UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 | |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to Section 240.14a-12 |
RELIANCE GLOBAL GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules |
RELIANCE GLOBAL GROUP, INC.
300 Blvd. of the Americas, Suite 105
Lakewood, New Jersey 08701
Dear Stockholders of Reliance Global Group, Inc.:
We cordially invite you to attend a Virtual Special Meeting of Stockholders (the “Special Meeting”) of Reliance Global Group, Inc., a Florida corporation (“we,” “us,” “our” or the “Company”). The Special Meeting will be held virtually on Wednesday, March 13, 2024 at 1:00 p.m. Eastern Time. The purpose of the Special Meeting and the matters to be acted on are stated below. The Company’s Board of Directors (the “Board”) knows of no other business that will come before the Special Meeting.
Stockholders will vote on the following matters at the Special Meeting:
(1) | To approve the potential issuance of shares of the Company’s common stock in excess of 19.99% of our outstanding common stock pursuant to Nasdaq listing rules; | |
(2) | To approve the 2024 Equity Incentive Plan; and | |
(3) | To transact such other business as may properly come before the Special Meeting or any adjournments or postponements of the Special Meeting. |
September 21, 2022The Special Meeting proposals are more fully described in the accompanying Proxy Statement. We urge you to read carefully the Proxy Statement in its entirety.
We are providing the accompanying Proxy Statement and proxy cards to our stockholders in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournments or postponements thereof. Information about the Special Meeting and the proposals to be considered by the Company’s stockholders is included in the accompanying Proxy Statement. Whether or not you plan to attend the Special Meeting, we urge all stockholders to read our proxy materials carefully and in their entirety.
After careful consideration, our Board unanimously recommends that our stockholders vote “FOR” all of the proposals presented in the accompanying Proxy Statement.
Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by following the instructions in the accompanying Proxy Statement to make sure that your shares are represented at the Special Meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Special Meeting.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the Special Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend virtually the Special Meeting, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record and you attend the Special Meeting, and wish to vote virtually, you may withdraw your proxy and vote virtually at the Special Meeting.
On behalf of our Board, I would like to thank you for your support of Reliance Global Group, Inc.
February [●], 2024 | Sincerely, |
/s/ Ezra Beyman | |
Ezra Beyman | |
Chairman of the Board and Chief Executive Officer |
NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS OF
RELIANCE GLOBAL GROUP, INC.
To the Stockholders of Reliance Global Group, Inc.:
You are cordially invited to attend the 2022 AnnualVirtual Special Meeting of Stockholders (the “2022 Annual“2024 Special Meeting”) of Reliance Global Group, Inc., a Florida corporation (the “Company”). The meeting2024 Special Meeting will be held virtually on Thursday, October 27, 2022Wednesday, March 13, 2024 at 12:1:00 p.m. Eastern Time atTime. You may attend the offices of2024 Special Meeting and vote during the Company, 300 Blvd. of2024 Special Meeting by visiting www.virtualshareholdermeeting.com/RELI2024 . You will need to provide the Americas, Suite 105, Lakewood, New Jersey 08701. control number that is on your proxy card.
The purpose of the 2022 Annual2024 Special Meeting and the matters to be acted on are stated below. The Board of Directors knows of no other business that will come before the 2022 Annual2024 Special Meeting.
At the 2022 Annual2024 Special Meeting, stockholders will vote on the following matters:
(1) | To approve the potential issuance of shares of the Company’s common stock in excess of 19.99% of our outstanding common stock pursuant to | |
(2) |
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(3) | ||
The above matters listed in this notice of meeting are more fully described in detail in the accompanying Proxy Statement. We urge you to read carefully the Proxy Statement in its entirety.
The Boardrecord date for the 2024 Special Meeting is January 18, 2024 (the “Record Date”). Only stockholders of Directors has fixedrecord at the close of business on September 6, 2022 asJanuary 18, 2024 are entitled to notice of, and may vote, at the record date (the “Record Date”) for determining those2024 Special Meeting or any adjournment or postponement thereof. A complete list of our stockholders who areof record entitled to notice of, and to vote at, the 2022 Annual2024 Special Meeting or any adjournment or postponement of the 2022 Annual Meeting. The list of the stockholders of record as of the Record Date will be made available for inspection at the 2022 Annual Meeting and will also be available for inspection during10 days before the ten days preceding the meeting2024 Special Meeting at the Company’sour principal executive offices, located at 300 Blvd. of the Americas, Suite 105, Lakewood, New Jersey 08701.NJ 08701, for inspection by stockholders during ordinary business hours.
None of the proposals at the 2024 Special Meeting is conditioned on the approval of any other proposal set forth in the Proxy Statement.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2022 ANNUAL2024 SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 27, 2022.NOVEMBER 14, 2023.
On or about September 26, 2022,February [●], 2024, we will begin mailing thisour proxy statement and our Annual Report on Form 10-K formaterials, including the year ended December 31, 2021.accompanying Proxy Statement.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO VIRTUALLY ATTEND THE 2022 ANNUAL2024 SPECIAL MEETING, PLEASE SUBMIT A PROXY TO HAVE YOUR SHARES VOTED AS PROMPTLY AS POSSIBLE BY USING THE INTERNET OR THE DESIGNATED TOLL-FREE TELEPHONE NUMBER, OR BY SIGNING, DATING AND RETURNING BY MAIL THE PROXY CARD ENCLOSED WITH THE PROXY MATERIALS. IF YOU DO NOT RECEIVE THE PROXY MATERIALS IN PRINTED FORM AND WOULD LIKE TO SUBMIT A PROXY BY MAIL, YOU MAY REQUEST A PRINTED COPY OF THE PROXY MATERIALS (INLCUDING(INCLUDING THE PROXY) AND SUCH MATERIALS WILL BE SENT TO YOU.
On behalf of the Board of Directors and the employees of Reliance Global Group, Inc., we thank you for your continued support and look forward to speaking with you at the 2022 Annual Meeting.support.
Sincerely, | |
/s/ Ezra Beyman | |
Ezra Beyman | |
Chairman of the Board and Chief Executive Officer |
RELIANCE GLOBAL GROUP, INC.
300 Blvd. of the Americas, Suite 105
Lakewood, New JerseyNJ 08701
PROXY STATEMENT
For the 2022 Annual2024 Virtual Special Meeting of Stockholders to be held on October 27, 2022
GENERAL INFORMATION
We are providing these proxy materials to holders of shares of common stock, $0.086 par value per share, of Reliance Global Group, Inc., a Florida corporation (including its consolidated subsidiaries, referred to herein as “Reliance Global Group,” the “Company,” “we,” or “us”), in connection with the solicitation by the Company’s Board of Directors of Reliance Global Group (the “Board of Directors”“Board”) of proxies to be voted at our 2022 Annual2024 Virtual Special Meeting of Stockholders (the “2022 Annual“2024 Special Meeting”) to be held on October 27, 2022,March 13, 2024, beginning at 12:1:00 p.m., Eastern Time, at the offices of the Company, 300 Blvd. of the Americas, Suite 105, Lakewood, New Jersey 08701. Time.
The purpose of the 2022 Annual2024 Special Meeting and the matters to be acted on are stated in the accompanying Notice of AnnualSpecial Meeting of Stockholders. The Board of Directors knows of no other business that will come before the 2022 Annual2024 Special Meeting.
The Board of Directors is soliciting votes (1) (i) “FOR each” approval of the five (5) directors named herein for electionpotential issuance of shares of the Company’s common stock in excess of 19.99% of our outstanding common stock pursuant to the Boardlisting rules of Directors; (2) The Nasdaq Stock Market LLC; and (ii) “FOR the ratification” approval of the appointment of Mazars USA LLP as our independent registered public accounting firm for the fiscal year ending on December 31, 2022; (3) FOR the approval, on an advisory basis, of the compensation of our named executive officers, as disclosed in this proxy statement; and (4) FOR the recommendation, on an advisory basis, of a three-year frequency for holding an advisory vote on executive compensation.2024 Equity Incentive Plan.
ANNUAL MEETING ADMISSIONRECORD DATE
Only stockholders as of September 6, 2022January 18, 2024 (the “Record Date”) may virtually attend the 2022 Annual2024 Special Meeting. If you attend, please note that you will be asked to present government-issued identification (such as a driver’s license or passport) and evidence of your share ownership of our common stock on the Record Date. Such evidence of ownership can be your proxy card. If your shares are held beneficially in the name of a bank, broker or other holder of record and you plan to attend the 2022 Annual Meeting, you will be required to present proof of your ownership of our common stock on the Record Date, such as a bank or brokerage account statement or voting instruction card, to be admitted to the 2022 Annual Meeting.
No cameras, recording equipment or electronic devices will be permitted in the 2022 Annual Meeting.
Information on how to obtain directions to attend the 2022 Annual Meeting is available at: https://www.relianceglobalgroup.com/.
ADDITIONAL INFORMATION ABOUT THESE PROXY MATERIALS AND VOTING
We are providing you with these proxy materials because the Board of Directors, is soliciting your proxy to vote at the 2022 Annual2024 Special Meeting, including at any adjournments or postponements thereof, to be held on October 27, 2022March 13, 2024 at 12:1:00 p.m. Eastern Time.
You are invited to virtually attend the 2022 Annual2024 Special Meeting to vote on the proposals described in this Proxy Statement.Statement relating to the 2024 Special Meeting. However, you do not need to virtually attend the 2022 Annual2024 Special Meeting to vote your shares. Instead, you may simply follow the instructions below to submit your proxy. The purpose of the 2022 Annual2024 Special Meeting and the matters to be acted on are stated in the accompanying Notice of AnnualSpecial Meeting of Stockholders. The Board of Directors knows of no other business that will come before the 2022 Annual2024 Special Meeting. The proxy materials, including this Proxy Statement, and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”), are being distributed and made available on or about September 26, 2022.February [●], 2024.
Q: | Why am I receiving these materials? |
A: | We have sent you these proxy materials because the Board |
Q: | Who can vote at the |
A: | Only stockholders of record at the close of business on |
Stockholder of Record: Shares Registered in Your Name | |
If, on | |
Beneficial Owner: Shares Registered in the Name of a Broker or Bank | |
If, on |
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Q: | What information is contained in the Proxy Statement? |
A: | The information included in this Proxy Statement relates to the proposals to be voted on at the |
Q: | How do I get electronic access to the proxy materials? |
A: | This Proxy Statement |
Q: | What items of business will be voted on at the |
A: | The |
● | Approval of the | |
● | Approval of the |
We will also consider any other business that properly comes before the | |
Q: | How does the Board |
A: | The Board |
● | FOR approval of the potential issuance of shares of the Company’s common stock in excess of 19.99% of our outstanding common stock pursuant to Nasdaq listing rules. | ||
● | FOR approval of the 2024 Equity Incentive Plan. |
Q: | What shares can I vote? |
A: | You may vote or cause to be voted all shares owned by you as of the close of business on |
Q: | How may I |
A: | You may |
with respect to Proposals 1 and 2. The procedures for voting are | |
Stockholder of Record: Shares Registered in Your Name | |
If you are a stockholder of record, you may have your shares voted in person at the |
● | To have your shares voted using the stockholder proxy card, simply complete, sign and date the enclosed stockholder proxy card and return it promptly in the envelope provided. If you return your signed stockholder proxy card to us before the | |
● | To have your shares voted through a proxy submitted by the internet, go to http://www.voteproxy.com to complete an electronic proxy card. You will be asked to provide the |
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Beneficial Owner: Shares Registered in the Name of Broker or Bank | |
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a voting instruction form with these proxy materials from that organization rather than from | |
Q: | How many votes do I have? |
A: | On each matter to be voted upon at the 2024 Special Meeting, you have one vote for each share of common stock you own as of |
Q: | What happens if I am a stockholder and do not vote? |
A: | Stockholder of Record: Shares Registered in Your Name |
If you are a stockholder of record and do not vote in person (virtually) or by proxy by completing your stockholder proxy card or submitting your proxy through the internet or by telephone, your shares will not be voted. | |
Beneficial Owner: Shares Registered in the Name of Broker or Bank | |
If you are a beneficial owner of shares and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (the “NYSE”) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of | |
Q: | What if I return a stockholder proxy card or otherwise submit a stockholder proxy but do not make specific choices? |
A: | If you are a record |
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Q: | |
Who can help answer my questions? | |
A: | If you have any questions about the |
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Q: | What is a quorum and why is it necessary? |
A: | Conducting business at the Abstentions are treated as present for purposes of determining whether a quorum exists. Your shares will be counted |
Q: | What is the voting requirement to approve |
A: | For Proposal 1 |
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For Proposal 2
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If your shares are held in “street name” and you do not indicate how you wish to vote, your broker is permitted to exercise its discretion to vote your shares on certain “routine” matters. | |
For purposes of Proposal 1 | |
We encourage you to vote FOR | |
Q: | What should I do if I receive more than one Proxy Statement? |
A: | You may receive more than one Proxy Statement. For example, if you are a stockholder of record and your shares are registered in more than one name, you will receive more than one Proxy Statement. Please follow the voting instructions on all of the Proxy Statements to ensure that all of your shares are voted. |
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Q: | Where can I find the voting results of the |
A: | We intend to announce preliminary voting results at the |
Q: | What happens if additional matters are presented at the |
A: | Other than the |
Q: | How many shares are outstanding and how many votes is each share entitled? |
A: | Each share of our common stock that is issued and outstanding as of the close of business on |
Q: | Who will count the votes? |
A: | One or more inspectors of election will tabulate the votes. |
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 Reliance Global Group or to anyone else, except: |
Q: | Who will bear the cost of soliciting votes for the |
A: | The Board |
Q: | When are stockholder proposals and director nominations due for next year’s Annual Meeting? |
A: | Stockholders who intend to present proposals for inclusion in next year’s proxy materials at the |
See “Stockholder Proposals For the |
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PROPOSAL 1—APPROVAL OF THE POTENTIAL ISSUANCE OF SHARES OF COMMON STOCK IN EXCESS OF 19.99% OF OUR OUTSTANDING COMMON STOCK PURSUANT TO NASDAQ LISTING RULES
Our Board is seeking the approval of our stockholders of the potential issuance of shares of our common stock to the holder of an outstanding Series G common stock purchase warrant issued on December 12, 2023 (the “Series G Warrant”) in excess of 19.99% of our outstanding common stock pursuant to Nasdaq Listing Rules 5635(b), 5635(d) and 5635(e).
Series G Warrant
On or around March 13, 2023, the Company entered into a securities purchase agreement (the “March 2023 Purchase Agreement”) with the Investors, pursuant to which the Company issued those certain Series F common stock purchase warrants (the “Series F Warrants”), among other securities. On December 12, 2023, the Company entered into that certain Inducement Offer to Exercise Series F Warrants to Subscribe for Common Stock with Investors (the “Series F Inducement Agreement”), pursuant to which (i) the Company agreed to lower the exercise price of the Series F Warrants to $0.6562 per share; and (ii) Investors agreed to exercise the remaining Series F Warrants to purchase 2,105,264 shares of common stock into 2,105,264 shares of common stock (the “Exercise Shares”) by payment of the aggregate exercise price of approximately $1,381,474 (gross proceeds before expenses). The closing occurred on December 14, 2023. The Exercise Shares were issued in accordance with the beneficial ownership limitations in the Series F Inducement Agreement. From December 12, 2023, until 60 days after the closing date, neither the Company nor any subsidiary of the Company shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any common stock or common stock equivalents (subject to customary carve outs for certain exempt issuances) or (ii) file any registration statement or any amendment or supplement to any existing registration statement (other than a resale registration statement, as agreed to by the Company and Investors.
Pursuant to the Series F Inducement Agreement, the Company agreed to issue a new unregistered Series G common share purchase warrant (“Series G Warrant”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”), to purchase 4,210,528 shares of common stock at an initial exercise price equal to $0.6562 per share. If the Company issues common stock pursuant to an “at-the-market offering” with a registered broker-dealer, whereby such registered broker-dealer is acting as principal or agent in the purchase of shares, at a cost basis per share less than the exercise price in effect under the Series G Warrant, then the exercise price of the Series G Warrant will be adjusted to such lower price. Pursuant to Nasdaq rules, the presence of any provision that could cause the conversion or exercise price of a convertible security to be reduced to below (i) the closing price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement, or (ii) the average closing price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement, plus an additional value of $0.125 per share that Nasdaq attributes to securities convertible into shares of common stock for purposes of Nasdaq Listing Rule 5635(d) for a transaction of this type (the “Nasdaq Minimum Price”), will cause the transaction to be viewed as a discounted issuance.
The Series G Warrant is not exercisable until the Company obtains the approval of a sufficient amount of holders of the Company’s common stock to satisfy the shareholder approval requirements for such action as provided in Nasdaq Rule 5635(e), to effectuate the issuance of all shares of common stock underlying the Series G Warrant (the “Shareholder Approval”). The Company agreed to hold an annual or special meeting of shareholders on or prior to the date that is 90 days following the closing date for the purpose of obtaining Shareholder Approval. If the Company does not obtain Shareholder Approval at the first meeting, the Company agreed to call a meeting every 90 days thereafter to seek Shareholder Approval until the earlier of the date on which Shareholder Approval is obtained or the Series G Warrants are no longer outstanding.
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PROPOSAL 1Requirement to Seek Stockholder Approval Pursuant to Nasdaq Rule 5635(d)
ELECTION OF DIRECTORSAs a result of our listing on The Nasdaq Capital Market, issuances of our common stock are subject to the Nasdaq Listing Rules, including Rule 5635(d) and 5635(b).
The BoardNasdaq Listing Rule 5635(d) requires us to obtain stockholder approval prior to the issuance of Directors currently consistssecurities in connection with a transaction, other than a public offering, involving the sale, issuance or potential issuance by us of five (5) directors. At the recommendationmore than 19.99% of our Nominating and Governance Committee,outstanding shares of our common stock (or securities convertible into or exercisable for shares of our common stock) at a price less than the Board of Directors proposed that Ezra Beyman, Alex Blumenfrucht, Scott Korman, Ben Fruchtzweig and Sheldon Brickman for a one-year term expiring at the 2023 Annual Meeting of Stockholders and until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification, or removal.Nasdaq Minimum Price.
Shares represented by proxies will be voted “FOR”Under the election of eachNasdaq Listing Rule 5635(d), in no event may we issue or sell to Investors pursuant to exercise of the five (5) nominees named below,Series G Warrant more than 19.99% of our outstanding shares of common stock unless (i) we obtain stockholder approval to issue shares of common stock in excess thereof, or (ii) the proxyaverage price of all applicable sales of common stock to Investors pursuant to the Series G Warrant equals or exceeds the Nasdaq Minimum Price, such that issuances and sales of the common stock to the accredited investors pursuant to the Series G Warrant would be exempt from the Nasdaq 20% rule. In any event, we may not issue or sell any shares of our common stock under the Series G Warrant if such issuance or sale would breach any applicable Nasdaq rules.
In addition, Nasdaq Listing Rule 5635(b) generally requires us to obtain stockholder approval prior to the issuance of securities when the issuance or potential issuance will result in a change of control. Pursuant to applicable Nasdaq guidance, a change of control may generally be deemed to occur when an investor would own or have the right to acquire 20% or more of the outstanding shares of common stock or voting power and such ownership or voting power would be the largest ownership position of the issuer. However, in determining if a change of control has occurred (and stockholder approval is markedrequired), Nasdaq will consider all circumstances concerning the transaction and may determine that a change of control has occurred even if the number of shares of common stock or voting power that an investor has a right to withhold authorityacquire is less than 20%.
Pursuant to so vote. If any nominee for any reason is unablethe terms of the Series G Warrant, up to serve or for good cause will not serve, the proxies4,210,528 shares of common stock may be voted for such substitute nominee as the proxy holder might determine. Each nominee has consented to being named in this Proxy Statement and to serve if elected. Proxies may not be voted for more than two directors. Stockholders may not cumulate votes for the election of directors.
The following is a brief biography of each nominee and each director whose term will continueissued at any time on or after the 2022 Annual Meeting.
Nomineesdate that Shareholder Approval is obtained, and on or prior to the Board5:00 p.m. ET on December 12, 2028. The number of Directors
Eachshares that may be issued upon exercise of the director nominees and their age and position with our company are provided in the table below and in the additional biographical descriptionsSeries G Warrant is subject to adjustment as set forth in the text below the table.
Name of Director Nominee | Age | Position | Director Since | |||
Ezra Beyman | 67 | Chairman and Chief Executive Officer | 2018 | |||
Alex Blumenfrucht | 34 | Director | 2018 | |||
Scott Korman | 67 | Director | 2019 | |||
Ben Fruchtzeig | 58 | Director | 2019 | |||
Sheldon Brickman | 56 | Director | 2020 |
Ezra BeymanSeries G Warrant, and is subject to a 4.99% equity blocker, which may be increased up to 9.99%.
Ezra Beyman has served asUnder this Proposal 1, we are seeking stockholder approval for the Chairmanissuance of shares of our common stock to Investors upon exercise of the Series G Warrant in excess of 19.99% of our outstanding shares of common stock. Our Board has determined that the issuance of Directors and our Chief Executive Officer since 2018. Mr. Beymanshares of common stock pursuant to exercise of the Series G Warrant is the central force leading the success and growth of Reliance Global Group, Inc. Drawing on his nearly three decades of entrepreneurial experience in real estate and ten years in insurance, he has set his vision and acuity on one integrated goal: integrity and success. At one point in time Mr. Beyman’s portfolio of commercial and residential properties comprised of approximately 40,000 units, as well as several insurance agencies. In 1985, he founded a small mortgage brokerage, together with his wife, which he operated in his basement. From there, his company rapidly grew into a dynamic force on the market. By 2008, he owned the third largest licensed mortgage brokerage in the U.S., having acquired numerous mortgage companies in the interim. He also expanded to real estate acquisition, having grown his portfolio to over three billion dollars. In expanding his investments, Mr. Beyman began exploring opportunities in other markets, acquiring several insurance agencies in both Florida and New Jersey. His ventures included entering the domainsbest interests of warrantee and insurance carriers. Raised in the New York metropolitan area, Mr. Beyman spent his secondary and post-secondary school years at Mesivta Tifereth Yerushalayim, where he advanced his analytic abilities while mastering various areas of Talmudic studies, earning a position as one of the closest students of the Dean. He earned his First Talmudic degree in 1975.
The Board determined that Mr. Beyman’s business experience makes him an ideal director for the Company.
Alex BlumenfruchtEffect of Failure to Obtain Stockholder Approval
Alex Blumenfrucht has served as memberIf Proposal 1 is not approved by our stockholders at the 2024 Special Meeting, we will not be permitted to issue shares of common stock to Investors pursuant to the Series G Warrant in excess of 19.99% of our boardoutstanding shares of directors since 2018common stock, unless the average price of all sales and served as our Chief Financial Officer (CFO) from 2018 until June 1, 2022, at which time he resigned as our Chief Financial Officer and accepted employment as CFOissuances of an unaffiliated company, Future Care Consultants, where he remains employed to-the date of this filing. Priorcommon stock to joining our Company, Mr. Blumenfrucht served as an Audit & Assurance Professional at Deloitte & Touché, LLP from September 2015 until May 2018, where he successfully led audit teams on both public and privately held corporations.
The Board determined that Mr. Blumenfrucht’s extensive experience in internal control, financial analysis, and reporting for both private and publicly traded companies is centralInvestors pursuant to the Company’s managementSeries G Warrant equals or exceeds the Minimum Price (as defined under Nasdaq Rule 5635(d)(1)(A)), such that issuances and sales of finances, reporting,our common stock under the Series G Warrant would be exempt from 19.99% limitation under the Nasdaq 20% Rule, and controls and makes him an ideal director.
Scott Korman
Mr. Korman has served on our board of directors since December 2019 and he currently serves as President of Nashone, Inc., a private equity firm, which he founded in 1984. In this role, Mr. Korman is involved in financial advisory, M&A, and general management assignments. He is a founder and Managing Member and CEO of Innervate Radiopharmaceuticals LLC since May 2019, CEO of Sentry Laboratories LLC since February 2020 and CFO and board member of Adenocyte LLC since 2018. Mr. Korman previously served as Chairman of Da-Tech Corporation, a Pennsylvania based contract electronics manufacturer and as Chairman and CEO of Best Manufacturing Group LLC, a leading manufacturer and distributor of uniforms, napery, service apparel, and hospitality and healthcare textiles. Mr. Korman also served as President and CEO of Welsh Farms Inc., a full-service dairy processor and distributor of milk, ice cream mix and ice cream products. Mr. Korman received a B.S. degree in Economics fromwe may not issue shares under the University of Pennsylvania Wharton School. He has servedSeries G Warrant if the issuance would violate Nasdaq Listing Rule 5635(b). If, as a memberresult of failing to obtain stockholder approval, we are prohibited from issuing shares of common stock pursuant to exercise of the BoardSeries G Warrant in excess of Directors19.99% of Tofutti Brands, Inc. since December 2011, and advises companies including Damina Advisors, CFO Squad, Beis Capital LLC and Cinch Delivers LLC. He also servesour outstanding common stock (or in an amount that would violate Nasdaq Listing Rule 5635(b)), we would likely be required to seek alternative sources of financing, which may not be available on terms favorable to the boards of various not-for-profit groups.
The Board determined that Mr. Korman’s business experience makes him an ideal director for the Company.Company, or at all.
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Ben FruchtzweigDilution
Mr. Fruchtzweig has served on our board of directors since December 2019 and brings decades of executive experience in accounting and financial services. He currently serves on the board of Mosdos Beis Abba since June 2013. He has served as Chief Comptroller/Financial Analyst at national financial services and investment companies. He received his NYS C.P.A license in 1987 and has worked at Deloitte Haskins and Sells and other leading accounting firms. Currently, Mr. Fruchtzweig lectures on a variety of topics including business ethics. He also serves on a voluntary basis as a trustee of a non-profit private foundation, which serves to provide the needed financial support, services and guidance to qualifying individuals and families. Mr. Fruchtzweig graduated Magna Cum Laude from Queens College/C.U.N.Y. in June 1985.
The Board believes that his strong accountingissuance of shares of common stock upon exercise of the Series G Warrant will have a dilutive effect on the existing stockholders, including the voting power and finance background makes him a strong director.economic rights of the existing stockholders. For example, if we were to issue 4,210,528 shares of common stock upon exercise of the Series G Warrant (which is the maximum number of shares we could issue upon exercise of the Series G Warrant), such amount would represent approximately [●]% of the outstanding shares of the Company, based on [●] shares of common stock outstanding as of the Record Date.
Sheldon BrickmanBeneficial Ownership Limitation
Mr. Brickman has served onNotwithstanding the foregoing, the Series G Warrant provides that the Company shall not effectuate any exercise of the Series G Warrant, and the Investors shall not have the right to exercise any portion of the Series G Warrant, to the extent that after giving effect to such issuance after exercise, the Investor (together with any affiliates and any other persons acting as a group together with the Investors or any of the Investor’s affiliates, would beneficially own (as calculated pursuant to Section 13(d) of the Exchange Act) in excess of 4.99% of our boardthen issued and outstanding shares of directors since August 2020 and has been Presidentcommon stock. This beneficial ownership limitation limits the number of Rockshore Advisors LLC since May, 2013 and hasshares the Investors may beneficially own at any one time to 4.99% of our outstanding common stock. Consequently, the number of shares the Investors may beneficially own in compliance with the beneficial ownership limitation may increase over 25 yearstime as the number of M&A advisory and business development experience, totaling more than $40 billionoutstanding shares of our common stock increases over time. Investors may sell some or all of the shares purchased upon exercise of the Series G Warrant, permitting the purchase of additional shares in deal value. In addition, he has also served as Chief Financial Officer of InfinT Acquisition Corporation since May 2021. He has worked for numerous multibillion-dollar insurance carriers, including assignments for such companies as AIG, Aetna and National General. Sheldon has assisted international companies (UAE, UK, Asia and Latin America), start-up operations, and regional insurance carriers. Mr. Brickman’s experience coverscompliance with the property casualty and life/health markets, including working with insurance carriers, managing general agencies, wholesalers, retailers and third-party administrators.beneficial ownership limitation.
The Board determinedUpon notice to the Company, Investors may increase or decrease the equity blocker percentage, provided that Mr. Brickman’s M&Athe equity blocker percentage may not exceed 9.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of the Series G Warrant.
Effect of Approval of Proposal 1
If this Proposal 1 is approved by our stockholders, we will be able to issue shares of common stock equal to 20% or more of our outstanding shares upon exercise of the Series G Warrant, up to a maximum of 4,210,528 shares of our common stock. Each additional share of common stock that would be issuable pursuant to the Warrant would have the same rights and insurance industry experience makes him an ideal director for the Company.privileges as each share of our currently authorized common stock.
Vote Required
Provided thatApproval of the issuance of shares of common stock to the Warrant holder upon exercise of the Warrant pursuant to Nasdaq Listing Rules 5635(b) and 5635(d) requires the affirmative vote of a majority of the shares entitled to vote on this proposal, present in person virtually or represented by proxy at a meeting at which a quorum is present,present. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions will have the nominees for director receivingeffect of a plurality of the votes cast at the 2022 Annual Meeting in person or by proxyvote against Proposal 1, and broker non-votes will be elected. Accordingly, the five (5) nominees receiving the highest number of votes will be elected.have no effect.
Family RelationshipsAppraisal Rights
ThereUnder Florida law, our stockholders are no arrangements betweennot entitled to dissenter’s rights or appraisal rights with respect to Proposal 1 and we will not independently provide our directors andstockholders with any other person pursuantsuch rights.
Interest of Certain Persons in Matters to which our directors were nominatedbe Acted Upon
No officer or elected for their positions. Except for Ezra Beyman and Yaakov Beyman (father and son), there are no family relationships betweendirector has any substantial interest, direct or indirect, by security holdings or otherwise, in Proposal 1 that is not shared by all of our directors or executive officers.other stockholders.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR“FOR” THE ELECTIONAPPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK TO ARMISTICE IN EXCESS OF 19.99% OF OUR OUTSTANDING COMMON STOCK PURSUANT TO NASDAQ LISTING RULES.
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PROPOSAL 2—APPROVAL OF THESE NOMINEES AS DIRECTORS2024 EQUITY INCENTIVE PLAN
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCEOn January 17, 2024, the Board approved, and proposed for stockholder approval, the 2024 Equity Incentive Plan. A copy of the 2024 Equity Incentive Plan is attached as Appendix I to this Proxy Statement.
The Board’s approval and recommendation of the 2024 Equity Incentive Plan follows a review by the Compensation Committee of our existing compensation program, comparable plans at other companies and trends in long-term compensation, particularly in the industries in which we compete.
The Board believes the 2024 Equity Incentive Plan will serve as an essential element of our compensation program and will be critical to our ability to attract and retain the highly qualified employees essential for the execution of our business strategy. The Board believes the 2024 Equity Incentive Plan, as proposed, will (i) attract and retain key personnel, and (ii) provide a means whereby directors, officers, employees, consultants, and advisors of the Company and its subsidiaries can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measure by reference to the value of the Company’s common stock, thereby strengthening their commitment to the welfare of the Company and its subsidiaries and aligning their interests with those of the Company’s stockholders. The 2024 Equity Incentive Plan provides for various stock-based incentive awards, including incentive and nonqualified stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”), and other equity-based or cash-based awards.
The 2024 Equity Incentive Plan highlights and the summary of the material features of the 2024 Equity Incentive Plan appearing below are qualified in their entirety by reference to the copy of the 2024 Equity Incentive Plan attached hereto as Appendix I.
Board Diversity Matrix2024 Equity Incentive Plan Highlights
Highlights of the 2024 Equity Incentive Plan are as follows:
● | The Compensation Committee, which is comprised solely of | |||||||||
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INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORSMaterial Features of the 2024 Equity Incentive Plan
Committees of the Board of DirectorsTerm
Our Board has established three standing committees: an Audit Committee, a Nominating and Governance Committee and a Compensation Committee, which are described below. Members of these committees are elected annually at a regular meeting ofIf approved by the Company’s stockholders, the 2024 Equity Incentive Plan will be effective January 17, 2024. The 2024 Equity Incentive Plan will terminate on January 17, 2034, unless the Board of Directors held in conjunction with the annual stockholders’ meeting. The charter of each committee is available on our website at www.relianceglobalgroup.com, and our committee appointments are set forth above.terminates it earlier.
Audit CommitteePurpose
The Audit Committee has authoritypurpose of the 2024 Equity Incentive Plan is to review our financial records, dealprovide a means through with our independent auditors, recommendthe Company and its subsidiaries may attract and retain key personnel, and to provide a means whereby directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and maintain an equity interest in the Company, or be paid incentive compensation, thereby strengthening their commitment to the Board policies with respect to financial reporting, and investigate all aspects of our business. Allwelfare of the membersCompany and its subsidiaries and aligning their interests with those of the Audit Committee currently satisfy the independence requirements and other established criteria of NASDAQ.
The Audit Committee has sole authority for the appointment, compensation and oversight of the work of our independent registered public accounting firm, and responsibility for reviewing and discussing with management and our independent registered public accounting firm our audited consolidated financial statements included in our Annual Report on Form 10-K, our interim financial statements and our earnings press releases. The Audit Committee also reviews the independence and quality control procedures of our independent registered public accounting firm, reviews management’s assessment of the effectiveness of internal controls, discusses with management the Company’s policies with respect to risk assessment and risk management and will review the adequacy of the Audit Committee charter on an annual basis.
Scott Korman, Ben Fruchtzweig and Sheldon Brickman who are all independent directors and sit on this Committee, with Scott Korman being the Chair and Audit Committee Financial Expert.
Nominating and Governance Committee
The Nominating and Corporate Governance Committee has the following responsibilities: (a) setting qualification standards for director nominees; (b) identifying, considering and nominating candidates for membership on the Board; (c) developing, recommending and evaluating corporate governance standards and a code of business conduct and ethics applicable to the Company; (d) implementing and overseeing a process for evaluating the Board, Board committees (including the Committee) and overseeing the Board’s evaluation of the Chairman and Chief Executive Officer of the Company; (e) making recommendations regarding the structure and composition of the Board and Board committees; (f) advising the Board on corporate governance matters and any related matters required by the federal securities laws; and (g) assisting the Board in identifying individuals qualified to become Board members; recommending to the Board the director nominees for the next annual meeting of shareholders; and recommending to the Board director nominees to fill vacancies on the Board.stockholders.
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The Nominating and Governance Committee determines the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommendAdministration
Pursuant to the Board for its approval, criteria to be considered in selecting nominees for director (the “Director Criteria”); identifies and screens individuals qualified to become membersterms of the 2024 Equity Incentive Plan, a committee of the Board consistentor any properly delegated subcommittee, or, if no such committee or subcommittee thereof exists, the Board, shall administer the 2024 Equity Incentive Plan. The Compensation Committee, which is comprised entirely of independent directors, administers the 2024 Equity Incentive Plan. The Compensation Committee will have the sole and plenary authority to (i) designate participants; (ii) determine the type or types of awards; (iii) determine the number of shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, awards; (iv) determine the Director Criteria. The Nominatingterms and Governance Committee considersconditions of any director candidates recommendedaward; (v) determine whether, to what extent, and under what circumstances awards may be settled in, or exercised for, cash, shares of Company common stock, other securities, other awards, or other property, or canceled, forfeited, or suspended and the method or methods by which awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances the Company’s shareholders pursuantdelivery of cash, shares of Company common stock, other securities, other awards, or other property and other amounts payable with respect to an award shall be deferred either automatically or at the procedures describedelection of the participant or of the Compensation Committee; (vii) interpret, administer, reconcile any inconsistency in, correct any defect in, and/or supply any omission in the Company’s proxy statement,2024 Equity Incentive Plan and any nominations of director candidates validly made by shareholders in accordance with applicable laws,instrument or agreement relating to, or award granted under, the 2024 Equity Incentive Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Compensation Committee shall deem appropriate for the proper administration of the 2024 Equity Incentive Plan; (ix) adopt sub-plans; and (x) make any other determination and take any other action that the Compensation Committee deems necessary or desirable for the administration of the 2024 Equity Incentive Plan.
The Compensation Committee may delegate its authority to administer the 2024 Equity Incentive Plan as permitted by law, except for award grants to non-employee directors.
The Compensation Committee will have the discretion to select particular performance targets in connection with awards under the 2024 Equity Incentive Plan. Under the 2024 Equity Incentive Plan, performance targets are specific levels of performance of the Company (and/or subsidiaries, divisions or operational and/or business units, product lines, brands, business segments, administrative departments, or any combination of the foregoing), which may be determined in accordance with GAAP or on a non-GAAP basis on the specified measures, including, but not limited to:
● | debt ratings; | ● | share price; | ||
● | debt to capital ratio; | ● | total stockholder return; | ||
● | generation of cash; | ● | acquisition or disposition of assets; | ||
● | issuance of new debt; | ● | acquisition or disposition of companies, entities or businesses; | ||
● | establishment of new credit facilities; | ● | creation of new performance and compensation criteria for key personnel; | ||
● | retirement of debt; | ● | recruiting and retaining key personnel; | ||
● | return measures (including, but not limited to, return on assets, return on capital, return on equity); | ● | customer satisfaction; | ||
● | attraction of new capital; | ● | employee morale; | ||
● | cash flow; | ● | hiring of strategic personnel; | ||
● | earnings per share; | ● | development and implementation of Company policies, strategies and initiatives; | ||
● | net income; | ● | creation of new joint ventures; | ||
● | pre-tax income; | ● | increasing the Company’s public visibility and corporate reputation; | ||
● | pre-tax pre-bonus income; | ● | development of corporate brand name; | ||
● | operating income; | ● | overhead cost reductions; or | ||
● | gross revenue; | ● | any combination of or variations on the foregoing. | ||
● | net revenue; | ||||
● | net margin; | ||||
● | pre-tax margin; |
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Eligibility
Employees, directors and independent contractors (except those performing services in connection with the offer or sale of the Company’s securities in a capital raising transaction, or promoting or maintaining a market for the Company’s securities) of the Company or its subsidiaries will be eligible to receive awards under the 2024 Equity Incentive Plan.
Maximum Shares Available
The total number of shares of common stock authorized for issuance under the 2024 Equity Incentive Plan is 2,000,000 shares, or approximately [●]% of the common stock outstanding at the Record Date. No non-employee director may be granted, in any fiscal year, awards with a grant date fair value (computed as of the date of grant in accordance with U.S. generally accepted accounting principles) of more than $300,000.
Adjustments
In the event that any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate structure of the Company affecting the shares occurs, the administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2024 Equity Incentive Plan, will adjust the number and class of shares of stock that may be delivered under the 2024 Equity Incentive Plan and/or the number, class, and price of shares of stock covered by each outstanding award, and the numerical share limits of the 2024 Equity Incentive Plan.
Restricted Stock
The Compensation Committee will be authorized to award restricted stock under the 2024 Equity Incentive Plan. Awards of restricted stock will be subject to the terms and conditions established by the Compensation Committee. Restricted stock is common stock that is subject to such restrictions as may be determined by the Compensation Committee for a specified period.
RSU Awards
The Compensation Committee will be authorized to award RSUs in lieu of or in addition to any restricted stock awards. RSUs will be subject to the terms and conditions established by the Compensation Committee. Each RSU will have an initial value that is at least equal to the fair market value of a share of Company common stock on the date of grant. RSUs may be paid at such time as the Compensation Committee may determine in its discretion, and payments may be made in a lump sum or in installments, in cash, shares of common stock, or a combination thereof, as determined by the Compensation Committee in its discretion.
Options
The Compensation Committee will be authorized to grant options to purchase shares of common stock that are either “qualified,” meaning they are intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) for incentive stock options, or “nonqualified,” meaning they are not intended to satisfy the requirements of Section 422 of the Code. Options granted under the 2024 Equity Incentive Plan will be subject to the terms and conditions established by the Compensation Committee. Under the terms of the 2024 Equity Incentive Plan, the exercise price of the options will not be less than the fair market value of our common stock at the time of grant. Options granted under the 2024 Equity Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum term of an option granted under the 2024 Equity Incentive Plan will be 10 years from the date of grant (or five years in the case of a qualified option granted to a 10% stockholder). Payment in respect of the exercise of an option may be made in cash or by check, by surrender of unrestricted shares (at their fair market value on the date of exercise), or through a “net exercise,” or the Compensation Committee may, in its discretion and to the extent permitted by law, allow such payment to be made through a broker-assisted cashless exercise mechanism or by such other method as the Compensation Committee may determine to be appropriate.
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Stock Appreciation Rights
The Compensation Committee will be authorized to award SARs under the 2024 Equity Incentive Plan. SARs will be subject to the terms and conditions established by the Compensation Committee and reflected in the award agreement. A SAR is a contractual right that allows a participant to receive, in the form of either cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the 2024 Equity Incentive Plan may include SARs, and SARs may also be awarded to a participant independent of the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs.
Other Stock-Based Awards
The Compensation Committee will be authorized to award other stock-based awards having terms and conditions as determined by the Compensation Committee. These awards may be granted either alone or in tandem with other awards.
Qualified Performance-Based Awards
Restricted stock and RSUs granted to officers and employees of the Company may depend on the degree of achievement of one or more performance goals relative to a pre-established targeted level or levels using one or more identified performance targets. The applicable performance period may not be less than three months nor more than 10 years.
Dividends and Voting Rights
Participants awarded stock options and SARs will not receive dividends or dividend equivalents or have any voting rights with respect to shares of common stock underlying these awards prior to the issuance of any such shares. Participants that hold unearned awards subject to performance vesting conditions (other than or in additional to the passage of time) will not receive dividends or dividend equivalents or have any voting rights with respect to shares of common stock underlying these awards prior to the issuance of any such shares; provided, however, that dividends and dividend equivalents may be accumulated in respect of unearned awards and paid within 30 days after such awards are earned and become payable or distributable.
Transferability
Awards granted under the 2024 Equity Incentive Plan generally will be transferable only by will or the applicable laws of descent and distribution. In certain limited circumstances, the Compensation Committee may authorize stock options, other than incentive stock options, to be transferred to family members or trusts controlled by family members of the participant. Restricted stock may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of until the applicable restrictions lapse.
Clawback
All awards under the 2024 Equity Incentive Plan are subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Compensation Committee and as in effect from time to time; and (ii) applicable law.
Amendment and Termination
The Board may terminate or amend the 2024 Equity Incentive Plan or any portion thereof at any time; provided, however, that the Board may not, without stockholder approval, amend the 2024 Equity Incentive Plan if:
● | Such approval is necessary to comply with any regulatory requirement applicable to the 2024 Equity Incentive Plan; | |
● | It would materially increase the number of securities which may be issued under the 2024 Equity Incentive Plan (except for increases expressly provided for in the 2024 Equity Incentive Plan; or | |
● | It would materially modify the requirements for participation in the 2024 Equity Incentive Plan. |
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In addition, any such amendment that would materially and adversely affect an award holder’s rights with respect to a previously granted and outstanding award will not to that extent be effective without the consent of the affected holder of such award.
The Compensation Committee may terminate or amend any award agreement, to the extent consistent with the terms of the 2024 Equity Incentive Plan and any applicable award agreement and so long as such termination or amendment would not materially and adversely affect an award holder’s rights with respect to a previously granted and outstanding award (unless the affected holder consents thereto); provided, however that the Compensation Committee may not, without stockholder approval, amend or terminate an award or award agreement to:
● | Reduce the exercise price of any option or the strike price of any SAR; | |
● | To cancel any outstanding option or SAR and replace it with a new option or SAR (with a lower exercise price or strike price, as the case may be) or other award or cash payment that is greater than the intrinsic value (if any) of the canceled option or SAR; and | |
● | Take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted. |
U.S. Federal Income Tax Consequences
The following is a general summary of the material U.S. federal income tax consequences to 2024 Equity Incentive Plan participants and the Company of the grant, vesting and exercise of awards under the 2024 Equity Incentive Plan and the disposition of shares acquired pursuant to the exercise of such awards and is based upon an interpretation of the current federal income tax laws and regulations and may be inapplicable if such laws and regulations are changed. This summary is not intended to be a complete statement of applicable law or constitute tax advice, nor does it address foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant. To the extent that any awards under the 2024 Equity Incentive Plan are subject to Section 409A of the Code (“Section 409A”), the following discussion assumes that such awards will be designed to conform to the requirements of Section 409A and the regulations promulgated thereunder (or an exception thereto). The 2024 Equity Incentive Plan is not subject to the protective provisions of the Employee Retirement Income Security Act of 1974, as amended, and is not qualified under Section 401(a) of the Code.
Incentive Stock Options. Options issued under the 2024 Equity Incentive Plan and designated as incentive stock options are intended to qualify as such under Section 422 of the Code. Under the provisions of Section 422 of the Code and the related regulations, holders of incentive stock options will generally incur no federal income tax liability at the time of grant or upon exercise of those options, and the Company will not be entitled to a deduction at the time of the grant or exercise of the option. However, the difference between the value of the common stock received on the exercise date and the exercise price paid will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability to the holder for the taxable year in which the exercise occurs. The taxation of gain or loss upon the sale of the common stock acquired upon exercise of an incentive stock option depends, in part, on whether the holding period of the shares of our common stock acquired through the exercise of an incentive stock option is at least (i) two years from the date of grant of the option and (ii) one year from the date the option was exercised. If these holding period requirements are satisfied, any gain or loss realized on a subsequent disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to us for federal income tax purposes in connection with the grant or exercise of the incentive stock option. If these holding periods requirements are not met, then, upon such “disqualifying disposition” of the shares, the participant will generally realize compensation, taxable as ordinary income, at the time of such disposition in an amount equal to the difference between the fair market value of the share on the date of exercise over the exercise price, limited to the gain on the sale, and that amount will generally be deductible by us for federal income tax purposes, subject to the possible limitations on deductibility under Section 162(m)of the Code for compensation paid to certain executives designated thereunder. Finally, if an otherwise qualified incentive stock option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the incentive stock option in respect of those excess shares will be treated as a non-qualified stock option for federal income tax purposes.
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Non-qualified Stock Options. No income will generally be realized by a participant upon grant of a non-qualified stock option. Upon the exercise of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over the option exercise price paid at the time of exercise. We will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Section 162(m) of the Code for compensation paid to certain executives designated thereunder. Upon a subsequent disposition of the shares acquired under a non-qualified stock option, the participant will realize short-term or long-term capital gain (or loss) depending on the holding period. The capital gain (or loss) will be short-term if the shares are disposed of within one year after the non-qualified stock option is exercised, and long-term if shares were held more than 12 months as of the sale date.
Restricted Stock. A participant will normally not be required to recognize income for federal income tax purposes upon the grant of an award of restricted stock, nor is the Company entitled to any deduction, to the extent that the shares awarded have not vested (i.e., are no longer subject to a substantial risk of forfeiture). On the date an award of restricted stock is no longer subject to a substantial risk of forfeiture, the participant will compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the vested shares on that date and the amount the participant paid for such shares, if any, unless the participant made an election under Section 83(b) of the Code to be taxed at the time of grant. The participant may, however, make an election under Section 83(b) of the Code, within 30 days following the grant of the restricted stock award, to be taxed at the time of the grant of the award based on the difference between the fair market value of the shares on the date of grant and the amount the participant paid for such shares, if any. If the shares subject to such election are subsequently forfeited, the participant will not be entitled to any deduction, refund or loss for tax purposes with respect to the forfeited shares. We will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Section 162(m) of the Code for compensation paid to certain executives designated thereunder. Upon the sale of the vested shares, the participant will realize short-term or long-term capital gain or loss depending on the holding period. The holding period generally begins when the restriction period expires. If the recipient timely made a Section 83(b) election, the holding period commences on the date of the grant.
Deferred Stock Units and Restricted Stock Units. A participant will not be subject to federal income tax upon the grant of a deferred stock unit award or a restricted stock unit award, and the Company is not entitled to a deduction at the time of grant. Rather, upon the delivery of shares or cash pursuant to a deferred stock unit award or a restricted stock unit award, the participant will generally have compensation taxable at ordinary income rates in an amount equal to the fair market value of the number of shares (or the amount of cash) actually received with respect to the settlement of the award of such units. We will generally be able to deduct the amount of the ordinary income realized by the participant for U.S. federal income tax purposes, but the deduction may be limited under Section 162(m) of the Code for compensation paid to certain executives designated thereunder. If the participant receives shares upon settlement then, upon disposition of such shares, appreciation or depreciation after the settlement date is treated as either short-term or long-term capital gain or loss, depending on how long the shares have been held.
SARs. SARs are treated very similarly to non-qualified options for tax purposes. No income will normally be realized by a participant upon grant of a SAR. Upon the exercise of a SAR, the participant will recognize compensation taxable as ordinary income in an amount equal to either: (i) the cash received upon exercise; or (ii) if shares are received upon the exercise of the SAR, the fair market value of the shares received in respect of the SAR. We will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Section 162(m) of the Code for compensation paid to certain executives designated thereunder.
Performance Awards. A participant generally will not recognize income upon the grant of a performance award. Upon payment of the performance award, the participant will recognize ordinary income in an amount equal to the cash received or, if the performance award is payable in shares, the fair market value of the shares received. When the participant recognizes ordinary income upon payment of a performance award, the Company generally will be entitled to a tax deduction in the same amount.
Other Stock-Based Awards. A participant will generally have compensation taxable as ordinary income for federal income tax purposes in an amount equal to the difference between the fair market value of the shares on the date the award is settled (whether in shares or cash, or both) over the amount the participant paid for such shares, if any. We will generally be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Section 162(m) for compensation paid to certain executives designated thereunder.
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Consequences of Change of Control. If a change of control of the Company causes awards under the 2024 Equity Incentive Plan to accelerate vesting or is deemed to result in the attainment of performance goals, certain participants could, in some cases, be considered to have received “excess parachute payments,” which could subject certain participants to a 20% excise tax on the excess parachute payments and result in a disallowance of the Company’s charter documents.deductions under Section 280G of the Code.
Section 409A. Section 409A applies to compensation that individuals earn in one year but that is not paid until a future year. This is referred to as non-qualified deferred compensation. Section 409A, however, does not apply to qualified plans (such as a Section 401(k) plan) and certain welfare benefits. If deferred compensation covered by Section 409A meets the requirements of Section 409A, then Section 409A has no effect on the individual’s taxes. The Nominatingcompensation is taxed in the same manner as it would be taxed if it were not covered by Section 409A. If a deferred compensation arrangement does not meet the requirements of Section 409A, the compensation is subject to accelerated taxation in the year in which such compensation is no longer subject to a substantial risk of forfeiture and Governance Committee makes recommendationscertain additional taxes, interest and penalties, including a 20% additional income tax. Awards of stock options, SARs, restricted stock units and performance awards under the 2024 Equity Incentive Plan may, in some cases, result in the deferral of compensation that is subject to the Board regardingrequirements of Section 409A. Awards under the selection2024 Equity Incentive Plan are intended to comply with Section 409A, the regulations issued thereunder or an exception thereto. Notwithstanding, Section 409A may impose upon a participant certain taxes or interest charges for which the participant is responsible. Section 409A does not impose any penalties on the Company and approvaldoes limit the Company’s deduction with respect to compensation paid to a participant.
Section 162(m). The Company generally may deduct any compensation or ordinary income recognized by the recipient of an award under the 2024 Equity Incentive Plan when recognized, subject to the limits of Section 162(m) of the nomineesCode (“Section 162(m)”). Prior to 2018, Section 162(m) imposed a $1 million limit on the amount a public company may deduct for directorcompensation paid to a Company’s Chief Executive Officer or any of the Company’s three other most highly compensated executive officers (other than the Chief Financial Officer) who were employed as of the end of the year. This limitation did not apply to compensation that met Code requirements for “qualified performance-based compensation.” The performance-based compensation exemption, the last day of the year determination date, and the exemption of the Chief Financial Officer from Code Section 162(m)’s deduction limit have all been repealed under the Tax Cuts and Jobs Act of 2017 (“Tax Reform”), effective for taxable years beginning after December 31, 2017, such that awards paid under the 2024 Equity Incentive Plan to our covered executive officers may not be deductible for such taxable years due to the application of the $1 million deduction limitation. However, under Tax Reform transition relief, compensation provided under a written binding contract in effect on November 2, 2017 that is not materially modified after that date continues to be submitted to a shareholder vote at the Annual Meeting of shareholders, subject to approvalthe performance-based compensation exception. As in prior years, while deductibility of executive compensation for federal income tax purposes is among the factors the Compensation Committee considers when structuring our executive compensation, it is not the sole or primary factor considered. Our Board and the Compensation Committee retain the flexibility to authorize compensation that may not be deductible if they believe it is in our best interests.
Tax Withholding. The Company and its affiliates have the right to deduct or withhold, or require a participant to remit to the Company and its affiliates, an amount sufficient to satisfy federal, state and local taxes (including employment taxes) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising with respect to awards under the 2024 Equity Incentive Plan.
New Plan Benefits
As of the Record Date, approximately 80 employees and non-employee directors would be eligible to participate in the 2024 Equity Incentive Plan. If the 2024 Equity Incentive Plan is approved by our stockholders, awards under the 2024 Equity Incentive Plan will be determined by the Compensation Committee in its discretion. Therefore, the benefits and amounts that will be received or allocated under the 2024 Equity Incentive Plan in the future are not determinable at this time.
THE BOARD OF DIRECTORS AND COMPENSATION COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR THE APPROVAL OF THE 2024 EQUITY INCENTIVE PLAN.
15 |
EXECUTIVE COMPENSATION
We are a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Exchange Act and the following compensation disclosure is intended to comply with the requirements applicable to smaller reporting companies. Although the rules allow us to provide less detail about our executive compensation program, the Compensation Committee is committed to providing the information necessary to help stockholders understand its executive compensation-related decisions. Accordingly, this section includes supplemental narratives that describe the 2023 executive compensation program for our named executive officers.
Oversight of Executive Compensation
The compensation of our named executive officers is determined and approved by our Compensation Committee, in discussion with the Chief Executive Officer with respect to the other named executive officers. The Chief Executive Officer does not participate in discussions or decisions regarding her own compensation.
We believe that in order to create value for our stockholders, it is critical to attract, motivate and retain key executive talent by providing competitive compensation packages. Accordingly, we design our executive compensation programs to:
● | attract, motivate and retain executives with the skills and expertise to execute our business plans; | |
● | reward those executives fairly over time for actions consistent with creating long-term stockholder value; | |
● | align the interests of our executive officers with those of our stockholders; and | |
● | provide compensation packages that are competitive, reasonable and fair within the highly competitive life sciences market for talented individuals. |
2023 SUMMARY COMPENSATION TABLE
The following table shows compensation awarded to or earned by our named executive officers (each, an “NEO” and collectively, the “NEOs”), for the fiscal years ended December 31, 2023 and 2022.
Name and principal position | Year | Salary ($) | Bonus (2) ($) | Stock awards ($) | Option awards (Unvested) ($) | Non-equity incentive plan compensation ($) | Change in pension value and nonqualified deferred compensation earnings | All other compensation ($) | Total ($) | |||||||||||||||||||||||||||
Ezra Beyman, | 2023 | |||||||||||||||||||||||||||||||||||
CEO | 2022 | 300,000 | 305,963 | - | - | - | - | - | 605,962 | |||||||||||||||||||||||||||
Joel Markovits, | 2023 | |||||||||||||||||||||||||||||||||||
CFO | 2022 | 197,499 | - | 130,625 | - | - | - | - | 328,124 | |||||||||||||||||||||||||||
Yaakov Beyman, EVP | 2023 | |||||||||||||||||||||||||||||||||||
Insurance | 2022 | 219,539 | 30,000 | - | - | - | - | - | 249,539 |
16 |
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
The following table provides information about the number of outstanding equity awards held by each of our NEOs as of December 31, 2023:
Option Awards | Stock Awards | |||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (Unexercisable) | Option Exercise Price | Option Expiration Date | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested | ||||||||||||||||||
Yaakov Beyman | 1,556 | $ | 218.56 | 09/3/2024 |
During the year ended December 31, 2019, the Company adopted the Reliance Global Group, Inc. 2019 Equity Incentive Plan (the “Plan”) under which options exercisable for shares of common stock have been or may be granted to employees, directors, consultants, and service providers.
The Plan is administered by the Board. The NominatingBoard is authorized to select from among eligible employees, directors, and Governance Committee does not have a set policyservice providers those individuals to whom options are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options. The Board is also authorized to prescribe, amend, and rescind terms relating to options granted under the Plan. Generally, the interpretation and construction of any provision of the Plan or process for considering diversity in identifying nominees, but strives to identity and recruit nominees with a broad diversityany options granted hereunder is within the discretion of experience, talents, professions, backgrounds, perspective, age, gender, ethnicity and country of citizenship, and who possess the commitment necessary to make a significant contribution to the Company. Board nominees should be committed to enhancing long-term stockholder value and should possess high standards of integrity and ethical behavior.Board.
Scott Korman, Ben FruchtzweigThe Plans provide that options may or may not be Incentive Stock Options (ISOs) within the meaning of Section 422 of the Internal Revenue Code. Only employees of the Company are eligible to receive ISOs, while employees, non-employee directors, consultants, and Sheldon Brickman sitservice providers are eligible to receive options which are not ISOs, i.e. “Non-Statutory Stock Options.” The options granted by the Board in connection with its adoption of the Plan were Non-Statutory Stock Options.
The fair value of each option granted is estimated on this Committee with Sheldon Brickman being the Chair.grant date using the Black-Scholes option pricing model or the value of the services provided, whichever is more readily determinable. The Black-Scholes option pricing model takes into account, as of the grant date, the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock and the risk-free interest rate for the term of the option.
PAY VERSUS PERFORMANCE
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between “compensation actually paid” to our principal executive officer and to our other non-principal executive officer NEOs and certain financial performance of the Company. Compensation actually paid, as determined under SEC requirements, does not reflect the actual amount of compensation earned by or paid to our executive officers during a covered year.
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PEO | Average of Non-Principal Executive Officer NEOs | Value of $100 Initial Investment Based On: | ||||||||||||||||||||||
Year1 | Summary Compensation Table Total Compensation | Compensation Actually | Summary Compensation Table Total Compensation | Compensation Actually | Cumulative Total Stockholder Return3 | Net Income ($000) | ||||||||||||||||||
2023 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
2022 | $ | 605,963 | $ | 605,963 | $ | 403,239 | $ | 388,311 | $ | 9.76 | $ | 6,466 |
(1) The PEO for all three covered years was Ezra Beyman. The non-PEO NEOs in 2023 and 2022 were Joel Markovits and Yaakov Beyman.
(2) Amounts reported in this column are based on total compensation reported for our PEO and our non-PEO NEOs in the Summary Compensation Table for the indicated reporting and adjusted as shown in the table below. Fair value of equity awards was computed in accordance with the Company’s methodology used for financial reporting purposes.
(3) TSR was calculated from February 9, 2021, which was date the trading in the Company’s common stock commenced following the IPO.
Fair value of equity awards was computed in accordance with the Company’s methodology used for financial reporting purposes:
2023 | 2022 | |||||||||||||||
Principal Executive Officer | Non-Principal Executive Officers | Principal Executive Officer | Non-Principal Executive Officer NEOs | |||||||||||||
Summary Compensation Table Reported Compensation | $ | $ | $ | 605,963 | $ | 403,239 | ||||||||||
Deduct: Grant date fair values of equity awards reported in “Stock Awards” column of the Summary Compensation Table for the covered fiscal year | $ | $ | $ | - | $ | 192,344 | ||||||||||
Deduct: For any awards granted in any prior fiscal year that were forfeited during the covered fiscal year, the fair value at the end of the prior fiscal year | $ | $ | $ | - | $ | - | ||||||||||
Add: Fair values as of the end of the covered fiscal year of all equity awards granted during the covered fiscal year that are outstanding and unvested as of the end of such covered fiscal year | $ | $ | $ | - | $ | - | ||||||||||
Add: The change in fair value (whether positive or negative) as of the end of the covered fiscal year of any equity awards granted in any prior fiscal year that are outstanding and unvested as of the end of such covered fiscal year | $ | $ | $ | - | $ | - | ||||||||||
Add: For awards that are granted and vest in the same fiscal year, the fair value as of the vesting date | $ | $ | $ | - | $ | 191,562 | ||||||||||
Add: The change in fair value (whether positive or negative) as of the vesting date of any awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year | $ | $ | $ | - | $ | (14,146 | ) | |||||||||
Total Compensation Actually Paid | $ | $ | $ | 605,963 | $ | 388,311 |
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The graphs below describe the relationship between compensation actually paid to our NEOs and the Company’s cumulative Total Shareholder Return, net income and adjusted EBITDA for the indicated years. In addition, the first graph below compares the Company’s cumulative TSR and our peer group cumulative TSR.
[GRAPHS]
Equity Compensation Plan Information
On January 29, 2019, our Board and stockholders adopted the 2019 Equity Incentive Plan, pursuant to which 46,667 shares of our common stock were reserved for issuance as awards to employees, directors, consultants, advisors and other service providers as of December 31, 2023.
On August 10, 2023 and November 14, 2023, the Board and the Company’s stockholders, respectively, approved the 2023 Equity Incentive Plan, pursuant to which 800,000 shares of our common stock were reserved for issuance as awards to employees, directors and consultants as of December 31, 2023.
The following table gives information about the Company’s common stock that may be issued upon the exercise of options granted to employees, directors and consultants under its 2019 Equity Incentive Plan and the 2023 Equity Incentive Plan, each as of December 31, 2023, which had outstanding grants and remaining unissued shares, taking into account issuance of restricted stock to officers and directors, as follows:
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | 10,928 | $ | 232.78 | 47,080 | ||||||||
Equity compensation plans not approved by security holders | ||||||||||||
Total | 10,928 | $ | 232.78 | 47,080 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information concerning the ownership of our common stock as of the Record Date with respect to:
● | Each person known to us to be the beneficial owner of more than 5% of our common stock; | |
● | All directors; | |
● | All named executive officers; and | |
● | All directors and executive officers as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC that deem shares to be beneficially owned by any person who has voting or investment power with respect to such shares. Shares of common stock issuable upon exercise of options or warrants as of the Record Date or are exercisable within 60 days of such date are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of calculating the percentage ownership of such person but are not treated as outstanding for the purpose of calculating the percentage ownership of any other person. Applicable percentage ownership is based on [●] shares of common stock outstanding as the date of the Record Date.
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Name and Address of Beneficial Owner | Number of Shares Common | Number of Shares Preferred | Beneficial Ownership Percentage | |||||||||
Named Executive Officers and Directors | ||||||||||||
Ezra Beyman | (1) | - | % | |||||||||
Alex Blumenfrucht | - | % | ||||||||||
Yaakov Beyman | - | % | ||||||||||
Joel Markovits | (2) | - | % | |||||||||
Sheldon Brickman | - | % | ||||||||||
Scott Korman | - | % | ||||||||||
Ben Fruchtzweig | - | % | ||||||||||
All directors and executive officers as a group (7 persons) | (3) | % | ||||||||||
5% Stockholders | ||||||||||||
Armistice Capital, LLC (4) | (5) | - | % | |||||||||
Jonathan Fortman (6) | - | % | ||||||||||
Zachary Fortman (7) | - | % | ||||||||||
Hudson Bay Capital Management LP (8) | (9) | - | % | |||||||||
YES Americana Group, LLC (10) | - | % |
* Represents beneficial ownership of less than 1%.
(1) | Represents (i) [●] shares of common stock held by Ezra Beyman directly, (ii) [●] shares of common stock held by Reliance Global Holdings, LLC, and (iii) [●] shares of common stock held by YES Americana Group, LLC. Reliance Global Holdings, LLC is an entity controlled by Ezra Beyman and his spouse. YES Americana Group, LLC is an entity controlled by Ezra Beyman’s spouse. | |
(2) | Represents (i) [●] shares of common stock held by Mr. Markovits, and (ii) [●] shares of common stock that Mr. Markovits has or had the right to acquire within 60 days of the Record Date; provided, however, that certain of the shares referenced in clause (ii) have been or will be withheld for payment of payroll taxes. | |
(3) | Includes [●] shares of common stock the directors and named executive officers have or had the right to acquire within 60 days of the Record Date; provided, however, that certain of these shares have been or will be withheld for payment of payroll taxes. | |
(4) | Armistice Capital, LLC’s address is 510 Madison Avenue, 7th Floor, New York, NY 10022. | |
(5) | Represents (i) [●] shares of common stock held by Armistice Capital, LLC, and (ii) [●] shares that Armistice Capital, LLC has the right to acquire within 60 days of the Record Date pursuant to exercisable warrants. Armistice Capital holds warrants to purchase an aggregate of [●] shares of common stock; however, only [●] of those warrants are exercisable within 60 days due to equity blockers in the warrants. | |
(6) | Jonathan Fortman’s address is 24267 Bay Shore Dr., Daphne, AL 36526. | |
(7) | Zachary Fortman’s address is 3759 State Route 12 E, Pandora, OH 45877. | |
(8) | Hudson Bay Capital Management LP (the “Investment Manager”) serves as the investment manager to Hudson Bay Master Fund Ltd., in whose name the securities are held. Sander Gerber serves as the managing member of Hudson Bay Capital GP LLC, which is the general partner of the Investment Manager. Mr. Gerber disclaims beneficial ownership of these securities. The address of the business office of each of the Investment Manager and Mr. Gerber is 28 Havemeyer Place, 2nd Floor, Greenwich, CT 06830. | |
(9) | Represents (i) [●] shares of common stock held by Hudson Bay Master Fund Ltd., and (ii) [●] shares that Hudson Bay Master Fund Ltd. has the right to acquire within 60 days of the Record Date pursuant to exercisable warrants. Hudson Bay Master Fund Ltd. holds warrants to purchase an aggregate of [●] shares of common stock; however, only [●] of those warrants are exercisable within 60 days due to equity blockers in the warrants. | |
(10) | YES Americana Group, LLC is an entity controlled by Ezra Beyman’s spouse and its address is 300 Blvd. of the Americas, Suite 105, Lakewood, NJ 08701. |
The transfer agent and registrar for our common stock is VStock Transfer, LLC. The transfer agent and registrar’s address is 18 Lafayette Place, Woodmere, New York 11598. Its telephone number is (212) 828-8436.
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NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS
(“HOUSEHOLDING” INFORMATION)
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports by delivering a single copy of these materials to an address shared by two or more Reliance Global Group securityholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for securityholders and cost savings for companies and intermediaries. A number of brokers and other intermediaries with account holders who are our securityholders may be householding our stockholder materials, including this Proxy Statement. In that event, a single set of proxy materials will be delivered to multiple securityholders sharing an address unless contrary instructions have been received from the affected securityholders. Once you have received notice from your broker or other intermediary that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent, which is deemed to be given unless you inform the broker or other intermediary otherwise when you receive or received the original notice of householding. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your broker or other intermediary to discontinue householding and direct your written request to receive a separate proxy statement to us at: Reliance Global Group, Inc., Attention: Corporate Secretary, 300 Blvd. of the Americas, Suite 105, Lakewood, NJ 08701 or by calling us at (732) 380-4600. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their broker or other intermediary.
STOCKHOLDER PROPOSALS FOR THE 2024 ANNUAL MEETING
Stockholders who intend to present proposals for inclusion in next year’s proxy materials at the 2024 Annual Meeting under Rule 14a-8 promulgated under the Exchange Act must ensure that such proposals are received by the Corporate Secretary of the Company not later than June 6, 2024. Such proposals must be timely and meet the requirements of the SEC to be eligible for inclusion in our 2024 proxy materials.
In order for stockholders to give timely notice of nominations for directors for inclusion on a universal proxy card in connection with the 2024 Annual Meeting, notice must be submitted by the same deadline as disclosed above under the advance notice provisions of our bylaws and must include the information in the notice required by our bylaws and by Rule 14a-19(b)(2) and Rule 14a-19(b)(3) under the Exchange Act, including a statement that the stockholder intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors. If any change occurs with respect to such stockholder’s intent to solicit the holders of shares representing at least 67% of such voting power, such stockholder must notify us promptly.
All proposals should be addressed to the Corporate Secretary, Reliance Global Group, Inc., 300 Blvd. of the Americas, Suite 105, Lakewood, NJ 08701.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no other matters to be presented for stockholder action at the 2024 Special Meeting. However, other matters may properly come before the 2024 Special Meeting, or any adjournment(s) or postponement(s) thereof. If any other matter is properly brought before the 2024 Special Meeting for action by the stockholders, proxies in the enclosed respective forms returned to Reliance Global Group will be voted in accordance with the Board’s recommendation.
By order of the Board of Directors, | |
/s/ Ezra Beyman | |
Ezra Beyman | |
Chief Executive Officer and Director |
Lakewood, New Jersey
February [●], 2024
21 |
APPENDIX I
2024 Equity Incentive Plan
I-1 |
Reliance Global Group, Inc.
2024 Equity Incentive Plan
Adopted January 17, 2024
Table of Contents
Article I. Purposes and Definitions | I-4 | ||
Section 1.01 | Purposes of this Plan; Structure | I-4 | |
Section 1.02 | Definitions | I-4 | |
Section 1.03 | Additional Interpretations | I-8 | |
Article II. Stock Subject to this Plan; Administration | I-8 | ||
Section 2.01 | Stock Subject to this Plan | I-8 | |
Section 2.02 | Administration of this Plan | I-9 | |
Section 2.03 | Eligibility | I-10 | |
Section 2.04 | Indemnification | I-10 | |
Article III. Awards. | I-10 | ||
Section 3.01 | Stock Options | I-10 | |
Section 3.02 | Stock Appreciation Rights | I-13 | |
Section 3.03 | Restricted Stock | I-14 | |
Section 3.04 | Restricted Stock Units | I-14 | |
Section 3.05 | Performance Units and Performance Shares | I-15 | |
Section 3.06 | Cash-Based Awards and Other Stock-Based Awards | I-17 | |
Section 3.07 | Form of Award Agreements | I-19 | |
Article IV. Additional Provisions Applicable to this Plan and Awards | I-19 | ||
Section 4.01 | Outside Director Limitations | I-19 | |
Section 4.02 | Compliance With Code Section 409A | I-19 | |
Section 4.03 | Leaves of Absence/Transfer Between Locations | I-19 | |
Section 4.04 | Limited Transferability of Awards | I-19 | |
Section 4.05 | Adjustments; Dissolution, Merger, Etc. | I-19 | |
Section 4.06 | Tax Withholding | I-21 | |
Section 4.07 | Compliance with Securities Laws | I-22 |
I-2 |
Section 4.08 | Tax Withholding | I-22 | |
Section 4.09 | No Effect on Employment or Service | I-22 | |
Section 4.10 | Repurchase Rights | I-22 | |
Section 4.11 | Fractional Shares | I-23 | |
Section 4.12 | Forfeiture Events | I-23 | |
Section 4.13 | Date of Grant | I-23 | |
Section 4.14 | Term of Plan | I-23 | |
Section 4.15 | Amendment and Termination of this Plan | I-23 | |
Section 4.16 | Conditions Upon Issuance of Shares | I-23 | |
Section 4.17 | Inability to Obtain Authority | I-24 | |
Section 4.18 | Shareholder Approval | I-24 | |
Section 4.19 | Retirement and Welfare Plans | I-24 | |
Section 4.20 | Beneficiary Designation | I-24 | |
Section 4.21 | Severability | I-24 | |
Section 4.22 | No Constraint on Corporate Action | I-24 | |
Section 4.23 | Unfunded Obligation | I-24 | |
Section 4.24 | Choice of Law | I-24 |
Exhibits | |
Exhibit A Form of Award Agreement for Options | I-A-1 |
Exhibit B Form of Award Agreement for Stock Appreciation Rights | I-B-1 |
Exhibit C Form of Award Agreement for Restricted Stock | I-C-1 |
Exhibit D Form of Award Agreement for Restricted Stock Units | I-D-1 |
I-3 |
Reliance Global Group, Inc.
2024 Equity Incentive Plan
Article I. Purposes and Definitions
Section 1.01 Purposes of this Plan; Structure.
(a) | The purposes of this Plan are (i) to attract and retain the best available personnel for positions of substantial responsibility, (ii) to provide additional incentive to Employees, Directors and Consultants, and (ii) to promote the success of the Company’s business. |
(b) | This Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards, Cash-Based Awards and Other Stock-Based Awards. |
Section 1.02 Definitions. As used herein, the following definitions will apply:
(a) | “Administrator” means the Board or any of its Committees as will be administering this Plan, in accordance with Section 2.02. |
(b) | “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person. |
(c) | “Applicable Laws” means the legal and regulatory requirements relating to the administration of equity-based awards, including but not limited to the related issuance of shares of Common Stock, including but not limited to under U.S. federal and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any non-U.S. country or jurisdiction where Awards are, or will be, granted under this Plan. |
(d) | “Award” means, individually or collectively, a grant under this Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, or Cash-Based Award or Other Stock-Based Award granted under this Plan. |
(e) | “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under this Plan, which Award Agreement shall be is subject to the terms and conditions of this Plan. |
(f) | “Board” means the Board of Directors of the Company. |
(g) | “Cash-Based Award” means an Award denominated in cash and granted pursuant to Section 3.06. |
(h) | “Change in Control” means the occurrence of any of the following events, subject to the provisions of Section 1.03: |
(i) | Change in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this Section 1.02(i)(i), the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control. Further, if the shareholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event shall not be considered a Change in Control under this Section 1.02(i)(i). For this purpose, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities. |
I-4 |
(ii) | Change in Effective Control of the Company. A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this Section 1.02(i)(ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control. |
(iii) | Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this Section 1.02(i)(iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s shareholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in clause (B)(3) of this Section 1.02(i)(iii). For purposes of this Section 1.02(i)(iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. |
(i) | “Code” means the Internal Revenue Code of 1986, as amended, and reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. |
(j) | “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or by a duly authorized committee of the Board, in accordance with Section 2.02. |
(k) | “Common Stock” means the common stock, par value $0.086 per share, of the Company. |
(l) | “Company” means Reliance Global Group, Inc., a Florida corporation, or any successor thereto. |
(m) | “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render bona fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in a capital-raising transaction, and (ii) do not directly promote or maintain a market for the Company’s securities, in each case, within the meaning of Form S-8 promulgated under the Securities Act, and provided further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under Form S-8 promulgated under the Securities Act. |
(n) | “Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise.” Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast 10% or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive 10% or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner ) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee. |
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(o) | “Director” means a member of the Board. |
(p) | “Disability” means total and permanent disability as defined in Code Section 22(e)(3), provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time. |
(q) | “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Administrator or as otherwise provided by this Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant. |
(r) | “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company, provided that neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company or any Parent or Subsidiary of the Company. |
(s) | “Exchange Act” means the Securities Exchange Act of 1934, as amended. |
(t) | “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced or increased. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion. |
(u) | “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: |
(i) | If the Common Stock is listed on any established stock exchange or a national market system (other than an over-the counter market, which will not be considered an established stock exchange of national market system for the purposes of this definition), including without limitation the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or, if no closing sales price was reported on that date, as applicable, on the last trading date such closing sales price was reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; |
(ii) | If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; |
(iii) | In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator. |
(v) | “Fiscal Year” means the fiscal year of the Company. |
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(w) | “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Code Section 422 and the regulations promulgated thereunder. |
(x) | “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option. |
(y) | “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. |
(z) | “Option” means a stock option granted pursuant to this Plan. |
(aa) | “Outside Director” means a Director who is not an Employee. |
(bb) | “Other Stock-Based Award” means an Award denominated in Shares and granted pursuant to Section 3.06. |
(cc) | “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Code Section 424(e). |
(dd) | “Participant” means the holder of an outstanding Award. |
(ee) | “Performance Award” means an Award of Performance Shares or Performance Units. |
(ff) | “Performance Award Formula” means, for any Performance Award, a formula or table established by the Administrator pursuant to Section 3.05 which provides the basis for computing the value of a Performance Award at one or more levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period. |
(gg) | “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 3.05. |
(hh) | “Performance Unit” means an Award which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 3.05. |
(ii) | “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. |
(jj) | “Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof. |
(kk) | “Plan” means this 2024 Equity Incentive Plan. |
(ll) | “Restricted Stock” means Shares issued pursuant to an Award of Restricted Stock under Section 3.03, or issued pursuant to the early exercise of an Option. |
(mm) | “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 3.04. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. |
(nn) | “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to this Plan. |
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(oo) | “Section 16(b)” means Section 16(b) of the Exchange Act. |
(pp) | “Securities Act” means the Securities Act of 1933, as amended. |
(qq) | “Service Provider” means an Employee, Director or Consultant. |
(rr) | “Share” means a share of the Common Stock, as adjusted in accordance with Section 4.05. |
(ss) | “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 3.02 is designated as a Stock Appreciation Right. |
(tt) | “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Code Section 424(f). |
Section 1.03 Additional Interpretations. For purposes of Section 1.02(i), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time. Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
Article II. Stock Subject to this Plan; Administration.
Section 2.01 Stock Subject to this Plan.
(a) | Subject to the provisions of Section 2.01(a) and Section 4.05, the maximum aggregate number of Shares that may be subject to Awards and sold under this Plan is 2,000,000 Shares. The Shares may be authorized but unissued, or reacquired Common Stock. |
(b) | If an Award expires or becomes un-exercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under this Plan (unless this Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued pursuant to a Stock Appreciation Right will cease to be available under this Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under this Plan (unless this Plan has terminated). Shares that have actually been issued under this Plan under any Award will not be returned to this Plan and will not become available for future distribution under this Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company due to the failure to vest, such Shares will become available for future grant under this Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholdings related to an Award will become available for future grant or sale under this Plan. To the extent an Award under this Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under this Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 4.05, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 2.01(a), plus, to the extent allowable under Code Section 422 and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under this Plan pursuant to Section 2.01(b) and Section 2.01(c). |
(c) | The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Plan. |
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Section 2.02 Administration of this Plan.
(a) | Procedure. |
(i) | Compensation Committee
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(ii) | Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. |
(iii) | Other Administration. Other than as provided above, this Plan will be administered by (A) the Board or (B) a Committee other than the Compensation Committee, |
(b) | Powers of the |
(i) | to determine the Fair Market Value; |
(ii) | to select the Service Providers to whom Awards may be granted hereunder; |
(iii) | to determine the number of Shares to be covered by each Award granted hereunder; |
(iv) | to approve forms of Award Agreements for use under this Plan; |
(v) | to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder, with such terms and conditions including, but not being limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine; |
(vi) | to determine whether an Award will be settled in Shares, cash, other property or in any combination thereof; |
(vii) | to institute and determine the terms and conditions of an Exchange Program; |
(viii) | to construe and interpret the terms of this Plan and Awards granted pursuant to this Plan; |
(ix) | to prescribe, amend and rescind rules and regulations relating to this Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable non-U.S. laws or for qualifying for favorable tax treatment under applicable non-U.S. laws; |
(x) | to modify or amend each Award (subject to Section 4.15(c)), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards; provided, however, that in no case will an Option or Stock Appreciation Right be extended beyond its original maximum term; |
(xi) | to allow Participants to satisfy tax withholding obligations in a manner prescribed in Section 4.05(d); |
(xii) | to authorize any person to execute on behalf of the |
(xiii) | to
Section 2.03 Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. Section 2.04 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Administrator or as officers or employees of the Company or any of its Affiliates, to the extent permitted by applicable law, members of the Board or the Administrator and any officers or employees of the Company or any of its Affiliates to whom authority to act for the Board, the Administrator or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with this Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same. Article III. Awards. Section 3.01 Stock Options.
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