprehensive Whistleblower Policy that encourages employees to report to proper authorities incorrect financial reporting, unlawful activity, activities that are not in line with Orbital Energy Group Code of Ethics and Business Conduct or activities, which otherwise amount to serious improper conduct. Our Whistleblower Policy is posted on our website at www.OrbitalEnergyGroup.com.

 

Committees of the Board of Directors

 

At December 31, 2019, our board of directors consisted of seven directors. Four of whom are ‘‘independent’’ as defined in Rule 5605(a)(2) of The Nasdaq Stock Market. Our board of directors has the following standing committees: Audit Committee, Nominating Committee, Compensation Committee, Investment Committee and Disclosure Committee. Each of the committees operates under a written charter adopted by the board of directors. All committee charters are available on our website at www.OrbitalEnergyGroup.com.

 

Audit Committee

The Audit Committee is established pursuant to the Sarbanes-Oxley Act of 2002 for the purposes of overseeing the Company’s accounts and financial reporting processes and audits of itsour financial statements. The Audit Committee reviews the financial information that will be provided to the stockholders and others, the systems of internal controls established by management and the board of directors and the independence and performance of the Company’s audit process. The Audit Committee is directly responsible for, among other things, the appointment, compensation, retention and oversight of our independent registered public accounting firm, review of financial reporting, internal company processes of business/financial risk and applicable legal, ethical and regulatory requirements. During 2019,2021, the Audit Committee held sixfour formal meetings.

internal controls established by management and the board and the independence and performance of the Company’s audit process. You may review the full text of our Audit Committee Charter, that includes our Audit Committee’s pre-approval policies and procedures, on our website, www.OrbitalEnergyGroup.com, under the link, governance.

 

At December 31, 2019,2021, the Audit Committee is comprised of Sean P. Rooney,Paul T. Addison, Chairman, C. Stephen Cochennet, and Corey A. Lambrecht. Messrs. Rooney,Addison, Cochennet, and Lambrecht are independent in accordance with Rule 10A-3 under the Securities Exchange Act of 1934 and Rule 5605(a)(2) of The Nasdaq Stock Market.

 

Audit Committee Report

THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER COMPANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES THIS REPORT BY REFERENCE THEREIN.

 

Audit Committee Report

The Audit Committee reviews the financial information that will be provided to the stockholders and others, the systems of internal controls established by management and the board and the independence and performance of the Company’s audit process.

 

The Audit Committee has:

reviewed and discussed with management the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K and the most recent Quarterly Report on Form 10-Q;

discussed with Grant Thornton LLP, the Company’s 2019 independent registered public accounting firm, the matters required to be discussed by General Auditing Standard 1301: Communications with Audit Committees as adopted by the Public Company Accounting Oversight Board; and

received the written disclosures and letter from Grant Thornton LLP as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with Grant Thornton LLP its independence from Orbital Energy Group.

reviewed and discussed with management the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K and the most recent Quarterly Report on Form 10-Q;

discussed with Grant Thornton LLP., the Company’s independent registered public accounting firm, the matters required to be discussed by General Auditing Standard 1301: Communications with Audit Committees as adopted by the Public Company Accounting Oversight Board; and

received the written disclosures and letter from Grant Thornton LLP as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with Grant Thornton LLP its independence from Orbital Energy Group.

 

Based on these reviews and discussions, the Audit Committee has recommended that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.2021. The Audit Committee has also considered whether the amount and nature of non-audit services provided by Grant Thornton LLP is compatible with the auditor’s independence and determined that it is compatible.

 

Submitted by: Audit Committee byby:

Sean P. RooneyPaul T. Addison

Corey A. Lambrecht

C. Stephen Cochennet

 

Nominating Committee

The nominating committee consists of all of the members of the board of directors who are ‘‘independent directors’’ within the meaning of Rule 5605(a)(2) of The Nasdaq Stock Market. The nominating committee is responsible for the evaluation of nominees for election as director, the nomination of director candidates for election by the stockholders and evaluation of sitting directors.

 

The board of directors has developed a formal policy for the identification and evaluation of nominees, Charter of the Nominating Committee of the Board of Directors, which can be reviewed on our website at www.OrbitalEnergyGroup.com. In general, when the board of directors determines that expansion of the board of directors or replacement of a director is necessary or appropriate, the nominating committee will review, through candidate interviews with members of the board of directors and management, consultation with the candidate's associates and through other means, a candidate's honesty, integrity, reputation in and commitment to the community, judgment, personality and thinking style, willingness to invest in the Company, residence, willingness to devote the necessary time, potential conflicts of interest, independence, understanding of financial statements and issues, and the willingness and ability to engage in meaningful and constructive discussion regarding Company issues. The committee reviews any special expertise, for example, which qualifies a person as an audit committee financial expert, membership or influence in a geographic or business target market, or other relevant business experience. To date the Company has not paid any fee to any third party to identify or evaluate, or to assist it in identifying or evaluating, potential director candidates.

 

The nominating committee considers director candidates nominated by stockholders during such times as the Company is actively considering obtaining new directors. Candidates recommended by stockholders will be evaluated based on the same criteria described above. Stockholders desiring to suggest a candidate for consideration should send a letter to the Company's secretary and include: (a) a statement that the writer is a stockholder (providing evidence if the person's shares are held in street name) and is proposing a candidate for consideration; (b) the name and contact information for the candidate; (c) a statement of the candidate's business and educational experience; (d) information regarding the candidate's qualifications to be director, including but not limited to an evaluation of the factors discussed above which the board of directors would consider in evaluating a candidate; (e) information regarding any relationship or understanding between the proposing stockholder and the candidate; (f) information regarding potential conflicts of interest and (g) a statement that the candidate is willing to be considered and willing to serve as director if nominated and elected. Because of the small size of the Company and the limited need to seek additional directors, there is no assurance that all stockholder-proposed candidates will be fully considered, that all candidates will be considered equally or that the proponent of any candidate or the proposed candidate will be contacted by the Company or the board of directors and no undertaking to do so is implied by the willingness to consider candidates proposed by stockholders.

 

Disclosure Committee

We have formed a Disclosure Committee, which has been adopted by our CEO and CFO (‘‘Principal Officers’’) and ratified by our Audit Committee. The Disclosure Committee assists our Principal Officers in fulfilling their responsibility for oversight of the accuracy, completeness and timeliness of our public disclosures including, but not limited to our SEC filings, press releases, correspondence disseminated to security holders, presentations to analysts and release of financial information or earnings guidance to security holders or the investment community. The Disclosure Committee consists of our Principal Officers, the individual or representative of the firm primarily charged with investor/public relations, the Audit Committee Chairman and outside SEC counsel. Our CEO is Chairman of the committee. Our SeniorPrincipal Officers may replace or add new members from time to time. Our SeniorPrincipal Officers have the option to assume all the responsibilities of this committee or designate a committee member, who shall be a person with expertise in SEC and SRO rules and regulations with respect to disclosure, who shall have the power, acting together with our Senior Officers, to review and approve disclosure statements when time or other circumstances do not permit the full committee to meet. You may review the full text of our Disclosure Committee Charter on our website, www.OrbitalEnergyGroup.com, under the link, governance.

 

Generally, the committee serves as a central point to which material information should be directed and a resource for people who have questions regarding materiality and the requirement to disclose. In discharging its duties, the committee has full access to all Company books, records, facilities and personnel, including the board of directors, Audit Committee, independent public accountants and outside counsel.

 

the investment committee is to administer and to operate the portfolio. The members of the investment committee are fiduciaries of the portfolio, with responsibility for overseeing investment policies, general policies, guidelines, investment performance and related risk management. Committee members will fulfill their duties solely on behalf of the company’s mission. In addition to aligning investment policies and strategies with the company’s short- and long-term goals, investment committees must set benchmarks to evaluate long-term objectives and continually evaluate their strategies to keep pace with market fluctuations and changes.

The Investment Committee shall also provide initial oversight and analysis of potential acquisition targets being considered by Management. In that capacity, Investment Committee members may, among other things, participate in reviewing initial due diligence; visit prospective acquisition targets; participate in strategy and other discussions with Management; and, where appropriate, more. You may review the full text of our Investment Committee Charter on our website, www.OrbitalEnergyGroup.com, under the link, governance.

At December 31, 2021, the Investment Committee is comprised of C. Stephen Cochennet, Corey A. Lambrecht, Chairman, and Nicholas M. Grindstaff, CFO.

 

Compensation Committee

The Compensation Committee discharges the board of director’s responsibilities relating to general compensation policies and practices and to compensation of our executives. In discharging its responsibilities, the Compensation Committee establishes principles and procedures in order to ensure to the board of directors and the stockholders that the compensation practices of the Company are appropriately designed and implemented to attract, retain and reward high quality executives and are in accordance with all applicable legal and regulatory requirements. In this context, the Compensation Committee’s authority, duties and responsibilities are:

To annually review the Company’s philosophy regarding executive compensation.

To periodically review market and industry data to assess the Company’s competitive position, and to retain any compensation consultant to be used to assist in the evaluation of directors’ and executive officers’ compensation.

To establish and approve the Company goals and objectives, and associated measurement metrics relevant to compensation of the Company’s executive officers.

To establish and approve incentive levels and targets relevant to compensation of the executive officers.

To annually review and make recommendations to the board of directors to approve, for all principal executives and officers, the base and incentive compensation, taking into consideration the judgment and recommendation of the Chief Executive Officer for the compensation of the principal executives and officers.

To separately review, determine and approve the Chief Executive Officer’s applicable compensation levels based on the Committee’s evaluation of the Chief Executive Officer’s performance considering the Company’s and the individual goals and objectives.

To review for any related party employee situations, to ensure appropriate controls are implemented surrounding compensation changes, bonuses and performance reviews of the related party employee, and to participate in such controls as appropriate.

To periodically review and make recommendations to the board of directors with respect to the compensation of directors, including board of directors and committee retainers, meeting fees, equity-based compensation and such other forms of compensation as the Compensation Committee may consider appropriate.

To administer and annually review the Company’s incentive compensation plans and equity-based plans.

To review and make recommendations to the board of directors regarding any executive employment agreement, any proposed severance arrangements or change in control and similar agreement/provisions, and any amendments, supplements or waivers to the foregoing agreement, and any perquisites, special or supplemental benefits.

To review and discuss with management, the Compensation Discussion and Analysis (CD&A) and determine the Committee’s recommendation for the CD&A’s inclusion in the Company’s annual report filed with the SEC on Form 10-K and proxy statement on Schedule 14A.

The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser.

The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee. The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.

The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel, only after taking into consideration the following factors:

 

To annually review the Company’s philosophy regarding executive compensation.

To periodically review market and industry data to assess the Company’s competitive position, and to retain any compensation consultant to be used to assist in the evaluation of directors’ and executive officers’ compensation.

To establish and approve the Company goals and objectives, and associated measurement metrics relevant to compensation of the Company’s executive officers.

To establish and approve incentive levels and targets relevant to compensation of the executive officers.

To annually review and make recommendations to the board of directors to approve, for all principal executives and officers, the base and incentive compensation, taking into consideration the judgment and recommendation of the Chief Executive Officer for the compensation of the principal executives and officers.

To separately review, determine and approve the Chief Executive Officer’s applicable compensation levels based on the Committee’s evaluation of the Chief Executive Officer’s performance considering the Company’s and the individual goals and objectives.

To review for any related party employee situations, to ensure appropriate controls are implemented surrounding compensation changes, bonuses and performance reviews of the related party employee, and to participate in such controls as appropriate.

To periodically review and make recommendations to the board of directors with respect to the compensation of directors, including board of directors and committee retainers, meeting fees, equity-based compensation and such other forms of compensation as the Compensation Committee may consider appropriate.

To administer and annually review the Company’s incentive compensation plans and equity-based plans.

To review and make recommendations to the board of directors regarding any executive employment agreement, any proposed severance arrangements or change in control and similar agreement/provisions, and any amendments, supplements or waivers to the foregoing agreement, and any perquisites, special or supplemental benefits.

To review and discuss with management, the Compensation Discussion and Analysis (CD&A) and determine the Committee’s recommendation for the CD&A’s inclusion in the Company’s annual report filed with the SEC on Form 10-K and Proxy Statement on Schedule 14A.

The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser.

The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee. The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.

The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel, only after taking into consideration the following factors:

1.(i)

the provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser;

 

2.(ii)

the amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;

 

3.(iii)

the policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;

 

4.(iv)

any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;

 

5.(v)

any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and

 

6.(vi)

any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the Company.

 

 

The Committee is not required to implement or act consistently with the advice or recommendations of the compensation consultant, legal counsel or other adviser to the Committee.

 

Compensation Committee Charter

Our Compensation Committee Charter is posted on our website at www.OrbitalEnergyGroup.com.

 

Compensation Committee Members

The Compensation Committee of the board of directors is appointed by the board of directors to discharge the board of director’s responsibilities with respect to all forms of compensation of the Company’s executive officers, to administer the Company’s equity incentive plans and to produce an annual report on executive compensation for use in the Company’s Form 10-K and the Proxy Statementproxy statement on Schedule 14A. At December 31, 2019,2021, the Compensation Committee consists of two independent members of the board of directors, Messrs. Corey A. Lambrecht, and C. Stephen Cochennet, both of whom are ‘‘independent directors’’ within the meaning of Rule 5605(a) (2) of the Nasdaq Stock Market.

 

Committee Meetings

Our Compensation Committee meets formally and informally as often as necessary to perform its duties and responsibilities. The Compensation Committee held twothree formal meetings during fiscal 2019.2021. On an as requested basis, our Compensation Committee receives and reviews materials prepared by management, consultants or committee members, in advance of each meeting. Depending on the agenda for the meeting, these materials may include, among other factors:

minutes and materials from the previous meeting(s);

reports on year-to-date Company financial performance versus budget;

reports on progress and levels of performance of individual and Company performance objectives;

reports on the Company’s financial and stock performance versus a peer group of companies;

reports from the Committee’s compensation consultant regarding market and industry data relevant to executive officer compensation;

reports and executive compensation summary worksheets, that set forth for each executive officer: current total compensation and incentive compensation target percentages, equity ownership and general partner ownership interest and current and projected value of each and all such compensation elements, including distributions and dividends therefrom, over a five-year period.

minutes and materials from the previous meeting(s);

reports on year-to-date Company financial performance versus budget;

reports on progress and levels of performance of individual and Company performance objectives;

reports on the Company’s financial and stock performance versus a peer group of companies;

reports from the Committee’s compensation consultant regarding market and industry data relevant to executive officer compensation;

reports and executive compensation summary worksheets, which set forth for each executive officer: current total compensation and incentive compensation target percentages, equity ownership and general partner ownership interest and current and projected value of each and all such compensation elements, including distributions and dividends therefrom, over a five-year period.

 

Compensation Committee Interlocks and Insider Participation

None of theThe current members of the Company’s Compensation Committee is or has at any time during the last completed fiscal year been an officer or employee of the Company. None of the Company’s executive officers has servedcompensation committee are Messrs. Lambrecht and Cochennet with Mr. Lambrecht serving as a member of thechair. Our board of directors or as a memberhas determined that all members of the compensation or similar committee qualify as “independent” under Nasdaq Rules. There are no interlocking relationships between any of our executive officers and compensation committee members, on the one hand, and the executive officers and compensation committee members of any entity that has one or more executive officers who servedother companies, on the Company’s board of directors or Compensation Committee duringother hand, nor have any such interlocking relationships existed in the last completed fiscal year.past.

 

Compensation Committee Report

We have reviewed and discussed the Compensation Discussion and Analysis with management and based on our review and discussion with management, we have recommended to the board of directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20192021, and the Proxy Statementproxy statement on Schedule 14A for the 20202021 Annual Meeting of Stockholders.

 

Submitted by:

Compensation Committee byby:

 

Corey A. Lambrecht, Chairman

 

C. Stephen Cochennet, Committee Member

 

Compensation Discussion and Analysis

General Philosophy

Our compensation philosophy is based on the premise of attracting, retaining and motivating exceptional leaders, setting high goals, working toward the common objectives of meeting the expectations of customers and stockholders and rewarding outstanding performance. Following this philosophy, in determining executive compensation, we consider all relevant factors, such as the competition for talent, our desire to link pay with performance, the use of equity to align executive interests with those of our stockholders, individual contributions, teamwork and performance, each executive’s total compensation package and internal pay equity. We strive to accomplish these objectives by compensating all employees with total compensation packages consisting of a combination of competitive base salary and incentive compensation.

Pay for Performance

At the core of our compensation philosophy is our strong belief that pay should be causally linked to performance. We believe in a pay for performance culture that places a significant portion of executive officer total compensation as contingent upon, or variable with, individual performance, Company performance and achievement of strategic goals including increasing shareholder value.

 

The performance based compensation for our executives may be in the form of (i) annual cash incentives to promote achievement of, and accountability for, shorter term performance plans and strategic goals and (ii) equity grants, designed to align the long-term interests of our executive officers with those of our shareholders, by creating a strong and direct link between executive compensation and shareholder return over a multiple year performance cycle. Long-term incentive equity awards are typically granted in restricted stock, stock appreciation rights or stock options. These awards generally vest over a two to four-year period. This opportunity for share ownership was to provide incentive and retain key employees and align their interests with our long-term strategic goals. AsAt the 2020 Annual Meeting, the Stockholders approved the Plan, a copy of December 31, 2019,which is attached to the Company does not have an approved equity incentive plan and shall submit a proposal for a new equity incentive plan to shareholders for approval during2020 Annual Stockholder Meeting Proxy Statement as Annex A that was filed with the SEC on October 1, 2020.

 

Base Compensation to be Competitive within Industry

A key component of an executive’s total base salary compensation is designed to compensate executives commensurate with their respective level of experience, scope of responsibilities, sustained individual performance and future potential. The goal has been to provide for base salaries that are sufficiently competitive with other similar-sized companies, both regionally and nationally, to attract and retain talented leaders.

 

Compensation Setting Process

 

ManagementManagement’ss Role in the Compensation Setting Process

Management plays a significant role in the compensation-setting process. The most significant aspects of management’s role are:

assisting in establishing business performance goals and objectives; 

assisting in establishing business performance goals and objectives;

evaluating employee and Company performance;

CEO and/or Executive Chairman recommending compensation levels and awards for executive officers;

implementing the board approved compensation plans; and

assistance in preparing agenda and materials for the Committee meetings.

evaluating employee and Company performance;

CEO and/or Executive Chairman recommending compensation levels and awards for executive officers;

implementing the board approved compensation plans; and

assistance in preparing agenda and materials for the Committee meetings.

 

The Chief Executive Officer, and/or Executive Chairman generally attendsattend the Committee meetings; however, the Committee also regularly meets in executive session.session when considering the compensation of executive officers. The Chief Executive Officer and/or Executive Chairman makesmake recommendations with respect to financial and corporate goals and objectives and makes non-CEO executivenon-executive officer compensation recommendations to the Compensation Committee based on Company performance, individual performance and the peer group compensation market analysis. The Compensation Committee considers and deliberates on this information and in turn makes recommendations to the board of directors, for the board’s determination and approval of the executives’ and other members of senior management’s compensation, as necessary, including base compensation, short-term cash incentives and long-term equity incentives. For related party employee matters, appropriate personnel meet with the Compensation Committee to determine compensation and incentives and to review ongoing performance of the employee. The Chief Executive Officer’s and/or Executive Chairman’s performance and compensation of the Chief Executive Officer, Executive Chairman and Chief Financial Officer are reviewed, evaluated and established separately by the Compensation Committee and ratified and approved bypresented to the board of directors.directors for ratification or approval.

 

Setting Compensation Levels

To evaluate whether total compensation is competitive and provides appropriate rewards to attract and retain talented leaders, as discussed above, we may rely on analyses of peer companies performed by independent compensation consultants and on other industry and occupation specific survey data available. Our general benchmark is to establish both base salary and total compensation for the executive officers at or near the compensation of peer group data, recognizing that a significant portion of executive officer total compensation should be contingent upon, or variable with, achievement of individual and Company performance objectives and strategic goals, as well as being variable with stockholder value. Further, while the objective for base salary is at that of peer group data, executives’ base salaries are designed to reward core competencies and contributions to the Company and may be increased above this general benchmark based on (i) the individual’s increased contribution over the preceding year; (ii) the individual’s increased responsibilities over the preceding year; and (iii) any increase in median competitive pay levels.

 

Setting Performance Objectives

The Company’s business plans and strategic objectives are generally presented by management annually and as needed to the board of directors. The board engages in an active discussion concerning the financial targets, the appropriateness of the strategic objectives and the difficulty in achieving the same. In establishing the compensation plan, our Compensation Committee then utilizes the primary financial targets and strategic objectives from the adopted business plan as the primary targets for determining the executive officers’ short-term cash incentives and long-term equity incentive compensation. The Committee also establishes additional nonfinancial performance goals and objectives, the achievement of which is required for funding of a significant portion approximately twenty five percent, of the executive officers’ incentive compensation. In 2019,2021, these non-financial performance goals and objectives included among other factors, divestiture of significant portions of the Power and Electromechanical segment,factors: the identification and procurement process to enhance and enable the growth of the Company through strategic industry specific acquisitions; management of oversight of the continued growth of the Orbital Gas Systems, North Americapower transmission and distribution operations; investment in VPScapitalizing on market drivers to create significant growth; increase customer relationships; oversight and reductiontaking advantage of costs at CUI-Canada; continued expansion within the global natural gaspotential financing opportunities including both dilutive (debt) and energy markets; continued product development and new product introductions including various VE technology-based sample systems;non-dilutive (equity raise); and general and administrative management responsibilities. In addition, such factors as revenue growth; new product adoption; market penetration; M&A activities; and investment banking transactions were and are considered in setting compensation levels.

 

Annual Evaluation

The Chief Executive Officer and/or Executive Chairman recommendsrecommend the actual incentive award amounts for all other executives based on actual Company performance relative to the targets set as well as on individual performance and recommends the executives’ base salary levels. The Compensation Committee considers these recommendations generally following the end of each fiscal year in determining its recommendations to the board of directors for the final short-term cash incentive and long-term equity award amounts for each executive. Executive base salary levels are reviewed in accordance with their respective employment agreements. The actual incentive amounts awarded to each executive are ultimately subject to the discretion of the Compensation Committee and the board of directors.

 

Voting Results on Executive Compensation (Say-on-Pay) Advisory Vote

As required by Section 14A of the Exchange Act, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Compensation Committee considers the prior year shareholder advisory vote on the compensation of the Named Executive Officers as appropriate for making compensation decisions. At the annual meeting of shareholders held December 3, 2019, 41%October 12, 2021, 85% percent of the shareholders present and voting on the proposal approved, on an advisory basis, the compensation disclosed in the Company’s proxy statement for the meeting filed with the Securities and Exchange Commission on October 2, 2019.August 10, 2021. As a result, the Compensation Committee concluded that the Company's shareholders were not supportive of the Company's executive compensation philosophy, policies and programs and theprograms. The Compensation Committee will continue to reach out to shareholders regarding compensation matters. The Compensation Committee determinedmatters and will continue to review suchcompensation philosophy, policies and programs with such updates and modifications as appropriate for changing circumstances.

Special Evaluation

Additional equity-based awards may also be granted to executives, as well as other employees, upon commencement of employment, promotions, for special performance recognition or for retention purposes, based on the recommendation of the Chief Executive Officer or Chief Financial Officer. In determining whether to recommend additional grants to an executive, the Chief Executive Officer typically considers the individual’s performance and any planned change in functional responsibility.

 

Elements of Executive Compensation

Total Compensation

Total compensation for our executives consists of three elements: (i) base salary; (ii) incentive cash award based on achieving specific performance targets as measured by revenues, cash flow and other objectives and (iii) equity incentive award, which is also performance based and may be paid out over a future period in the form of stock, restricted stock, stock appreciation rights, or stock purchase options. Base salaries are the value upon which both the incentive compensation percentage targets are measured against. For evaluation and comparison of overall compensation of the executives and to assist it in making its compensation decisions, the Compensation Committee reviews an executive compensation summary, which sets forth for each executive: current compensation and current equity ownership holdings as well as the projected value of each and all such compensation elements, including distributions and dividends therefrom. Also included in the summary are comparative performance numbers, specific milestones, strategic objectives, and other elements used to measure each executive's individual performance.

Base Salaries

Base salaries are designed to compensate executives commensurate with their respective level of experience, scope of responsibilities and to reward sustained individual performance and future potential. The goal has been to provide for base salaries that are sufficiently competitive with other similar-sized companies, both regionally and nationally, to attract and retain talented leaders.

Incentive Compensation

Incentive compensation is intended to align compensation with business objectives and performance and enable the Company to attract, retain and reward high quality executive officers whose contributions are critical to both the short and long-term success of the Company. The executives’ incentive awards are based upon three key performance metrics: (i) the Company’s earnings before interest, taxes, depreciation, and amortization (EBITDA); (ii) achievement of agreed-upon strategic and corporate performance goals;goals including development of greenfield operations and acquisition opportunities; and/or (iii) existing Employment Agreement.

 

The strategic and corporate performance goals are not intended to be a specific agreed-upon goal, but rather a general objective. Management and the board of directors discuss these factors and set objectives that are dynamic and change periodically. In setting these periodic goals, the board of directors discusses with management the nature of the objective and management’s proposed method of achieving the goal. These goals change throughout the operational process because of changing dynamics such as economic conditions, current success of marketing, availability of materials, availability of funding and overall momentum toward achieving the goal.

 

Incentive Plan Compensation

Incentive awards are typically paid out in cash, restricted common stock, stock appreciation rights, restricted stock units or option awards. The incentive award targets for the executives are established at the beginning of the year, generally, as a percentage of their base salary and the actual awards are determined in the following year at a Compensation Committee meeting based on actual Company performance relative to established goals and objectives, as well as on evaluation of the executive’s relevant departmental and individual performance during the past year. In many instances the award of restricted common stock, stock appreciation rights, restricted stock units and stock options vests over a multi-year term in equal periodic tranches. The award of restricted common stock purchased through options generally, although not in every instance, vests over a multi-year term upon exercise of the option and generally has a validity of up to five years and a per share purchase price of no less than the fair market value of our common stock on the date of grant. The awards are intended to serve as a means of incentive compensation for performance.

RetirementDefined Contribution Plans

Orbital Energy Group and its wholly owned subsidiary, Orbital Gas Systems, North America, Inc. maintain a 401(k) plan. The Company has a 401(k) retirement savings plan that allows employees to contribute to the plan after they have completed 60 days of service and are 18 years of age. The Company matches the employee’semployee's contribution up to 6% of total compensation. TotalGTS, Orbital Power, Inc., Orbital Solar Services, Front Line Power Construction, LLC, Eclipse Foundation, and Corporate made total employer contributions, net of forfeitures, were $0.5 million, $0.5 million, and $0.4 million for 2019, 2018 and 2017, respectively. These amounts include $0.3 million, $0.4of $0.6 million and $0.3 million for 2021 and 2020, respectively. In addition, in 2021 and 2020, the Company made contributions of $72 thousand and $0.1 million, respectively, associated with discontinued operations.

 

Involuntary Termination, Resignation for Good Reason and Change in Control

Our executives are awarded protection from involuntary termination, resignation for good reason and change in control specifically provided in their employment contracts.

 

Under involuntary termination without cause or resignation for good reason, the Executive Chairman, Chief Executive Officer and Chief ExecutiveFinancial Officer each would receive any amounts earned, accrued or owing but not yet paid; full vesting of any unvested stock options, stock appreciation rights and any deferred past bonuses that have been earned but not paid. Should the executive be terminated on account of disability he is entitled to 75% of his then current annual base salary for six months and eighteen months of medical coverage.

 

Under involuntary termination without cause or resignation for good reason, our Chief Financial Officer would receive any amounts earned, accrued or owing but not yet paid; full vesting of any unvested stock options and any deferred past bonuses that have been earned but not paid. Should the executive be terminated on account of disability he is entitled to 75% of his then current annual base salary for six months and eighteen months of medical coverage.

Perquisites

Perquisites

The Company does not provide for any perquisites or any other benefits for its senior executives that are not generally available to all employees.

 

Employment Agreements

During fiscal year 2019, four2021, the three named executive officers were employed under employment agreements. Those executive officers included:

Executive Chairman and General Counsel;

Executive Chairman, General Counsel, former Chief Executive Officer;

Chief Executive Officer;

Chief Financial Officer ; and

Former President of CUI Inc., and Chief Operating Officer of the Power and Electromechanical Division;

Chief Executive Officer;

Chief Financial Officer.

 

To see the material terms of each named executive officer’s employment agreement, please see the footnotes to the Summary Compensation Table.

 

Executive Salary and Bonus Performance Assessment Considerations

Bonuses for certain executive officers and employees of Orbital Energy Group and subsidiaries are calculated based on historical financial and non-financial information and accomplishments based on an ongoing review and approval by the Compensation Committee and the Chief Executive Officer. Accordingly, the Company accrues bonuses through components calculated on prior data. This review also considers ongoing performance and incentives for those officers and employees to increase their performance. As such, bonuses calculated based on fiscal 20192021 data are not necessarily earned or owed to the employees as of December 31, 20192021, and there is no legal right by the employees to receive such bonuses upon either termination by the Company or voluntary termination, unless they have been approved based on the subsequent review of subjective items.

 

The performance assessment considerations for William J. Clough, Esq. in his capacity as President, Chief Executive Officer and General Counsel of Orbital Energy Group, Inc. and subsidiaries through September 30, 2019 and General Counsel and Executive Chairman, thereafter, include his successful management and implementation of acquisition and growth strategy, both domestically and internationally, that resulted in the March 2015 asset acquisition of Tectrol, Inc., a Canadian electronics company by CUI Inc. and the highly lucrative February 2016 purchase order from Europe’s largest natural gas transmission company for our GasPT product. This purchase order culminates several years of Mr. Clough’s personal effort. The Tectrol asset purchase entailed complex labor union negotiations and ongoing management support. Mr. Clough continues to expand new technology development, implementation, branding and sales by strategically expanding the VE Technology product recognition through adoption of mercury sampling and thermowells. As a primary initiator of the Company’s growth strategy, he engineered the Company’s launch of Orbital Gas Systems, North America, Inc. as a unified international GasPT and VE Technology sales headquarters. Mr. Clough continues to expand investor relations and strengthen investment banking relationships through regular investor meetings and conferences. In addition, Mr. Clough and Mr. O’Neil are the point-persons for the Company's mergers and acquisition (M&A) strategy. In that capacity:

Mr. Clough spearheaded the divestiture of both the CUI Electromechanical Division (to a Management-led group) and divestiture of the CUI Power Division (to Bel Fuse) for a combined value of approximately $44.2 million - comprised of forgiveness of a $5.3 million Note; receipt of a $5.0 million Note Payable; and approximately $33.9 million in cash after working capital adjustments;

Mr. Clough identified and recruited James F. O’Neil, Orbital Energy Group’s chief executive officer, in order to begin a strategic acquisition and divestiture strategy designed to make Orbital Energy Group an energy-centric, services company along the lines of Quanta (Mr. O’Neil’s prior employer) and MasTec; and,

Mr. Clough provides insight, tactics, targets, and potential relationships to expand the Company's opportunities through strategic partnerships and acquisitions. His efforts have included strategic relationships with SAMSON AG, Socrate S.p.A., Daily Thermetrics, and others, along with various acquisition opportunities currently being explored by the Company.

As Corporate General Counsel, Mr. Clough is “hands on” in his management of corporate governance and legal issues, addressing employee concerns, providing personal direction and oversight of drafting revised and restated corporate bylaws and regularly communicating with the directors pertaining to various corporate matters as they arise.

The performance assessment considerations for James F. O’Neil, Chief Executive Officer of Orbital Energy Group and its subsidiaries since October 1, 2019, include his extensive experience and prior success at building shareholder value and significant return-on-investment. Mr. O’Neil is a veteran executive of the energy infrastructure industry and has been instrumental in formulating and overseeing execution on Orbital Energy Group’s transformation plan that reshapes the company into a diversified energy services platform.

 

The performance assessment considerations for Daniel N. Ford,William J. Clough, Esq., General Counsel and Executive Chairman, James F. O’Neil, Chief Executive Officer, and Nicholas M. Grindstaff, Chief Financial Officer, as an executive team, successfully managed the implementation of Orbital Energy Groupan acquisition and subsidiaries include his successful management of financial resources for Orbital Energy Groupgrowth strategy to become an energy centric service company, focused on infrastructure engineering, construction and subsidiaries including investments, corporate portfolio, cash and debt positions. Mr. Ford’s daily duties include ongoing development and oversight of global banking relationships and overall financial performance oversight and managementmaintenance primarily in areas that contribute to improving the carbon footprint of the accounting staffworld as we know it today. This management team focused the company on the acquisition and greenfield development of Orbital Energy Group, Inc. and all subsidiaries. In 2016, Mr. Ford addedportfolio companies that contribute to reducing the responsibility of Chief Operating Officer for the Energy Division including direct managementenergy industry carbon footprint.

The team’s refocus of the Division's leadership teamsCompany’s business model considers that the existing electric grid cannot handle ‘an electrified America’ as wellmore of our nations’ infrastructure, such as coordinating ongoing activities, planningtransportation, transitions to electric, the electric grid is being reconfigured as generation is shifting from predominately coal and initiativesnuclear power generation to continue growth within this divisionreliance on a global basis. Mr. Ford efficiently communicates withrenewables and natural gas. A significant portion of the board pertainingnation’s electric grid is approaching or has exceeded its useful life and needs to be upgraded.

The management team’s 2021 efforts include:

Gibson Technical Services, Inc.

Effective April 13, 2021, the Company purchased all of the capital stock of Gibson Technical Services, Inc. (“GTS”).  GTS is an Atlanta-based telecommunications company activities, audit results and findings, growth and acquisition strategy and investment tactics. Mr. Ford oversees SEC filing compliance, internal reporting matters, and works directly with internal and external audit and tax firms. As an integral partproviding diversified telecommunications services nationally since 1990.  A more detailed description of this management, ittransaction is necessary that he continue to be up to dateincluded on all current accounting and SEC regulatory standards such as ICFR and SOX. Mr. Ford works closelyour Form 8-K filed with the Executive Chairman and CEO regarding financial reporting, Energy Division activities, divestitures, M&A, investments, investor management and investor relations activities. Mr. Ford is integral to the M&A efforts and assists with analysis and identification of specific strategic partnerships and acquisitions. Mr. Ford has been particularly involved in the integration of previous acquisitions including Tectrol (CUI-Canada), Orbital-UK, and the greenfield startup of Orbital North America within the Orbital Energy Group portfolio.

Pay Ratio Disclosure Rule

In August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd - Frank Act”), the Securities and Exchange Commission (“SEC”) adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (‟PEO”). The Company’s PEO Mr. James F. O’Neil was appointed October 1, 2019. Mr. O’Neil’s compensation has been annualized for 2019 pay ratio purposes. The purpose of the new required disclosure is to provide a measure of the equitability of pay within the organization. The Company believes its compensation philosophy and process yield an equitable result and is presenting such information in compliance with the required disclosure as follows:

Median Employee total annual compensation $42,336 
Mr. O'Neil ("PEO") total annual compensation $798,876 
Ratio of PEO to Median Employee Compensation 19:1 

When determining the median employee, we included the following compensation in our calculations:on April 16, 2021.

 

Salary or wagesImmco, Inc.

Effective July 28, 2021, Orbital Energy Group acquired all of the capital stock of IMMCO, Inc. (“IMMCO”). IMMCO is an Atlanta-based telecommunications company providing enterprise solutions to the cable and telecommunications industries since 1992 and will become a wholly owned subsidiary of Gibson Technical Services. IMMCO and its owners own 100% of the capital stock of two Indian-based companies, IMMCO Software Solutions Private Limited ("ISS"), and Saranga Geosoftware and Engineering Services Private Limited, "SGES," and together with ISS, the "India" Companies."

 

BonusesFull Moon Telecom, LLC

Effective October 22, 2021, Orbital Energy Group and its subsidiary, Gibson Technical Services, Inc. ("GTS"), acquired all ownership interest in Full Moon Telecom, LLC (“Full Moon”). Full Moon is a Florida-based privately-owned telecommunications service provider that offers an extensive array of wireless service capabilities and experience including Layer 2/Layer 3 Transport, Radio Access Network (“RAN”) Integration, test and turn-up of Small Cell systems and Integration/Commissioning of Distributed Antenna (“DAS”) systems. Full Moon will become a wholly-owned subsidiary of GTS, expanding GTS’s service offerings to its customers. Full Moon’s additional capabilities include providing site surveys, regulatory support, project management, continuous wave testing, scanner walks, optimization/data collection and E911 data validation and testing.  These additional skill sets combined with Full Moon’s RAN integration and DAS commissioning efforts have allowed for an expanded service offering and turnkey approach to ensuring the on time delivery and quality on end-to-end solutions to wireless customers.

 

Stock awards

Other compensation including health insurance benefits, disability insurance benefits, life insurance benefits and 401(k) match benefits provided by the Company but excluding health and pension benefits provided by certain governments.Front Line Power Construction, LLC

Mr. O’Neil’s actual compensationEffective November 17, 2021, Orbital Energy Group entered into a Membership Unit Purchase agreement, dated November 17, 2021 (the “MUPA”) to acquire all membership interests of Front Line Power Construction, LLC, a Texas limited liability company (“FLP” or “Front Line”); a Houston-based full service electrical infrastructure service company that has provided construction, maintenance, and emergency response services for 2019 along with details of his employment agreement can be reviewed in more detail in the Summary Compensation Table.customers since 2010.

 

We elected to exclude our CUI-Japan sales office from the calculation due to there being less than 5% of the total number of employees there (5 employees).

Full and part-time employee compensation for employees that were hired during the year was annualized based on the average compensation they received during the period they were employed. The number of employees was determined as of December 31, 2019 when there were 252 total employees (Excluding CUI-Japan), 40 of which are considered US employees and 212 of which were considered non-US employees.

 

Summary Compensation Table

Summary Compensation Table

The following table sets forth the compensation paid and accrued to be paid by the Company for the fiscal years 2019, 20182021 and 20172020 to the Company’s Chief Executive Officer, Chief Financial Officer and President of CUI Inc. Effective May 8, 2020, the corporate name, CUI Global, Inc., was changed to Orbital Energy Group, Inc.Executive Chairman/Chief Legal Counsel

 

Effective October 1, 2019, William J. Clough resigned as the Company CEO and James F. O’Neil was appointed as CEO of the Company and subsidiaries and Vice-Chairman of the Board of Directors. Mr. Clough will remain Company President, Chief Legal Officer and Executive Chairman of the Board of Directors.

Name and Principal

Position

Year

Salary
($)

 

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation (9)

($)

 

All Other

Compensation

($)

Total
($)

William J. Clough, Executive

2019

687,018

(2)

-

-

710,966

(2)

31,833

1,429,817

Chairman/Chief Legal Counsel/Former

2018

559,660

(2)

-

-

552,428

(2)

33,077

1,145,165

CEO/Director (1)

2017

538,135

(2)

-

-

497,672

(2)

30,869

1,066,676

         

 

Daniel N. Ford, CFO (3)

2019

449,000

(4)

-

-

456,667

(4)

41,456

947,123

 

2018

350,000

(4)

-

-

254,789

(4)

40,238

645,027

 

2017

320,000

(4)

-

-

244,888

(4)

38,532

603,420

          

James F. O'Neil, CEO/Director (5)

2019

187,896

(6)

-

-

-

(6)

19,269

207,165

          

Matthew M. McKenzie,

2019

251,633

(6)

-

-

509,674

(6)

34,723

796,030

President of CUI Inc. /

2018

320,000

(6)

-

-

206,540

(6)

39,508

566,048

Director (7)

2017

292,465

(6)

-

-

107,105

(6)

37,848

437,418

 

 

        
Paul D. White,

2018

225,000

(8)

-

-

155,000

(8)

32,717

412,717

Senior Vice President/Director (9)

2017

114,759

(8)

49,991

-

30,000

(8)

-

194,750

Name and Principal Position

Year

 

Salary

(dollars)

   

Stock

Awards

(dollars)

   

Option

Awards

(dollars)

   

Non-equity

Incentive Plan Compensation

(dollars)

   

All Other

Compensation

(dollars)

  

Total

(dollars)

 

William J. Clough, Executive Chairman/ Chief Legal Officer/former CEO/ Director (1)

2021

 $831,442 (2) $ (2) $3,203,800 (2) $531,250 (2) $18,669  $4,585,160 
 

2020

  759,363 (2)  21,887 (2)  288,085 (2)  300,000 (2)  27,768   1,397,103 

Daniel N. Ford, Executive Vice President (3)

2021

  581,442 (4)   (4)  2,652,034 (4)  265,625 (4)  36,761   3,535,863 
 

2020

  512,346 (4)  18,904 (4)  224,066 (4)  150,000 (4)  43,121   948,437 

James F. O'Neil, CEO/Vice Chairman/Director (5)

2021

  800,000 (6)   (6)  5,695,644 (6)   (60  41,271   6,536,915 
 

2020

  753,563 (6)  8,937 (6)  120,036 (6)   (60  47,797   930,333 

 

Footnotes:

 

1.

Mr. Clough joined the Company on September 1, 2005. Effective September 13, 2007, Mr. Clough was appointed CEO/President of Orbital Energy Group Inc. and Chief Executive Officer of all wholly owned subsidiaries of the Company. Effective October 1, 2019, Mr. Clough stepped down as Chief Executive Officer and was appointed Executive Chairman and General Counsel.Chief Legal Officer.

 

2.

Mr. Clough is employed under a three-year employment contract with the Company, which became effective May 14, 2019. Said contract provides, in relevant part, for salary in year 1 of $750 thousand,$750,000, year 2 of $800 thousand$800,000 and year 3 of $850 thousand.$850,000. The employment agreement includes bonus provisions for each calendar year targeted at seventy-five percent of base salary to be based on performance objectives, goals and milestones for each calendar year including company performance. Bonuses are approved based on various performance-related factors and an evaluation of current performance and includes a discretionary bonus of up to twenty-five percent of salary based upon the reasonable judgment of the compensation committee. EmployeeMr. Clough has the ability to earn a larger bonus based on the performance criteria set forth and the reasonable judgment and discretion of the compensation committee. The agreement provides for up to $9,999 of annual premium life insurance expenses along with the ordinary benefits provided to employees of the Company. TheIn the event of involuntary termination or resignation for good reason, the agreement entitles Mr. Clough to severance package ofthat equates to 2.5 times the sum of annual base salary and target bonus along with eighteen months of medical coverage under the Company's medical plans. At December 31, 2019, 2018, and 2017, thereEffective April 1, 2022, Mr. Clough’s employment contract was renewed for an accrualadditional two years with a base salary of $0, $30 thousand, and $33 thousand, respectively, for compensation owed to Mr. Clough.$850,0000 per annum.

 

3.

Mr. Ford joined the Company May 15, 2008, and servesserved as Chief Financial Officer of Orbital Energy Group, Inc. and subsidiaries, and Chief Operating Officer of the Energy Division.until November 15, 2021, when he was appointed Executive Vice President.

 

4.

Mr. Ford is employed under a three-year employment contract with the Company, which became effective May 14, 2019. Said contract provides, in relevant part, for salary in year 1 of $500 thousand,$500,000, year 2 of $550 thousand$550,000 and year 3 of $600 thousand.$600,000. The employment agreement includes bonus provisions for each calendar year targeted at seventy-five percent of base salary to be based on performance objectives, goals and milestones for each calendar year including company performance. Bonuses are approved based on various performance-related factors and an evaluation of current performance and includes a discretionary bonus of up to twenty-five percent of salary based upon the reasonable judgment of the compensation committee. EmployeeMr. Ford has the ability to earn a larger bonus based on the performance criteria set forth and the reasonable judgment and discretion of the compensation committee. TheIn the event of involuntary termination or resignation for good reason, the agreement provides for ordinary benefits provided to employees of the Company. TheIn the event of involuntary termination or resignation for good reason, the agreement entitles Mr. Ford to a severance package ofthat equates to 2.0 times the sum of annual base salary and target bonus along with eighteen months of medical coverage under the Company's medical plans. At December 31, 2019, 2018, and 2017, there was an accrual of $0, $21 thousand, and $22 thousand, respectively, for compensation owed to Mr. Ford.

 

5.

Mr. O'Neil was appointed Director July 9, 2019, and was appointed Vice Chairman and Chief Executive Officer effective October 1, 2019.

 

6.

Mr. O'Neil is employed under a three-year employment contract with the Company, which became effective October 1, 2019. Said contract provides, in relevant part, for salary in year 1 of $750 thousand, year 2 of $800 thousand and year 3 of $850 thousand. The employment agreement includes bonus provisions for each calendar year targeted at seventy-five percent of base salary to be based on performance objectives, goals and milestones for each calendar year including company performance. Bonuses are approved based on various performance-related factors and an evaluation of current performance and includes a discretionary bonus of up to twenty-five percent of salary based upon the reasonable judgment of the compensation committee. EmployeeMr. O’Neil has the ability to earn a larger bonus based on the performance criteria set forth and the reasonable judgment and discretion of the compensation committee. The agreement provides for up to $9,999 of annual premium life insurance expenses along with the ordinary benefits provided to employees of the Company. TheIn the event of involuntary termination or resignation for good reason, the agreement entitles Mr. O'Neil to a severance package ofthat equates to 2.5 times the sum of annual base salary and target bonus along with eighteen months of medical coverage under the Company's medical plans. Effective April 1, 2022, Mr. O’Neil’s employment contract was renewed for an additional two years with a base salary of $800,0000 per annum.

 

7.

Mr. McKenzie joined the Company May 15, 2008 and served as President of CUI Inc. and Chief Operating Officer of the Power and Electromechanical Division. Effective September 30, 2019 Mr. McKenzie's employment was terminated with the disposition of the non-power supply electromechanical products group to Back Porch International, Inc.

8.

Mr. McKenzie was employed under a multi-year employment contract with the Company, which became effective July 1, 2013 and which was extended to run to and through December 31, 2019. Said contract provided, in relevant part, for salary in 2018 of $320 thousand, an annual 4% cost of living adjustment, an eighteen-month severance package and bonus provisions up to one hundred twenty-five percent of base salary to be based on performance objectives, goals, and milestones for each calendar year, including revenue performance in the Power and Electromechanical segment. The bonus included a discretionary bonus of up to twenty-five percent of salary based upon the reasonable judgment of the compensation committee. Employee could have earned a larger bonus based on the performance criteria set forth and the reasonable judgment and discretion of the compensation committee. Bonuses are approved quarterly based on the above factors and an evaluation of current performance. All such bonus payments were paid to Mr. McKenzie in equal monthly installments following the period in which the bonus was earned and were paid on the 15th day of each month. At December 31, 2019, 2018, and 2017, there was an accrual of $0, $18 thousand, and $12 thousand, respectively, for compensation owed to Mr. McKenzie. Mr. McKenzie terminated his employment with CUI Inc. to lead Back Porch International Inc.'s purchase of the electromechanical components business that was announced in October 2019.

9.

Mr. White served as President of Orbital Gas Systems, Ltd. from July 2017, initially in a consulting role, until July 2019. Upon accepting the permanent role of President of Orbital Gas Systems, Ltd. effective December 1, 2017, Mr. White ceased to be independent as a director of the Company. In July 2019, Mr. White became Senior Vice President for Orbital Energy Group, Inc.

10.

Mr. White is employed under a three-year employment contract with the Company through December 1, 2020 and provides, in relevant part, for an initial annual salary of $225 thousand in year 1 along with a $30 thousand one-time signing bonus, and increases to $250 thousand and $275 thousand in years 2 and 3, respectively, a severance of the Executive’s salary for the remainder of his severance term upon termination, bonus provisions to be based on performance objectives, goals, and milestones for each calendar year, including revenue performance at Orbital-UK. The bonus includes a discretionary bonus of up to twenty-five percent of salary based upon the reasonable judgment of the compensation committee. Employee can earn a larger bonus based on the performance criteria set forth and the reasonable judgment and discretion of the compensation committee. Bonuses are approved on an ongoing basis based on the above factors and an evaluation of current performance. All such bonus payments shall be paid to Mr. White following the period in which the bonus is earned. During 2017, Mr. White received $50 thousand of cash compensation and $50 thousand of stock awards for his services as an independent director. Further, during his time during the year ended December 31, 2017 serving as a consultant as interim President of Orbital Gas Systems, Limited, Mr. White received $46 thousand of compensation. At December 31, 2019, 2018 and 2017, there was an accrual of $0, $155 thousand, and $40 thousand, respectively, for compensation owed to Mr. White.

11.

As of December 31, 2019, William J.2021, Mr. Ford held 112,598 outstanding options. As of December 31, 2021, Mr. Clough, CEO/DirectorMr. Ford and Mr. O'Neil held 558,085 outstanding options, Daniel N. Ford, CFO held 125,196 outstanding options, Matthew M. McKenzie, COO/Director held 86,800 outstanding options,1,350,000, 1,095,000, and Paul D. White, Senior Vice President/Director held 7,500 options.1,787,500 cash settled stock appreciation rights, respectively.

 

12.8.

All other compensation includes health care, insurance and 401(k) matching benefits.

Nicholas M. Grindstaff was appointed Chief Financial Officer November 16, 2021. Mr. Grindstaff is employed under a three year employment agreement with the Company. Mr. Grindstaff’s Annual Base Salary is $650,000 per annum, payable in periodic installments in accordance with the Company’s customary payroll practices. Mr. Grindstaff’s Annual Base Salary shall be reviewed at least annually by the Compensation Committee, and the Compensation Committee may, but shall not be required to, increase the Annual Base Salary; providing, however, the Annual Base Salary shall be increased a minimum of 3% annually to cover “cost-of-living” adjustments. Mr. Grindstaff shall be entitled to receive a minimum annual bonus payment of one hundred percent (100%) of his Annual Base Salary (“Target Bonus”) during the employment term. Said bonus shall be based on performance objectives, goals, and milestones agreed to by the Executive, OEG’s CEO, and the Compensation Committee. Executive shall have the ability to earn a larger bonus based on performance criteria and the reasonable judgment and discretion of the Compensation Committee. He shall have the right to have any bonuses paid in the form of restricted stock units or other equity incentive arrangements provided for under the Equity Incentive Plan.

 

The following table summarizes potential payments upon termination of employment to each of the named executive officers employed on the last day of our most recently completed fiscal year. The amounts set forth in the table are based on the assumption that the triggering event occurred on the last business day of our last completed fiscal year.

 

Name

Benefit

 

Involuntary

Termination or

Resignation for

Good Reason

$

  

Termination

upon Disability

$

 
          

William J. Clough, Executive Chairman/

salary and bonus

 $3,281,250(1) $

281,250

(1)

Chief Legal Counsel/Former CEO/Director

continuation

benefits

  47,750(1)  71,624(1)
          

Daniel N. Ford, Chief Financial Officer/

salary and bonus

  1,750,000(2)  187,500(2)
COO Energy Division

continuation

benefits

  36,984(2)   55,476(2)
          

James F. O'Neil, CEO/ Director

salary and bonus

  3,281,250(3)  281,252(3)
 

continuation

benefits

  48,114(3)  72,171(3)
    

Involuntary

     
    

Termination

or

     
    

Resignation

for

  

Termination

 
    

Good

Reason

  

upon

Disability

 

Name

 

Benefit

        
           
  

Salary and bonus continuation

 $3,718,750(1) $318,750(1)

William J. Clough, Executive Chairman/ Chief Legal Officer/ former CEO/Director

 

Benefits

  28,003(1)  28,003(1)
           
  

Salary and bonus continuation

  2,100,000(2)  225,000(2)

Daniel N. Ford, Chief Financial Officer

 

Benefits

  29,042(2)  29,042(2)
           
  

Salary and bonus continuation

  350,000(3)  300,000(3)

James F. O'Neil, CEO/ Director

 

Benefits

  37,906(3)  37,906(3)

 

 

1.

Mr. Clough's employment contract with the Company entitles Mr. Clough to a severance package of 2.5 times the sum of his annual base salary and target bonus along with eighteen months of medical coverage under the Company's medical plans. Under involuntary termination without cause or resignation for good reason, Mr. Clough would receive any amounts earned, accrued or owing but not yet paid;paid; full vesting of any unvested stock options and any deferred past bonuses that have been earned but not paid. Should Mr. Clough be terminated on account of disability he is entitled to 75% of his then current annual base salary for six months and eighteen months of medical coverage.

 

2.

Mr. Ford's employment contract with the Company entitles Mr. Ford to a severance package of 2.0 times the sum of his annual base salary and target bonus along with eighteen months of medical coverage under the Company's medical plans. Under involuntary termination without cause or resignation for good reason, Mr. Ford would receive any amounts earned, accrued or owing but not yet paid;paid; full vesting of any unvested stock options and any deferred past bonuses that have been earned but not paid. Should Mr. Ford be terminated on account of disability he is entitled to 75% of his then current annual base salary for six months and eighteen months of medical coverage.

 

3.

Mr. O'Neil's employment contract with the Company entitles Mr. CloughO'Neil to a severance package of 2.5 times the sum of his annual base salary and target bonus along with eighteen months of medical coverage under the Company's medical plans. Under involuntary termination without cause or resignation for good reason, Mr. O'Neil would receive any amounts earned, accrued or owing but not yet paid;paid; full vesting of any unvested stock options and any deferred past bonuses that have been earned but not paid. Should Mr. O'Neil be terminated on account of disability he is entitled to 75% of his then current annual base salary for six months and eighteen months of medical coverage.

 

2019 Grants of Plan-Based Awards

  

Estimated Furure Payouts
Under Non-Equity Incentive
Plan Awards (1)

     

Name

Grant Date

Threshold
$

Target
$

Maximum
$

William J. Clough

Nonequity Award

                  -

512,264

858,773

Daniel N. Ford

Nonequity Award

                  -

336,750

561,250

James F. O'Neil

Nonequity Award

                  -

140,922

234,870

(1) These columns show the possible payouts for each named executive officer under the Incentive Plan for 2019 based on the goals set. Additional information is included in the Compensation Discussion and Analysis, and detail regarding actual awards under the Incentive Plan is reported in the Summary Compensation Table.

2020 Stock Appreciation Rights Issuances

Effective June 1, 2020, the executives and officers of Orbital Energy Group, Inc. identified below were issued Stock Appreciation Rights (“SARS”) in lieu of certain cash bonuses. The SARS distributions are as follows:

Executive

SARS

Effective Date

Vesting Period

Exercise Price

William Clough

450,000

June 1, 2020

24-months

$1.00

James O’Neil

187,500

June 1, 2020

24-months

$1.00

Daniel Ford

350,000

June 1, 2020

24-months

$1.00

The number of SARS granted to each of the officers equates to the corresponding dollar amount of a portion of the cash bonus otherwise due them pursuant to their employment agreements.  The SARS are subject to acceleration upon a change in control or termination of the executive’s employment with us in certain circumstances.

The $1.00 SAR exercise price represents approximately a 40% premium over the market price of our common stock as reported on the Nasdaq Stock Market as of May 29, 2020. The issuance of the SARS conserves approximately $1,000,000 of our current cash reserves.  Upon exercise, we are obligated to pay the executive an amount equal to the difference between the average closing price of our common stock, as reported on the Nasdaq Stock Market for the five (5) trading days preceding the exercise date, less the SAR exercise price of $1.00.  Reference is made to the form of the Employee Stock Appreciation Rights Agreement – Cash Settled, attached to Form 8-K, filed with the Commission June 4, 2020, the terms of which are incorporated herein by reference.

 

The employment contract of Nicholas M. Grindstaff, appointed our Chief Financial Officer November 16, 2021, upon involuntary termination or resignation for good reason, entitles Mr. Grindstaff to (i) 2.5 times the sum of his annual base salary and target bonus, paid in a single lump sum cash payment, (ii) up to eighteen (18) months of medical coverage under the Company’s medical plans for Mr. Grindstaff and his spouse, provided, however, that in order to receive such continued coverage, Mr. Grindstaff would be required to pay the applicable premiums directly to the plan provider, and the Company would reimburse Mr. Grindstaff an amount equal to the monthly COBRA premium payment, less applicable tax withholdings, (iii) any amounts earned, accrued or owing, but not yet paid as of the termination date, payable in a lump sum, (iv) all unvested RSU’s, issued to Mr. Grindstaff would immediately vest in full, and be exercisable at any time prior to such instruments stated expiration date, and (v) any deferred past bonuses that have been earned, but not paid shall be payable in a lump sum on or before the sixtieth (60th) day following the termination date.

Outstanding Equity Awards at Fiscal Year End

Outstanding Equity Awards at Fiscal Year-End-End

The following table sets forth the outstanding equity awards at December 31, 2019 for2021, to each of the named executive officers:

 

Name

 

Number of

Securities

Underlying

unexercised

Options (#)

Exercisable

  

Option Exercise

Price ($)

 

Option

Expiration

          

William J. Clough (1)

  5,422   9.00 

10/11/20

Daniel N. Ford (1)

  12,598   9.00 

10/11/20

Matthew M. McKenzie (1)

  15,100   9.00 

10/11/20

Matthew M. McKenzie (1)

  3,300   9.00 

10/11/20

William J. Clough (2)

  19,363   4.50 

04/16/22

William J. Clough (2)

  3,300   4.50 

04/16/22

Daniel N. Ford (2)

  12,598   4.50 

04/16/22

Matthew M. McKenzie (2)

  15,100   4.50 

04/16/22

Matthew M. McKenzie (2)

  3,300   4.50 

04/16/22

William J. Clough (3)

  330,000   6.00 

09/21/22

William J. Clough (4)

  200,000   6.25 

06/24/23

Daniel N. Ford (4)

  100,000   6.25 

06/24/23

Matthew M. McKenzie (4)

  50,000   6.25 

06/24/23

Name

 

Number of

Securities

Underlying

Unexercised

Options (#)

  

Option

Exercise Price

($)

 

Option Expiration

 

Payout Value

of Unexercised

In-the-Money

Options/SARs

at Fiscal Year-

End ($)

 

Daniel N. Ford (1)

  12,598   4.56 

4/16/2022

   

Daniel N. Ford (2)

  100,000   6.25 

6/24/2023

   

William J. Clough (3)

  450,000   1.00 

6/1/2026

  535,500 

Daniel N. Ford (3)

  350,000   1.00 

6/1/2026

  416,500 

James F. O'Neil (3)

  187,500   1.00 

6/1/2026

  223,125 

William J. Clough (4)

  900,000   2.89 

4/23/2024

   

Daniel N. Ford (4)

  745,000   2.89 

4/23/2024

   

James F. O'Neil (4)

  1,600,000   2.89 

4/23/2024

   

 

Footnotes:

 

1.

Effective October 11, 2010,April 16, 2012, Mr. Clough, Mr. Ford and Mr. McKenzie received bonus options to purchase 37,177 (5,422 remaining outstanding), 12,598 and 15,100 common shares respectively, within ten years from date of issuance, at a price of $9.00 per share that vested over 4 years: 25% at year one and thereafter in equal monthly installments. Additionally, effective October 11, 2010, for service as a director of the Company, Mr. McKenzie received an option to purchase 3,300 common shares within ten years from date of issuance at a price of $9.00 per share that vested one year after issuance. Effective September 30, 2019 Mr. McKenzie's employment was terminated with the disposition of the non-power supply electromechanical products group to Back Porch International, Inc.

2.

Effective April 16, 2012, Mr. Clough, Mr. Ford and Mr. McKenzie received bonus options to purchase 37,177 (19,363 remaining outstanding), 12,598, and 15,100 common shares, respectively, within ten years from date of issuance, at a price of $4.56 per share that vested over 4 years: 25% at year one and thereafter in equal monthly installments. Additionally, effective April 16, 2012, for their service as directors of the Company, Mr. Clough and Mr. McKenzie each received an option to purchase 3,300 common shares, within ten years from date of issuance, at a price of $4.56 per share that vested one year after issuance.

 

3.

Effective September 21, 2012, under the terms of his contract extension, Mr. Clough received a bonus option to purchase 330,000 common shares, within ten years from date of issuance, at a price of $6.00 per share that vested in equal monthly installments over 4 years.

4.2.

Effective June 24, 2013, Mr. Clough, Mr. Ford and Mr. McKenzie received bonus options to purchase 200,000, 100,000 and 50,000 common shares respectively, within ten years from date of issuance, at a price of $6.25 per share that vested one third per year over 3 years.

3.

Effective June 1, 2020, Mr. Clough, Mr. Ford and Mr. O'Neil received 450,000, 350,000 and 187,500 cash-settled stock appreciation rights, respectively, within 6 years from the date of issuance, at a price of $1.00 per share that vest in equal monthly installments over 2 years.

4.

Effective April 23, 2021, Mr. Clough, Mr. Ford, and Mr. O'Neil received 900,000, 745,000 and 1,600,000 cash-settled stock appreciation rights, respectively, within 3 years from the date of issuance, at a price of $2.89 per share that vests in equal monthly installments over 3 years.

 

 

Compensation, BonusExchange of Cash Settled Stock Appreciation Rights (SAR) for Restricted Stock Units (RSU)

As of April 13, 2022, the following named executive officers exchanged the cash value of previously issued cash settled SAR’s for RSU’s as summarized below:

NEO

 

SAR's Value

  

RSU's

  

Vested

  

Unvested

 

James F. O'Neil

 $2,122,078.14   1,035,161   373,055   662,106 

William J. Clough

 $1,752,023.83   854,734   457,224   397,510 

Daniel N. Ford (1)

 $1,413,959.64   689,736   362,324   327,412 

(1)Mr. Ford was our former Chief Financial Officer.

The RSU’s were issued at an exchange value of $2.05 per RSU.  One third of the RSU’s vest immediately and Severance Provisions of Employment Arrangements the remainder vest in two equal annual instalments.

On May 14, 2019, we entered into Executive Employment Agreements with William J. Clough, our Chief Executive Officer, President and General Counsel and Daniel N. Ford,

Effective November 16, 2021, Nicholas M. Grindstaff, our Chief Financial Officer, and Chief Operating Officer - Energy Division (collectively,was issued 141,946 fully vested RSUs valued at $650,000 at the “Executives”). Effective October 1, 2019, William Clough stepped down as Chief Executive Officertime of CUI Global and James F. O’Neil was appointed Chief Executive Officer of CUI Global and subsidiaries. Mr. Clough retains his positions as General Counsel and Executive Chairman of the Board of Directors. Effective May 8, 2020, the corporate name, CUI Global, Inc., was changed to Orbital Energy Group, Inc.grant.

Set forth below is a summary of the material terms and provisions of each of these Executive’s Employment Agreements:

William J. CloughDaniel N. Ford

Term

3 Years

3 Years

Base Salary

Yr. 1 - $750,000

Yr. 2 - $800,000

Ys. 3 - $850,000

Yr. 1 - $500,000

Yr. 2 - $550,000

Yr. 3 - $600,000

Future Bonuses

● 75% of Base Salary for

targets and milestones

agreed to by Compensation

Committee and

Executive.

● 25% of Base Salary

discretionary bonus

determined by Compensation

Committee.

● 75% of Base Salary for

targets and milestones

agreed to by Compensation

Committee and

Executive.

● 25% of Base Salary

discretionary bonus

determined by Compensation

Committee.

Severance

Compensation if

terminated without Cause

by Company or Good

Reason by Executive

● 2.5 times Base Salary plus

Target Bonus;

● Any deferred or unpaid past

bonuses;

● Acceleration of any

unvested options or other

equity incentive rights;

● Company may not terminate

Executive without Cause

within one (1) year of a

Change in Control event.

Company agrees to indemnify

Executive for breach of this

undertaking.

● 2.0 times Base Salary plus

Target Bonus;

● Any deferred or unpaid past

bonuses;

● Acceleration of any

unvested options or other

equity incentive rights;

● Company may not terminate

Executive without Cause

within one (1) year of a

Change in Control event.

Company agrees to indemnify

Executive for breach of this

undertaking.

Termination for Cause

No severance benefits.

Forfeit unvested options or

other equity compensation

rights.

No severance benefits.

Forfeit unvested options or

other equity compensation

rights.

Termination due to

Disability

75% of Base Salary for six (6)

months plus COBRA

reimbursement.

75% of Base Salary for six (6)

months plus COBRA

reimbursement.

COBRA Reimbursement

18 Months.

18 Months.

Restrictive Covenant

Term

24 Months.

24 Months.

Payment of Life

Insurance

for Executive's

Beneficiary

Up to $9,999 per Year.

-0-

Relocation

Reimbursement

None.

If Executive is required to

relocate greater than 50 miles

from current place of

employment, then Executive

shall be reimbursed for

certain relocation expenses or

may resign for Good Reason.

James F. O’Neil

Term

3 Years

Base Salary

Yr. 1 - $750,000

Yr. 2 - $800,000

Ys. 3 - $850,000

Future Bonuses

● 75% of Base Salary for

targets and milestones

agreed to by Compensation

Committee and

Executive.

● 25% of Base Salary

discretionary bonus

determined by Compensation

Committee.

Severance

Compensation if

terminated without Cause

by Company or Good

Reason by Executive

● 2.5 times Base Salary plus

Target Bonus;

● Any deferred or unpaid past

bonuses;

● Acceleration of any

unvested options or other

equity incentive rights;

● Company may not terminate

Executive without Cause

within one (1) year of a

Change in Control event.

Company agrees to indemnify

Executive for breach of this

undertaking.

Termination for Cause

No severance benefits.

Forfeit unvested options or

other equity compensation

rights.

Termination due to

Disability

75% of Base Salary for six (6)

months plus COBRA

reimbursement.

COBRA Reimbursement

18 Months.

Restrictive Covenant

Term

24 Months.

Payment of Life

Insurance for Executive's

Beneficiary

Up to $9,999 per Year.

Relocation

Reimbursement

None.

Compensation and Bonus

The previous Equity Incentive Plan approved by the Company’s stockholders, has expired. We are submitting a new Equity Incentive Plan for approval by our stockholders. Until an Equity Incentive Plan is approved by our stockholders, any bonus compensation payable to the Executive shall be in the form of cash. If and when a new Equity Incentive Plan is approved by the Company’s stockholders, the executive shall have the right to have any bonuses paid in the form of restricted stock units or other equity incentive arrangements provided for under the proposed new Equity Incentive Plan. Any issuance of equity-based compensation to the executive shall be consistent with the provisions of Nasdaq Stock Market Listing Rule 5635(c).

InvoluntaryTermination orResignation for Good Reason.

In the event of an involuntary termination of Executive’s employment by the Company for any reason other than cause, death, or disability or Executive's resignation for good reason, Mr. Clough and Mr. O’Neil shall be entitled to 2.5 times the sum of his annual base salary target bonus and Mr. Ford shall be entitled to 2.0 times the sum of his annual base salary target bonus, paid in a single lump sum cash payment, eighteen (18) months medical coverage, and all unvested stock options, issued to Executive shall immediately vest in full.

Change of Control

Each employment agreement contains wording that upon acquisitions, corporate consolidation, transfer of substantially all the corporate assets the surviving or new corporation or the transferee of the Company's assets shall be bound by and shall have the benefit of the provisions of the respective Employment Agreements.

Restrictive Covenants

In consideration of the payments and benefits to be received under each of the Employment Agreements, each executive officer is also a party to restrictive covenants regarding non-competition non-solicitation of customers/clients, non-solicitation of employees, intellectual property ownership of Company, confidentiality and non-disparagement.

 

Director Compensation

 

For 2019,2021, each of our directors received the following compensation pursuant to our director compensation plan:

 

Non-employee directors earned/received annual compensation of $100,000.

 

The $100,000 annual compensation for non-employee directors is issued in the form of $50,000 cash compensation and $50,000 common stock calculated by using the Nasdaq Stock Market closing price per share on the date of issuance.

In addition, the Chairman and member of the Investment Committee received an additional $67,500 and $22,500, respectively, for their services.

At the election of each director, all or any portion of the cash compensation may be converted to stock calculated by using the Nasdaq Stock Market closing price per share on the date of conversion.

The $100,000 annual compensation for non-employee directors is issued in the form of $50,000 cash compensation and $50,000 common stock calculated by using the Nasdaq Stock Market closing price per share on the date of issuance. In addition, the chairman and member of the Investment Committee received $44,500 and $37,500, respectively of additional cash compensation for their services. 

At the election of each director, all or any portion of the cash compensation may be converted to stock purchase options calculated by using the strike price of ten percent (10%) above the Nasdaq Stock Market closing price per share on the date of grant. 

At the election of each director, all or any portion of the cash compensation may be converted to stock calculated by using the Nasdaq Stock Market closing price per share on the date of conversion. 

 

The following table sets forth the compensation of the non-employee directors for the fiscal year ended December 31, 2019:2021:

 

 

Fees

          

Non-

             
 

earned

          

Equity

  

Nonqualified

         
 

or

          

Incentive

  

Deferred

         
 

paid in

  

Stock

  

Option

  

Plan

  

Compensation

  

All Other

     
 

Cash

  

Awards

  

Awards

  

Compensation

  

Earnings

  

Compensation

  

Total

 

Name

 

Fees

earned or

paid in

cash
$

  

Stock

Awards
($)

  

Option

Awards
$

  

Non-Equity

Incentive Plan Compensation
($)

  

Nonqualified

Deferred Compensation Earnings
($)

  

All Othe Compensation

($)

  

Total
($)

  ($)  ($)  ($)  ($)  ($)  ($)  ($) 

C. Stephen Cochennet, Director

  72,503   49,997   -   -   -   -   122,500 

Corey A. Lambrecht, Director

  117,503   49,997   -   -   -   -   167,500 
                            

Paul Addison, Director

 $28,851  $28,842  $  $  $  $  $57,693 
                            

C. Stephen Cochennet, Director (1)

  146,006   159,194               305,200 
                            

Corey A. Lambrecht, Director (2)

  172,006   159,194               331,200 
                            

Sean P. Rooney, Director

  50,003   49,997   -   -   -   -   100,000   75,006   146,694               221,700 
                            

Jerry Sue Thornton, Director

  20,837   20,830               41,667 
                            

Sarah Tucker, Director

  12,501   12,499   -   -   -   -   25,000   87,506   159,194               246,700 
                            

La Forrest Williams, Director

  20,837   20,830               41,667 

 

Footnote:Footnotes:

(1) Ms. Tucker was appointedIncludes $58,500 of fees in addition to regular board of director fees for additional services in connection with the BoardFront Line Power Construction acquisition.

(2) Includes $84,500 of Directors, effective October 1, 2019.fees in addition to regular board of director fees for additional services in connection with the Front Line Power Construction acquisition.

 

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth certain information regarding beneficial ownership of our voting shares as of December 31, 2019,2021, by: (i) each shareholderstockholder known by us to be the beneficial owner of 5% or more of the outstanding voting shares, (ii) each of our directors and executives and (iii) all directors and executive officers as a group. Except as otherwise indicated, we believe that the beneficial owners of the voting shares listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Shares of common stock issuable upon exercise of options and warrants that are currently exercisable or that will become exercisable within 60 days of December 31, 20192021, have been included in the table.

 

No shares of preferred stock are outstanding at the date of this report.

 

Beneficial Interest Table

Name and Address of Beneficial Owner (1)

Number of

Securities

Owned

Percentage of

Shares

Beneficially

Owned (2)

William J. Clough (3)

      693,251

2.40%

James F. O'Neil

      495,212

1.74%

C. Stehen Cochennet (4)

      104,333

*

Daniel N. Ford (5)

      206,000

*

Corey A. Lambrecht (6)

      116,638

*

Sean P. Rooney (7)

      134,465

*

Paul D. White (8)

        50,727

*

Sarah Tucker

        14,044

*

Bleichroeder, LP

   3,700,542

13.04%

   1345 Avenue of the Americas, 47th Floor,

   New York, NY 10105

 

 

Heartland Advisors, Inc.

   1,756,090

6.19%

   789 North Water Street,

   Milwaukee, WI 53202

Officers, Directors, Executives as Group

   1,814,670

6.34%

   

* Less than 1 percent

  

      

Percentages of

 
  

Number of

  

Shares

 
  

Securities

  

Beneficially

 

Name and Address of Beneficial Owner (1)

 

Owned

  

Owned (2)

 

Paul T. Addison (3)

  8,756   *

%

William J. Clough (4)

  319,480   *

%

James F. O'Neil (5)

  1,200,263   1.47

%

C. Stephen Cochennet (6)

  184,667   *

%

Daniel N. Ford (7)

  220,433   *

%

Corey A. Lambrecht (8)

  193,672   *

%

Jerry Sue Thornton (9)

  6,709   *

%

Sarah Tucker (10)

  94,378   *

%

Paul D. White (11)

  50,727   *

%

La Forrest V. Williams (12)

  2,443   *

%

Nicholas Grindstaff (13)

  -   *

%

Kurt A. Johnson, Jr.

        

15502 Bayou Oaks Drive, Danbury, Texas 77534

  4,408,807   5.38

%

Tidal Power Group LLC

        

4211 Chance Lane, Rosharon, Texas 77583

  7,213,211   8.81

%

         

Officers, Directors, Executives as Group

  2,281,528   2.79

%

 

Footnotes:

 

1.

Except as otherwise indicated, the address of each beneficial owner is c/o Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038.

 

2.

Calculated on the basis of 28,383,37381,906,676 shares of common stock issued and outstanding at December 31, 20192021, except that shares of common stock underlying options exercisable within 60 days and issued within 60 days of the date hereof are deemed to be outstanding for purposes of calculating the beneficial ownership of securities of such holder of options and shares. A * denotes less than 1 percent beneficially owned.

 

3.

Mr. Clough’s common stock includes vested options to purchase 558,085 common shares. Addison is a director.

4.

Mr. Clough is a Director, Executive Chairman and General CounselChief Legal Officer of Orbital Energy Group, Inc.

 

4.

Mr. Cochennet was appointed to the board of directors in December 2017.

5.

Mr. Ford’s shares include vested options to purchase 125,196 common shares. Mr. FordO'Neil is thea director, and Chief FinancialExecutive Officer of Orbital Energy Group, Inc.

 

6.

Mr. Lambrecht’s shares include vested options to purchase 16,600 common shares. Mr. LambrechtCochennet is a Director.director.

 

7.

Mr. Rooney’sFord’s shares include vested options to purchase 36,987 common shares. Mr. RooneyFord is a Director.the former Chief Financial Officer of Orbital Energy Group, Inc.

 

8.

Mr. Lambrecht’s shares include vested options to purchase 13,300 common shares. Mr. Lambrecht is a director.

9.

Ms. Thornton is a director.

10.

Ms. Tucker is a director.

11.

Mr. White’s shares include vested options to purchase 7,500 common shares. Mr. White is a Directordirector who is retiring from the board of directors and Presidentwill not stand for re-election as a director.

12.

Mr. Williams is a director.

13.

November 16, 2021, Nicholas M. Grindstaff, our Chief Financial Officer, was issued 141,946 fully vested RSUs valued at $650,000 at the time of Orbital-UK.grant.

 

No shares are held in margin accounts or pledged or otherwise available to a lender as security by executive officers and directors.

 

We relied upon Section 4(a)(2) of the Securities Act of 1933 as the basis for an exemption from registration for the issuance of the above securities.

 

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons owning more than 10% of our common stock to file reports of ownership and reports of changes of ownership with the Securities and Exchange Commission. These reporting persons are required to furnish us with copies of all Section 16(a) forms that they file. We have made all officers and directors aware of their reporting obligations and have appointed an employee to oversee Section 16 compliance for future filings. Our records show that all filings were timely.

Related Party Transactions of Directors and Executive Officers

 

The Board of Directors is responsible for the review and approval of all related party transactions. WithAlthough the Board does not have written policies and procedures with respect to the review of related party transactions, we intend that any such transactions will be reviewed by the Board of Directors or one of its committees, which will consider all relevant facts and circumstances and will consider, among other factors:

the material terms of the transaction;

the nature of the relationship between the Company and the related party;

the significance of the transaction to the Company; and

the material terms of the transaction;

the nature of the relationship between the Company and the related party;

the significance of the transaction to the Company; and

whether or not the transaction would be likely to impair (or create the appearance of impairing) the judgment of a director or executive officer to act in the best interest of the Company.

Our Executive Chairman, William J. Clough’s son, Nicholas J. Clough, serves as President at Orbital Gas Systems, North America, Inc., a wholly owned subsidiary of the Company. Additional Information on Nicholas Clough’s compensation is included in Note 11

Related Party Transactions, toparty” includes directors, nominees, executive officers, holders of 5% or more of any class of the Consolidated Financial Statements under Part II, Item 8, ‘‘Financial Statementscompany’s voting securities, and Supplementary Data’’any “immediate family member” of our Form 10-K filed March 30, 2020.any of these persons.

 

Except as set forth herein, no related party of the Company, including, but not limited to, any director, officer, nominee for director, immediate family member of a director or officer, immediate family member of any nominee for director, security holder that beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to its outstanding shares, or immediate family member of any such security holder, since the beginning of fiscal year 2019,2021, has any material interest, direct or indirect, in any transaction or in any presently proposed transaction with the Company where the amount involved exceeds $120,000 which has or will materially affect the Company.

 

IEDChief Legal Officer and Other AffiliatesExecutive Chairman of the Board of Directors, William J. Clough’s son, Nicholas J. Clough, serves as Operations Director for Orbital Energy Group. Additional Information on Nicholas Clough’s compensation is included in Note 11 Related MattersParty Transactions, to the Consolidated Financial Statements under Part II, Item 8, ‘‘Financial Statements and Supplementary Data’’ of our Form 10-K filed with the SEC on March 31, 2022.

Effective

On November 17, 2021, the Company entered into two unsecured promissory notes, one with Kurt A. Johnson, Jr., for $34,256,000 and the second for $51,384,000 with Tidal Power Group LLC. These promissory notes bear an interest rate of 6% per annum and were due on May 17, 2022. On December 10, 2021, Kurt A. Johnson, Jr. received an additional unsecured promissory note in the principal sum of $1,090,000 also with a 6% per annum interest rate in exchange for a reduction of shares issued to Kurt of 400,000.

In March 2022, the Company reached an agreement with Kurt Johnson and Tidal Power to extend the maturity dates for $52 million of promissory notes from the original maturity dated of May 16, 20082022 until May 31, 2023. The remaining balance of $35 million remained due in May 2022. The Company also agreed to reduce the restriction period under the Tidal lockup letter from two years to one year and to the extent that if the value of the shares previously issued to Tidal Power were less than $4.00 per share upon expiration of the restriction period, the Company formed a wholly owned subsidiary intohas agreed to pay additional consideration to Tidal Power so that the value of Tidal Power’s shares are equal to no less than $28,852,844. For the Johnson lockup letter, the Company agreed to pay additional consideration to Mr. Johnson upon expiration of the restriction period so that the value of his stock consideration is no less than $17,635,228, which CUI Inc.,is equal to $4.00 per common share. Any shortfall would be made up by issuing Mr. Johnson additional common shares.

On April 29, 2022, the Company reached an Oregon corporation, merged all its assets. The funding for this acquisition was provided by a bank note, a seller’s note and a convertible seller’s note. Matthew McKenzie, former COO and Daniel Ford, CFO each were partial owners in CUI Inc. prior to the acquisition and they each, along with James McKenzie are stockholders in International Electronic Devices, Inc. (IED). Effective September 30, 2019 Mr. McKenzie's employment was terminatedagreement with the dispositionFront Line Power Construction, LLC Sellers to pay $20 million of the non-power supply electromechanical products group$35 million due May 16, 2022 by May 6, 2022 and to Back Porch International, Inc. The convertible seller’s note was satisfied in 2010 and the bank note was satisfied in 2012. Effective September 30, 2019,extend the remaining seller's note was satisfied$15 million to a due date of December 31, 2022. The Company made the $20 million payment.

The Company’s Front Line Power Construction, LLC subsidiary has an operating lease for a facility with Danbury Property Company, LLC in full.Rosharon, Texas with a based rental of $10,500 per month. Danbury Property Company, LLC is owned by Kurt Johnson and Tidal Power, which are greater than 5%shareholders of Orbital Energy Group, Inc.

The Company’s Front Line Construction, LLC subsidiary has an operating lease for a facility with Manvel Property Management in Rosharon, Texas with a base rent of $4,000 per month. Tidal Power, a greater than 5% shareholder of Orbital Energy Group, Inc. has an ownership interest in Manvel Property Management.

 

 

Description of Orbital Energy Group’s Capital Stock

Description of Securities

The Company’s Common Stock is traded on The Nasdaq Stock Market under the trading symbol ‘‘OEG.’’ The Company currentlyFront Line Power Construction, LLC subsidiary has authorized 325,000,000 common shares, par value $0.001 per share, and as of December 31, 2019, the Company’s issued and outstanding shares consisted of 30,420,683 shares of common stock of which 28,003,070 shares are freely tradable without restriction or limitation under the Securities Act.

The holders of Common Stock are entitled to one vote per share and do not have cumulative voting rights. Holders of the Company’s Common Stock do not have any pre-emptive or other rights to subscribe for or purchase additional shares of capital stock and no conversion rights, redemption or sinking-fund provisions.

Lack of Compliance with Nasdaq Listing Rules

On July 20, 2020, Nasdaq notified the Company that the Nasdaq Listing Rules require listed securities to maintain a minimum bid price of $1 per share. Based upon the closing bid price for the last 30 consecutive business days, the Company failed to meet this requirement. However, the Rules provide the Company a compliance period of 180 calendar days in which to regain compliance. If at any time during this 180-day period the closing bid price of the Company’s security is at least $1an operating lease for a minimumfacility with Oak Property Group in Rosharon, Texas with a base rent of ten consecutive business days, Nasdaq will provide written confirmation of compliance and this matter will be closed.

Price Range of Our Common Stock

The Company's common stock is traded on The Nasdaq Stock Market under the trading symbol "OEG". The following table sets forth the high and low sales prices of our common stock on The Nasdaq Stock Market during each quarter of the two most recently completed years and the first six months of 2019.

 

 

High

  

Low

 

2020

        

First Quarter

 $1.31  $0.55 

Second Quarter

  0.90   0.61 

2019

        

First Quarter

 $1.79  $1.18 

Second Quarter

  1.31   0.82 

Third Quarter

  0.91   0.53 

Fourth Quarter

  1.19   0.68 

2018

        

First Quarter

 $3.25  $2.50 

Second Quarter

  3.16   2.56 

Third Quarter

  3.00   2.15 

Fourth Quarter

  2.25   1.17 

On August 31, 2020, the last reported sale price of our common stock on The Nasdaq Stock Market was $0.5373$2,000 per share. As of August 31, 2020, we had more than 3,000 beneficial holders of our common stock and more than 2,300 stockholders of record. The actual number of stockholders ismonth. Tidal Power, a greater than this number5% shareholder of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.

Stock Performance Graph

The following graph compares the performance of our common stock to the performance of the NASDAQ Composite Index and the Russell 2000 Index. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity markets. The comparisons in the chart below are provided in response to SEC disclosure requirements and are not intended to forecast or be indicative of future performance of our common stock. We issued 7,392,856 shares in October 2017, which increased the total number of shares outstanding by about 35% and this had a dilutive effect on the share price as reflected in the following graph.

Period Ending

 

Index

 

12/31/14*

  

12/31/2015

  

12/31/2016

  

12/31/2017

  

12/31/2018

  

12/31/2019

 

Orbital Energy Group

 $100.00  $94.50  $93.02  $36.91  $16.51  $14.77 

Nasdaq Composite

  100.00   106.96   116.45   150.96   146.67   200.49 

Russell 2000

  100.00   95.59   115.95   132.94   118.30   148.49 

* Assumed $100 invested on 12/31/2014 in stock or index, including reinvestment of dividends. Fiscal year ended December 31.

Source: S&P Global Market Intelligence

©2020

Dividend Policy

The Company has never paid cash dividends on its Common Stock and the Company does not expect to pay dividends in the foreseeable future. Our ability to declare dividends is restricted by bank covenants.

We currently expect to retain future earnings to finance the growth and development of our business. The timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flows; our general financial condition and future prospects; our capital requirements and surplus; contractual restrictions; the amount of distributions, if any, received by us from our subsidiaries; and other factors deemed relevant by our board of directors. Any future dividends on our common shares would be declared by and subject to the discretion of our board of directors.

Common Stock Reserved for Future Issuances

Set forth below is a summary of the outstanding securities, transactions and agreements, which relate to 849,635 shares of common stock the Company is required to reserve for potential future issuances.

As of December 31, 2019, there were reserved for issuance an aggregate of 849,635 shares of common stock for options outstanding under the Company’s 2008 Equity Incentive Plan and the Company’s 2009 Equity Incentive Plan (Executive).

Other than as described herein, as of December 31, 2019, there are currently no plans, arrangements, commitments or understandings for the issuance of additional shares of Common Stock.

Shares Eligible for Future Sale

As of December 31, 2019, we had outstanding 28,383,373 shares of Common Stock. Of these shares, 28,246,147 shares are freely tradable without restriction or limitation under the Securities Act.

The 137,226 shares of Common Stock held by existing shareholders as of December 31, 2019 that are ‘‘restricted’’ within the meaning of Rule 144 adopted under the Securities Act (the ‘‘Restricted Shares’’), may not be sold unless they are registered under the Securities Act or sold pursuant to an exemption from registration, such as the exemption provided by Rule 144 promulgated under the Securities Act. The Restricted Shares were issued and sold by us in private transactions in reliance upon exemptions from registration under the Securities Act.

Issuer Purchases of Equity Securities

On December 3, 2019, the Board of Directors of the Company authorized and approved a two-year share repurchase program for up to $5 million of the then outstanding shares of the Company's common stock. The following table provides information regarding repurchases of the Company's common stock during the quarter ended December 31, 2019:

Period

 

Total

Number

of Shares

Purchased

  

Average

Price

Paid Per

Share

  

Total Number

of Shres as

Part

of Public

Announced

Plans

or Programs

  

Maximum Dollar Value of Shares

that May Yet Be Purchased

Under the Plans

or Programs

 

December 1, 2019 through December 31, 2019

  353,063  $1.17   353,063  $4,586,678 

Total

  353,063  $1.17   353,063  $4,586,678 

Changes in Orbital Energy Group’s Certifying Accountant.

Effective June 20, 2019, Perkins & Company, P.C. (Perkins) was dismissed from the client-auditor relationship by Orbital Energy Group, Inc. (“has an ownership interest in Oak Property Group.

Kurt Johnson, has an employment contract with the Company”). The terminationCompany’s Front Line Power Construction, LLC subsidiary with a base compensation ranging up to $250,000 per year.

Director and Executive Officer Compensation

Please see "Summary Compensation Table" and "Director Compensation" for information regarding compensation of directors and executive officers.

Employment Agreements

We have entered into employment agreements with our executive officers. For more information regarding the agreements, see " Summary Compensation Table” and the footnote narrative thereto and “Outstanding Equity Awards at Fiscal Year End.”

Director and Officer Indemnification Agreements

We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us to indemnify each director and executive officer to the fullest extent permitted by Colorado law, including indemnification of expenses such as attorneys' fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the relationship with the independent registered accounting firm was approved by the Audit Committee and ratified by the Orbital Energy Group of Directors.person's services as a director or executive officer.

 

Perkins' reports on the Company’s consolidated balance sheets as of and for the years ended December 31, 2018 and 2017 and related consolidated statements of operations, comprehensive income and (loss), changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the "consolidated financial statements") did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to the uncertainty, or audit scope. As discussed in Note 2 to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K filed with the Commission on March 30, 2020, the Company changed its method for the recognition, measurement, presentation and disclosure of revenue in the year ended December 31, 2018 due to the adoption of ASC 606, Revenue from Contracts with Customers. Perkins' report on the audit of the Company’s internal control over financial reporting as of December 31, 2018 expressed an unqualified opinion on the Company’s internal control over financial reporting.

In connection with the audit of Orbital Energy Group, Inc., during the three fiscal years ended December 31, 2018, 2017 and 2016 and the subsequent period through June 20, 2019, there were no (1) disagreements between the Company and Perkins on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement or (2) reportable events as set forth in Item 304(a)(1)(iv) of Regulation S-K. The Company has provided Perkins with a copy of the Form 8-K that was filed with the Commission on June 24, 2019, and requested that Perkins provide the Company with a letter addressed to the Securities and Exchange Commission stating whether or not Perkins agrees with the statements related to them made by the Company in said Form 8-K. A copy of such letter from Perkins & Company, PC is attached as Exhibit 16.1 to said Form 8-K and is incorporated by reference herein.

Effective June 20, 2019, the Audit Committee appointed Grant Thornton LLP, as its independent registered public accounting firm to audit Orbital Energy Group, Inc. This proposal was ratified by the Orbital Energy Group Board of Directors and fulfills the requirement that our independent registered public accounting firm have appropriate international experience and capabilities to serve our existing and future operations.

During the two most recent fiscal years and any subsequent interim period prior to the June 20, 2019 appointment of Grant Thornton LLP as our independent registered public accounting firm, neither the Company, nor anyone on its behalf, consulted Grant Thornton LLP regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements and neither a written report was provided to the Company nor oral advice was provided that Grant Thornton LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue or any matter that was either the subject of a disagreement or a reportable event.

Principal Accountant Billings

Fees or controlled billings for services billed by the Company’s principal accountant, Perkins & Company, P.C. through June 20, 2019 and Grant Thornton LLP from June 20, 2019 through December 31, 2019, were as follows:

  For the Year Ended December 31, 
(In thousands) 2019  2018 

Audit fees (1)

 $738   614 

Audit related fees

  125   127 

Tax fees and other fees (2)

  30   83 

Total Fees

 $893   824 

(1)

Fees and expenses for professional services rendered in connection with the audit of the Company's financial statements and internal control over financial reporting and the reviews of the financial statements included in each of the Company's quarterly reports on Form 10-Q.

(2)

Tax fees are lower in 2019 as a result of the Company's tax returns prepared in 2019 not being prepared by the principal accountant.

In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, the Audit Committee has adopted an informal approval policy that it believes will result in an effective and efficient procedure to pre-approve services performed by the independent registered public accounting firm.

Representatives of Grant Thornton LLP and Perkins & Company P.C. are expected to be available by teleconference at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

Legal Proceedings

No director, officer or affiliate of Orbital Energy Group, Inc., any owner of record or beneficially of more than five percent of any class of voting securities of Orbital Energy Group, Inc. or any associate of any such director, officer, affiliate of Orbital Energy Group, Inc. or security holder is a party adverse to Orbital Energy Group, Inc. or any of its subsidiaries or has a material interest adverse to Orbital Energy Group, Inc. or any of its subsidiaries.

 

Principal Accountant Fees and Services

Fees or controlled billings for services billed by the Company’s principal accountant, Grant Thornton LLP, were as follows:

  

For the Years Ended December 31,

 

(In thousands)

 

2021

  

2020

 

Audit fees (1)

 $1,064  $725 

Tax fees and other fees (2)

  242   106 

Total Fees

 $1,306  $831 

(1)

Includes fees for audit of the Company's consolidated financial statements, review of the related quarterly financial statements, and services that are normally provided by our independent registered public accounting firm in connection with the statutory and regulatory filings, including reviews of documents filed with the SEC.

(2)

Includes fees for tax planning and tax compliance/preparation fees for professional services rendered by our independent registered public accounting firm to certain subsidiaries of the Company.

In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, the Audit Committee has adopted an informal approval policy that it believes will result in an effective and efficient procedure to pre-approve services performed by the independent registered public accounting firm.

Representatives of Grant Thornton LLP are expected to be available by teleconference at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

Expenses of Issuance and Distribution

The following table sets forth an estimate of the various expenses, which will be incurred in connection with the issuance and distribution of this Proxy Statement. Orbital Energy Groupproxy statement. OEG will be responsible for these expenses:

 

Printing and Distribution Expenses

 $3,000  $10,000 

Legal Fees and Expenses

  20,000   40,000 

Accounting Fees and Expenses

  10,000   25,000 

Miscellaneous expenses

  2,000   5,000 

TOTAL

 $35,000 

Total

 $70,000 

                                                       

Where You Can Find Additional Information

The Company will provide to each person to whom a Proxy Statementproxy statement is delivered:

a copy of any or all the information that has been incorporated by reference in the Proxy Statement,proxy statement, but not delivered with the Proxy Statement;proxy statement;

we will provide this information upon written or oral request;

we will provide this information at no cost to the requester.

 

Contact us at: Orbital Gas Systems, North America, Inc., 1924 Aldine Western, Houston, Texas 77038; phone us at (832) 467-1420;467‑1420; email us at Investors@OrbitalEnergyGroup.com or view copies online at www.OrbitalEnergyGroup.com.

 

You may read and copy all or any portion of the Proxy Statementproxy statement or any other information, which we filed at the SEC's public reference rooms in Washington, D.C., New York City and Chicago, Illinois. The address for the SEC's public reference room in Washington, D.C. is U.S. Securities and Exchange Commission, 100 "F" Street, N.E., Washington, DC 20549. You may request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our SEC filings are also available to you free of charge at the SEC's web site at http://www.sec.gov and our Company website at www.OrbitalEnergyGroup.com.

 

 

Shareholder Proposals for the 20212023 Annual Meeting of Stockholders

Under the Security and Exchange Commission’s proxy rules, shareholder proposals that meet certain conditions may be included in our Proxy Statementproxy statement and form of proxy for a particular annual meeting. Stockholders may present proper proposals for inclusion in our Proxy Statementproxy statement and for consideration at the next annual meeting of stockholders by submitting their proposals in writing to Orbital Energy Group’s Corporate Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our Proxy Statementproxy statement for our 20212023 Annual Meeting of Stockholders, the Corporate Secretary of Orbital Energy Group must receive the written proposal at our principal executive offices no later than June 1, 2021;May 27, 2023; provided, however, that in the event that we hold our 20212023 Annual Meeting of stockholders more than 3060 days before or after the one-year anniversary date of the 20202022 Annual Meeting, we will disclose the new deadline by which stockholders proposals must be received in a Form 8-K or under Item 5 of our earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably calculated to inform stockholders. In addition, stockholder proposals must otherwise comply with the requirements of our bylaws and Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:

 

Orbital Energy Group Global, Inc.
Attn: Corporate Secretary
1924 Aldine Western
Houston, Texas 77038

Orbital Energy Group Global, Inc.

Attn: Corporate Secretary

1924 Aldine Western

Houston, Texas 77038

 

Our receipt of any such proposal from a qualified shareholder in a timely manner will not guarantee its inclusion in our proxy materials or its presentation at the 20212023 Annual Meeting because there are other requirements in the proxy rules.rules and our bylaws.

 

Annual Report

 

A COPY OF OUR ANNUAL REPORT TO STOCKHOLDERS WHICH INCLUDES OUR ANNUAL REPORT ON FORM 10-K, AND10-K/A, OUR MOST RECENT QUARTERLY FORM 10-Q AND THIS PROXY STATEMENT ARE AVAILABLE TO YOU ON THE INTERNET OR, UPON YOUR REQUEST, WILL BE PROMPTLY MAILED TO YOU, PROVIDED YOU ARE A STOCKHOLDER ENTITLED TO VOTE AT THE ANNUAL MEETING. THE NOTICE, WHICH WAS MAILED TO YOU, INSTRUCTS YOU AS TO HOW YOU MAY ACCESS AND REVIEW ALL OF THE PROXY MATERIALS ON THE INTERNET. IF YOU WOULD LIKE TO RECEIVE A PAPER OR EMAIL COPY OF OUR PROXY MATERIALS, YOU SHOULD FOLLOW THE INSTRUCTIONS FOR REQUESTING SUCH MATERIALS IN THE NOTICE.

By Order of the Board of Directors

Deborah Moen,

Corporate Secretary

Documents Incorporated by Reference

The SEC allows us to incorporate by reference into this Proxy Statement the information that we file with the SEC in other documents. This means that we may disclose important information to you by referring to other documents that contain that information. The information may include documents filed after the date of this Proxy Statement which update and supersede the information you read in this Proxy Statement. We incorporate by reference the following documents listed below, except to the extent information in those documents is different from the information contained in this Proxy Statement, and all future documents filed with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act. The Company filed with the Commission:

Our annual report on Form 10-K for the year ended December 31, 2019, filed with the Commission March 30, 2020;

Our current reports on Form 8-K filed with the Commission on April 6, 2020, April 27, 2020, May 4, 2020, May 8, 2020, June 4, 2020, June 16, 2020;

Our quarterly report on Form 10-Q for the second quarter of 2020, filed with the Commission on August 18, 2020;

Our Form S-3 filed with the Commission July 17, 2020.

Prospectus filed with the Commission on September 3, 2020, pursuant to Rule 424(b)(2).

Exhibits

Annex A - Orbital Energy Group 2020 Incentive Award Plan.

 

Proxy Solicited on Behalf of the

Board of Directors

for the Annual Shareholder Meeting of the

Orbital Energy Group Global, Inc. Stockholders

The undersigned, revoking all previous proxies, appoints Deborah Moen, Corporate Secretary, proxy of the undersigned, with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Orbital Energy Group, Inc., Inc. to be held at 9:00 am CST on Tuesday, December 8, 2020, at Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038 and for any adjournments and to vote all shares of Voting Stock of the Company, which the undersigned is entitled to vote on all matters coming before said meeting.

[X]     Please mark your votes with an “X” as in this example.

PROPOSAL I

Election of Directors

The board of directors recommends a vote FOR the following directors:

Nominee: William J. Clough

 [  ]

FOR

 [  ]

WITHHOLD

Nominee: James F. O’Neil III

 [  ]

FOR

 [  ]

WITHHOLD

Nominee: C. Stephen Cochennet

 [  ]

FOR

 [  ]

WITHHOLD

Nominee: Sean P. Rooney

 [  ]

FOR

 [  ]

WITHHOLD

Nominee: Paul D. White

 [  ]

FOR

 [  ]

WITHHOLD

Nominee: Corey A. Lambrecht,

 [  ]

FOR

 [  ]

WITHHOLD

Nominee: Sarah Tucker

 [  ]

FOR

 [  ]

WITHHOLD

PROPOSAL II

Ratification of the Appointment of

Grant Thornton LLP as the Company’sIndependent Registered Public Accounting Firm

for theYear Ending December 31, 2020

The board of directors recommends a vote FOR ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020.

[  ]  FOR

[  ] AGAINST

[  ] ABSTAIN

 

PROPOSAL III

Advisory Approval of the Company’sAppendixExecutive Compensation

(Say-on-Pay)

 

The board of directors recommends a vote FOR the advisory approval of the Company’s executive compensation (Say-on-Pay).

[  ]  FOR[  ] AGAINST[  ]  ABSTAIN

PROPOSAL IV

74

 

Approval of the Annex A (Orbital Energy Group 2020 Incentive Award Plan

The Board of Directors recommends a vote “FOR” adoption of theExcerpt from Orbital Energy Group 2020 Incentive Award Plan Proposal.

[  ]  FOR[  ] AGAINST[  ] ABSTAIN

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS TO ELECT THE NOMINEE DIRECTORS, RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITOR FOR THE YEAR ENDING DECEMBER 31, 2020, ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION (SAY-ON-PAY)AND FOR THE ORBITAL ENERGY GROUP 2020 INCENTIVE AWARD PLAN.)

 

EXCERPT from

Date

2020

Signature

Signature of joint holder, if any

Please sign exactly as your name appears on your stock certificate or account. Executors, administrators, trustees, etc. should give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer. If a partnership, please sign in partnership name by authorized person.

Annex A:

Orbital Energy Group 2020 Incentive Award Plan.

ORBITAL ENERGY GROUP

2020 INCENTIVE AWARD PLAN

ARTICLE I.

PURPOSE

The Plan’s purpose is to enhance the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities. Capitalized terms used in the Plan are defined in Article XI.

ARTICLE II.

ELIGIBILITY

Service Providers are eligible to be granted Awards under the Plan, subject to the limitations described herein.

ARTICLE III.

ADMINISTRATION AND DELEGATION

3.1       Administration. The Plan is administered by the Administrator. The Administrator has authority to determine which Service Providers receive Awards, grant Awards and set Award terms and conditions, subject to the conditions and limitations in the Plan. The Administrator also has the authority to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreements and to adopt, amend and repeal Plan administrative rules, guidelines and practices as it deems advisable. The Administrator may correct defects and ambiguities, supply omissions and reconcile inconsistencies in the Plan or any Award as it deems necessary or appropriate to administer the Plan and any Awards. The Administrator’s determinations under the Plan will be final and binding on all persons having or claiming any interest in the Plan or any Award.

3.2       Appointment of Committees. To the extent Applicable Laws permit, the Board may delegate any or all of its powers under the Plan to one or more Committees or officers of the Company or any of its Subsidiaries. The Board may abolish any Committee authority under the Plan or re-vest in itself any previously delegated authority at any time.

ARTICLE IV.

STOCK AVAILABLE FOR AWARDS

4.1       Number of Shares. Subject to adjustment under Article VIII and the terms of this Article IV, Awards may be made under the Plan covering up to the Overall Share Limit. No Prior Plan Awards may be recycled into this Plan. Prior Plan Awards will remain subject to the terms of the applicable Prior Plan. Shares issued under the Plan may consist of authorized, but unissued Shares, Shares purchased on the open market or treasury Shares.

4.2       Share Recycling. If all or any part of an Award expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will not become or again be available for Award grants under the Plan. Further, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award and/or to satisfy any applicable tax withholding obligation (including Shares retained by the Company from the Award being exercised or purchased and/or creating the tax obligation) will not become or again be available for Award grants under the Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not count against the Overall Share Limit.

4.3       Incentive Stock Option Limitations. Subject to paragraph 4.4 below, no Shares may be issued pursuant to the exercise of Incentive Stock Options in excess of the Overall Share Limit.

4.4       Substitute Awards. In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Administrator may grant Awards in substitution for any Options or other stock or stock-based awards granted before such merger or consolidation by such entity or its affiliate. Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards will not count against the Overall Share Limit (nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided above), except that Shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or combination.

4.5       Non-Employee Director Compensation. Notwithstanding any provision to the contrary in the Plan, the Administrator may establish compensation for non-employee Directors from time to time, subject to the limitations in the Plan. The Administrator will from time to time determine the terms, conditions and amounts of all such non-employee Director compensation in its discretion and pursuant to the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time, provided that the sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of Awards granted to a non-employee Director as compensation for services as a non-employee Director during any fiscal year of the Company may not exceed $250,000 in the fiscal year of a non-employee Director’s initial service as a non-employee Director. The Administrator may make exceptions to this limit for individual  non-employee Directors in extraordinary circumstances, as the Administrator may determine in its discretion, provided that the non-employee Director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving non-employee Directors.

ARTICLE V.

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

5.1       General. The Administrator may grant Options or Stock Appreciation Rights to Service Providers subject to the limitations in the Plan, including any limitations in the Plan that apply to Incentive Stock Options. The Administrator will determine the number of Shares covered by each Option and Stock Appreciation Right, the exercise price of each Option and Stock Appreciation Right and the conditions and limitations applicable to the exercise of each Option and Stock Appreciation Right. A Stock Appreciation Right will entitle the Participant (or other person entitled to exercise the Stock Appreciation Right) to receive from the Company upon exercise of the exercisable portion of the Stock Appreciation Right an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the exercise price per Share of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose and payable in cash, Shares valued at Fair Market Value or a combination of the two as the Administrator may determine or provide in the Award Agreement.

5.2       Exercise Price. The Administrator will establish each Option’s and Stock Appreciation Right’s exercise price and specify the exercise price in the Award Agreement. The exercise price will not be less than 100% of the Fair Market Value on the grant date of the Option or Stock Appreciation Right.

5.3       Duration. Each Option or Stock Appreciation Right will be exercisable at such times and as specified in the Award Agreement, provided that the term of an Option or Stock Appreciation Right will not exceed five (5) years. Notwithstanding the foregoing and unless determined otherwise by the Company, in the event that on the last business day of the term of an Option or Stock Appreciation Right (other than an Incentive Stock Option) (i) the exercise of the Option or Stock Appreciation Right is prohibited by Applicable Law, as determined by the Company, or (ii) Shares may not be purchased or sold by the applicable Participant due to any Company insider trading policy (including blackout periods) or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Option or Stock Appreciation Right shall be extended until the date that is thirty (30) days after the end of the legal prohibition, black-out period or lock-up agreement, as determined by the Company; provided, however, in no event shall the extension last beyond the five-(5)-year term of the applicable Option or Stock Appreciation Right. Notwithstanding the foregoing, if the Participant, prior to the end of the term of an Option or Stock Appreciation Right, violates the non-competition, non-solicitation, confidentiality or other similar restrictive covenant provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company or any of its Subsidiaries, the right of the Participant and the Participant’s transferees to exercise any Option or Stock Appreciation Right issued to the Participant shall terminate immediately upon such violation, unless the Company otherwise determines. In addition, if, prior to the end of the term of an Option or Stock Appreciation Right, the Participant is given notice by the Company or any of its Subsidiaries of the Participant’s Termination of Service by the Company or any of its Subsidiaries for Cause, and the effective date of such Termination of Service is subsequent to the date of the delivery of such notice, the right of the Participant and the Participant’s transferees to exercise any Option or Stock Appreciation Right issued to the Participant shall be suspended from the time of the delivery of such notice until the earlier of (i) such time as it is determined or otherwise agreed that the Participant’s service as a Service Provider will not be terminated for Cause as provided in such notice or (ii) the effective date of the Participant’s Termination of Service by the Company or any of its Subsidiaries for Cause (in which case the right of the Participant and the Participant’s transferees to exercise any Option or Stock Appreciation Right issued to the Participant will terminate immediately upon the effective date of such Termination of Service).

5.4       Exercise. Options and Stock Appreciation Rights may be exercised by delivering to the Company a written notice of exercise, in a form the Administrator approves (which may be electronic), signed by the person authorized to exercise the Option or Stock Appreciation Right, together with, as applicable, payment in full (i) as specified in Section 5.5 for the number of Shares for which the Award is exercised and (ii) as specified in Section 9.5 for any applicable taxes. Unless the Administrator otherwise determines, an Option or Stock Appreciation Right may not be exercised for a fraction of a Share.

5.5       Payment Upon Exercise. Subject to Section 10.8, any Company insider trading policy (including blackout periods) and Applicable Laws, the exercise price of an Option must be paid by:

(a)

cash, wire transfer of immediately available funds or by check payable to the order of the Company, provided that the Company may limit the use of one of the foregoing payment forms if one or more of the payment forms below is permitted;

(b)

if there is a public market for Shares at the time of exercise, unless the Company otherwise determines, (A) delivery (including electronically or telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to pay the exercise price, or (B) the Participant’s delivery to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to pay the exercise price; provided that such amount is paid to the Company at such time as may be required by the Administrator;

(c)

to the extent permitted by the Administrator, delivery (either by actual delivery or attestation) of Shares owned by the Participant valued at their Fair Market Value;

(d)

to the extent permitted by the Administrator, surrendering Shares then issuable upon the Option’s exercise valued at their Fair Market Value on the exercise date;

(e)

to the extent permitted by the Company, any combination of the above payment forms approved by the Administrator.

ARTICLE VI.

RESTRICTED STOCK; RESTRICTED STOCK UNITS

6.1       General. The Administrator may grant Restricted Stock, or the right to purchase Restricted Stock, to any Service Provider, subject to the Company’s right to repurchase all or part of such Shares at their issue price or other stated or formula price from the Participant (or to require forfeiture of such Shares) if conditions the Administrator specifies in the Award Agreement are not satisfied before the end of the applicable restriction period or periods that the Administrator establishes for such Award. In addition, the Administrator may grant to Service Providers Restricted Stock Units, which may be subject to vesting and forfeiture conditions during the applicable restriction period or periods, as set forth in an Award Agreement and subject to paragraph 9.6 hereof. The Administrator will determine and set forth in the Award Agreement the terms and conditions for each Restricted Stock and Restricted Stock Unit Award, subject to the conditions and limitations contained in the Plan.

6.2       Restricted Stock.

(a) Dividends. Participants holding vested Shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such Shares, unless the Administrator provides otherwise in the Award Agreement. In addition, unless the Administrator provides otherwise, if any dividends or distributions are paid in Shares, or consist of a dividend or distribution to holders of Common Stock of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

(b) Stock Certificates. The Company may require that the Participant deposit in escrow with the Company (or its designee) any stock certificates issued in respect of Shares of Restricted Stock, together with a stock power endorsed in blank.

6.3       Restricted Stock Units.

(a)

Settlement. The Administrator may provide that settlement of Restricted Stock Units will occur upon or as soon as reasonably practicable after the Restricted Stock Units vest or will instead be deferred, on a mandatory basis or at the Participant’s election, in a manner intended to comply with Section 409A.

(b)

Stockholder Rights. A Participant will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.

(c)

Dividend Equivalents. If the Administrator provides, a grant of Restricted Stock Units may provide a Participant with the right to receive Dividend Equivalents subject to paragraph (b) above. Dividend Equivalents may be paid currently or credited to an account for the Participant, settled in cash or Shares and subject to the same restrictions on transferability and forfeitability as the Restricted Stock Units with respect to which the Dividend Equivalents are granted and subject to other terms and conditions as set forth in the Award Agreement.

ARTICLE VII.

OTHER STOCK OR CASH BASED AWARDS

Other Stock or Cash Based Awards may be granted to Participants, including Awards entitling Participants to receive Shares to be delivered in the future and including annual or other periodic or long-term cash bonus awards (whether based on specified Performance Criteria or otherwise), in each case subject to any conditions and limitations in the Plan. Such Other Stock or Cash Based Awards will also be available as a payment form in the settlement of other Awards, as standalone payments and as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock or Cash Based Awards may be paid in Shares, cash or other property, as the Administrator determines. Subject to the provisions of the Plan, the Administrator will determine the terms and conditions of each Other Stock or Cash Based Award, including any purchase price, performance goal (which may be based on the Performance Criteria), transfer restrictions, and vesting conditions, which will be set forth in the applicable Award Agreement, subject to paragraph 9.6 hereof.

ARTICLE VIII.

ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS

8.1       Equity Restructuring. In connection with any Equity Restructuring, notwithstanding anything to the contrary in this Article VIII, the Administrator will equitably adjust each outstanding Award as it deems appropriate to reflect the Equity Restructuring, which may include adjusting the number and type of securities subject to each outstanding Award and/or the Award’s exercise price or grant price (if applicable), granting new Awards to Participants, and making a cash payment to Participants. The adjustments provided under this Section 8.1 will be nondiscretionary and final and binding on the affected Participant and the Company; provided that the Administrator will determine whether an adjustment is equitable.

8.2       Change in Control - Impact of Event

Notwithstanding any provision of the Plan to the contrary, in the event of a Change in Control, the provisions of this Section 8.2 shall apply except to the extent an Award Agreement provides for a different treatment (in which case the Award Agreement shall govern and this Section 8.2 shall not be applicable):

(a)

If and to the extent that outstanding awards under the Plan: (A) are assumed by the Successor Entity (or an affiliate of the successor) or continued or (B) are replaced with equity awards that preserve the existing value of the awards at the time of the Change in Control and provide for subsequent payout in accordance with a vesting schedule and Performance Criteria, as applicable, that are the same or more favorable to the Participants than the vesting schedule and Performance Criteria applicable to the awards, then all such awards or such substitutes for them shall remain outstanding and be governed by their respective terms and the provisions of the Plan subject to Section 8.2(e).

(b)

If and to the extent that outstanding awards under the Plan are not assumed, continued, or replaced in accordance with Section 8.2(a), then upon the Change in Control the following treatment (referred to as "Change-in-Control Treatment") shall apply to such awards: (A) outstanding Options and Stock Appreciation Rights shall immediately vest and become exercisable; and (B) the restrictions and other conditions applicable to outstanding Restricted Stock, Restricted Stock Units, and other Share-based Awards, including vesting requirements, shall immediately lapse, and any Performance Criteria relevant to such awards shall be deemed to have been achieved at the target performance level; such Awards shall be free of all restrictions and fully vested; and, with respect to Restricted Stock Units, shall be payable immediately in accordance with their terms or, if later, as of the earliest permissible date under Code section 409A.

(c)

However, unless the Change in Control is a change in the ownership or effective control or of ownership of a substantial portion of the assets of the Company (within the meaning of Code section  409A), a Change in Control shall not accelerate the time of payment of Restricted Stock Units and other awards and amounts payable under the Plan that are deferred compensation subject to Code section 409A.

(d)

If and to the extent that outstanding awards under the Plan are not assumed, continued, or replaced in accordance with Section 8.2(a) above, then in connection with the application of the Change-in-Control Treatment set forth in Section 8.2(b) above, the Board may, in its sole discretion, provide for cancellation of such outstanding awards at the time of the Change in Control in which case a payment of cash, property, or a combination of cash and property shall be made to each such Participant upon the consummation of the Change in Control that is determined by the Board in its sole discretion and that is at least equal to the excess (if any) of the value of the consideration that would be received in such Change in Control by the holders of the Company's securities relating to such awards over the exercise or purchase price (if any) for such awards (except that, in the case of an Option or Stock Appreciation Right, such payment shall limited as necessary to prevent the Option or Stock Appreciation Right from being subject to Code section 409A).

(e)

If and to the extent that: (A) outstanding awards are assumed, continued or replaced in accordance with Section 8.2(a) above and (B) a Participant's employment with, or performance of services for, the Company is terminated by the Company for any reasons other than Cause or by such Participant for Good Reason, in each case, within the two-year period commencing on the Change in Control, then, as of the date of such Participant's termination, the Change-in-Control Treatment set forth in Section 8.2(b) above shall apply to all assumed or replaced awards of such Participant then outstanding.

(f)

Outstanding Options or Stock Appreciation Rights that are assumed, continued, or replaced in accordance with Section 8.2(a) may be exercised by the Participant in accordance with the applicable terms and conditions of such award as set forth in the applicable Award Agreement or elsewhere; provided, however, that Options or Stock Appreciation Rights that become exercisable in accordance with Section 8.2(e) may be exercised until the expiration of the original full term of such Option or Stock Appreciation Right notwithstanding the other original terms and conditions of such award.

8.3       Administrative Stand Still. In the event of any pending stock dividend, stock split, combination or exchange of Shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the share price of Common Stock, including any Equity Restructuring or any securities offering or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up to sixty (60) days before or after such transaction.

8.4       General. Except as expressly provided in the Plan or the Administrator’s action under the Plan, no Participant will have any rights due to any subdivision or consolidation of Shares of any class, dividend payment, increase or decrease in the number of Shares of any class or dissolution, liquidation, merger, or consolidation of the Company or other corporation. Except as expressly provided with respect to an Equity Restructuring under Section 8.1 above or the Administrator’s action under the Plan, no issuance by the Company of Shares of any class, or securities convertible into Shares of any class, will affect, and no adjustment will be made regarding, the number of Shares subject to an Award or the Award’s grant or exercise price. The existence of the Plan, any Award Agreements and the Awards granted hereunder will not affect or restrict in any way the Company’s right or power to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any merger, consolidation dissolution or liquidation of the Company or sale of Company assets or (iii) any sale or issuance of securities, including securities with rights superior to those of the Shares or securities convertible into or exchangeable for Shares. The Administrator may treat Participants and Awards (or portions thereof) differently under this Article VIII.

ARTICLE IX.

GENERAL PROVISIONS APPLICABLE TO AWARDS

9.1       Transferability. Except as the Administrator may determine or provide in an Award Agreement or otherwise for Awards other than Incentive Stock Options, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, subject to the Administrator’s consent, pursuant to a domestic relations order, and, during the life of the Participant, will be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, will include references to a Participant’s authorized transferee that the Administrator specifically approves.

9.2       Documentation. Each Award will be evidenced in an Award Agreement, which may be written or electronic, as the Administrator determines. Each Award may contain terms and conditions in addition to those set forth in the Plan.

9.3       Discretion. Except as the Plan otherwise provides, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award to a Participant need not be identical, and the Administrator need not treat Participants or Awards (or portions thereof) uniformly.

9.4      Termination of Status. The Administrator will determine how the disability, death, retirement, authorized leave of absence or any other change or purported change in a Participant’s Service Provider status affects an Award and the extent to which, and the period during which, the Participant, the Participant’s legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award, if applicable.

9.5       Withholding. Each Participant must pay the Company or make provision satisfactory to the Administrator for payment of, any taxes required by law to be withheld in connection with such Participant’s Awards by the date of the event creating the tax liability. The Company may deduct an amount sufficient to satisfy such tax obligations based on the applicable statutory withholding rates (or such other rate as may be determined by the Company after considering any accounting consequences or costs) from any payment of any kind otherwise due to a Participant. In the absence of a contrary determination by the Company (or, with respect to withholding pursuant to clause (ii) below with respect to Awards held by individuals subject to Section 16 of the Exchange Act, a contrary determination by the Administrator), all tax withholding obligations will be calculated based on the minimum applicable statutory withholding rates. Subject to Section 10.8 and any Company insider trading policy (including blackout periods), Participants may satisfy such tax obligations (i) in cash, by wire transfer of immediately available funds, by check made payable to the order of the Company, provided that the Company may limit the use of the foregoing payment forms if one or more of the payment forms below is permitted, (ii) to the extent permitted by the Administrator, in whole or in part by delivery of Shares, including Shares delivered by attestation and Shares retained from the Award creating the tax obligation, valued at their Fair Market Value on the date of delivery, (iii) if there is a public market for Shares at the time the tax obligations are satisfied, unless the Company otherwise determines, (A) delivery (including electronically or telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to satisfy the tax obligations, or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to satisfy the tax withholding; provided that such amount is paid to the Company at such time as may be required by the Administrator, or (iv) to the extent permitted by the Company, any combination of the foregoing payment forms approved by the Administrator. Notwithstanding any other provision of the Plan, the number of Shares which may be so delivered or retained pursuant to clause (ii) of the immediately preceding sentence shall be limited to the number of Shares which have a Fair Market Value on the date of delivery or retention no greater than the aggregate amount of such liabilities based on the maximum individual statutory tax rate in the applicable jurisdiction at the time of such withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting principles in the United States of America); provided, however, to the extent such Shares were acquired by Participant from the Company as compensation, the Shares must have been held for the minimum period required by applicable accounting rules to avoid a charge to the Company’s earnings for financial reporting purposes; provided, further, that, any such Shares delivered or retained shall be rounded up to the nearest whole Share to the extent rounding up to the nearest whole Share does not result in the liability classification of the applicable Award under generally accepted accounting principles in the United States of America. If any tax withholding obligation will be satisfied under clause (ii) above by the Company’s retention of Shares from the Award creating the tax obligation and there is a public market for Shares at the time the tax obligation is satisfied, the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on the applicable Participant’s behalf some or all of the Shares retained and to remit the proceeds of the sale to the Company or its designee, and each Participant’s acceptance of an Award under the Plan will constitute the Participant’s authorization to the Company and instruction and authorization to such brokerage firm to complete the transactions described in this sentence.

9.6       Mandatory Vesting of Awards. All Awards shall be subject to a minimum vesting of one year from the Grant Date.

9.7      Conditions on Delivery of Stock. The Company will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Company’s satisfaction, (ii) as determined by the Company, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Administrator deems necessary or appropriate to satisfy any Applicable Laws. The Company’s inability to obtain authority from any regulatory body having jurisdiction, which the Administrator determines is necessary to the lawful issuance and sale of any securities, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.

9.8       No Dividend on Award Prior to Vesting. No dividend will be paid in cash, stock or otherwise on any Award that is not vested. Any dividend earned after vesting shall be prorated from the date of vesting as applicable.

9.9       Additional Terms of Incentive Stock Options. The Administrator may grant Incentive Stock Options only to employees of the Company, any of its present or future parent or subsidiary corporations, as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code. If an Incentive Stock Option is granted to a Greater Than 10% Stockholder, the exercise price will not be less than 110% of the Fair Market Value on the Option’s grant date, and the term of the Option will not exceed five (5) years. All Incentive Stock Options will be subject to and construed consistently with Section 422 of the Code. By accepting an Incentive Stock Option, the Participant agrees to give prompt notice to the Company of dispositions or other transfers (other than in connection with a Change in Control) of Shares acquired under the Option made within (i) two years from the grant date of the Option or (ii) one year after the transfer of such Shares to the Participant, specifying the date of the disposition or other transfer and the amount the Participant realized, in cash, other property, assumption of indebtedness or other consideration, in such disposition or other transfer. Neither the Company nor the Administrator will be liable to a Participant, or any other party, if an Incentive Stock Option fails or ceases to qualify as an “incentive stock option” under Section 422 of the Code. Any Incentive Stock Option or portion thereof that fails to qualify as an “incentive stock option” under Section 422 of the Code for any reason, including becoming exercisable with respect to Shares having a Fair Market Value exceeding the $100,000 limitation under Treasury Regulation Section 1.422-4, will be a Non-Qualified Stock Option.

ARTICLE X.

MISCELLANEOUS

10.1     No Right to Employment or Other Status. No person will have any claim or right to be granted an Award, and the grant of an Award will not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan or any Award, except as expressly provided in an Award Agreement.

10.2     No Rights as Stockholder; Certificates. Subject to the Award Agreement, no Participant or Designated Beneficiary will have any rights as a stockholder with respect to any Shares to be distributed under an Award until becoming the record holder of such Shares. Notwithstanding any other provision of the Plan, unless the Administrator otherwise determines or Applicable Laws require, the Company will not be required to deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares may be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). The Company may place legends on stock certificates issued under the Plan that the Administrator deems necessary or appropriate to comply with Applicable Laws.

10.3    Effective Date and Term of Plan. The Plan shall be effective (the “Effective Date”) on the date this Plan is approved by a majority of the Company’s stockholders prior to such Effective Date and occurring within twelve (12) months following the date the Board approved the Plan. If the Plan is not approved by the Company’s stockholders within the foregoing time frame, the Plan will not become effective. If the Plan is approved by a majority of the stockholders, the Plan shall remain in effect until the fifth (5th) anniversary of the date the Company’s stockholders approved the Plan, but Awards previously granted may extend beyond that date in accordance with the Plan.

10.4    Amendment or Termination of Plan. The Administrator may amend, suspend or terminate the Plan at any time; provided that no amendment, other than an increase to the Overall Share Limit, may materially and adversely affect any Award outstanding at the time of such amendment without the affected Participant’s consent. Administrator may not, without the approval of the stockholders of the Company, increase the Overall Share Limit. Awards may not be granted under the Plan during any suspension period or after the Plan’s termination. Awards outstanding at the time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination. The Board will obtain stockholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.

10.5     Provisions for Foreign Participants. The Administrator may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

10.6     Section 409A.

(a)

General. The Company intends that all Awards be structured to comply with, or be exempt from, Section 409A, such that no adverse tax consequences, interest, or penalties under Section 409A apply. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the Administrator may, without a Participant’s consent, amend this Plan or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (A) exempt this Plan or any Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Award’s grant date. The Company makes no representations or warranties as to an Award’s tax treatment under Section 409A or otherwise. The Company will have no obligation under this Section 10.6 or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any Participant or any other person if any Award, compensation or other benefits under the Plan are determined to constitute noncompliant “nonqualified deferred compensation” subject to taxes, penalties or interest under Section 409A.

(b)

Separation from Service. If an Award constitutes “nonqualified deferred compensation” under Section 409A, any payment or settlement of such Award upon a termination of a Participant’s Service Provider relationship will, to the extent necessary to avoid taxes under Section 409A, be made only upon the Participant’s “separation from service” (within the meaning of Section 409A), whether such “separation from service” occurs upon or after the termination of the Participant’s Service Provider relationship. For purposes of this Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms means a “separation from service.”

(c)

Payments to Specified Employees. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” required to be made under an Award to a “specified employee” (as defined under Section 409A and as the Administrator determines) due to his or her “separation from service” will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six (6)-month period immediately following such “separation from service” (or, if earlier, until the specified Employee’s death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six (6)-month period or as soon as administratively practicable thereafter (without interest). Any payments of “nonqualified deferred compensation” under such Award payable more than six (6) months following the Participant’s “separation from service” will be paid at the time or times the payments are otherwise scheduled to be made.

10.7     Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other Employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any Award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other Employee or agent of the Company or any Subsidiary. The Company will indemnify and hold harmless each director, officer, other Employee and agent of the Company or any Subsidiary that has been or will be granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Administrator’s approval) arising from any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.

10.8    Lock-Up Period. The Company may, at the request of any underwriter representative or otherwise, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to one hundred eighty days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter.

10.9    Data Privacy. As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan. The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”). The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan. A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 10.9 in writing, without cost, by contacting the local human resources representative. The Company may cancel Participant’s ability to participate in the Plan and, in the Administrator’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents in this Section 10.9. For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.

10.10   Severability. If any portion of the Plan or any action taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and the illegal or invalid action will be null and void.

10.11   Governing Documents. If any contradiction occurs between the Plan and any Award Agreement or other written agreement between a Participant and the Company (or any Subsidiary) that the Administrator has approved, the Plan will govern, unless it is expressly specified in such Award Agreement or other written document that a specific provision of the Plan will not apply.

10.12   Governing Law. The Plan and all Awards will be governed by and interpreted in accordance with the laws of the State of Colorado, disregarding any state’s choice-of-law principles requiring the application of a jurisdiction’s laws other than the State of Colorado.

10.13   Claw-back Provisions. All Awards (including, without limitation, any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with Applicable Laws (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder) as and to the extent set forth in such claw-back policy or the Award Agreement.

10.14   Titles and Headings. The titles and headings in the Plan are for convenience of reference only and, if any conflict, the Plan’s text, rather than such titles or headings, will control.

10.15   Conformity to Securities Laws. Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws. Notwithstanding anything herein to the contrary, the Plan and all Awards will be administered only in conformance with Applicable Laws. To the extent Applicable Laws permit, the Plan and all Award Agreements will be deemed amended as necessary to conform to Applicable Laws.

10.16  Relationship to Other Benefits. No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.

10.17 Broker-Assisted Sales. In the event of a broker-assisted sale of Shares in connection with the payment of amounts owed by a Participant under or with respect to the Plan or Awards, including amounts to be paid under the final sentence of Section 9.5: (a) any Shares to be sold through the broker assisted sale will be sold on the day the payment first becomes due, or as soon thereafter as practicable; (b) such Shares may be sold as part of a block trade with other Participants in the Plan in which all participants receive an average price; (c) the applicable Participant will be responsible for all broker’s fees and other costs of sale, and by accepting an Award, each Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (d) to the extent the Company or its designee receives proceeds of such sale that exceed the amount owed, the Company will pay such excess in cash to the applicable Participant as soon as reasonably practicable; (e) the Company and its designees are under no obligation to arrange for such sale at any particular price; and (f) in the event the proceeds of such sale are insufficient to satisfy the Participant’s applicable obligation, the Participant may be required to pay immediately upon demand to the Company or its designee an amount in cash sufficient to satisfy any remaining portion of the Participant’s obligation.

ARTICLE XI.

DEFINITIONS

As used in the Plan, the following words and phrases will have the following meanings:

11.1     “Administrator” means the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

11.2     “Applicable Laws” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted.

11.3     “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Other Stock or Cash Based Awards.

11.4     “Award Agreement” means a written agreement evidencing an Award, which may be electronic, that contains such terms and conditions as the Administrator determines, consistent with and subject to the terms and conditions of the Plan.

11.5     “Board” means the Board of Directors of the Company.

11.6     “Cause” with respect to a Participant, means “Cause” (or any term of similar effect) as defined in such Participant’s employment agreement with the Company if such an agreement exists and contains a definition of Cause (or term of similar effect), or, if no such agreement exists or such agreement does not contain a definition of Cause (or term of similar effect), then Cause shall include, but not be limited to: (i) the Participant’s unauthorized use or disclosure of confidential information or trade secrets of the Company or any material breach of a written agreement between the Participant and the Company, including without limitation a material breach of any employment, confidentiality, non-compete, non-solicit or similar agreement; (ii) the Participant’s commission of, indictment for or the entry of a plea of guilty or nolo contendere by the Participant to, a felony under the laws of the United States or any state thereof or any crime involving dishonesty or moral turpitude (or any similar crime in any jurisdiction outside the United States); (iii) the Participant’s gross negligence or willful misconduct or the Participant’s willful or repeated failure or refusal to substantially perform assigned duties; (iv) any act of fraud, embezzlement, material misappropriation or dishonesty committed by the Participant against the Company; or (v) any acts, omissions or statements by a Participant which the Company reasonably determines to be materially detrimental or damaging to the reputation, operations, prospects or business relations of the Company.

11.7     “Change in Control” means and includes each of the following:

(a)

A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (i) and (ii) of subsection (c) below) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its Subsidiaries, an employee benefit plan maintained by the Company or any of its Subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or

(b)

During any period of two (2) consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (a) or (c)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the two- (2)-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

(c)

The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

(i)

which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

(ii)

after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (ii) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.

(d)

The definition of a Change in Control contained in any Participant’s Employment Agreement or Award Agreement.

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or portion of any Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (a), (b) or (c) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).

The Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

11.8     “Code” means the Internal Revenue Code of 1986, (as amended and the regulations issued thereunder.October 12, 2021)

 

11.9     “Committee” means one or more committees or subcommittees of the Board, which may include one or more Company directors or executive officers, to the extent Applicable Laws permit. To the extent required to comply with the provisions of Rule 16b-3, it is intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3; however, a Committee member’s failure to qualify as a “non-employee director” within the meaning of Rule 16b-3 will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.

11.10   “Common Stock” means the common stock of the Company.

11.11    “Company” means Orbital Energy Group, Inc., a Colorado corporation, or any successor.

11.12   “Consultant” means any person, including any adviser, engaged by the Company or its parent or Subsidiary to render services to such entity if the consultant or adviser: (a) renders bona fide services to the Company; (b) renders services not in connection with the offer or sale of securities in a capital-raising transaction and does not directly or indirectly promote or maintain a market for the Company’s securities; and (c) is a natural person.

11.13   “Designated Beneficiary” means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participant’s rights if the Participant dies or becomes incapacitated. Without a Participant’s effective designation, “Designated Beneficiary” will mean the Participant’s estate.

11.14   “Director” means a Board member.

11.15   “Disability” means a permanent and total disability under Section 22(e)(3) of the Code, as amended.

11.16   “Dividend Equivalents” means a right granted to a Participant under the Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares.

11.17   “Employee” means any employee of the Company or its Subsidiaries.

11.18   “Equity Restructuring” means a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other Company securities) or the share price of Common Stock (or other Company securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.

11.19   “Exchange Act” means the Securities Exchange Act of 1934, as amended.

11.20   “Fair Market Value” means, as of any date, the value of a Share determined as follows: (a) if the Common Stock is listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Common Stock as quoted on such exchange for such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported by The Nasdaq Stock Market or another source the Administrator deems reliable; (b) if the Common Stock is not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported by The Nasdaq Stock Market or another source the Administrator deems reliable; or (c) without an established market for the Common Stock, the Administrator will determine the Fair Market Value in its discretion.

11.21   “Good Reason” means (a) if a Participant is a party to a written employment or consulting agreement with the Company or any of its Subsidiaries or an Award Agreement in which the term “good reason” is defined, “Good Reason” as defined in such agreement, and (b) if no such agreement exists, (i) a change in the Participant’s position with the Company (or its Subsidiary employing the Participant) that materially reduces the Participant’s authority, duties or responsibilities or the level of management to which he or she reports, (ii) a material diminution in the Participant’s level of compensation (including base salary, fringe benefits and target bonuses under any corporate performance-based incentive programs) or (iii) a relocation of the Participant’s place of employment by more than 50 miles, provided that such change, reduction or relocation is effected by the Company (or its Subsidiary employing the Participant) without the Participant’s consent.

11.22   “Greater Than 10% Stockholder” means an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company, its parent or subsidiary corporation, as defined in Section 424(e) and (f) of the Code, respectively.

11.23   “Incentive Stock Option” means an Option intended to qualify as an “incentive stock option” as defined in Section 422 of the Code.

11.24   “Non-Qualified Stock Option” means an Option not intended or not qualifying as an Incentive Stock Option.

11.25   “Option” means an option to purchase Shares, which will either be an Incentive Stock Option or a Non-Qualified Stock Option.

11.26   “Other Stock or Cash Based Awards” means cash awards, awards of Shares, and other awards valued wholly or partially by referring to, or are otherwise based on, Shares or other property awarded to a Participant under Article VII.

 

11.27 “Overall Share Limit” means the total number of Shares reserved and available for grant and issuance pursuant to this Plan, as of the date of adoption of the Plan by the Stockholders, is TwoFive Million (2,000,000)(5,000,000) Shares. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

 

This number of Overall Share Limit shares was increased by 5,000,000 by the shareholders at their Annual Stockholders Meeting held on October 12, 2021.

Annex B(Plan of Conversion)

Plan of Conversion of

Orbital Energy Group, Inc., a Colorado corporation,

into

Orbital Infrastructure Group, Inc., a Texas corporation

This PLAN OF CONVERSION (this “Plan”), dated as of April __, 2022, is hereby adopted by Orbital Energy Group, Inc., a Colorado corporation (“Orbital Energy Group, Inc.”), in order to set forth the terms, conditions and procedures governing the conversion of Orbital Energy Group, Inc., a Colorado Corporation, into Orbital Infrastructure Group, Inc., a Texas corporation (“Orbital Infrastructure Group, Inc.”) pursuant to Section 7-111-101.5 of the Colorado Business Corporation Act, as amended (the “CBCA”), Sections 7-90-201 and 7-90-202 of the Colorado Corporations and Associations Act, as amended (the “CCAA”) and the Texas Business Organizations Code (the “TBOC”) Title 1, Chapter 10, Subchapter C.

WHEREAS, the Orbital Energy Group, Inc. Board of Directors has approved the Conversion (as defined below) and submitted this Plan to the shareholders of Orbital Energy Group, Inc. for approval, and the shareholders have approved this Plan.

NOW, THEREFORE, Orbital Energy Group, Inc. does hereby adopt this Plan to effectuate the conversion of Orbital Energy Group, Inc. into Orbital Infrastructure Group, Inc., a Texas corporation, as follows:

1.    Conversion. Upon and subject to the terms and conditions of this Plan and pursuant to the relevant provisions of the CBCA, CCAA and the TBOC, including, without limitation, Section 7-111-101.5 of the CBCA, Sections 7-90-201 and 7-90-202 of the CCAA and the TBOC, Title 1, Chapter 10, Subchapter C, Orbital Energy Group, Inc. shall convert (referred to herein as the “Conversion”) into a Texas corporation named “Orbital Infrastructure Group, Inc.” (referred to herein as “Orbital Infrastructure Group, Inc.”) at the Effective Time (as defined in Section 3 below). Orbital Infrastructure Group, Inc. shall thereafter be subject to all of the provisions of the TBOC.

Orbital Energy Group, Inc. was initially formed as a Colorado for profit corporation on April 21, 1998, and maintains its principle corporate executive offices at 1924 Aldine Western, Houston, Texas 77038-1204. This location shall continue as the corporate executive offices following the intended Conversion. The existence of Orbital Infrastructure Group, Inc. shall be deemed to have commenced on the date Orbital Energy Group, Inc. commenced its existence in Colorado. Following the Conversion, Orbital Energy Group, Inc. will no longer conduct any business activity in Colorado.

2.    Effect of Conversion. Following the Conversion, Orbital Infrastructure Group, Inc. shall, for all purposes of the laws of the State of Texas and Colorado, be deemed to be the same entity as Orbital Energy Group, Inc. Upon the Effective Time, all of the rights, privileges and powers of Orbital Energy Group, Inc., and all property, real, personal and mixed, and all debts due to Orbital Energy Group, Inc., as well as all other things and causes of action belonging to Orbital Energy Group, Inc., shall remain vested in Orbital Infrastructure Group, Inc. and shall be the property of Orbital Infrastructure Group, Inc. and the title to any real property vested by deed or otherwise in Orbital Energy Group, Inc. shall not revert or be in any way impaired, but all rights of creditors and all liens upon any property of Orbital Energy Group, Inc. shall be preserved unimpaired, and all debts, liabilities and duties of Orbital Energy Group, Inc. shall remain attached to Orbital Infrastructure Group, Inc. and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as a Texas corporation.

 

11.28   “Participant” means a Service Provider who has been granted an Award.

11.29  “Performance Criteria” mean the criteria (and adjustments) that the Administrator may select for an Award to establish performance goals for a performance period, which may include the following: net earnings or losses (either before or after one or moreThe rights, privileges, powers and interests in property of interest, taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenue or sales or revenue growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or invested capital; cost of capital; return on stockholders’ equity; total stockholder return; return on sales; costs, reductions in costs and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human resources management; supervision of litigation and other legal matters; strategic partnerships and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or reductions; sales-related goals; financing and other capital raising transactions; cash on hand; acquisition activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute terms or as compared to any incremental increase or decrease. Such performance goals also may be based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the Company or a Subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies.

11.30   “Plan” means this Orbital Energy Group, 2020 Incentive Award Plan.Inc., as well as the debts, liabilities and duties of Orbital Energy Group, Inc., shall be deemed, as a consequence of the Conversion, to have been transferred to Orbital Infrastructure Group, Inc. for any purpose of the laws of the State of Texas. The Conversion shall not be deemed to affect any obligations or liabilities of Orbital Energy Group, Inc. incurred prior to the Effective Time or the personal liability of any person incurred prior thereto. Orbital Energy Group, Inc. shall not be required to wind up its affairs or pay its liabilities and distribute its assets and the Conversion shall not be deemed to constitute a dissolution of Orbital Energy Group, Inc. and shall constitute a continuation of the existence of Orbital Energy Group, Inc. in the form of Orbital Infrastructure Group, Inc., a Texas corporation. Orbital Infrastructure Group, Inc. is the same entity as Orbital Energy Group, Inc.

 

11.313.    Effective Time. Provided that this Plan has not been terminated or deferred pursuant to Section 14 hereof, the Conversion shall be effected as soon as practicable after the shareholders of Orbital Energy Group, Inc. have approved this Plan. Subject to the foregoing, unless another date and time is specified, the Conversion shall be effective upon (a) the filing with the Secretary of State of the State of Colorado of a duly executed Statement of Conversion meeting the requirements of Section 7-90-201.7 of the CCAA substantially in the form of Exhibit A hereto (thePrior PlanColorado Statement of Conversion means) and (b) the CUI Global,filing with the Secretary of State of the State of Texas of (i) a duly executed Certificate of Conversion meeting the requirements of TBOC, Title 1, Chapter 10, Subchapter C in substantially the form of Exhibit B hereto (the “Texas Certificate of Conversion”), and (ii) a duly executed Certificate of Formation of Orbital Infrastructure Group, Inc. 2008 Equity Incentive Plan and 2009 Equity Incentive Plan (Executive)in the form specified below (the “Effective Time”).

 

11.324. Governance and Other Matters Related to Orbital Infrastructure Group, Inc.

a. Certificate of Formation. At the Effective Time, the Certificate of Formation of Orbital Infrastructure Group, Inc. shall be as set forth in substantially the form of Exhibit C attached hereto (thePrior Plan AwardCertificate of Formation means an award outstanding under) and shall be filed with the Prior PlanSecretary of State of Texas.

b. Bylaws. At the Effective Time, the Bylaws of Orbital Infrastructure Group, Inc. shall be as set forth in substantially the form of Exhibit D attached hereto (the “Bylaws”), and shall be adopted as such by the Board of Directors of Orbital Infrastructure Group, Inc. Thereafter, the Bylaws may be amended by the Board of Directors or stockholders of Orbital Infrastructure Group, Inc. as provided in the Bylaws and, as applicable, the Certificate of Formation.

c. Directors and Officers. The members of the Plan’s effective date under Section 10.3.Board of Directors and the officers of Orbital Energy Group, Inc. immediately prior to the Effective Time shall continue in office following the Effective Time as directors and officers of Orbital Infrastructure Group, Inc., respectively, until the expiration of their respective terms of office and until their successors have been duly elected and have qualified, or until their earlier death, resignation or removal.

 

11.33   “Restricted Stock” means Shares awarded to a Participant under Article VI subject to certain vesting conditions and other restrictions.

11.34   “Restricted Stock Unit” means an unfunded, unsecured right to receive,5.    Effect of the Conversion on the applicable settlement date, one Share or an amount in cash or other consideration determinedCommon Stock of Orbital Energy Group, Inc.. Subject to the terms and conditions of this Plan, at the Effective Time, automatically by the Administrator to be of equal value as of such settlement date, subject to certain vesting conditions and other restrictions.

11.35   “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act.

11.36   “Section 409A” means Section 409Avirtue of the CodeConversion and all regulations, guidance, compliance programswithout any further action on the part of Orbital Energy Group, Inc., Orbital Infrastructure Group, Inc. or any shareholder or stockholder thereof, respectively, each share of common stock, par value $.001 per share, of Orbital Energy Group, Inc. (the “Orbital Energy Group, Inc. Common Stock”), shall convert into one validly issued, fully paid and other interpretative authority thereunder.

11.37nonassessable share of common stock, par value $0.001 per share, of Orbital Infrastructure Group, Inc. (theSecurities ActOrbital Infrastructure Group, Inc. Common Stock means the Securities Act of 1933, as amended.

11.38   “Service Provider” means an Employee, Consultant or Director.).

 

 

11.396.    Effect of the Conversion on Outstanding Warrants or Other Rights of Orbital Energy Group, Inc. Subject to the terms and conditions of this Plan, at the Effective Time, automatically by virtue of the Conversion and without any further action on the part of Orbital Energy Group, Inc., Orbital Infrastructure Group, Inc. or any shareholder or stockholder thereof, respectively, each warrant or other right, of Orbital Energy Group, Inc. (theSharesOrbital Energy Group, Inc. Warrant or Other Right means), shall convert into an equivalent warrant or other right to acquire, upon the same terms and conditions (including the exercise price per share applicable to each such warrant or other right) as were in effect immediately prior to the Effective Time, the same number of shares of Orbital Infrastructure Group, Inc.

7.    Stock Certificates. From and after the Effective Time, all of the outstanding certificates that prior to that time represented shares of Orbital Energy Group, Inc. Common Stock shall be deemed for all purposes to evidence ownership of and to represent the shares of Orbital Infrastructure Group, Inc. Common Stock into which the shares represented by such certificates have been converted as provided herein. The registered owner on the books and records of Orbital Infrastructure Group, Inc. or its transfer agent of any such outstanding stock certificate shall, until such certificate shall have been surrendered for transfer or conversion or otherwise accounted for to Orbital Infrastructure Group, Inc. or its transfer agent, have and be entitled to exercise any voting and other rights with respect to and to receive any dividend and other distributions upon the shares of Orbital Infrastructure Group, Inc. evidenced by such outstanding certificate as provided herein.

8.    Employee Benefit and Compensation Plans. At the Effective Time, each employee benefit plan, incentive compensation plan, equity incentive plan, stock purchase plan, restricted stock unit agreement, cash-settled performance unit, stock option agreement, stock appreciation rights agreement and other similar plans and agreements to which Orbital Energy Group, Inc. is then a party shall be automatically assumed by, and continue to be the plan of, Orbital Infrastructure Group, Inc., without further action by Orbital Energy Group, Inc. or Orbital Infrastructure Group, Inc. or any other party thereto. To the extent any employee benefit plan, incentive compensation plan, equity incentive plan, restricted stock unit, cash-settled performance unit, stock option agreement, stock appreciation rights agreement or other similar plan provides for the issuance or purchase of, or otherwise relates to, Orbital Energy Group, Inc. Common Stock, after the Effective Time, such plan or agreement shall be deemed to provide for the issuance or purchase of, or otherwise relate to, the Orbital Infrastructure Group, Inc. Common Stock.

 

11.40   “Stock Appreciation Right” means a9.    Outstanding Awards. At the Effective Time, all outstanding stock options, purchase rights, restricted stock awards, restricted stock units, stock appreciation right granted under Article V.

11.41   “Subsidiary” means any entity (other thanrights agreement and other stock awards relating to the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if eachOrbital Energy Group, Inc. Common Stock shall, by virtue of the entities other thanConversion and without any further action on the last entity inpart of Orbital Energy Group, Inc., Orbital Infrastructure Group, Inc. or the unbroken chain beneficially owns, atholder thereof, continue on the time ofsame terms and conditions and be assumed by Orbital Infrastructure Group, Inc., provided that all such awards shall be deemed to provide for the determination, securitiesissuance or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

11.42   “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumptionpurchase of, or in substitution or exchange for, awards previously granted, orotherwise relate to, the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.Orbital Infrastructure Group, Inc. Common Stock.

 

11.43   “Termination of Service” means the date the Participant ceases to be a Service Provider.

* * * * *

 

ORBITAL ENERGY GROUP

2020 INCENTIVE AWARD PLAN

STOCK OPTION GRANT NOTICE

Capitalized terms not specifically defined10.    Filings, Licenses, Permits, Titled Property, Etc. As necessary, following the Effective Time, Orbital Infrastructure Group, Inc. shall apply for new qualifications to conduct business (including as a foreign corporation), licenses, permits and similar authorizations on its behalf and in this Stock Option Grant Notice (the “Grant Notice”) haveits own name in connection with the meanings givenConversion and to them inreflect the fact that it is a Texas corporation. As required or appropriate, following the Effective Time, all real, personal or intangible property of Orbital Energy Group, 2020 Incentive Award Plan (as amended from timeInc. which was titled or registered in the name of Orbital Energy Group, Inc. shall be re-titled or re-registered, as applicable, in the name of Orbital Infrastructure Group, Inc. by appropriate filings and/or notices to time, the Plan”)appropriate parties (including, without limitation, any applicable governmental agencies).

 

The Company11.    Further Assurances. If, at any time after the Effective Time, Orbital Infrastructure Group, Inc. shall determine or be advised that any deeds, bills of sale, assignments, agreements, documents or assurances or any other acts or things are necessary, desirable or proper, consistent with the terms of this Plan to vest, perfect or confirm, of record or otherwise, in Orbital Infrastructure Group, Inc. its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of Orbital Energy Group, Inc., or to otherwise carry out the purposes of this Plan, Orbital Infrastructure Group, Inc. and its proper officers and directors (or their designees), are hereby grantsauthorized to execute and deliver, in the name and on behalf of Orbital Energy Group, Inc., all such deeds, bills of sale, assignments, agreements, documents and assurances and do, in the name and on behalf of Orbital Energy Group, Inc., all such other acts and things necessary, desirable to vest, perfect or confirm, of record or otherwise, in Orbital Infrastructure Group, Inc. its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of Orbital Energy Group, Inc., or to otherwise carry out the purposes of this Plan and the Conversion.

12.    Implementation and Interpretation; Termination and Amendment. This Plan shall be implemented and interpreted, prior to the participant listed below (“Participant”)Effective Time, by the stock option described inBoard of Directors of Orbital Energy Group, Inc. and, upon the Effective Time, by the Board of Directors of Orbital Infrastructure Group, Inc., (a) each of which shall have full power and authority to delegate and assign any matters covered hereunder to any other party(ies), including, without limitation, any officers of Orbital Energy Group, Inc. or Orbital Infrastructure Group, Inc., as the case may be, and (b) the interpretations and decisions of which shall be final, binding, and conclusive on all parties.

13.    Texas Indemnification Agreements. As promptly as practicable following the Effective Time, Orbital Infrastructure Group, Inc. shall enter into an indemnification agreement with each member of the Board of Directors of Orbital Infrastructure Group, Inc. and each executive officer of Orbital Infrastructure Group, Inc. .

14.    Amendment. This Plan may be amended or modified by the Board of Directors of Orbital Energy Group, Inc. at any time prior to the Effective Time, provided that an amendment made subsequent to the approval of this Grant Notice (the “Option”), subjectPlan by the shareholders of Orbital Energy Group, Inc. shall not alter or change (a) the amount or kind of shares or other securities to be received by the shareholders hereunder, (b) any term of the Certificate of Incorporation or the Bylaws, other than changes permitted to be made without stockholder approval by the TBOC, or (c) any of the terms and conditions of this Plan if such alteration or change would adversely affect the Plan and the Stock Option Agreement attached hereto as Exhibit A (the “Agreement”), bothholders of which are incorporated into this Grant Notice by reference.

Participant:

Grant Date:

Exercise Price Per Share:

Shares Subject to the Option:

Final Expiration Date:

Vesting Commencement Date:

Vesting Schedule: (To be specified in individual award agreements and subject to a minimum vesting of one year from the Grant Date)

Type of Option: ☐ Incentive Stock Option ☐ Non-Qualified Stock Option

By Participant’s signature below, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisionsany class or series of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretationsstock of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.Orbital Energy Group, Inc..

Orbital Energy Group, Inc.

Participant

By:

By:

Print Name:

Print Name:

Title:

 

15.    Termination or Deferral. At any time before the Effective Time, (a) this Plan may be terminated and the Conversion may be abandoned by action of the Board of Directors of Orbital Energy Group, Inc., notwithstanding the approval of this Plan by the shareholders of Orbital Energy Group, Inc., or (b) the consummation of the Conversion may be deferred for a reasonable period of time if, in the opinion of the Board of Directors of Orbital Energy Group, Inc., such action would be in the best interest of Orbital Energy Group, Inc. and its shareholders. In the event of termination of this Plan, this Plan shall become void and of no effect and there shall be no liability on the part of Orbital Energy Group, Inc. or its Board of Directors or shareholders with respect thereto.

16.    Third Party Beneficiaries. This Plan shall not confer any rights or remedies upon any person or entity other than as expressly provided herein.

17.    Severability. Whenever possible, each provision of this Plan will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Plan is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Plan.

IN WITNESS WHEREOF, Orbital Energy Group, Inc., a Colorado corporation, has caused this Plan to be executed by its duly authorized representative as of the date first stated above.

Orbital Energy Group, Inc.

a Colorado corporation

By: ___________________________

William J. Clough

Executive Chairman and CLO

Attached hereto:

Exhibit A, Colorado Statement of Conversion

Exhibit B, Texas Certificate of Conversion

Exhibit C, Certificate of Formation

Exhibit D, Bylaws

 

Annex C(Colorado Statement of Conversion)

c1.jpg

c2.jpg

Annex D(Texas Certificate of Conversion)

Certificate of Conversion

Converting a Foreign Entity to a Texas Filing Entity

This Certificate of Conversion dated July __, 2022, is filed on behalf of Orbital Infrastructure Group, Inc., a Texas corporation, which Certificate of Formation, Exhibit A, was formed pursuant to a signed Plan of Conversion, Exhibit B, on or about July __, 2022, Texas file number ______.

The Plan of Conversion, a copy of which is on file at the corporate principal place of business, 1924 Aldine Western, Houston, Texas 77038-1204, includes the details of converting Orbital Energy Group, Inc., a Colorado corporation, (the “converting entity”) to Orbital Infrastructure Group, Inc., a Texas corporation, (the “converted entity”) which Plan of Conversion was approved by the shareholders of the converting entity as required by the laws of Colorado and the converting entity’s governing documents and is signed on behalf of the converting entity. The Plan of Conversion will be, on written request, furnished without cost, by Orbital Infrastructure Group, Inc. to any owner or member of the converting entity or the converted entity.

Orbital Infrastructure Group, Inc., the converted entity, affirms its liability for payment of Texas franchise taxes.

IN WITNESS WHEREOF, Orbital Infrastructure Group, Inc., a Texas corporation, has caused this Certificate of Conversion to be executed by its duly authorized representative as of the date first stated above.

Orbital Infrastructure Group, Inc.,

a Texas corporation

By: ___________________________

William J. Clough

Executive Chairman and CLO

Attached hereto:

Exhibit A, Certificate of Formation

Exhibit B, Plan of Conversion

Annex E

STOCK OPTION AGREEMENT

Capitalized terms not specifically defined in this Agreement haveCertificate of Formation

of

Orbital Infrastructure Group, Inc.

a Texas For-Profit Corporation

This certificate of formation (“Certificate of Formation”) is submitted for filing pursuant to the meanings specified inapplicable provisions of the Grant Notice or, if not defined in the Grant Notice, in the Plan.Texas Business Organizations Code, as amended from time to time (the “TBOC.”)

 

ARTICLE XII.I

GENERAL

12.1 Grant of Option. The Company has granted to Participant the Option effective as of the grant date set forth in the Grant Notice (the “Grant Date”).Entity Name, Type, and Initial Mailing Address

 

12.2 IncorporationThe name of Terms of Planthe entity is Orbital Infrastructure Group, Inc. (the "Corporation"). The OptionCorporation is subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the termsa for-profit corporation. The initial mailing address of the Plan will control.Corporation is 1924 Aldine Western, Houston, Texas 77038-1204.

 

ARTICLE XIII.II

PERIOD OF EXERCISABILITYRegistered Agent and Registered Office

13.1 Commencement

The initial registered agent of Exercisability.the Corporation is an individual resident of Texas whose name is William J. Clough. The Option will vestbusiness address of the registered agent and become exercisable according to the vesting scheduleregistered office address is 1924 Aldine Western, Houston, Texas 77038-1204.

ARTICLE III
Corporate Address

The address of the Corporation's principal office in the Grant Notice (the “Vesting Schedule”), except that any fractionthis state is: 1924 Aldine Western, Houston, Texas 77038-1204.

ARTICLE IV

Capital

The aggregate number of a Share as toshares which the Option wouldCorporation shall have the authority to issue is 335,000,000 shares of which a portion shall be vested or exercisable willcommon stock and a portion shall be accumulated and will vest and become exercisable only when a whole Share has accumulated. The Option shall not be exercisable with respect to fractional Shares. Notwithstanding anything in the Grant Notice, the Plan or this Agreement to the contrary, unless the Administrator otherwise determines, the Option will immediately expire and be forfeitedpreferred stock, as to any portion that is not vested and exercisable as of Participant’s Termination of Service for any reason.

13.2 Duration of Exercisability. The Vesting Schedule is cumulative. Any portion of the Option which vests and becomes exercisable will remain vested and exercisable until the Option expires. The Option will be forfeited immediately upon its expiration.

13.3 Expiration of Option. Subject to Section 5.3 of the Plan, the Option may not be exercised to any extent by anyone after, and will expire on, the first of the following to occur:described below.

 

 

(a)1.

Common Stock.  The final expiration dateaggregate number of common stock shares which the Corporation shall have the authority to issue is 325,000,000, each with $0.001 par value which shares shall be designated as “Common Stock.”  Subject to all of the rights of the Preferred stock as expressly provided herein, by law or by the Board of Directors pursuant to this Article, the Common Stock of the Corporation shall possess all such rights and privileges as are afforded to capital stock by applicable law in the Grant Notice; which shallabsence of any express grant of rights or privileges in no event be more than five (5) years fromthis Certificate of Formation, including, but not limited to, the Grant Date;following rights and privileges;

 

 

(b)a.

If this Option is designated as an IncentiveDividends may be declared and set apart for payment on the Common Stock Optionor of any assets or funds of the Corporation legally available for the payment of dividends;

b.

The holders of Common Stock shall have unlimited voting rights, including the right to vote for the election of directors and on all other matters requiring stockholder action.  Each holder of Common Stock shall have one vote for each share of Common Stock standing in the Participant, atholder’s name on the timebooks of the Option was granted, was a Greater Than 10% Stockholder,Corporation and entitled to vote. Cumulative voting shall not be permitted in the expirationelection of five (5) years fromdirectors or otherwise.

c.

On the Grant Date;voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and after paying or adequately providing for the payment of all of the Corporation’s obligations and amounts payable in liquidation, dissolution or winding up, and subject to the rights of the holders of Preferred Stock, if any, the net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock.

 

 

(c)2.

ExceptPreferred Stock.  The aggregate number of preferred shares which this corporation shall have the authority to issue is 10,000,000 shares, each with $0.001 par value, which shares shall be designated “Preferred Stock.”  Shares of Preferred Stock may be issued from time to time in one or more series as determined by the Administrator may otherwise approve,Board of Directors.  The Board of Directors is hereby authorized, by resolution or resolutions, to provide from time to time, out of the expirationunissued shares of three (3) months fromPreferred Stock, not then allocated to any series of Preferred Stock, for a series of the datePreferred Stock.  Each such series shall have distinctive serial designations.  Before any shares of Participant’s Terminationany such series of Service, unless Participant’s TerminationPreferred Stock are issued, the Board of ServiceDirectors shall fix and determine, and is for Causehereby expressly empowered to fix and determine, by resolution or resolutions, the voting powers, full or limited, or no voting powers, and the designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof as provided by reason of Participant’s death or Disability;

(d)

Except as the Administrator may otherwise approve, the expiration of one (1) year from the date of Participant’s Termination of Service by reason of Participant’s death or Disability; and

(e)

Except as the Administrator may otherwise approve, the date of Participant’s Termination of Service for Cause.Texas law.

 

ARTICLE XIV.V

EXERCISE OF OPTIONPerpetual Existence

14.1 Person Eligible to Exercise. During Participant’s lifetime, only Participant may exercise

The Corporation shall have perpetual existence.

ARTICLE VI

Formation Purpose

The Corporation is formed for the Option, unless it has been disposedpurpose of withtransacting any and all lawful business as a for-profit corporation organized under the consentTBOC.

ARTICLE VII

Plan of Conversion

This Certificate of Formation is being filed under a plan of conversion. The name of the Administrator,prior entity is Orbital Energy Group, Inc. The prior entity was located at 1924 Aldine Western, Houston, Texas 77038-1204. It was formed on April 21, 1998 as a corporation pursuant to a domestic relations order. After Participant’s death, any exercisable portionthe laws of and in the jurisdiction of Colorado.

ARTICLE VIII

Special Shareholder Meetings

Special shareholders’ meetings may be called by the Executive Chairman, Chief Executive Officer, Board of Directors, holders of not less than 35% of all of the Option may, priorshares entitled to vote at the time when the Option becomes unexercisable under Section 2.3 hereof, be exercisedproposed meeting or such additional parties as authorized by the Participant’s Designated Beneficiary or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.bylaws.

 

14.2 Partial ExerciseARTICLE IX

Shareholder Action by Less than Unanimous Written Consent. Any exercisable portion

For any action required or permitted by the TBOC, this Certificate of Formation, or this Corporation's Bylaws to be taken at any annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote, if one or more written consents setting forth the action so taken shall be signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take such action at a meeting at which the holders of all shares entitled to vote on the action were present and voted, constituting at least a majority of the Option oroutstanding shares entitled to vote thereon.

The last dated signing of a holder for such written consent shall not be later than the entire Option, if then wholly exercisable, may be exercised, in whole or in part, according to60th day of the procedures infirst dated signing by a holder for the Plan atwritten consent.  The Corporation shall promptly notify any time prior toholder who did not sign such written consent about the timeaction that is subject of the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.written consent.

 

 

14.3 Tax Withholding.Notwithstanding anything contained in this Certificate of Formation to the contrary, the affirmative vote of at least a majority of the then outstanding voting shares of the Corporation shall be required to amend, repeal, or adopt any provision inconsistent with this Article if such a resolution is submitted by the Board of Directors to the shareholders for consideration.

(a)

The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the Option as Participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise issuable under the Option.

(b)

Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Option. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Shares. The Company and the Subsidiaries do not commit and are under no obligation to structure the Option to reduce or eliminate Participant’s tax liability.

 

ARTICLE XV.X

OTHER PROVISIONSVoting Quorum

15.1 Adjustments

Unless otherwise ordered by a  court of competent jurisdiction, at all meetings of shareholders one-third of the shares of a voting group entitled to vote at such meeting, represented in person or by proxy, shall constitute a quorum of that voting group.

ARTICLE XI

Preemptive Rights

A shareholder of the corporation shall not be entitled to a preemptive right to purchase, subscribe for, or otherwise acquire any unissued shares of stock of the corporation, or any options or warrants to purchase, subscribe for or otherwise acquire any such unissued shares, or any shares, bonds, notes, debentures, or other securities convertible into or carrying options or warrants to purchase, subscribe for or otherwise acquire any such unissued shares.

ARTICLE XII

Cumulative Voting

The shareholders shall not be entitled to use cumulative voting in the election of directors.

ARTICLE XIII

Initial Board of Directors

The Corporation is to be managed by a board of directors (the “Board of Directors. Participant acknowledges”) The initial Board of Directors of the Corporation shall consist of the following eight named individuals, who shall serve as directors until the next annual meeting of shareholders and until their successor is elected and qualified, is as follows: James F. O’Neil, William J. Clough, Corey A. Lambrecht, C. Stephen Cochennet, Sarah Tucker, Jerry Sue Thornton, Paul T. Addison, LaForrest V. Williams.  The address as to all is: 1924 Aldine Western, Houston, Texas 77038-1204.

The number of directors shall be fixed in accordance with the Bylaws, or if the Bylaws fail to fix such number, then by resolution adopted from time to time by the Board of Directors, provided that the Optionnumber of directors shall not be less than one. At present the number of directors is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.set at no more than 12.

 

15.2 Notices. Any noticeARTICLE XIV
Bylaws Amendment

The Corporate Bylaws may be amended by the vote of at least two-thirds of the members of the Board of Directors or by two-thirds of the holders of the outstanding shares entitled to be given under the terms of this Agreementvote, provided that any amendment to the Company must be in writingBylaw Anti-takeover Provisions requires approval by either (i) a majority of the continuing and addressed to the Company in careunaffiliated directors and holders of a majority of the Company’s Secretary atoutstanding shares or (ii) a majority of all of the Company’s principal office ordirectors and holders of at least 66 and 2/3% of the Secretary’s then-current email address or facsimile number. Any notice to be given underCompany’s outstanding shares not held by the terms“affiliated shareholder”.

ARTICLE XV

Certificate of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased,Formation Amendment

An amendment to the personCertificate of Formation requires the approval by holders of a majority of the outstanding shares entitled to exercise the Option) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

15.3 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

15.4 Conformity to Securities Laws. The Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended to the extent necessary to conform to such Applicable Laws.

15.5 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth in the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

15.6 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Option will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

15.7 Entire Agreement. The Plan, the Grant Notice and this Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.vote thereon.

 

 

ARTICLE XVI

Effectiveness of Filing

This Certificate of Formation becomes effective when it is filed by the Texas Secretary of State.

ARTICLE XVII

Director's Limited Liability

A director of the Corporation shall not be liable to the Corporation or its shareholders for monetary damages for an act or omission in the director's capacity as a director, except to the extent the director is found liable for: (1) a breach of the director's duty of loyalty to the Corporation or its shareholders; (2) an act or omission not in good faith that constitutes a breach of duty of the director to the Corporation or an act or omission that involves intentional misconduct or a knowing violation of the law; (3) a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's duties; or (4) an act or omission for which the liability of a director is expressly provided by applicable law.

ARTICLE XVIII

Indemnification

1.

Pursuant to the terms of the TBOC, Title 1, Chapter 8, Subchapters A-C, as amended from time to time (the “Indemnification Sections”), the Corporation shall indemnify and advance expenses to a director or officer in connection with a proceeding to the fullest extent permitted or required by and in accordance with the Indemnification Sections.

2.         The Corporation may, as determined by the Board of Directors of the Corporation in a specific instance or by resolution of general application, indemnify and advance expenses to an employee, fiduciary, agent or such other nongoverning persons in connection with a proceeding to the extent permitted or required by and in accordance with the Indemnification Sections.

3.         This Article XVIII shall not be deemed exclusive of any other rights to which those indemnified may be entitled under this Certificate of Formation, any bylaw, agreement, vote of shareholders or disinterested directors or otherwise.  The rights provided under this Article shall continue as to a person who has ceased to be in this position which entitled him to such indemnification and shall inure to the benefit of the heirs, estate or personal representative of such a person.  This Article shall not be deemed to preclude the Corporation from indemnifying other persons from similar or other expenses and liabilities as the Board of Directors of the Corporation may determine in a specific instance or by resolution of general application.

ARTICLE XIX

Directors Conflicting Interests Transactions

1.         Conflicting Interest Transaction.  As used in this section, “Conflicting Interest Transaction” means any of the following:

(a)  A loan or other assistance by the Corporation to a director of the Corporation or to an entity in which a director of the Corporation is a director or officer or has a financial interest;

(b)  A guaranty by the Corporation of an obligation of a director of the Corporation or of any obligation of an entity in which a director of the Corporation is a director or officer or has a financial interest; or

(c)  A contract or transaction between the Corporation and a director of the Corporation or between the Corporation and an entity in which a director of the Corporation is a director or officer or has a financial interest.

Conflicting Interest Transaction shall not include any transactions which are deemed not to be Conflicting Interest Transactions under the TBOC.

2.         Effect of Conflicting Interest Transaction.  No Conflicting Interest Transaction shall be void or voidable or be enjoined, set aside, or give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the Corporation, solely because the Conflicting Interest Transaction involves a director of the Corporation or an entity in which a director of the Corporation is a director or officer or has a financial interest or solely because the director is present at or participates in the meeting of the Corporation’s Board of Directors or of the committee of the Board of Directors which authorizes, approves, or ratifies the conflicting interest transaction or solely because the director’s vote is counted for such purpose if:

(a)  The material facts as to the director’s relationship or interest and as to the Conflicting Interest Transaction are disclosed or are known to the Board of Directors of the committee, and the Board of Directors or committee in good faith authorizes, approves, or ratifies the Conflicting Interest Transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or

(b)  The material facts as to the director’s relationship or interest and as to the conflicting interest transaction are disclosed or are known to the shareholders entitled to vote thereon, and the conflicting interest transaction is specifically authorized, approved, or ratified in good faith by a vote of the shareholders; or

(c)  The Conflicting Interest Transaction is fair as to the Corporation.

3.         Common or Interested Directors.  Common or interested directors may be counted in determining the presences of a quorum at a meeting of the Board of Directors or of a committee which authorizes, approves or ratifies the conflicting interest transaction.

4.         Notice to Shareholders.  The Board of Directors of the Corporation or a committee thereof shall not authorize a loan, by the Corporation to a director of the Corporation or to an entity in which a director of the Corporation is a director or officer or has a financial interest, or a guaranty, by the Corporation of an obligation of a director of the Corporation or of an obligation of an entity in which a director of the Corporation is a director or officer or has a financial interest, as provided in paragraph (a) of section (2) of this Article until at least 10 days after written notice of the proposed authorization of the loan or guaranty has been given to the shareholders who would be entitled to vote thereon if the issue of the loan or guaranty were  submitted to a vote of the shareholders.

ARTICLE XX

Distributions to Shareholders

The Corporation may pay distributions on its shares without considering the amount that would be needed if the Corporation were to be dissolved at the time of the distribution to satisfy the preferential rights upon dissolution to shareholders whose preferential rights are superior to those receiving the distributions.

ARTICLE XXI
Merger or Other Business Combination

Any merger or other business combination with a third party requires the approval of such transactions by affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon, unless any class or series of shares is entitled to vote as a class thereon, in which event the vote required shall be the affirmative vote of the holders of a majority of the outstanding shares within each class or series of shares entitled to vote thereon as a class and at least a majority of the outstanding shares otherwise entitled to vote thereon.

ARTICLE XXII

Sale, Lease, or Exchange of Corporate Assets

The sale, lease, exchange or other disposition of all, or substantially all, of the property and assets of the Corporation requires the affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon.

ARTICLE XXIII

Execution

The undersigned affirms that the person designated as registered agent has consented to the appointment. The undersigned signs this document subject to the penalties imposed by law for the submission of a materially false or fraudulent instrument and certifies under penalty of perjury that the undersigned is authorized to execute the filing instrument.

IN WITNESS WHEREOF, the below named incorporator signed this Certificate of Formation on July __, 2022.

____________________________

William J. Clough,

Executive Chairman and

Chief Legal Officer of

Orbital Energy Group, Inc., the converting entity,

Orbital Infrastructure Group, Inc., the converted entity,

And Texas Resident Agent for the converted entity.

Annex F (Texas Bylaws)

BYLAWS

of

Orbital Infrastructure Group, Inc.

a Texas Corporation

CONTENTS

ARTICLE I

6

OFFICES

6

Section 1.1 Registered Office

6

Section 1.2 Other Offices.

6

ARTICLE II

6

STOCKHOLDERS

6

Section 2.1 Annual Meeting.

6

Section 2.2 Special Meetings.

6

Section 2.3 Place of Meetings.

7

Section 2.4 Notice

8

Section 2.5 Setting a Record Date for Stockholder Meetings

8

Section 2.6 Quorum

8

Section 2.7 Adjourned Meetings

9

Section 2.8 Voting by Stockholders on Matters Other Than the Election of Directors

9

Section 2.9 Voting by Stockholders in the Election of Directors

9

(a) Resignation of Incumbent Director Who Fails to Receive a Majority Vote.

9

(b) Definition of “Compelling Reason”

9

(c) Acceptance or Non-Acceptance of a Director’s Resignation.

10

(d) Failure of a Non-Incumbent Director to Win Election.

10

(e) Filling Vacancies.

10

(f) Nominees to Agree in Writing to Abide by these Bylaws.

10

(g) Majority Vote Defined.

10

(h) Vote Standard in Contested Elections.

10

Section 2.10 Voting Rights

10

(a) One Vote per Share

10

(b) No Cumulative Voting

10

(c) Voting by Ballot

10

Section 2.11 Proxies

11

Section 2.12 Action by Written Consent

11

(a) General

11

(b) Inspectors of Written Consent

12

(c) Effectiveness of Action by Written Consent

12

(d) Notice of Action by Written Consent.

12

(e) Setting a Record Date for Action by Written Consent.

12

Section 2.13 Stock Records

13

Section 2.14 Notice of Stockholder Nominations and Other Business

13

(a) Annual Meetings of Stockholders.

13

(1) Nominations and Other Business.

13

(2) Timely Advance Notice in Writing.

13

(3) Increased Number of Directors.

16

(b) Director Nominations-Special Meetings of Stockholders

16

(c) General.

17

(1) Procedure to be Followed.

17

(2) Public Announcement.

17

(3) Comply with the Exchange Act

17

(d) Stockholder Access to the Corporation’s Proxy Materials.

18

(1)  Right of Access

18

(2)  Eligibility.

18

(3)  Process.

19

(4)  Other Requirements

20

(5)  Definitions.

21

(e) Bylaw Anti-takeover Provisions Defined.

23

Section 2.15 Submission of Questionnaire, Representation and Agreement.

23

Section 2.16 Court Ordered Meetings.

23

Section 2.17 Voting of Shares by Certain Stockholders

24

Section 2.18 Waiver of Notice.

24

Section 2.19 Conduct of Meetings.

25

ARTICLE III

26

BOARD OF DIRECTORS

26

Section 3.1 General Powers

26

Section 3.2 Performance of Duties

26

Section 3.3 Number, Tenure and Qualifications.

26

Section 3.4 Executive Chairman of the Board

26

Section 3.5 Quorum, Required Vote and Adjournment.

26

Section 3.6 Regular Meetings.

26

Section 3.7 Special Meetings.

27

Section 3.8 Notice

27

Section 3.9 Manner of Acting

27

Section 3.10 Informal Action by Directors or Committee Members

27

Section 3.11 Participation by Electronic Means

27

Section 3.12 Vacancies

27

Section 3.13 Resignation

28

Section 3.14 Removal.

28

Section 3.15 Committees.

28

Section 3.16 Limitations on Committee Powers

28

Section 3.17 Committee Rules

28

Section 3.18 Use of Communications Equipment in Conducting Meetings

29

Section 3.19 Compensation.

29

Section 3.20 Presumption of Assent.

29

Section 3.21 Books and Records

29

ARTICLE IV

29

OFFICERS

29

Section 4.1 Officers Delineated.

29

Section 4.2 Election and Term of Office

30

Section 4.3 Removal.

30

Section 4.4 Vacancies.

30

Section 4.5 Executive Chairman.

30

Section 4.6 Chief Executive Officer.

30

Section 4.7 Chief Financial Officer.

30

Section 4.8 President.

31

Section 4.9 Chief Legal Officer.

31

Section 4.10 Secretary.

31

Section 4.11 Treasurer.

32

Section 4.12 Assistant Secretaries and Assistant Treasurers.

32

Section 4.13 Other Officers, Assistant Officers and Agents.

32

Section 4.14 Reservation of Authority.

32

Section 4.15 Salaries.

32

Section 4.16 Delegation of Authority.

32

Section 4.17 Execution of Contracts.

32

ARTICLE V

32

WAIVER OF NOTICE

32

ARTICLE VI

32

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

32

Section 6.1 Coverage.

32

Section 6.2 Claims.

33

Section 6.3 Enforcement of Claims.

34

Section 6.4 Enforceability.

34

Section 6.5 Rights Not Exclusive.

34

Section 6.6 Employees and Agents

35

Section 6.7 Insurance.

35

Section 6.8 Notices.

35

ARTICLE VII

35

CONTRACTS, LOANS, CHECKS AND DEPOSITS

35

Section 7.1 Contracts.

35

Section 7.2 Loans.

35

Section 7.3 Checks, Drafts, etc.

35

Section 7.4 Deposits

35

ARTICLE VIII

35

SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES

35

Section 8.1 Regulation.

35

Section 8.2 Shares Without Certificates.

36

Section 8.3 Certificates for Shares.

36

Section 8.4 Cancellation of Certificates.

36

Section 8.5 Consideration for Shares.

36

Section 8.6 Lost, Stolen or Destroyed Certificates.

37

Section 8.7 Transfer of Shares.

37

ARTICLE IX

37

FISCAL YEAR

37

ARTICLE X

37

DIVIDENDS AND DISTRIBUTIONS

37

ARTICLE XI

38

CORPORATE SEAL

38

ARTICLE XII

38

AMENDMENTS

38

ARTICLE XIII

38

EXECUTIVE COMMITTEE

38

Section 13.1 Appointment.

38

Section 13.2 Authority.

38

Section 13.3 Tenure and Qualifications

38

Section 13.4 Meetings.

38

Section 13.5 Quorum.

38

Section 13.6 Informal Action by Executive Committee

39

Section 13.7 Vacancies.

39

Section 13.8 Resignations and Removal.

39

Section 13.9 Procedure.

39

ARTICLE XIV

39

EMERGENCY BYLAWS

39

ARTICLE XV

40

GENERAL PROVISIONS

40

Section 15.1 Voting Securities Owned by the Corporation.

40

Section 15.2 General and Special Bank Accounts.

40

Section 15.3 Section Headings.

40

Section 15.4 Forum Selection.

40

Section 15.5 Waiver of Notice.

40

Section 15.6 Voting of Securities.

41

Section 15.7 Evidence of Authority.

41

Section 15.8 Certificate of Formation.

41

Section 15.9 Severability.

41

Section 15.10 Pronouns.

41

Section 15.11 Electronic Transmission.

41

CERTIFICATE

42

BYLAWS

of

Orbital Infrastructure Group, Inc.

ARTICLE I

OFFICES

Section 1.1 Registered Office. The registered office of the corporation shall be located at the corporation’s principal place of business or at the office of the person or entity then acting as the corporation’s registered agent in Texas. The registered office and/or registered agent of the corporation may be changed from time to time by resolution of the Board of Directors (the “Board”).

Section 1.2 Other Offices. The corporation may also have offices at such other places as the Board may determine from time to time or as the business of the corporation may require.

ARTICLE II

STOCKHOLDERS

Section 2.1 Annual Meeting. The annual meeting of stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board, the Executive Chairman of the Board (the “Executive Chairman”), or the Chief Executive Officer, which date shall not be a legal holiday, in the place, if any, where the meeting is to be held. The Board acting pursuant to a resolution adopted by the majority of the Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders, before or after the notice for such meeting has been sent to the stockholders.

Section 2.2 Special Meetings. Special meetings of stockholders may be called for any purpose and may be held at such time and place as shall be stated in a notice of meeting or in a duly executed waiver of notice thereof. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting.

(a) A special meeting of stockholders may be called at any time by the Executive Chairman, Chief Executive Officer, President or, if directed by resolution of the Board, the Secretary.

(b) A special meeting of stockholders shall be called by the Secretary at the written request (“Special Meeting Request”) of holders of record of at least 35% of the outstanding common stock of the corporation entitled to vote on the matter or matters to be brought before the proposed special meeting (the “Requisite Percentage”). A Special Meeting Request to the Secretary shall be signed by each stockholder requesting the special meeting (each, a “Requesting Stockholder”) and shall be accompanied by a notice setting forth the information required by Section 2.14(a)(2)(A)-(D) of these bylaws (the "Bylaws"), as if such Section were applicable to Special Meeting Requests. Requesting Stockholders who collectively hold at least the Requisite Percentage on the date the Special Meeting Request is submitted to the Secretary must (i) continue to hold at least the number of shares of common stock set forth in the Special Meeting Request with respect to each such Requesting Stockholder through the date of the special meeting and (ii) submit a written certification (an “Ownership Certification”) confirming the continuation of such holdings on the business day immediately preceding the special meeting, which Ownership Certification shall include the information required by Section 2.14(a)(2)(A) of these Bylaws as of the date of such special meeting with respect to each such Requesting Stockholder.

(c) A special meeting called pursuant to Section 2.2 of these Bylaws shall be held at such date, time and place as may be set by the Board in accordance with these Bylaws; provided, however, that the date of any special meeting called pursuant to Section 2.2(b) of these Bylaws shall not be more than 90 days after a Special Meeting Request that satisfies the requirements of this Section 2.2 is received by the Secretary. The day, place and hour of such special meeting shall be set forth in the notice of special meeting. If a valid Special Meeting Request is received by the Secretary subsequent to a valid Special Meeting Request and before the date of the corresponding special meeting of stockholders, all items of business contained in such Special Meeting Requests may be presented at one special meeting.

(d) Notwithstanding the foregoing provisions of this Section 2.2, a special meeting requested by stockholders pursuant to Section 2.2(b) of these Bylaws shall not be held if (i) the Special Meeting Request does not comply with this Section 2.2; (ii) the Special Meeting Request relates to an item of business that is not a proper subject for stockholder action under applicable law; (iii) the Special Meeting Request is received by the corporation during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting; (iv) an annual or special meeting of stockholders that included a substantially similar item of business (“Similar Business”) (as determined in good faith by the Board) was held not more than 120 days before the Special Meeting Request was received by the Secretary; (v) the Board has called or calls for an annual or special meeting of stockholders to be held within 90 days after the Special Meeting Request is received by the Secretary and the Board determines in good faith that the business to be conducted at such meeting includes the Similar Business; (vi) such Special Meeting Request was made in a manner that involved a violation of Regulation 14A under the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”), or other applicable law; or (vii) two or more special meetings of stockholders called pursuant to the request of stockholders have been held within the 12-month period before the Special Meeting Request was received by the Secretary. For purposes of this Section 2.2(d), the nomination, election or removal of directors shall be deemed to be Similar Business with respect to all items of business involving the nomination, election or removal of directors, changing the size of the Board and filling of vacancies and/or newly created directorships resulting from any increase in the authorized number of directors.

(e) Any Requesting Stockholder may revoke such stockholder’s participation in a Special Meeting Request at any time by written revocation delivered to the Secretary and if, following any such revocation, there are outstanding un-revoked requests from stockholders holding less than the Requisite Percentage in accordance with this Section 2.2, the Board may, in its discretion, cancel the special meeting. If none of the Requesting Stockholders appears or sends a duly authorized agent to present the business to be presented for consideration that was specified in the Special Meeting Request, or if the Ownership Certification does not satisfy the requirements set forth in Section 2.2(b) of these Bylaws, the corporation need not present such business for a vote at such special meeting.

(f) Business conducted at a special meeting requested by stockholders pursuant to Section 2.2(b) of these Bylaws shall be limited to the matters described in the applicable Special Meeting Request; provided that, nothing herein shall prohibit the Board from submitting matters to the stockholders at any such special meeting requested by stockholders.

Section 2.3 Place of Meetings. Annual and special meetings may be held at such place as the Board may determine, including but not limited to telephonic or virtual meetings.

Section 2.4 Notice. Written notice stating the place, day and hour of the meeting of stockholders shall be delivered not less than 10 nor more than 60 days before the date of the meeting, except that (i) if the number of authorized shares is to be increased, at least thirty 30 days’ notice shall be given, or (ii) any other longer notice period is required by the Texas Business Organizations Code (the “TBOC”). Notice of a special meeting shall include a description of the purpose or purposes of the meeting. Notice of an annual meeting need not include a description of the purpose or purposes of the meeting except the purpose or purposes shall be stated with respect to (i) an amendment to the certificate of formation of the corporation (the "Certificate of Formation"), (ii) a merger or share exchange in which the corporation is a party and, with respect to a share exchange, in which the corporation's shares will be acquired, (iii) a sale, lease, exchange or other disposition, other than in the usual and regular course of business, of all or substantially all of the property of the corporation or of another entity which this corporation controls, in each case with or without the goodwill, (iv) a dissolution of the corporation, or (v) any other purpose for which a statement of purpose is required by the TBOC. Notice shall be given personally or by mail, private carrier, telegraph, teletype, electronically transmitted facsimile or other form of wire or wireless communication, by or at the direction of the Executive Chairman, Chief Executive Officer, Chief Legal Officer, President, or the Secretary, or the officer or other persons calling the meeting, to each stockholder entitled to vote at such meeting. If mailed and in a comprehensible form, such notice shall be deemed to be delivered when deposited in the United States mail. If notice is given other than by mail, and provided such notice is in a comprehensible form, the notice is given and effective on the date received by the stockholder.

If three successive letters mailed to the last-known address of any stockholder of record are returned as undeliverable, no further notices to such stockholder shall be necessary until another address for such stockholder is made known to the corporation.

Section 2.5 Setting a Record Date for Stockholder Meetings. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may set a record date, which record date shall not precede the date upon which the resolution setting the record date is adopted by the Board, and which record date shall not be more than 60 nor less than 10 days before the date of any such meeting. Only stockholders as of the record date are entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof. If no record date is set by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment or postponement of the meeting; provided, however, that the Board may set a new record date for the adjourned or postponement meeting.

Section 2.6 Quorum. One-third of the votes entitled to be cast on the matter by a voting group, represented in person or by proxy, constitutes a quorum of that voting group for the action on the matter. If no specific voting group is designated in the Certificate of Formation or under the TBOC for a particular matter, all outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a voting group. In the absence of a quorum at any such meeting, a majority of the shares so represented may adjourn the meeting from time to time for a period not to exceed 120 days without further notice. However, if the adjournment is for more than 120 days, or if after the adjournment a new record date is set for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 2.7 Adjourned Meetings. When a meeting is adjourned to another date, time or place, notice need not be given of the new date, time or place, if the new date, time or place of such meeting is announced before adjournment at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which may have been transacted at the original meeting. If the adjournment is for more than 120 days, or if a new record date is set for the adjourned meeting, a new notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting as of the new record date.

Section 2.8 Voting by Stockholders on Matters Other Than the Election of Directors. With respect to any matters as to which no other voting requirement is specified by the TBOC, the Certificate of Formation or these Bylaws, the affirmative vote required for stockholder action shall be that of a majority of the shares present in person or represented by proxy (as counted for purposes of determining the existence of a quorum) and entitled to vote at a meeting of stockholders at which a quorum is present. In the case of a matter submitted for a vote of the stockholders as to which a stockholder approval requirement is applicable under the stockholder approval policy of the NASDAQ Stock Market, the requirements of Rule 16b-3 under the Exchange Act, or any provision of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), including Code Section 162(m), in each case for which no higher voting requirement is specified by the TBOC, the Certificate of Formation or these Bylaws, the vote required for approval shall be the requisite vote specified in such stockholder approval policy, Rule 16b-3 or such Code provision, as the case may be (or the highest such requirement if more than one is applicable). For the approval of the appointment of independent public accountants (if submitted for a vote of the stockholders), the vote required for approval shall be a majority of the votes cast on the matter.

Section 2.9 Voting by Stockholders in the Election of Directors. Each director to be elected by the stockholders shall be elected by a plurality of the votes cast at any meeting held for the purpose of the election of directors at which a quorum is present, subject to the following provisions:

(a)Resignation of Incumbent Director Who Fails to Receive a Majority Vote. In any non-contested election of directors, any director nominee who is an incumbent director who receives a greater number of votes “withheld” from his or her election (or “against” or “no” votes) than votes “for” such election shall immediately tender his or her resignation to the Board, which resignation shall be irrevocable. Thereafter, the Board shall decide, through a process managed by the Corporate Nominating Committee (and excluding the nominee in question from all Board and Committee deliberations), whether to accept such resignation within 90 days of the date of such resignation. Absent a compelling reason for the director to remain on the Board (as determined by the Board), the Board shall accept the resignation from the director. To the extent that the Board determines that there is a compelling reason for the director to remain on the Board and does not accept the resignation, the Board’s explanation of its decision shall be disclosed promptly in a Current Report on Form 8-K filed with the United States Securities and Exchange Commission (the “SEC”) or in a press release that is widely disseminated.

(b)Definition of Compelling Reason”. For purposes of this policy, a “compelling reason” shall be determined by the Board (excluding the nominee in question from all Board and Committee deliberations) and could include, by way of example and without limitation, situations in which a director nominee was the target of a “vote no” or “withhold” campaign on what the Board believes to be an illegitimate or inappropriate basis or if the resignation would cause the corporation to be in violation of its constituent documents or regulatory requirements.

(c)Acceptance or Non-Acceptance of a Directors Resignation. If such incumbent director’s resignation is accepted by the Board, then such director shall immediately cease to be a member of the Board upon the date of action taken by the Board to accept such resignation. If such incumbent director’s resignation is not accepted by the Board, such director will continue to serve until the next annual meeting, or until his or her subsequent resignation or removal.

(d)Failure of a Non-Incumbent Director to Win Election. If any nominee for director who is not an incumbent fails in a non-contested election to receive a majority vote for his or her election at any meeting for the purpose of the election of directors at which a quorum is present, such candidate shall not be elected and shall not take office.

(e)Filling Vacancies. If an incumbent director’s resignation is accepted by the Board pursuant to these Bylaws, or if a non-incumbent nominee for director is not elected, the Board, may, subject to the provisions of Article III of these Bylaws, fill any resulting vacancy pursuant to the provisions of Article III, Section 3.12 of these Bylaws, or may set the size of the Board pursuant to the provisions of Article III, Section 3.3 of these Bylaws.

(f)Nominees to Agree in Writing to Abide by these Bylaws. To be eligible for election as a director of the corporation, each nominee (including incumbent directors and nominees proposed by stockholders in accordance with Article II of these Bylaws) must agree in writing in advance to comply with the requirements of this Article II of these Bylaws.

(g)Majority Vote Defined. For purposes of these Bylaws, a majority of votes cast shall mean that the number of shares voted “for” a director’s election exceeds 50% of the total number of votes cast with respect to that director’s election. Votes “cast” shall include votes “against” and “no” votes, but shall exclude withhold and abstentions with respect to a director’s election or with respect to the election of directors in general.

(h)Vote Standard in Contested Elections. Notwithstanding anything to the contrary contained in this Article II, Section 9 of these Bylaws, in the event of a contested election, directors shall be elected by the vote of a plurality of the votes cast at any meeting for the election of directors at which a quorum is present. For purposes of these Bylaws, a contested election shall mean any election of directors in which the number of candidates for election as directors exceeds the number of directors to be elected, with the determination thereof being made by the Secretary (i) as of the close of the applicable notice of nomination period set forth in Article II, Section 2.14 of these Bylaws based on whether one or more notice(s) of nomination were timely filed in accordance with said Bylaws or (ii) if later, reasonably promptly following the determination by any court or other tribunal of competent jurisdiction that one or more notice(s) of nomination were timely filed in accordance with said Bylaws; provided, that the determination that an election is a contested election by the Secretary pursuant to clause (i) or (ii) shall be determinative only as to the timeliness of a notice of nomination and not otherwise as to its validity.

Section 2.10 Voting Rights.

(a) One Vote per Share. Unless otherwise provided by these Bylaws or the Certificate of Formation, each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of stockholders. The corporation is not obligated to issue fractional shares. Only whole shares are entitled to vote.

(b) No Cumulative Voting. No stockholder shall be permitted to cumulate his or her votes in the election for directors or otherwise.

(c) Voting by Ballot. Voting on any question or in any election may be by voice vote unless the presiding officer shall order or any stockholder shall demand that voting be by ballot.

Section 2.11 Proxies. At all meetings of stockholders, a stockholder may vote by proxy by signing an appointment form or similar writing, either personally or by his or her duly authorized attorney-in-fact. A stockholder may also appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment to the proxy, a proxy solicitor, proxy support service organization, or other person duly authorized by the proxy to receive appointments as agent for the proxy, or to the corporation. The transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the stockholder transmitted or authorized the transmission of the appointment. The proxy appointment form or similar writing shall be filed with the Secretary of the corporation before or at the time of the meeting. The appointment of a proxy is effective when received by the corporation and is valid for eleven months unless a different period is expressly provided in the appointment form or similar writing.

Any complete copy, including an electronically transmitted facsimile, of an appointment of a proxy may be substituted for or used in lieu of the original appointment for any purpose for which the original appointment could be used.

Revocation of a proxy does not affect the right of the corporation to accept the proxy's authority unless (i) the corporation had notice that the appointment was coupled with an interest and notice that such interest is extinguished is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment, or (ii) other notice of the revocation of the appointment is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment. Other notice of revocation may, in the discretion of the corporation, be deemed to include the appearance at a stockholders' meeting of the stockholder who granted the proxy and his or her voting in person on any matter subject to a vote at such meeting.

The death or incapacity of the stockholder appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment.

The corporation shall not be required to recognize an appointment made irrevocably if it has received a writing revoking the appointment signed by the stockholder (including a stockholder who is a successor to the stockholder who granted the proxy) either personally or by his or her attorney-in-fact, notwithstanding that the revocation may be a breach of an obligation of the stockholder to another person not to revoke the appointment.

Section 2.12 Action by Written Consent.

(a)General. Any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken and bearing the dates of signature of the stockholders who signed the consent or consents, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to the corporation’s principal place(s) of business, or an officer or agent of the corporation having custody of the book or books in which proceedings of meetings of the stockholders are recorded. Delivery made to the corporation’s principal place(s) of business office shall be by hand, by certified or registered mail, return receipt requested, or other receipted delivery, provided, however, that no consent or consents delivered by certified or registered mail or other receipted delivery shall be deemed delivered until received at the registered office. All consents properly delivered in accordance with this Section shall be deemed to be recorded when so delivered. Any action taken pursuant to such written consent or consents of the stockholders shall have the same force and effect as if taken by the stockholders at a meeting of stockholders.

(b)Inspectors of Written Consent. In the event of the delivery, in the manner provided by Section 2.12(a) of these Bylaws, to the corporation of the requisite written consent or consents to take corporate action and/or any related revocation or revocations, the corporation shall engage an inspector(s) of elections for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. For the purpose of permitting the inspector(s) to perform such review, no action by written consent without a meeting shall be effective until such date as the inspector(s) certify to the corporation that the consents delivered to the corporation in accordance with Section 2.12(a) of these Bylaws represent at least the minimum number of votes that would be necessary to take the corporate action. Nothing contained in this paragraph shall in any way be construed to suggest or imply that the Board or any stockholder shall not be entitled to contest the validity of any consent or revocation thereof, whether before or after such certification by the inspector(s), or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

(c)Effectiveness of Action by Written Consent. No written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered to the corporation as required by this Section, written consents signed by the holders of a sufficient number of shares to take such corporate action are so recorded.

(d)Notice of Action by Written Consent. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were recorded.

(e)Setting a Record Date for Action by Written Consent. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board may set a record date, which record date shall not precede the date upon which the resolution setting the record date is adopted by the Board, and which date shall not be more than 10 days after the date upon which the resolution setting the record date is adopted by the Board. Only stockholders as of the record date are entitled to consent to corporate action in writing without a meeting. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board to set a record date. The Board shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution setting the record date (unless a record date has previously been set by the Board pursuant to the first sentence of this Bylaw). If no record date has been set by the Board, pursuant to these Bylaws or otherwise within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board is required by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Texas, its principal place(s) of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. If no record date has been set by the Board and prior action by the Board is required by statute, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.

Section2.13 Stock Records. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at the earlier of 10 days before such meeting of stockholders or two business days after notice of the meeting, a complete list of the stockholders entitled to vote at each meeting of stockholders or any adjournment thereof. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be arranged in alphabetical order, within each class or series, and shall show the address of and the number of shares of each class or series held by each stockholder. For the period beginning the earlier of 10 days prior to such meeting or two business days after notice of the meeting is given and continuing through the meeting and any adjournment thereof, this list shall be kept on file at the principal office of the corporation, or at a place (which shall be identified in the notice) in the city where the meeting will be held. Such list shall be available for inspection on written demand by any stockholder (including for the purpose of this Section any holder of voting trust certificates) or his or her agent or attorney during regular business hours and during the period available for inspection. The original stock transfer books shall be prima facie evidence as to the stockholders entitled to examine such list or to vote at any meeting of stockholders.

Any stockholder, his or her agent or attorney, may copy the list during regular business hours and during the period it is available for inspection, provided (i) the stockholder has been a stockholder for at least three months immediately preceding the demand or is a stockholder of at least five percent of all of the outstanding shares of any class of shares as of the date of the demand, (ii) the demand is made in good faith and for a purpose reasonably related to the demanding stockholder's interest as a stockholder, (iii) the stockholder describes with reasonable particularity the purpose and the list the stockholder desires to inspect, (iv) the list is directly connected with the described purpose; and (v) the stockholder pays a reasonable charge covering the cost of labor and material for such copies.

Section 2.14 Notice of Stockholder Nominations and Other Business.

(a)Annual Meetings of Stockholders.

(1) Nominations and Other Business. Nominations of persons for election to the Board and the proposal of other business to be considered by the corporation’s stockholders may be made at an annual meeting of stockholders (A) by or at the direction of the Board, including pursuant to the corporation’s notice of meeting, or (B) by any stockholder of the corporation who (i) at the time of giving of notice provided for in these Bylaws and at the time of the stockholder meeting (including any adjournment or postponement thereof) is a stockholder of the corporation who has continuously held at least $2,000 in market value, or 1%, of the corporation's securities entitled to be voted at a stockholder meeting for at least one year by the date the proposal is submitted and continue to hold those securities through the date of the stockholder meeting and shall be in full compliance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, (ii) is entitled to vote at the meeting and (iii) complies with the notice procedures set forth in these Bylaws as to such business or nomination; this clause (B) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the corporation’s notice of meeting) before an annual meeting of stockholders.

(2) Timely Advance Notice in Writing. Without qualification, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.14(a)(1)(B) of these Bylaws, the stockholder must have given timely advance notice (“notice”) in writing to the Secretary and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the corporation. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. To be in proper form, a stockholder’s notice (whether given pursuant to this Section 2.14(a)(2) or Section 2.14(b) of these Bylaws) to the Secretary must:

(A) Set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made:

(i) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, if any,

(ii) (1) the class or series and number of shares of the corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (2) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation, (3) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the corporation, (4) any short interest in any security of the corporation (for purposes of these Bylaws, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (5) any rights to dividends on the shares of the corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the corporation, (6) any proportionate interest in shares of the corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (7) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to, based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation, any such interests held by members of such stockholder’s immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date), and

(iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

(B) If the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the annual meeting, set forth:

(i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, in such business and

(ii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder;

(C) Set forth, as to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board:

(i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and

(ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K of the Securities Act of 1933 as amended if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and

(D) With respect to each nominee for election or reelection to the Board, include a completed and signed questionnaire, representation and agreement required by Article II, Section 2.15 of these Bylaws. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

(E) Without exception, no person shall be eligible for election or re-election as a director of the corporation at a meeting of stockholders unless nominated in accordance with the provisions set forth in this Section 2.14. In addition, a nominee shall not be eligible for election or re-election if any of the responses required by this Section 2.14 contain an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairman of any meeting shall have the power and duty to determine whether a nomination was made in accordance with the provisions of this Section 2.14 (including the previous sentence of this Section), and if the chairman should determine that a nomination was not made in accordance with the provisions of this Section 2.14, the chairman shall so declare to the meeting and such nomination shall not be brought before the meeting.

(F) Except as otherwise required by law, nothing in this Section 2.14 shall obligate the corporation or the Board to include in any proxy statement or other stockholder communication distributed on behalf of the corporation or the Board information with respect to any nominee for director submitted by a stockholder.

(G) Notwithstanding the foregoing provisions of this Section 2.14, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting to present a nomination, such nomination shall not be brought before the meeting, notwithstanding that proxies in respect of such nominee may have been received by the corporation. For purposes of this Section 2.14, to be considered a “qualified representative of the stockholder”, a person must be authorized by a written instrument executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such written instrument or electronic transmission, or a reliable reproduction of the written instrument or electronic transmission, at the meeting of stockholders.

(H) For purposes of this Section 2.14, “public disclosure” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(I) Notwithstanding the foregoing provisions of this Section 2.14, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.14, provided however, that any references in these Bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations to be considered pursuant to this Section 2.14 (including paragraph (a)(ii) hereof), and compliance with paragraph (a)(ii) of this Section 2.14 shall be the exclusive means for a stockholder to make nominations. Nothing in this Section 2.14 shall be deemed to affect any rights of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Formation.

(3) Increased Number of Directors. Notwithstanding anything in the second sentence of Section 2.14(a)(2) of these Bylaws to the contrary, in the event that the number of directors to be elected to the Board is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased Board at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by these Bylaws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

(b)Director Nominations-Special Meetings of Stockholders. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected (1) by or at the direction of the Board, including pursuant to the corporation’s notice of meeting, (2) pursuant to Section 2.2 of this Bylaw, or (3) by any stockholder of the corporation who:

(i) is a stockholder of the corporation who has continuously held at least $2,000 in market value, or 1%, of the corporation's securities entitled to be voted at a stockholder meeting for at least one year by the date the proposal is submitted and continue to hold those securities through the date of the stockholder meeting and shall be in full compliance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended,

(ii) is entitled to vote at the meeting (including any adjournment or postponement thereof), and

(iii) complies with the notice procedures set forth in these Bylaws as to such nomination. In the event a special meeting of stockholders is called for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the corporation’s notice of meeting, if the stockholder’s notice required by Section 2.14(a)(2) of these Bylaws with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 2.15 of these Bylaws) shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

(c)General.

(1) Procedure to be Followed. Only such persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in these Bylaws. Except as otherwise provided by law, the Certificate of Formation or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall be disregarded.

(2) Public Announcement. For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the corporation with the SEC pursuant to Sections 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(3) Comply with the Exchange Act. Notwithstanding the foregoing provisions of these Bylaws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these Bylaws; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 2.14(a)(1)(B) or Section 2.14(b) of these Bylaws. Nothing in these Bylaws shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Formation or these Bylaws.

(d) Stockholder Access to the Corporations Proxy Materials.

(1) Right of Access. The corporation shall include in the proxy statement (such right of inclusion being sometimes referred to as “Access”) distributed on behalf of the Board for the meeting of stockholders the information specified below (the “Required Information”) with respect to the Eligible Stockholder (as defined below) proposing to nominate a candidate to be elected as a director of the corporation and the candidate to be nominated (an “Access Candidate”); provided that the nomination complies with the requirements of this Section, all other applicable provisions of these Bylaws and the corporation’s Certificate of Formation and all applicable state and federal laws or regulations. The Required Information shall be (i) all information concerning the Access Candidate and the Eligible Stockholder required to be provided by a stockholder in connection with a solicitation of proxies for the election as a director of the Access Candidate under the rules of the Securities and Exchange Commission, these Bylaws, the corporation’s Certificate of Formation, the rules and listing guidelines of the NASDAQ Stock Market or such other principal U.S. securities market in which the common stock of the corporation trades and all other applicable state and federal laws and regulations and (ii) if the Eligible Stockholder so elects, a statement (the “Statement”), of not more than 500 words in support of the nomination. The Required Information shall be furnished to the corporation by the Eligible Stockholder in accordance with this Section 2.14(d).

The form of proxy that the corporation distributes for the meeting of stockholders shall permit stockholders to give instructions for the voting of their shares with respect to the election of the Access Candidate in substantially the same manner as provided with respect to the nominees of the Board, but shall clearly distinguish between an Access Candidate and a nominee of the Board. Nominees need not be listed in alphabetical order either in the proxy statement or the form of proxy. Moreover, the form of proxy may permit stockholders to vote for all of the Board’ nominees without specifying each such nominee, as well as to give discretion to the named proxies to vote for (or withhold votes from) nominees of their choice.

The corporation shall not be required to provide Access with respect to any meeting of stockholders (a) for more than the Maximum Number of Access Candidates or (b) if it receives timely notice pursuant to the corporation’s advance notice bylaw that any stockholder proposes to nominate a candidate for election with respect to which Access is not being requested.

(2) Eligibility. In order for information about an Access Candidate of an Eligible Stockholder to be included in the corporation’s proxy materials, the following requirements must be satisfied:

A.    The Eligible Stockholder shall have provided to the corporation notice of the candidate for whom it seeks Access pursuant to this Section (“Notice of Access”) not later than the last date by which notice of a proposed nomination is required to be provided to the corporation in accordance with the corporation’s advance notice bylaw, Section 2.14(a)(2).

B.    The Eligible Stockholder’s Notice of Access shall identify only one Access Candidate for election as a director at the meeting of stockholders.

C.    The Access Candidate shall be Independent and shall not be a Disqualified Repeat Nominee.

D.    The Eligible Stockholder shall represent and undertake in its Notice of Access that it, its Access Candidate and each of its and its Access Candidate’s Affiliates and Associates (a) has not nominated and will not nominate for election to the Board at the meeting of stockholders any individual other than the individual named in its Notice of Access, (b) has not engaged and will not engage in, and has not and will not be a “participant” in another person’s “solicitation” within the meaning of SEC Rule 14a-1(l) in support of the election of any individual as a director at the meeting of stockholders other than its named Access Candidate or a nominee of the Board and (c) will not distribute to any stockholder any form of proxy for the meeting of stockholders other than the form distributed by the corporation.

E.    The Eligible Stockholder shall represent and undertake in its Notice of Access that at the time of giving its Notice of Access and at all times until the election of directors at the meeting of stockholders neither it nor the Access Candidate nor the Affiliates and Associates of it and its Access Candidate shall own any securities of the corporation for the purpose, or with the effect, of changing or influencing the control of the corporation, or in connection with or as a participant in any transaction having that purpose or effect, including any transaction referred to in SEC Rule 13d–3(b), other than solely by reason of seeking the election as a director of its named Access Candidate.

F.    The Eligible Stockholder shall not have submitted a Notice of Access with respect to the immediately preceding meeting of stockholders, except where the individual named in such Notice of Access received at such meeting votes in favor of his or her election representing at least 25% of the total votes cast with respect to the election.

(3) Process.

A.    The Nominating Committee shall consider a Notice of Access and shall determine if the Access Candidate is Independent based on the information regarding the Independence of such Access Candidate that is received by the Board pursuant to the corporation’s advance notice bylaw. If the Committee believes it needs additional information to make the Independence determination, it shall notify the Eligible Stockholder of the nature and type of information required and afford the Eligible Stockholder and the Access Candidate a reasonable period of time to submit such additional information. The Committee may, in its sole discretion, permit the Eligible Stockholder and/or the Access Candidate and its or their representatives an opportunity to appear before the Committee in connection with its consideration of the Independence of the Access Candidate. The Committee may, in its sole discretion, make a recommendation to the Board as to whether the Access Candidate should be nominated by the Board for election at the meeting of stockholders.

B.    If the Board nominates an Access Candidate as part of the Board’ slate of nominees, the Notice of Access will be deemed withdrawn and the former Access Candidate shall be presented to the stockholders in the same manner as every other nominee of the Board. However, if elected, the Access Candidate shall be considered a director for whom Access was provided for all purposes of this Section, including the determination of the Maximum Number of nominees. If the Board does not so nominate the Access Candidate, Access shall be provided in accordance with the terms and subject to the conditions of this Section 2.14(d).

C.    If an Access Candidate or an Eligible Stockholder fails to continue to meet the requirements of this Section for Access or if an Access Candidate fails to meet all of the requirements of the corporation’s advance notice bylaw to be properly nominated as a candidate for election as a director at the meeting of stockholders or if an Access Candidate dies, becomes disabled or is otherwise disqualified from being nominated for election or serving as a director prior to the meeting of stockholders:

(i)    The corporation may, to the extent feasible, remove the name of the Access Candidate and the Statement from its proxy statement, remove the name of the Access Candidate from its form of proxy and/or otherwise communicate to its stockholders that the Access Candidate will not be eligible for nomination at the meeting of stockholders.

(ii)    The Eligible Stockholder may not name another Access Candidate or, subsequent to the last day on which a stockholder’s notice of an intent to make a nomination would be timely, otherwise cure in any way any defect preventing the nomination of the Access Candidate at the meeting of stockholders.

D.    The Board or a committee thereof may adopt such rules or guidelines for applying the provisions of this Section as it determines are appropriate.

E.    If there are more than the Maximum Number of candidates for which Access has been sought in compliance with this Section, Access hereunder shall be provided for the Maximum Number of Access Candidates made by those Eligible Stockholders who Net Long Beneficially Own the highest number of shares of common stock of the corporation, based on the Net Long Beneficial Ownership of each Eligible Stockholder on the date as of which it reported its Net Long Beneficial Ownership in its Notice of Access.

(4) Other Requirements

A.    The Eligible Stockholder shall have executed and delivered to the corporation simultaneously with its delivery of its Notice of Access an undertaking acknowledging its responsibility for the Required Information, all other information submitted to the corporation pursuant to this Section and all of its and its Access Candidate’s communications to stockholders in connection with the election of directors at the meeting of stockholders. In such undertaking, the Eligible Stockholder shall expressly assume all liability to which the corporation or any of its Affiliates, or any director, officer, employee or representative thereof, may be subject as a result of any legal or regulatory violation arising out of any such information or communication made available by or on behalf of the Eligible Stockholder or any of its Affiliates or its Access Candidate to the corporation or to any stockholder of the corporation in connection with the election of directors at the meeting of stockholders.

B.    The Eligible Stockholder and its Access Candidate shall each provide to the corporation prompt written notice of (a) any material change in its Net Long Beneficial Ownership of common stock of the corporation occurring since the date as of which the Eligible Stockholder reported its Net Long Beneficial Ownership in its Notice of Access and before the election of directors at the meeting and (b) any material error recognized by the Eligible Stockholder or its Access Candidate in, or any change in circumstances that makes incorrect or misleading in any material respect, the information previously provided by the Eligible Stockholder or its nominee in the Notice of Access or otherwise provided in accordance with this Section. The Eligible Stockholder, in addition, shall certify as to the accuracy in all material respects of its Notice of Access as of the record date for notice of the meeting of stockholders and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, or, if there are fewer than 10 business days between the date of the meeting of stockholders and such adjourned or postponed meeting, then as of the date of the meeting so adjourned or postponed. Such certification shall be delivered to, or mailed to and received by, the Secretary at the principal executive offices of the corporation not later than five business days after the record date for notice of the meeting (in the case of a certification required to be made as of such record date), and not later than eight business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of a certification required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof).

(5) Definitions. For the purposes of this Section, the following definitions shall apply:

A.    An “Affiliate” of a person shall mean another person that, directly or indirectly through one of more intermediaries, controls, is controlled by or is under common control with such person.

B.    An “Associate” of a person shall mean any:

(i)    Corporation or organization (other than a majority-owned subsidiary of such person) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities;

(ii)    Trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and

(iii)    Relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a director or officer of the registrant or any of its parents or subsidiaries.

C.    “Net Long Beneficial Ownership” (and its correlative terms), when used to describe the nature of a person’s ownership of common stock of the corporation, shall mean those shares of common stock of the corporation as to which the person in question possesses (a) the full unhedged power to vote or direct the voting of such shares, (b) the full unhedged economic incidents of ownership of such shares (including the full right to profits and the full risk of loss), and (c) the full unhedged power to dispose of or direct the disposition of such shares; provided that the number of shares calculated in accordance with clauses (a), (b) and (c) shall not include any shares (i) sold by such person or any of its Affiliates in any transaction that has not been settled or closed, (ii) borrowed by such person or any of its Affiliates for any purposes or purchased by such person or any of its Affiliates pursuant to an agreement to resell or (iii) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or other agreement or understanding sold or acquired by such person or any of its Affiliates, whether any such instrument is to be settled with shares or with cash based on the notional amount of shares subject thereto, in any such case which has, or is intended to have, the purpose or effect of (A) reducing in any manner, to any extent or at any time in the future, such person’s or Affiliates’ full rights to vote or direct the voting and full rights to dispose or direct the disposition of any of such shares, and/or (B) offsetting to any degree gain or loss arising from the full economic ownership of such shares by such person or Affiliate.

D.    A “Disqualified Repeat Nominee” in respect of a meeting of stockholders shall mean an individual as to whom Access to the corporation’s proxy materials for the immediately preceding meeting of stockholders was provided and who withdrew from or became ineligible or unavailable for election at the meeting or received at such meeting votes in favor of his or her election representing less than 25% of the total votes cast for or withheld from his or her election.

E.    An “Eligible Stockholder” shall mean a person who, as of the date of submission of the Notice of Access:

(i)    Is a stockholder of the corporation who has continuously held at least $2,000 in market value, or 1%, of the corporation's securities entitled to be voted at a stockholder meeting for at least one year by the date the proposal is submitted and continue to hold those securities through the date of the stockholder meeting.

(ii)    Has or have had continuous Net Long Beneficial Ownership of at least the same amount of securities so owned by such person on the date as of which the Eligible Stockholder reported its Net Long Beneficial Ownership in its Notice of Access for a minimum of one year prior to the date of submission of the Notice of Access,

(iii)    Continue(s) to have Net Long Beneficial Ownership of at least the same amount of securities so owned by such person as of the date of which the Eligible Stockholder reported its Net Long Beneficial Ownership in its Notice of Access through the date of the election of directors at the meeting of stockholders to which the Notice of Access pertains and

(iv)    Complies with all other provisions of this Section and shall be in full compliance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended. Each Eligible Stockholder shall submit with the Notice of Access one or more written statements from the registered holder of the shares (and from each intermediary through which each such person derives, or during the minimum holding period has derived, Net Long Beneficial Ownership of such shares) verifying that, as of a date within seven days preceding the date of submission of the Notice of Access, such person beneficially owns such shares and has beneficially owned at least that amount of shares continuously for at least the minimum holding period. For purposes of this Section, persons who jointly nominate an individual for election as a director shall be considered an Eligible Stockholder only if they have agreed in writing to so act, are so identified in the Notice of Access and the information and the undertakings required by this Section for an Eligible Stockholder are provided with respect to each such person. For the avoidance of doubt, for purposes of determining if persons who claim jointly to satisfy the minimum stock ownership and minimum holding period requirements for an Eligible Stockholder, only the common stock of the corporation Net Long Beneficially Owned by any member of a group continuously for at least one full year shall be aggregated with the common stock Net Long Beneficially Owned continuously for one year by each other person acting jointly to constitute an Eligible Stockholder. No person may be a member of more than one group of persons constituting an Eligible Stockholder with respect to any annual meeting of stockholders.

F.   “Independent” with respect to an Access Candidate shall mean (a) that the nominee would be considered an independent director in accordance with applicable rules promulgated by the Securities and Exchange Commission and within the meaning of Rule 5605(a)(2) of The NASDAQ Stock Market or such other principal U.S. securities market in which the common stock of the corporation trades and any additional standards used by the Board or a duly authorized committee thereof in determining and disclosing the independence of the corporation’s directors and (b) the nominee is not an employee or officer of, or consultant to, the Eligible Stockholder or any of its Affiliates and has no other material association, by agreement, understanding or familial or other relationship, with the Eligible Stockholder or any of its Affiliates or Associates.

G.    The “Maximum Number” of candidates for which Access to the corporation’s proxy materials must be provided in respect of a meeting of stockholders (“Maximum Number of Access Candidates”) shall be that number of directors representing 25% of the entire Board in office on the immediate preceding annual meeting, rounded down to the nearest whole number. This Maximum Number of Access Candidates shall be set as of the last date by which advance notice of the proposed nomination by a stockholder of an individual for election as a director at the meeting of stockholders may be timely given to the corporation in accordance with the corporation’s advance notice bylaw. The Maximum Number of Access Candidates shall in no event exceed the number of nominees of the Board.

H.    All references in this Section to rules of the Securities and Exchange Commission shall refer to the rules of the Securities and Exchange Commission as in effect on the date this Section becomes effective and as such rules may be amended from time to time thereafter or any successor provision of such rules.

I.    An “annual meeting of stockholders” shall include a special meeting of stockholders to elect directors held in lieu of an annual meeting of stockholders and any adjournment of an annual meeting of stockholders or any such special meeting.

(e) Bylaw Anti-takeover Provisions Defined. Sections 2.2(b), 2.14(a)(1), 2.14(a)(2), and 2.14(b) of these Bylaws are the "Bylaw Anti-takeover Provisions."

Section 2.15 Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee for election or reelection as a director of the corporation, a person must complete and deliver (in accordance with the time periods prescribed for delivery of notice under Article II, Section 2.14 of these Bylaws) to the Secretary at the principal executive offices of the corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be in the form provided by the corporation, and shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (a) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law, (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein and (c) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the corporation.

Section 2.16 Court Ordered Meetings. A stockholder may apply to the district court in the county in Texas where the corporation's principal office is located or, if the corporation has no principal office in Texas , to the appropriate court of the county in which the corporation's corporate office is located to seek an order that a stockholder meeting be held (i) if an annual meeting was not held within 15 months after its last annual meeting, or (ii) if a stockholder participated in a proper call of or demand for a special meeting and notice of the special meeting was not given within 30 days after the date of the call or the date of the last of the demands necessary to require the calling of the meeting was received by the corporation pursuant to the TBOC, or the special meeting was not held in accordance with the notice.

Section 2.17 Voting of Shares by Certain Stockholders. If the name on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a stockholder, the corporation is entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and give it effect as the act of the stockholder.

If the name signed on a vote, consent, waiver, proxy appointment or proxy appointment revocation does not correspond to the name of a stockholder, the corporation is, nevertheless, entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and to give it effect as the act of the stockholder if:

(a) The stockholder is an entity and the name signed purports to be that of an officer or agent of the entity;

(b) The name signed purports to be that of an administrator, executor, guardian or conservator representing the stockholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation;

(c) The name signed purports to be that of a receiver or trustee in bankruptcy of the stockholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation;

(d) The name signed purports to be that of a pledge, beneficial owner or attorney-in-fact of the stockholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the stockholder has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation;

(e) Two or more persons are the stockholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-tenants or fiduciaries, and the person signing appears to be acting on behalf of all the co-tenants or fiduciaries; or

(f) The acceptance of the vote, consent, waiver, proxy appointment or proxy appointment revocation is otherwise proper under rules established by the corporation that are not inconsistent with this Section 2.17.

The corporation is entitled to reject a vote, consent, waiver, proxy appointment or proxy appointment revocation if the Secretary or other officer or agent authorized to tabulate votes has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the stockholder.

Neither the corporation nor any of its directors, officers, employees or agents who accepts or rejects a vote, consent, waiver, proxy appointment or proxy appointment revocation in good faith and in accordance with the standards of this Section is liable in damages for the consequences of the acceptance or rejection.

Section 2.18 Waiver of Notice. When any notice is required to be given to any stockholder, a waiver thereof in writing signed by the person entitled to such notice, whether before, at, or after the time stated therein, shall be equivalent to the giving of such notice. Such waiver shall be delivered to the corporation for filing with the corporate records.

The attendance of a stockholder at any meeting shall constitute a waiver of notice, waiver of objection to defective notice of such meeting, or a waiver of objection to the consideration of a particular matter at the stockholder meeting unless the stockholder, at the beginning of the meeting, objects to the holding of the meeting, the transaction of business at the meeting, or the consideration of a particular matter at the time it is presented at the meeting.

Section 2.19 Conduct of Meetings.

(a) Meetings of stockholders shall be presided over by the Executive Chairman of the Board, if any, or in the Chairman’s absence by the Vice Chairman of the Board, if any, or in the Vice Chairman’s absence by the Chief Executive Officer, or in the Chief Executive Officer’s absence, by a chairman designated by the Board. The Secretary shall act as secretary of the meeting, but in the absence of the Secretary, the chairman of the meeting may appoint any person to act as secretary of the meeting.

(b) The Board may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board, the chairman of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

(c) The chairman of the meeting shall announce at the meeting when the polls for each matter to be voted upon at the meeting will be opened and closed. After the polls close, no ballots, proxies or votes or any revocations or changes thereto may be accepted.

(d) In advance of any meeting of stockholders, the Board, the Executive Chairman of the Board or the Chief Executive Officer shall appoint one or more inspectors of election to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is present, ready and willing to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the corporation. The inspector shall have the duties prescribed by law and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law. Every vote taken by ballots shall be counted by a duly appointed inspector or duly appointed inspectors.

ARTICLE III

BOARD OF DIRECTORS

Section 3.1 General Powers. The business and affairs of the corporation shall be managed by or under the direction of the Board, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Formation.

Section 3.2 Performance of Duties. A director of the corporation shall perform his or her duties as a director, including his or her duties as a member of any committee of the board upon which he or she may serve, in good faith, in a manner he or she reasonably believes to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. In performing his or her duties, a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by persons and groups listed in paragraphs (a), (b), and (c) of this Section 3.2; but he or she shall not be considered to be acting in good faith if he or she has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs his or her duties shall not have any liability by reason of being or having been a director of the corporation.

Those persons and groups on whose information, opinions, reports, and statements a director is entitled to rely upon are:

(a) One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;

(b) Counsel, public accountants, or other persons as to matters which the director reasonably believes to be within such persons’ professional or expert competence; or

(c) A committee of the board upon which he or she does not serve, duly designated in accordance with the provision of the Certificate of Formation or these Bylaws, as to matters within its designated authority, which committee the director reasonably believes to merit confidence.

Section 3.3 Number, Tenure and Qualifications. The number of directors of the corporation shall be set from time to time by resolution of the Board, but in no instance shall there be less than one director. Each director shall hold office until the next annual meeting of stockholders or until his or her successor shall have been elected and qualified. Directors need not be residents of the State of Texas or stockholders of the corporation.

Section3.4 Executive Chairman of the Board. Subject to the provisions of Article III of these Bylaws, the Executive Chairman of the Board shall be appointed by resolution of the Board and shall preside at all meetings of the Board and stockholders.

Section3.5 Quorum, Required Vote and Adjournment. A majority of the total number of directors shall constitute a quorum for the transaction of business except as otherwise provided by statute or by the Certificate of Formation or these Bylaws. The vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the Board, unless otherwise provided by an applicable provision of law, by these Bylaws, by the Certificate of Formation or by a resolution of the Board. If a quorum shall not be present at any meeting of the Board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 3.6 Regular Meetings. A regular meeting of the Board shall be held without notice other than these Bylaws immediately after, and at the same place as, the annual meeting of stockholders. The Board may provide, by resolution, the time and place, either within or without the State of Texas , for the holding of additional regular meetings without notice other than such resolution.

Section 3.7 Special Meetings. Special meetings of the Board may be called by or at the request of the Executive Chairman, Vice Chairman of the Board, the Chief Executive Officer or any two directors. The person or persons authorized to call special meetings of the Board may set any place, either within or without the State of Texas , as the place for holding any special meetings of the Board called by them.

Section 3.8 Notice. Written notice of any special meeting of directors shall be given as follows:

(a)     By mail to each director at his or her business address at least four days prior to the meeting; or

(b)     By personal delivery, facsimile, email or other electronic means at least 24 hours prior to the meeting to the business address of each director, or in the event such notice is given on a Saturday, Sunday or holiday, to the residence address of each director.

(c)     If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, so addressed, with postage thereon prepaid. If notice is given by facsimile, email or other electronic means, such notice shall be deemed to be delivered when a confirmation of the transmission has been received by the sender. Any director may waive notice of any meeting before or after the time and date of the meeting stated in the notice. The waiver shall be in writing and signed by the director entitled to the notice. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meetings of the Board need be specified in the notice or waiver of notice of such meeting.

Section 3.9 Manner of Acting. Except as otherwise required by the TBOC or by the Certificate of Formation, the act of the majority of the directors present at a meeting at which a quorum is present when a vote is taken shall be the act of the Board.

Section 3.10 Informal Action by Directors or Committee Members. Unless the Certificate of Formation or these Bylaws provide otherwise, any action required or permitted to be taken at a meeting of the Board or any committee designated by said Board may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by each director or committee member, and delivered to the Secretary for inclusion in the minutes or for filing with the corporate records. Action taken under this Section is effective when all directors or committee members have signed the consent unless the consent specifies a different effective date. Such consent has the same force and effect as a unanimous vote of the directors or committee members and may be stated as such in any document.

Section 3.11 Participation by Electronic Means. Any members of the Board or any committee designated by such Board may participate in a meeting of the Board or committee by means of telephone conference or similar communications equipment by which all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the meeting.

Section 3.12 Vacancies. Any vacancy occurring in the Board may be filled by the affirmative vote of a majority of the stockholders or the Board. If the directors remaining in office constitute less than a quorum of the Board, the directors may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.

If elected by the directors, the director filling the vacancy shall hold office until the next annual stockholders' meeting at which directors are elected. If elected by the stockholders, the director filling the vacancy shall hold office for the unexpired term of his or her predecessor in office; except that, if the director's predecessor was elected by the directors to fill a vacancy, the director elected by the stockholders shall hold the office for the unexpired term of the last predecessor elected by the stockholders.

If the vacant office was held by a director elected by a voting group of stockholders, only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the stockholders, and, if one or more of the remaining directors were elected by the same voting group, only such directors so elected by the same voting group are entitled to vote to fill the vacancy if it is filled by the directors.

Section 3.13 Resignation. Any director of the corporation may resign at any time by giving written notice to the Secretary. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.

Section 3.14 Removal. Subject to any limitations contained in the Certificate of Formation, any director or directors of the corporation may be removed at any time, with or without cause, in the manner provided in the TBOC.

Section 3.15 Committees. By resolution adopted by a majority of the Board, the directors may designate two or more directors to constitute a committee, any of which shall have such authority in the management of the corporation as the Board shall designate and as shall be prescribed by or limited by the TBOC and Article III of these Bylaws.

Section3.16 Limitations on Committee Powers. No committee of the Board, acting without concurrence of the entire Board, shall have power or authority to:

(a) Amend the Certificate of Formation or recommend the same to the stockholders;

(b) Adopt an agreement of merger or consolidation or recommend the same to the stockholders; 

(c) Recommend to the stockholders the sale, lease, or exchange of all or substantially all of the corporation’s property and assets;

(d) Recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution;

(e) Amend or repeal these Bylaws;

(f) Unless expressly so provided by resolution of the Board, (i) declare a dividend; or (ii) authorize the issuance of shares of the corporation of any class; and

(g) Amend, alter, or repeal any resolution of the Board which, by its terms, provides that it shall not be amended, altered or repealed by any committee or, as applicable, a certain committee.

Section3.17 Committee Rules. Each committee of the Board may set its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board designating such committee. Unless otherwise provided in such a resolution, the presence of at least a majority of the members of the committee shall be necessary to constitute a quorum. In the event that a member of such committee is or are absent or disqualified, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member.

Section3.18 Use of Communications Equipment in Conducting Meetings. Members of the Board or any committee thereof may participate in and act at any meeting of the Board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant to this Section shall constitute attendance and presence in person at the meeting of the person or persons so participating.

Section 3.19 Compensation. By resolution of the Board and irrespective of any personal interest of any of the directors, each director may be paid his or her expenses, if any, of attendance at each meeting of the Board and/or Committee, and may be paid a stated salary as director or committee member or a set sum for attendance at each meeting of the Board or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

Section 3.20 Presumption of Assent. A director of the corporation who is present at a meeting of the Board or committee of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless (i) the director objects at the beginning of the meeting, or promptly upon his or her arrival, to the holding of the meeting or the transaction of business at the meeting and does not thereafter vote for or assent to any action taken at the meeting, (ii) the director contemporaneously requests that his or her dissent or abstention as to any specific action taken be entered in the minutes of the meeting, or (iii) the director causes written notice of his or her dissent or abstention as to any specific action to be received by the presiding officer or the meeting before its adjournment or by the corporation promptly after the adjournment of the meeting. A director may dissent to a specific action at a meeting, while assenting to others. The right to dissent to a specific action taken at a meeting of the Board or a committee of the board shall not be available to a director who voted in favor of such action.

Section3.21 Books and Records. The Board shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board and of the stockholders, appropriate stock books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the corporation.

ARTICLE IV

OFFICERS

Section4.1 Officers Delineated. The officers of the corporation shall be: Executive Chairman, Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, President, Secretary, and Treasurer, each of whom must be a natural person who is eighteen years or older and shall be elected by the Board. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board, the Executive Chairman or the Chief Executive Officer.

Any number of offices may be held by the same person, except that neither the Executive Chairman, Chief Executive Officer nor any President shall also hold the office of either Treasurer or Secretary. All officers, as between themselves and the corporation, shall have such authority and perform such duties in the management of the business and affairs of the corporation as may be provided in these Bylaws, or, to the extent not so provided, as may be prescribed by the Board or by the Chief Executive Officer.

Section4.2 Election and Term of Office. The officers of the corporation to be elected by the Board shall be elected annually by the Board at the first meeting of the Board held after the annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as practicable. Each officer shall hold office until his or her successor shall have been duly elected and shall have qualified or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided.

Section4.3 Removal. Any officer or agent may be removed by the Board at any time, with or without cause, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

An officer may resign at any time by giving written notice of the resignation to the Secretary of the corporation. The resignation is effective when the notice is received by the corporation unless the notice specifies a later effective date.

Section4.4 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board for the unexpired portion of the term.

Section4.5 Executive Chairman. The Executive Chairman shall preside at all meetings of the directors or if the offices of the Chief Executive Officer and Executive Chairman are separate, the Executive Chairman may delegate such duties to the Chief Executive Officer. The Executive Chairman shall have the general charge of the business and affairs of the corporation and shall oversee the management of the business of the corporation. The Executive Chairman shall perform such other duties as are required of him or her by the Board and shall have no other duties except such as are delegated to him or her by the Board. The Executive Chairman shall have the power to execute any and all instruments and documents on behalf of the corporation and to delegate to any other officer of the corporation the power to execute any and all such instruments and documents.

Section4.6 Chief Executive Officer. Subject to the provisions of the Article IV, the Chief Executive Officer of the corporation shall have the general charge of the business and affairs of the corporation and shall oversee the management of the business of the corporation. In the absence of the Executive Chairman of the Board, or if designated to do so by the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and of the directors and shall exercise the other powers and perform the other duties of the Executive Chairman of the Board or designate the executive officers of the corporation by whom such other powers shall be exercised and other duties performed. The Chief Executive Officer shall see to it that all resolutions and orders of the Board are carried into effect, and the Chief Executive Officer shall have full power of delegation in so doing. The Chief Executive Officer shall have such other powers and perform such other duties as the Board or these Bylaws may, from time to time, prescribe. The Chief Executive Officer shall have the power to execute any and all instruments and documents on behalf of the corporation and to delegate to any other officer of the corporation the power to execute any and all such instruments and documents.

Section4.7 Chief Financial Officer. The Chief Financial Officer shall have charge and custody of and be responsible for all funds and securities of the corporation, including primarily responsibility for managing the financial risks of the corporation, financial planning and record-keeping, budget management, cost benefit analysis, forecasting financial needs, monitoring cash flow, analysis of the company's financial strengths and weaknesses and suggestion of plans for improvement, ensure that the company's financial reports are accurate and completed on time, evaluate the cost of projects and advise financial feasibility, oversee banking, investments, liquidity management and create investment strategies.

Section4.8 President. The President shall be the chief executive officer of the corporation and, subject to the control of the Board, shall in general supervise and control all of the business and affairs of the corporation. He or she may sign certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the Board has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by these Bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board from time to time. The President or his or her designees may sell, lease, exchange, or otherwise dispose of any or all of the corporation's property in the usual and regular course of business.

Section4.9 Chief Legal Officer. The Chief Legal Officer shall have full oversight of all legal issues related to the corporation and the Board and has full authority to engage legal private legal counsel and have full oversight thereof. Chief Legal Officer and shall perform such other duties as from time to time may be assigned to him or her by the Executive Chairman, Chief Executive Officer or by the Board.

Section4.10 Secretary. The Secretary shall (a) prepare and maintain as permanent records the minutes of the proceedings of the stockholders and the Board, a record of all actions taken by the stockholders or Board without a meeting, a record of all actions taken by a committee of the Board in place of the Board on behalf of the corporation, and a record of all waivers of notice and meetings of stockholders and of the Board or any committee thereof, (b) ensure that all notices are duly given in accordance with the provisions of these Bylaws and as required by law, (c) serve as custodian of the corporate records and of the seal of the corporation and affix the seal to all documents when authorized by the Board, (d) keep at the corporation's registered office or principal place of business a record containing the names and addresses of all stockholders in a form that permits preparation of a list of stockholders arranged by voting group and by class or series of shares within each voting group, that is alphabetical within each class or series and that shows the address of, and the number of shares of each class or series held by, each stockholder, unless such a record shall be kept at the office of the corporation's transfer agent or registrar, (e) maintain at the corporation's principal office the originals or copies of the corporation's Certificate of Formation, Bylaws, minutes of all stockholders' meetings and records of all action taken by stockholders without a meeting for the past three years, all written communications within the past three years to stockholders as a group or to the holders of any class or series of shares as a group, a list of the names and business addresses of the current directors and officers, a copy of the corporation's most recent corporate report filed with the Secretary of State, and financial statements showing in reasonable detail the corporation's assets and liabilities and results of operations for the last three years, (f) have general charge of the stock transfer books of the corporation, unless the corporation has a transfer agent, (g) authenticate records of the corporation, and (h) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the president or by the Board. Assistant Secretaries, if any, shall have the same duties and powers, subject to supervision by the Secretary. The directors or stockholders may respectively designate a person other than the Secretary or Assistant Secretary to keep the minutes of their respective meetings.

Any books, records, or minutes of the corporation may be in written form or in any form capable of being converted into written form within a reasonable time.

Section 4.11 Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these Bylaws; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, President or by the Board.

Section 4.12 Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President, Chief Executive Officer or the Board.

Section 4.13 Other Officers, Assistant Officers and Agents. The Board may also elect or may delegate to the Executive Chairman of the Board and the Chief Executive Officer the power to appoint such other officers, assistant officers and agents, as it may at any time or from time to time deem advisable, and any officers, assistant officers and agents so elected or appointed shall have such authority and perform such duties as the Board, Chief Executive Officer or President may from time to time prescribe.

Section 4.14 Reservation of Authority. All other powers not expressly delegated or provided for herein, or in the TBOC to any officer, are expressly reserved to the Board and may be delegated by it to any officer by resolution adopted from time to time by the Board.

Section 4.15 Salaries. The salaries of the officers shall be set from time to time by the Board and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the corporation.

Section 4.16Delegation of Authority. The Board may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

Section 4.17Execution of Contracts. Each Executive Officer and Non-Executive Officer of the corporation may execute, affix the corporate seal and/or deliver, in the name and on behalf of the corporation, deeds, mortgages, notes, bonds, contracts, agreements, powers of attorney, guarantees, settlements, releases, evidences of indebtedness, conveyances or any other document or instrument which (i) is authorized by the Board or (ii) is executed in accordance with policies adopted by the Board from time to time, except in each case where the execution, affixation of the corporate seal and/or delivery thereof shall be expressly and exclusively delegated by the Board to some other officer or agent of the corporation.

ARTICLE V

WAIVER OF NOTICE

Whenever a notice is required to be given by any provision of law, by these Bylaws, or by the Certificate of Formation, a written waiver, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the sole and express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE VI

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

Section6.1 Coverage. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she is or was a director, officer of the corporation (which term shall include any predecessor corporation of the corporation) or is or was serving at the request of the corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust or other enterprise of any type or kind, domestic or foreign, including service with respect to employee benefit plans (“indemnitee”), whether the basis of such proceeding is an alleged action in an official capacity as a director, officer, employee, fiduciary or agent or in any other capacity while serving as a director, officer, employee, fiduciary or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the TBOC , as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than the applicable law permitted the corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement or other disposition) incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. The right to indemnification conferred in these Bylaws shall be a contract right that vests at the time of such person’s service to or at the request of the corporation and includes the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the corporation within 20 days after the receipt by the corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the TBOC requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the corporation of an undertaking by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under these Bylaws or otherwise.

Section6.2 Claims. To obtain indemnification under these Bylaws, a claimant shall submit to the corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon such written request by a claimant for indemnification, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (a) if requested by the claimant, by Independent Counsel (as defined below), or (b) if no request is made by the claimant for a determination by Independent Counsel, (i) by the Board by a majority vote of a quorum consisting of Disinterested Directors (as defined below), or (ii) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the claimant, or (iii) if a quorum of Disinterested Directors so directs, by the stockholders of the corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination.

For purposes of these Bylaws:

“Disinterested Director” means a director of the corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

“Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, who is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the corporation or the claimant in an action to determine the claimant’s rights under these Bylaws.

Section6.3 Enforcement of Claims. If a claim under Section 6.1 of these Bylaws is not paid in full by the corporation within 60 days after a written claim pursuant to Section 6.2 of these Bylaws has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standard of conduct which makes it permissible under the TBOC for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the TBOC , nor an actual determination by the corporation (including its Board, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. If a determination shall have been made pursuant to this Section 6.2 that the claimant is entitled to indemnification, the corporation shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 6.3. The corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 6.3 that the procedures and presumptions of these Bylaws are not valid, binding and enforceable and shall stipulate in such proceeding that the corporation is bound by all the provisions of these Bylaws.

Section 6.4 Enforceability. If any provision or provisions of these Bylaws shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of these Bylaws (including, without limitation, each portion of any paragraph of these Bylaws containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of these Bylaws (including, without limitation, each such portion of any paragraph of these Bylaws containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

Section 6.5 Rights Not Exclusive. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in these Bylaws (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the corporation, the Board or the stockholders of the corporation with respect to a person’s service prior to the date of such termination. No repeal or modification of these Bylaws shall in any way diminish or adversely affect the rights of any current or former director, officer, employee or agent of the corporation hereunder in respect of any occurrence or matter arising prior to any such repeal or modification.

Section 6.6 Employees and Agents. Persons who are not covered by the foregoing provisions of this Article VI and who are or were employees or agents of the corporation may be indemnified and may have their expenses paid to the extent and subject to such terms and conditions as may be authorized at any time or from time to time by the Board or the Chief Executive Officer.

Section 6.7 Insurance. The corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee, fiduciary or agent of the corporation or who is serving or has served at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the corporation would have the power to indemnify such person against such liability under this Article VII.

Section 6.8 Notices. Any notice, request or other communication required or permitted to be given to the corporation under this Article VI shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary and shall be effective only upon receipt by the Secretary.

ARTICLE VII

CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 7.1 Contracts. The Board may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

Section 7.2 Loans. No loans shall be contracted on behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board. Such authority may be general or confined to specific instances.

Section 7.3 Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidence of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the Board.

Section 7.4 Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board may select.

ARTICLE VIII

SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES

Section 8.1 Regulation. The Board may make such rules and regulations as it may deem appropriate concerning the issuance, transfer and registration of certificates for shares of the corporation, including the appointment of transfer agents and registrars.

The shares of the corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of the corporation’s stock shall be uncertificated shares. Every holder of stock of the corporation represented by certificates shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board, representing the number of shares held by such holder registered in certificate form. Each such certificate shall be signed in a manner that complies with Sections 3.202-204 of the TBOC.

Section 8.2 Shares Without Certificates. Unless otherwise provided by the Certificate of Formation or these Bylaws, the Board may authorize the issuance of any of its classes or series of shares without certificates. Such authorization shall not affect shares already represented by certificates until they are surrendered to the corporation.

Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Section 3.205 of the TBOC or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 8.3 Certificates for Shares. If shares of the corporation are represented by certificates, the certificates shall be respectively numbered serially for each class of shares, or series thereof, as they are issued, and shall be signed by the corporate Secretary and either the Executive Chairman or the Chief Executive Officer or by such other officers of the corporation authorized by a resolution of the Board and complies with Sections 3.202-204 of the TBOC; provided that such signatures may be facsimile. Each certificate shall state the name of the corporation, the fact that the corporation is organized or incorporated under the laws of the State of Texas, the name of the person to whom issued, the date of issue, the class (or series of any class), the number of shares represented thereby.

A statement of the designations, preferences, qualifications, limitations, restrictions and special or relative rights of the shares of each class shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue, or in lieu thereof, the certificate may set forth that such a statement or summary will be furnished to any stockholder upon request without charge. Each certificate shall be otherwise in such form as may be prescribed by the Board and as shall conform to the rules of any stock exchange on which the shares may be listed.

If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of each certificate representing shares of such class or series of stock, provided that in lieu of the foregoing requirements there may be set forth on the face or back of each certificate representing shares of such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

The corporation shall not issue certificates representing fractional shares and shall not be obligated to make any transfers creating a fractional interest in a share of stock. The corporation may, but shall not be obligated to, issue scrip in lieu of any fractional shares, such scrip to have terms and conditions specified by the Board.

Section 8.4 Cancellation of Certificates. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificates shall be issued in lieu thereof until the former certificate for a like number of shares shall have been surrendered and cancelled, except as herein provided with respect to lost, stolen or destroyed certificates.

Section 8.5 Consideration for Shares. Certificated or uncertificated shares shall not be issued until the shares represented thereby are fully paid. The Board may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed or other securities of the corporation. Future services shall not constitute payment or partial payment for shares of the corporation. The promissory note of a subscriber or an affiliate of a subscriber shall not constitute payment or partial payment for shares of the corporation unless the note is negotiable, recourse and is secured by collateral, other than the shares being purchased, having a fair market value of at least equal to the principal amount of the note.

Section 8.6 Lost, Stolen or Destroyed Certificates. Any stockholder claiming that his or her certificate for shares is lost, stolen or destroyed may make an affidavit or affirmation of that fact and lodge the same with the Secretary of the corporation, accompanied by a signed application for a new certificate. Thereupon, and upon the giving of a satisfactory bond of indemnity to the corporation or transfer agent not exceeding an amount double the value of the shares as represented by such certificate (the necessity for such bend and the amount required to be determined by the President and Treasurer of the corporation), a new certificate may be issued of the same tenor and representing the same number, class and series of shares as were represented by the certificate alleged to be lost, stolen or destroyed.

Section 8.7 Transfer of Shares. Subject to the terms of any stockholder agreement relating to the transfer of shares or other transfer restrictions contained in the Certificate of Formation or authorized therein, shares of the corporation shall be transferable on the books of the corporation by the holder thereof in person or by his or her duly authorized attorney, upon the surrender and cancellation of a certificate or certificates for a like number of shares. Upon presentation and surrender of a certificate for shares properly endorsed and payment of all taxes therefor, the transferee shall be entitled to a new certificate or certificates in lieu thereof. As against the corporation, a transfer of shares can be made only on the books of the corporation and in the manner hereinabove provided, and the corporation shall be entitled to treat the holder of record of any share as the owner thereof and shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided by the TBOC.

ARTICLE IX

FISCAL YEAR

Except as from time to time otherwise designated by the Board, the fiscal year of the corporation shall begin on the first day of January of each year and end on the last day of December in each year.

ARTICLE X

DIVIDENDS AND DISTRIBUTIONS

The Board shall have full power and discretion pursuant to law, at any regular or special meeting, subject to the provisions of the Certificate of Formation or the terms of any other corporate document or instrument, to determine what, if any, dividends or distributions shall be declared and paid or made upon or with respect to outstanding shares of the capital stock of the corporation. Dividends may be paid in cash, bonds, property, or in shares of the capital stock, subject to the provisions of the Certificate of Formation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or any other purpose and the directors may modify or abolish any such reserve in the manner in which it was created.

ARTICLE XI

CORPORATE SEAL

The Board may authorize the use of a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words "CORPORATE SEAL."

ARTICLE XII

AMENDMENTS

Corporate Bylaws may be amended by the vote of at least a majority of the members of the board of directors or by a majority of the holders of the outstanding shares entitled to vote, provided that any amendment to the Bylaw Anti-takeover Provisions requires approval by either (i) a majority of the continuing and unaffiliated directors and holders of a majority of the Company’s outstanding shares or (ii) a majority of all of the Company’s directors and holders of at least 66 and 2/3% of the Company’s outstanding shares not held by the “affiliated shareholder”.

ARTICLE XIII

EXECUTIVE COMMITTEE

Section 13.1 Appointment. The Board by resolution adopted by a majority of all directors in office, may designate two or more of its members to constitute an Executive Committee. The designation of such Committee and the delegation thereto of authority shall not operate to relieve the Board, or any member thereof, of any responsibility imposed by law.

Section 13.2 Authority. The Executive Committee, when the Board is not in session shall have and may exercise all of the authority of the Board except to the extent, if any, that such authority shall be limited by the resolution appointing the Executive Committee and except also that the Executive Committee shall not have the authority of the Board in reference to authorizing distributions, filling vacancies on the Board, authorizing reacquisition of shares, authorizing and determining rights for shares, amending the Certificate of Formation, adopting a plan of merger or share exchange, recommending to the stockholders the sale, lease or other disposition of all or substantially all of the property and assets of the corporation otherwise than in the usual and regular course of its business, recommending to the stockholders a voluntary dissolution of the corporation or a revocation thereof, or amending the Bylaws of the corporation.

Section 13.3 Tenure and Qualifications. Each member of the Executive Committee shall hold office until the next regular annual meeting of the Board following his or her designation and until his or her successor is designated as a member of the Executive Committee and is elected and qualified.

Section 13.4 Meetings. Regular meetings of the Executive Committee may be held without notice at such time and places as the Executive Committee may set from time to time by resolution. Special meetings of the Executive Committee may be called by any member thereof upon not less than one day's notice stating the place, date and hour of the meeting, which notice may be written or oral. Any member of the Executive Committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the Executive Committee need not state the business proposed to be transacted at the meeting.

Section 13.5 Quorum. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the Executive Committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present when a vote is taken.

Section 13.6 Informal Action by Executive Committee. Any action required or permitted to be taken by the Executive Committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the Executive Committee entitled to vote with respect to the subject matter thereof.

Section 13.7 Vacancies. Any vacancy in the Executive Committee may be filled by a resolution adopted by a majority of the Board.

Section 13.8 Resignations and Removal. Any member of the Executive Committee may be removed at any time with or without cause by resolution adopted by a majority of the Board. Any member of the Executive Committee may resign from the Executive Committee at any time by giving written notice to the President or Secretary of the corporation, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 13.9 Procedure. The Executive Committee shall elect a presiding officer from its members and may set its own rules of procedure which shall not be inconsistent with these Bylaws. It shall keep regular minutes of its proceedings and report the same to the Board for its information at the meeting thereof held next after the proceedings shall have been taken.

ARTICLE XIV

EMERGENCY BYLAWS

The Emergency Bylaws provided in this Article XIV shall be operative during any emergency in the conduct of the business of the corporation resulting from a catastrophic event causing a quorum of directors to be not readily available as a result thereof, notwithstanding any different provision in the preceding articles of the Bylaws or in the Certificate of Formation of the corporation or in the TBOC. To the extent not inconsistent with the provisions of this Article, the Bylaws provided in the preceding articles shall remain in effect during such emergency and upon its termination the Emergency Bylaws shall cease to be operative.

During any such emergency:

(a) A meeting of the Board may be called by any officer or director of the corporation. Notice of the time and place of the meeting shall be given by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting.

(b) At any such meeting of the Board, a quorum shall consist of the number of directors in attendance at such meeting.

(c) The Board, either before or during any such emergency, may, effective in the emergency, change the principal office or designate several alternative principal offices or regional offices, or authorize the officers so to do.

(d) The Board, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the corporation shall for any reason be rendered incapable of discharging their duties.

(e) No officer, director or employee acting in accordance with these Emergency Bylaws shall be liable except for willful misconduct.

(f) These Emergency Bylaws shall be subject to repeal or change by further action of the Board or by action of the stockholders, but no such repeal or change shall modify the provisions of the next preceding paragraph with regard to action taken prior to the time of such repeal or change. Any amendment of these Emergency Bylaws may make any further or different provision that may be practical and necessary for the circumstances of the emergency.

ARTICLE XV

GENERAL PROVISIONS

Section 15.1 Voting Securities Owned by the Corporation. Voting securities in any other entity held by the corporation shall be voted by the Executive Chairman of the Board or the Chief Executive Officer, unless the Board specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with or without general power of substitution.

Section 15.2 General and Special Bank Accounts. The Board may authorize from time to time the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may designate or as may be designated by any officer or officers of the corporation to whom such power of designation may be delegated by the Board from time to time. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.

Section 15.3 Section Headings. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 15.4 Forum Selection. Unless the corporation consents in writing to the selection of an alternative forum, the courts of the State of Texas (or, in the event that the Texas state judicial system does not have jurisdiction, the federal district court for the District of Texas shall, to the fullest extent permitted by law, be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (1) any derivative action or proceeding brought on behalf of the corporation, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of the corporation to the corporation or the corporation’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the TBOC , the Certificate of Formation or these Bylaws, or (4) any action asserting a claim governed by the internal affairs doctrine, except as to each of (1) through (4) above, for any claim as to which the court determines that there is an indispensable party not subject to the jurisdiction of the court (and the indispensable party does not consent to the personal jurisdiction of the court within ten days following such determination). Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Section 15.

Section 15.5 Waiver of Notice. Whenever notice is required to be given by law, by the Certificate of Formation or by these Bylaws, a written waiver signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before, at or after the time of the event for which notice is to be given, shall be deemed equivalent to notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in any such waiver. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

Section 15.6Voting of Securities. Except as the Board may otherwise designate, the Executive Chairman, Chief Executive Officer, the President or the Treasurer may waive notice, vote, consent, or appoint any person or persons to waive notice, vote or consent, on behalf of the corporation, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) with respect to, the securities of any other entity which may be held by this corporation.

Section 15.7Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.

Section 15.8Certificate of Formation. All references in these Bylaws to the Certificate of Formation shall be deemed to refer to the Certificate of Formation of the corporation, as amended and/or restated and in effect from time to time.

Section 15.9Severability. Any determination that any provision of these Bylaws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these Bylaws.

Section 15.10Pronouns. All pronouns used in these Bylaws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

Section 15.11Electronic Transmission. For purposes of these Bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, which creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

CERTIFICATE

I hereby certify that the foregoing Bylaws, consisting of 42 pages, including this page, constitute the Bylaws of Orbital Infrastructure Group, Inc., a Texas Corporation, adopted by the Board of the corporation

    /s/                                                        

Deborah Moen

Corporate Secretary

57

Annex G(Texas Indemnification Agreement)

Orbital Infrastructure Group, Inc.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement, effective as of July __, 2022, is made between Orbital Infrastructure Group, Inc., a Texas corporation (the “Company”), and .__________ _____________________ (the “Indemnitee”).

RECITALS

A.    The Company desires to attract and retain the services of talented and experienced individuals, such as Indemnitee, to serve as directors and officers of the Company and its subsidiaries and wishes to indemnify its directors and officers to the maximum extent permitted by law;

B.    The Company and Indemnitee recognize that corporate litigation in general has subjected directors and officers to expensive litigation risks;

C.    The Texas Business Organizations Code (the “TBOC”) under which the Company is organized, empowers the Company to indemnify its directors and officers by agreement and to indemnify persons who serve, at the request of the Company, as the directors and officers of other corporations or enterprises, and expressly provides that the indemnification provided by Chapter 8 of the TBOC is not exclusive;

D.    The Company’s Bylaws expressly provide that the indemnification provisions set forth therein, which include mandatory advancement, are not exclusive and may be supplemented by contracts such as this Indemnification Agreement;

E.    The Company’s Bylaws expressly provide that the indemnification provisions set forth therein, which include mandatory advancement, are not exclusive and may be supplemented by contracts such as this Indemnification Agreement;

F.    Section 8, Subchapter D allows for the purchase of liability (“D&O”) insurance by the Company, which in theory can cover asserted liabilities without regard to whether they are indemnifiable or not;

G.    Individuals considering service with or presently serving Company expect to be extended market terms of indemnification commensurate with their position, and that entities such as Company will endeavor to maintain appropriate D&O insurance; and

H.    In order to induce Indemnitee to serve or continue to serve as a director or officer of the Company and/or one or more subsidiaries of the Company, the Company and Indemnitee enter into this Agreement.

AGREEMENT

NOW, THEREFORE, Indemnitee and the Company hereby agree as follows:

1.    Definitions. As used in this Agreement:

(a)    “Agent” means any person who is or was a director, officer, employee or other agent of the Company or a subsidiary of the Company; or is or was serving at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company as a director, officer, employee or agent of another foreign or domestic corporation, limited liability company, employee benefit plan, nonprofit entity, partnership, joint venture, trust or other enterprise; or was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Company or a subsidiary of the Company, or was a director, officer, employee or agent of another enterprise at the request of, for the convenience of, or to represent the interests of such predecessor corporation.

(b)    “Board” means the Board of Directors of the Company.

(c)    A “Change in Control” shall be deemed to have occurred if (i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or 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, is or becomes the “beneficial owner” (as defined in Rule 13d‑3 under the Exchange Act), directly or indirectly, of securities of the Company representing a majority of the total voting power represented by the Company’s then outstanding voting securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board, together with any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination was previously so approved, cease for any reason to constitute a majority of the Board, (iii) the stockholders of the Company approve a merger or consolidation or a sale of all or substantially all of the Company’s assets with or to another entity, other than a merger, consolidation or asset sale that would result in the holders of the Company’s outstanding voting securities immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a majority of the total voting power represented by the voting securities of the Company or such surviving or successor entity outstanding immediately thereafter, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company.

(d)    “Expenses” shall include all reasonable out‑of‑pocket costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements), actually and reasonably incurred by Indemnitee in connection with either the investigation, defense or appeal of a Proceeding or establishing or enforcing a right to indemnification under this Agreement.

(e)    “Independent Counsel” means a law firm, or a partner (or, if applicable, member) of such a law firm, which is experienced in relevant matters of corporation law and neither currently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to or witness in the proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. Where required by this Agreement, Independent Counsel shall be retained at the Company’s sole expense.

(f)    “Proceeding” means any threatened, pending, or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether formal or informal, civil, criminal, administrative, or investigative, including any such investigation or proceeding instituted by or on behalf of the Corporation or its Board of Directors, in which Indemnitee is or reasonably may be involved as a party or target, that is by reason of Indemnitee’s being an Agent of the Corporation.

(g)    “Subsidiary” means any corporation of which more than 50% of the outstanding voting securities is owned directly or indirectly by the Company, by the Company and one or more other subsidiaries, or by one or more other subsidiaries.

2.    Agreement Severableto Serve. Indemnitee agrees to serve and/or continue to serve as an Agent of the Company, at its will (or under separate agreement, if such agreement exists), in the capacity Indemnitee currently serves as an Agent of the Company, so long as Indemnitee is duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws or charter of the Company or any subsidiary of the Company or until such time as Indemnitee tenders his or her resignation in writing; provided, however, that nothing contained in this Agreement is intended to create any right to continued employment or other service by Indemnitee.

3.    Liability Insurance.

(a)    Maintenance of D&O Insurance. The Company hereby covenants and agrees that, so long as Indemnitee shall continue to serve as an Agent of the Company and thereafter so long as Indemnitee shall be subject to any possible Proceeding by reason of the fact that Indemnitee was an Agent of the Company, the Company, subject to Section 3(c), shall promptly obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established and reputable insurers of a minimum A.M. Best rating of A- VII, and as more fully described below. In the event of a Change in Control, the Company shall, as set forth in Section (c) below, either: i) maintain such D&O Insurance for six years; or ii) purchase a six year tail for such D&O Insurance. Should a tail policy be purchased, reasonable efforts shall be made to try to negotiate that such policy is purchased by the Company’s D&O insurance broker at that time, and under the same or better terms and limits for individuals that is in place at that time.

(b)    Rights and Benefits. In all policies of D&O Insurance, Indemnitee shall qualify as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s independent directors (as defined by the insurer) if Indemnitee is such an independent director; of the Company’s non-independent directors if Indemnitee is not an independent director; of the Company’s officers if Indemnitee is an officer of the Company; or of the Company’s key employees, if Indemnitee is not a director or officer but is a key employee.

(c)    Limitation on Required Maintenance of D&O Insurance. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance at all, or of any type, terms, or amount, if the Company determines in good faith and after using commercially reasonable efforts that: such insurance is not reasonably available; the premium costs for such insurance are disproportionate to the amount of coverage provided; the coverage provided by such insurance is limited so as to provide an insufficient or unreasonable benefit; Indemnitee is covered by similar insurance maintained by a subsidiary of the Company; or the Company is to be acquired and a policy (tail or otherwise) of reasonable terms and duration can be purchased for pre-closing acts or omissions by Indemnitee.

4.    Mandatory Indemnification. Subject to the terms of this Agreement:

(a)    Third Party Actions. If Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was an Agent of the Company, or by reason of anything done or not done by Indemnitee in any such capacity, the Company shall indemnify Indemnitee against all Expenses and liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such Proceeding, provided Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or Proceeding, had no reasonable cause to believe his or her conduct was unlawful.

(b)    Derivative Actions. If Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company by reason of the fact that Indemnitee is or was an Agent of the Company, or by reason of anything done or not done by Indemnitee in any such capacity, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such Proceeding, provided Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification under this Section 4(b) shall be made in respect to any claim, issue or matter as to which Indemnitee shall have been finally adjudged to be liable to the Company by a court of competent jurisdiction unless and only to the extent that any Texas court of competent jurisdiction or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such amounts which any Texas court of competent jurisdiction shall deem proper.

(c)    Actions where Indemnitee is Deceased. If Indemnitee is a person who was or is a party or is threatened to be made a party to any Proceeding by reason of the fact that Indemnitee is or was an Agent of the Company, or by reason of anything done or not done by Indemnitee in any such capacity, and if, prior to, during the pendency of or after completion of such Proceeding Indemnitee is deceased, the Company shall indemnify Indemnitee’s heirs, executors and administrators against all Expenses and liabilities of any type whatsoever to the extent Indemnitee would have been entitled to indemnification pursuant to this Agreement were Indemnitee still alive.

(d)    Certain Terminations. The termination of any Proceeding or of any claim, issue, or matter therein by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

(e)    Limitations. Notwithstanding the foregoing provisions of Sections 4(a) through (d) hereof, but subject to the exception set forth in Section 14 which shall control, the Company shall not be obligated to indemnify the Indemnitee for Expenses or liabilities of any type whatsoever for which payment (and the Company’s indemnification obligations under this Agreement shall be reduced by such payment) is actually made to or on behalf of Indemnitee, by the Company or otherwise, under a corporate insurance policy, or under a valid and enforceable indemnity clause, right, bylaw, or agreement; and, in the event the Company has previously made a payment to Indemnitee for an Expense or liability of any type whatsoever for which payment is actually made to or on behalf of the Indemnitee under an insurance policy, or under a valid and enforceable indemnity clause, bylaw or agreement, Indemnitee shall return to the Company the amounts subsequently received by the Indemnitee from such other source of indemnification.

(f)    Witness. In the event that Indemnitee is not a party or threatened to be made a party to a Proceeding, but is subpoenaed (or given a written request to be interviewed by or provide documents or information to a government authority) in such a Proceeding by reason of the fact that the Indemnitee is or was an Agent of the Company, or by reason of anything witnessed or allegedly witnessed by the Indemnitee in that capacity, the Company shall indemnify the Indemnitee against all actually and reasonable out of pocket costs (including without limitation legal fees) reasonably incurred by the Indemnitee in responding to such subpoena or written request for an interview. As a condition to this right, Indemnitee must provide notice of such subpoena or request to the Company within 14 days, subject to the terms of Section 7(a).

5.    Indemnification for Expenses in a Proceeding in Which Indemnitee is Wholly or Partly Successful.

(a)    Successful Defense. Notwithstanding any other provisions of this Agreement, to the extent Indemnitee has been successful, on the merits or otherwise, in defense of any Proceeding (including, without limitation, an action by or in the right of the Company) in which Indemnitee was a party by reason of the fact that Indemnitee is or was an Agent of the Company at any time, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with the investigation, defense or appeal of such Proceeding.

(b)    Partially Successful Defense. Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee is a party to any Proceeding (including, without limitation, an action by or in the right of the Company) in which Indemnitee was a party by reason of the fact that Indemnitee is or was an Agent of the Company at any time and is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with each successfully resolved claim, issue or matter.

(c)    Dismissal. For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(d)    Contribution. If the indemnification provided in this Agreement is unavailable and may not be paid to Indemnitee, then to the extent allowed by law, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Company on the one hand and Indemnitee on the other hand from the transaction from which such action, suit or proceeding arose, and (ii) the relative fault of Company on the one hand and of Indemnitee on the other in connection with the events which resulted in such judgments, fines or settlement amounts, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of Indemnitee on the other shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information, active or passive conduct, and opportunity to correct or prevent the circumstances resulting in such judgments, fines or settlement amounts. The Company agrees that it would not be just and equitable if contribution pursuant to this section were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.

6.    Mandatory Advancement of Expenses.

(a)     Subject to the terms of this Agreement and following notice pursuant to Section 7(a) below, the Company shall advance, interest free, all Expenses reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any Proceeding to which Indemnitee is a party or is threatened to be made a party by reason of the fact that Indemnitee is or was an Agent of the Company (unless there has been a final determination that Indemnitee is not entitled to indemnification for such Expenses) upon receipt satisfactory documentation supporting such Expenses. Such advances are intended to be an obligation of the Company to Indemnitee hereunder and shall in no event be deemed to be a personal loan. Such advancement of Expenses shall otherwise be unsecured and without regard to Indemnitee’s ability to repay. The advances to be made hereunder shall be paid by the Company to Indemnitee within 30 days following delivery of a written request therefore by Indemnitee to the Company, along with such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to advancement (which shall include without limitation reasonably detailed invoices for legal services, but with disclosure of confidential work product not required). The Company shall discharge its advancement duty by, at its option, (a) paying such Expenses on behalf of Indemnitee, (b) advancing to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimbursing Indemnitee for Expenses already paid by Indemnitee. In the event that the Company fails to pay Expenses as incurred by Indemnitee as required by this paragraph, Indemnitee may seek mandatory injunctive relief (including without limitation specific performance) from any court having jurisdiction to require the Company to pay Expenses as set forth in this paragraph. If Indemnitee seeks mandatory injunctive relief pursuant to this paragraph, it shall not be a defense to enforcement of the Company’s obligations set forth in this paragraph that Indemnitee has an adequate remedy at law for damages.

(b)     Undertakings. By execution of this Agreement, Indemnitee agrees to repay the amount advanced only in the event and to the extent that it shall be finally determined that Indemnitee is not entitled to indemnification by the Company to the extent set forth in this agreement and under Texas law. Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement. No additional undertaking, or security, shall be required of Indemnitee.

7.    Notice and Other Indemnification Procedures.

(a)    Notice by Indemnitee. Promptly after receipt by Indemnitee of notice of the commencement of or the threat of commencement of any Proceeding, Indemnitee shall, if Indemnitee believes that indemnification with respect thereto may be sought from the Company under this Agreement, notify the Company in writing of the commencement or threat of commencement thereof providedhowever, that a delay in giving such notice will not deprive Indemnitee of any right to be indemnified under this Agreement unless, and then only to the extent that, the Company did not otherwise learn of the Proceeding and such delay is materially prejudicial to the Company; and, providedfurther, that notice will be deemed to have been given without any action on the part of Indemnitee in the event the Company is a party to the same Proceeding and has notice thereof. The omission to notify the Company will not relieve the Company from any liability for indemnification which it may have to Indemnitee otherwise than under this Agreement.

(b)    Insurance. If the Company receives notice pursuant to Section 7(a) hereof of the commencement of a Proceeding that may be covered under D&O Insurance then in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

(c)    Defense. In the event the Company shall be obligated to pay the Expenses of any Proceeding against Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld), upon the delivery to Indemnitee of written notice of the Company’s election so to do. After delivery of such notice, and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ his or her own counsel in any such Proceeding at Indemnitee’s expense; and (ii) Indemnitee shall have the right to employ his or her own counsel in any such Proceeding at the Company’s expense if (A) the Company has authorized the employment of counsel by Indemnitee at the expense of the Company; (B) Indemnitee shall have reasonably concluded based on the written advice of Indemnitee’s legal counsel that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense; or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding. In addition to all the requirements above, if the Company has D&O Insurance, or other insurance, with a panel counsel requirement that may cover the matter for which indemnity is claimed by Indemnitee, then Indemnitee shall use such panel counsel or other counsel approved by the insurers, unless there is an actual conflict of interest posed by representation by all such counsel, or unless and to the extent Company waives such requirement in writing. Indemnitee and his counsel shall provide reasonable cooperation with such insurer on request of the Company.

8.    Right to Indemnification.

(a)    Right to Indemnification. In the event that Section 5(a) is inapplicable, the Company shall indemnify Indemnitee pursuant to this Agreement unless, and except to the extent that, it shall have been determined by one of the methods listed in Section 8(b) that Indemnitee has not met the applicable standard of conduct required to entitle Indemnitee to such indemnification.

(b)    Determination of Right to Indemnification. A determination of Indemnitee’s right to indemnification under this Section 8 shall be made at the election of the Board by (i) a majority vote of directors who are not parties to the Proceeding for which indemnification is being sought, even though less than a quorum, or by a committee consisting of directors who are not parties to the Proceeding for which indemnification is being sought, who, even though less than a quorum, have been designated by a majority vote of the disinterested directors, or (ii) if there are no such disinterested directors or if the disinterested directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee. However, in the event there has been a Change in Control, then the determination shall, at Indemnitee’s sole option, be made by Independent Counsel as in (b)(ii), above, with Indemnitee choosing the Independent Counsel subject to Company’s consent, such consent not to be unreasonably withheld.

(c)    Submission for Decision. As soon as practicable, and in no event later than 30 days after Indemnitee’s written request for indemnification, the Board shall select the method for determining Indemnitee’s right to indemnification. Indemnitee shall cooperate with the person or persons or entity making such determination with respect to Indemnitee’s right to indemnification, including providing to such person, persons or entity, upon reasonable advance request, any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel or member of the Board shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement.

(d)    Application to Court. If (i) a claim for indemnification or advancement of Expenses is denied, in whole or in part, (ii) no disposition of such claim is made by the Company within 60 days after the request therefore, (iii) the advancement of Expenses is not timely made pursuant to Section 6 of this Agreement or (iv) payment of indemnification is not made pursuant to Section 5 of this Agreement, Indemnitee shall have the right at his option to apply to any Texas state or federal court of competent jurisdiction, the court in which the Proceeding is or was pending, or any other court of competent jurisdiction, for the purpose of enforcing Indemnitee’s right to indemnification (including the advancement of Expenses) pursuant to this Agreement. Upon written request by Indemnitee, the Company shall consent to service of process.

(e)    Expenses Related to the Enforcement or Interpretation of this Agreement. The Company shall indemnify Indemnitee against Expenses incurred by Indemnitee in connection with any hearing or proceeding under this Section 8 involving Indemnitee, and against Expenses incurred by Indemnitee in connection with any other proceeding between the Company and Indemnitee to the extent involving the interpretation or enforcement of the rights of Indemnitee under this Agreement, if and to the extent Indemnitee is successful.

(f)    In no event shall Indemnitee’s right to indemnification (apart from advancement of Expenses) be determined prior to a final adjudication in the Proceeding at issue if the Proceeding is both ongoing, and of the nature to have a final adjudication.

(g)    In any proceeding to determine Indemnitee’s right to indemnification or advancement, Indemnitee shall be presumed to be entitled to indemnification or advancement, with the burden of proof on the Company to prove, by a preponderance of the evidence (or higher standard if required by relevant law) that Indemnitee is not so entitled.

(h)    Indemnitee shall be fully indemnified for those matters where, in the performance of his duties for the Company, he relied in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any of the Company’s officers or employees, or committees of the board of directors, or by any other person as to matters Indemnitee reasonably believed were within such other person's professional or expert competence and who was selected with reasonable care by or on behalf of the Company.

9.    Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated:

(a)    Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by Indemnitee (including cross actions), with a reasonable allocation where appropriate, unless (i) such indemnification is expressly required to be made by law, (ii) the Proceeding was authorized by the Board, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the TBOC or (iv) the Proceeding is brought pursuant to Section 8 specifically to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 in advance of a final determination, in which case 8(e)’s fees-on-fees provision shall control;

(b)    Fees on Fees. To indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to enforce or interpret this Agreement, to the extent Indemnitee is not successful in such a Proceeding;

(c)    Unauthorized Settlements. To indemnify Indemnitee under this Agreement for any amounts paid in settlement of a Proceeding unless the Company consents to such settlement, which consent shall not be unreasonably withheld;

(d)    Claims Under Section 16(b). To indemnify Indemnitee for Expenses associated with any Proceeding related to, or the payment of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law (provided, however, that the Company must advance Expenses for such matters as otherwise permissible under this Agreement); or

(e)    Payments Contrary to Law. To indemnify or advance Expenses to Indemnitee for which payment is prohibited by applicable law.

10.    NonExclusivity. The provisions for indemnification and advancement of Expenses set forth in this Agreement shall not be deemed exclusive of any other rights which Indemnitee may have under any provision of law, the Grant NoticeCompany’s Certificate of Formation or Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while occupying Indemnitee’s position as an Agent of the Company. Indemnitee’s rights hereunder shall continue after Indemnitee has ceased acting as an Agent of the Company and shall inure to the benefit of the heirs, executors and administrators of Indemnitee.

11.    Permitted Defenses. It shall be a defense to any action for which a claim for indemnification is made under this Agreement (other than an action brought to enforce a claim for Expenses pursuant to Section 6 hereof, provided that the required documents have been tendered to the Company) that Indemnitee is not entitled to indemnification because of the limitations set forth in Sections 4 and 9 hereof. Neither the failure of the Company (including its Board of Directors) or an Independent Counsel to have made a determination prior to the commencement of such enforcement action that indemnification of Indemnitee is proper in the circumstances, nor an actual determination by the Company (including its Board of Directors) or an Independent Counsel that such indemnification is improper, shall be a defense to the action or create a presumption that Indemnitee is not entitled to indemnification under this Agreement or otherwise. In making any determination concerning Indemnitee’s right to indemnification, there shall be a presumption that Indemnitee has satisfied the applicable standard of conduct. Any determination by the Company concerning Indemnitee’s right to indemnification that is adverse to Indemnitee may be challenged by the Indemnitee in a Texas court of competent jurisdiction.

12.    Subrogation. In the event the Company is obligated to make a payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery under any corporate insurance policy or any other indemnity agreement covering Indemnitee, who shall execute all documents reasonably required and take all action that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights (provided that the Company pays Indemnitee’s costs and expenses of doing so), including without limitation by assigning all such rights to the Company or its designee to the extent of such indemnification or advancement of Expenses. The Company’s obligation to indemnify or advance expenses under this Agreement shall be reduced by any amount Indemnitee has collected from such other source, and in the event that Company has fully paid such indemnity or expenses, Indemnitee shall return to the Company any amounts subsequently received from such other source of indemnification. With regard to Fund Indemnitors, however, Section 13 shall control over this section.

13.    Primacy of Indemnification. The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of expenses or liability insurance provided by a third-party investor in Company and certain of its affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees that (i) it is the indemnitor of first resort, i.e., its obligations to Indemnitee under this Agreement and any indemnity provisions set forth in its Certificate of Formation, Bylaws or elsewhere (collectively, “Indemnity Arrangements”) are primary, and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same Expenses or liabilities incurred by Indemnitee is secondary and excess, (ii) it shall advance the full amount of Expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of Indemnitee, to the extent legally permitted and as required by any Indemnity Arrangement, without regard to any rights Indemnitee may have against the Fund Indemnitors, and (iii) it irrevocably waives, relinquishes and releases the Fund Indemnitors from any claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind arising out of or relating to any Indemnity Arrangement. The Company further agrees that no advancement or indemnification payment by any Fund Indemnitor on behalf of Indemnitee shall affect the foregoing, and the Fund Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 13. The Company, on its own behalf and on behalf of its insurers to the extent allowed by the policies, waives subrogation rights against Indemnitee.

14.    Broadest Interpretation. The Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Certificate of Formation or Bylaws as now or hereafter in effect, or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Texas corporation to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Texas corporation to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

15.    No Imputation. The knowledge or actions, or failure to act, of any director, officer, employee, or agent of the Company, or the Company itself shall not be imputed to Indemnitee for the purpose of determining Indemnitee’s rights hereunder.

16.    Survival of Rights.

(a)    All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an Agent of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed Proceeding by reason of the fact that Indemnitee was serving in the capacity referred to herein.

(b)    The Company shall require any successor to the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

17.    Interpretation of Agreement. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the fullest extent permitted by law, including those circumstances in which indemnification would otherwise be discretionary.

18.    Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or invalid,unenforceable for any reason whatsoever, (i) the provision will be severable from,validity, legality and the illegality or invalidityenforceability of the provision will not be construed to have any effect on, the remaining provisions of the Grant NoticeAgreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement.Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to this Section.

15.919.    Limitation on Participant’s RightsEntire Agreement.. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation onconstitutes the part ofentire agreement between the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any,parties with respect to the Option,matters addressed herein, and rights no greater than the right to receive the Shares as a general unsecured creditorany other prior or contemporaneous oral or written understandings or agreements with respect to the Option, asmatters addressed herein (including without limitation any prior indemnification agreement for Indemnitee) are expressly superseded by this Agreement.

20.    Modification and when exercised pursuantWaiver. No supplement, modification or amendment of this Agreement shall be binding unless it is in a writing signed by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

21.    Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) upon delivery if delivered by hand to the terms hereof.

15.10 Notparty to whom such notice or other communication shall have been directed, (b) if mailed by certified or registered mail with postage prepaid, return receipt requested or other receipted delivery service, on the third business day after the date on which it is so mailed, (c) one business day after the business day of deposit with a Contractnationally recognized overnight delivery service, specifying next day delivery, with written verification of Employment. Nothingreceipt, or (d) on the same day as delivered by confirmed facsimile transmission if delivered during business hours or on the next successive business day if delivered by confirmed facsimile transmission after business hours. Addresses for notice to either party shall be as shown on the signature page of this Agreement, or to such other address as may have been furnished by either party in the Plan,manner set forth above.

22.    Governing Law. This Agreement shall be governed exclusively by and construed according to the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or servicelaws of the Company or any Subsidiary or interferes with or restricts in any way the rightsState of Texas. This Agreement is intended to be an agreement of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminatetype contemplated by Chapter 8 of the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.TBOC.

15.1123.    Counterparts. The Grant NoticeThis Agreement may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which willshall for all purposes be deemed to be an original, andbut all of which together willshall constitute one instrument.and the same Agreement. Only one such counterpart signed by the party against whom enforcement is sought needs to be produced to evidence the existence of this Agreement.

 

15.12 Incentive Stock Options. IfThe parties hereto have entered into this Indemnification Agreement, including the Option is designated as an Incentive Stock Option:

(a) Participant acknowledges that to the extent the aggregate fair market value of shares (determinedundertaking contained herein, effective as of the time the option with respect to the shares is granted) with respect to which stock options intended to qualify as “incentive stock options” under Section 422 of the Code, including the Option, are exercisable for thedate first time by Participant during any calendar year exceeds $100,000 or if for any other reason such stock options do not qualify or cease to qualify for treatment as “incentive stock options” under Section 422 of the Code, such stock options (including the Option) will be treated as non-qualified stock options. Participant further acknowledges that the rule set forth in the preceding sentence will be applied by taking the Option and other stock options into account in the order in which they were granted, as determined under Section 422(d) of the Code. Participant acknowledges that amendments or modifications made to the Option pursuant to the Plan that would cause the Option to become a Non-Qualified Stock Option will not materially or adversely affect Participant’s rights under the Option, and that any such amendment or modification shall not require Participant’s consent. Participant also acknowledges that if the Option is exercised more than three (3) months after Participant’s Termination of Service as an Employee, other than by reason of death or disability, the Option will be taxed as a Non-Qualified Stock Option.above written.

 

(b) Participant will give prompt written notice to theThe Company of any disposition or other transfer of any Shares acquired under this Agreement if such disposition or other transfer is made (a) within two (2) years from the Grant Date or (b) within one (1) year after the transfer of such Shares to Participant. Such notice will specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.

Orbital Infrastructure Group, Inc.

a Texas corporation

 

* * * * *By: ___________________________

William J. Clough

Executive Chairman and CLO

The Indemnitee

____________________________

Signature

____________________________

Printed Name

 

Proxy Solicited on Behalf of the

Board of Directors

for the Annual Shareholder Meeting of the

Orbital Energy Group Global, Inc. Stockholders

The undersigned, revoking all previous proxies, appoints Deborah Moen, Corporate Secretary, proxy of the undersigned, with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Orbital Energy Group, Inc., Inc. to be held at 9:00 am CST on Thursday, July 21, 2022, at the Orbital Energy Group, Inc., 1924 Aldine Western, Houston, Texas 77038 and for any adjournments and to vote all shares of Voting Stock of the Company, which the undersigned is entitled to vote on all matters coming before said meeting.

[X]

Please mark your votes with an “X” as in this example.

PROPOSAL I

Election of Directors

The board of directors recommends a vote FOR the following directors:

Nominee: William J. Clough

[  ]  FOR

[  ]  WITHHOLD

Nominee: James F. ONeil III

[   ]  FOR

[   ]  WITHHOLD

Nominee: C. Stephen Cochennet

[   ]  FOR

[   ]  WITHHOLD

Nominee: Corey A. Lambrecht,

[   ]  FOR

[   ]  WITHHOLD

Nominee: Sarah Tucker

[   ]  FOR

[   ]  WITHHOLD

Nominee: Paul T. Addison

[   ]  FOR

[   ]  WITHHOLD

Nominee: Jerry Sue Thornton

[   ]  FOR

[   ]  WITHHOLD

Nominee: LaForrest V. Williams

[   ]  FOR

[   ]  WITHHOLD

PROPOSAL II

Ratification of the Appointment of

Grant Thornton LLP

as the Companys Independent Registered Public Accounting Firm

for the Year Ending December 31, 2022

The board of directors recommends a vote FOR ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 20222.

[  ]  FOR

[  ] AGAINST

[  ] ABSTAIN

PROPOSAL III

Advisory Approval of the Companys Executive Compensation

(Say-on-Pay)

The board of directors recommends a vote FOR the advisory approval of the Company’s executive compensation (Say-on-Pay).

[  ] FOR 

[  ]  AGAINST

[  ]  ABSTAIN

PROPOSAL IV

To Approve an Amendment to Paragraph 11.27 of the

Orbital Energy Group 2020 Incentive Award Plan

by Increasing the Overall Share Limit by 5,000,000 shares

The Board of Directors recommends a vote “FOR” adoption of an amendment to Paragraph 11.27 of the Orbital Energy Group 2020 Incentive Award Plan by Increasing the Overall Share Limit by 5,000,000 shares.

[  ]  FOR

[  ] AGAINST

[  ] ABSTAIN

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS TO ELECT THE NOMINEE DIRECTORS, RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANYS INDEPENDENT AUDITOR FOR THE YEAR ENDING DECEMBER 31, 2022, ADVISORY APPROVAL OF THE COMPANYS EXECUTIVE COMPENSATION (SAY-ON-PAY), APPROVAL OF AN AMENDMENT TO PARAGRAPH 11.27 OF THE ORBITAL ENERGY GROUP 2020 INCENTIVE AWARD PLAN BY INCREASING THE OVERALL SHARE LIMIT BY 5,000,000 SHARES AND APPROVAL OF THE CONVERSION OF THE COMPANYS DOMICILE STATE FROM COLORADO TO TEXAS WHICH CONVERSION SHALL INCLUDE CHANGING THE CORPORATE NAME FROM ORBITAL ENERGY GROUP, INC. TO ORBITAL INFRASTRUCTURE GROUP, INC.

Date

2022

Signature

Signature of joint holder, if any

Please sign exactly as your name appears on your stock certificate or account. Executors, administrators, trustees, etc. should give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer. If a partnership, please sign in partnership name by authorized person.

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