Types of Awards

The 2021 Plan provides for the reasonsgrant of stock options (both stock options intended to meet the requirements of “incentive stock options” under Section 422 of the Code and “non-qualified stock options” that do not meet such requirements), stock appreciation rights, restricted shares, restricted stock units, dividend equivalent rights and other share-based or cash-based awards.

All of the awards described above are subject to the conditions, limitations, restrictions, vesting and our Board may desireforfeiture provisions determined by the Compensation Committee, in its sole discretion, subject to use our common stock for these or other reasonscertain limitations set forth in the future. Of these shares, since January 2015, we have granted equity2021 Plan. The Compensation Committee may condition the vesting of or the lapsing of any applicable vesting restrictions or conditions on awards for compensatory purposes for a totalupon the attainment of 2,450,231 sharesperformance goals, continuation of our common stock (on a fully diluted basis), andservices, or any other term or conditions. The vesting conditions placed on any award need not be the Board believes the availability of additional shares for future compensatory purposes is an important recruiting and retention tool. 

Exceptsame with respect to each grantee and the issuanceCompensation Committee will have the sole discretion to amend any outstanding award to accelerate or waive any or all goals, restrictions, vesting provisions or conditions set forth in the applicable award agreement.

Each award granted under the 2021 Plan will be evidenced by an award agreement, which will govern that award’s terms and conditions. In the case of any conflict or potential inconsistency between the 2021 Plan and a provision of any award agreement, the 2021 Plan will govern.

Stock Options

A stock option entitles the recipient to purchase shares of the Company’s common stock at a fixed exercise price. The Compensation Committee may award non-qualified stock options or incentive stock options under the 2021 Plan. Incentive stock options may only be granted to persons eligible to receive incentive stock option under the Code and from a plan that has been properly approved by the Company’s stockholders in compliance with the relevant provisions of the Code. The aggregate fair market value of shares of our common stock upon(determined based on the exercise or conversion of outstanding securities and in connectionclosing price per share on the trading day immediately prior to the grant date) with respect to which incentive stock options are exercisable for the Plan andfirst time by a grantee during any calendar year (whether issued under the FBR Stock2021 Plan and awards granted thereunder, we currently have no specific understandings or commitments, oral or written, which would require us to issue a material amount of new shares of our common stock.

Possible Adverse Effects if this Proposal 3 Is Approved

If this Proposal 3 is approved by our stockholders, the Board would generally be able to issue the additional authorized shares in its discretion from time to time without further action by or approval of our stockholders, subject to and as limited by the rules and listing requirements of the Nasdaq Stock Market (“Nasdaq”) or any other then applicable securities exchange and the requirements of all applicable law.

Approval of this Proposal 3 could have the following adverse effects:

Except as described above, we do not presently have any plans, intentions or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences, and the Board is not presently aware of any attempt, or contemplated attempt, to acquire control of our Company. Further, this Proposal 3 is not being presented with the design or intent that it be used to prevent or discourage a change in control or management or an acquisition attempt; however, stockholders should be aware that nothing would prevent the Board from taking any such actions that it deems consistent with its fiduciary duties.

Possible Adverse Effects if this Proposal 3 Is Not Approved

If this Proposal 3 is not approved by our stockholders, the number of shares of our common stock we would be authorized to issue would remain at its current level of 40,000,000 shares, and we would have only 7,641,188 shares of our common stock available for future issuance (based on our capitalization as of May 31, 2018, as described above).

A failure to obtain the approval of our stockholders of this Proposal 3 could have the following adverse effects:

Rights of Additional Authorized Shares of Common Stock

The additional authorized shares of our common stock, if and when issued, would be part of our existing class of common stock and would have the same rights, preferences and privileges as the shares of common stock that are currently issued and outstanding.

Text and Effectiveness of the Increase to Our Authorized Shares of Common Stock

We propose to effect the increase to the authorized shares of our common stock by amending Article IV(A) of our Restated Certificate to read in its entirety as follows:

“The total number of shares of capital stock which the Corporation shall have the authority to issue is One Hundred One Million (101,000,000) shares, such shares being divided into One Hundred Million (100,000,000) shares of common stock, par value $0.0001 per share (the “Common Stock”), and One Million (1,000,000) shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”).”

The only change to the language of Article IV(A) being voted on in this Proposal 3 is to increase the total number of shares of our common stock we may issue from 40,000,000 shares to 100,000,000 shares, and consequently the total number of shares of stock we may issue by the same amount. Other than as set forth above, our Restated Certificate as currently in effect would remain unchanged by the amendment to effect the authorized share increase contemplated by this Proposal 3.

If this Proposal 3 is approved and adopted by our stockholders at the Annual Meeting, the increase to our authorized shares contemplated hereby would become effective upon our filing of a Certificate of Amendment to our Restated Certificate with the Secretary of State of the State of Delaware reflecting the amendment to Article IV(A) thereof as set forth above, or at such other date and time as may be specified in the Certificate of Amendment. Subject to the discretion of the Board to abandon the authorized share increase contemplated by this Proposal 3, as described below, we expect to file such an amendment with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval.

Board Discretion to Abandon the Increase to Our Authorized Shares of Common Stock

Even if this Proposal 3 is approved by our stockholders, the Board retains the discretion to abandon the increase to the authorized shares of our common stock as contemplated hereby, if it determines such an abandonment to be in the best interestsplan of the Company and our stockholders.of any subsidiary of the Company) may not exceed $100,000. No more than the Share Limit (subject to adjustment as described above) may be issued upon the exercise of incentive stock options granted under the 2021 Plan.

No Appraisal Rights

Under applicable Delaware law, our stockholders are not entitled to appraisal rightsThe exercise price per share with respect to the proposed amendment to our Restated Certificate to increase the number of authorized shares of our commoneach stock we are authorized to issue.

Vote Required and Board of Directors’ Recommendation

Proposal 3 must be approved by the affirmative vote of a majority of the issued and outstanding shares of our common stock as of the record date for the Annual Meeting, which is required by applicable law. As a result, abstentions will have the same effect as a vote against this proposal because of the nature of this voting requirement, and broker non-votes are not expected to occur on this proposal because brokers and other nomineesoption will be entitled to vote uninstructed shares held in street name on this proposal.

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF

AN AMENDMENT TO OUR RESTATED CERTIFICATE

TO INCREASE THE AUTHORIZED SHARES OF OUR COMMON STOCK

PROPOSAL NO. 4

APPROVAL OF THE COMPANY’S
2018 EMPLOYEE STOCK PURCHASE PLAN

General

The stockholders are being asked to approve the Company’s 2018 Employee Stock Purchase Plan (the “ESPP”) and the reservation of 750,000 shares for issuance under the ESPP. The purpose of the ESPP is to allow the Company to provide eligible employees of the Company and its participating parents and subsidiaries with the opportunity to purchase Common Stock of the Company at a discount from the then current market price through payroll deductions. The ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 421 and 423 of the Code.

The Company’s ESPP was adopteddetermined by the Board of Directors on June 7, 2018. Under the ESPP, eligible employees may authorize payroll deductions of up to 10% of eligible compensation for the purchase of Common Stock during each semi-annual purchase period.

The Board of Directors recommends a vote FOR the approval of the ESPP and the reservation of 750,000 shares for issuance under the ESPP.

A general description of the ESPP is set forth below, but the summary is qualified in its entirety by reference to the full text of the ESPP. A copy of the ESPP is attached to this Proxy Statement as Appendix A and is incorporated herein by reference.

Administration

The ESPP may be administered by the Board or a committee of the Board. It is anticipated the Compensation Committee but will serve as Plan Administrator. The Compensation Committee, as Plan Administrator, has full authority to adopt such rules and procedures as it may deem necessary for the proper plan administration and to interpret the provisions of the ESPP. To the extent permitted by applicable law, the Compensation Committee may delegate its authority under the ESPP.

Shares Available Under the ESPP

A total of 750,000 shares of Common Stock are authorized for purchase over the term of the ESPP, subject to adjustment in the event of a stock split, stock dividend, combination or reclassification or similar event.

Offering Periods

The ESPP is anticipated to be implemented by one offering period during each six-month period beginning each Janaury 1 and July 1. However, the initial offering period is anticipated to run from September 1, 2018 to December 31, 2018. The Plan Administrator may alter the duration of future offering periods in advance without stockholder approval. Each participant is granted a separate purchase right to purchase shares of Common Stock for each offering period in which he or she participates. Purchase rights under the ESPP are granted on the start date of each offering period in which the participant participates and are automatically exercised on the last day of the offering period. Each purchase right entitles the participant to purchase the whole number of shares of Common Stock obtained by dividing the participant’s payroll deductions for the offering period by the purchase price in effect for such period.

Eligibility

Except as described in this paragraph with respect to certain foreign employees, all employees of the Company and any designated parent or subsidiary who are regularly expected to work for more than 20 hours per week for more than five months per calendar year and who have been employed for such continuous period as the Plan Administrator may require (which period mustnot be less than two years) are eligible to participate in the ESPP. An eligible employee may only join an offering period in advance of the start date of that period. Designated parents and subsidiaries include any parent or subsidiary corporations of the Company, whether now existing or hereafter organized, which elect, with the approval of the Plan Administrator, to extend the benefits of the ESPP to their eligible employees. Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether he or she is also a citizen of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) are ineligible to participate in the ESPP if his or her participation is prohibited under the laws on the applicable non-U.S. jurisdiction or if complying with the laws of the applicable non-U.S. jurisdiction would cause the ESPP or an offering to violate Section 423 of the Code.

As of April 10, 2018, approximately 760 employees would be eligible to participate in the ESPP, including all of our executive officers except for our Chief Executive Officer who holds more than 5% of our outstanding common stock.

Purchase Provisions

Each participant in the ESPP may authorize periodic payroll deductions that may not exceed 10% of his or her compensation, which is generally defined in the ESPP to include the regular U.S. payroll base salary, cash bonuses, draws, wages, commissions and overtime in effect at the beginning of the offering period, exclusive of any payments for reimbursements or other expense allowances, loan forgiveness, fringe benefits (cash or non-cash), moving expenses, deferred compensation, or contributions (other than contributions under a 401(k) or cafeteria plan). A participant may reduce his or her rate of payroll deductions during an offering period, subject to the rules set by the Plan Administrator.

On the last day of each offering period, the accumulated payroll deductions of each participant are automatically applied to the purchase shares of Common Stock at the purchase price in effect for that period.

Purchase Price

The purchase price per share at which Common Stock is purchased on the participant’s behalf for each offering period is equal to 85%100% of the fair market value perof a share of common stock on the lasttrading day immediately prior to the date the applicable stock option is granted (for incentive stock options granted to 10% stockholders, the exercise price per share will not be less than 110% of such offering period.

Valuation

the fair market value).

The fair market valueCompensation Committee may determine the vesting schedule and expiration dates for stock options; provided that the expiration date may not exceed 10 years (or, in the case of an incentive stock option granted to a ten percent stockholder, 5 years) from the date on which such stock option is granted.

The 2021 Plan provides for a variety of methods to exercise stock options. The exercise price of any stock option may be paid using cash or in another form determined by the Compensation Committee, which may include (a) a personal check, (b) shares of our common stock, (c) other consideration approved by us and permitted by applicable law or (d) any combination of the Common foregoing.

The repricing of stock options, including through amendment, cancellation in exchange for the grant of a substitute award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), is not permitted without the approval of our stockholders. We will not grant any stock options with automatic reload features.

Stock on a given date isAppreciation Rights

A stock appreciation right entitles the closing sales pricerecipient to receive shares of the Common Stock onCompany’s common stock, cash or other property equal in value to the appreciation of the Company’s common stock over the stated exercise price. The NASDAQGMexercise price per share for each stock appreciation right will be determined by the Compensation Committee, but (except as subject to adjustment by the Compensation Committee) may not be less than 100% of such date. As of May 31, 2018, the fair market value of a share of the Company’s Common Stockcommon stock on the trading day immediately prior the date the stock appreciation right is granted.

The Compensation Committee may determine the vesting schedule and expiration dates for stock appreciation rights; provided that the expiration date may not exceed ten years from the date of grant.

Each stock appreciation right will entitle the applicable grantee to receive, upon exercise, an amount equal to the number of shares of the Company’s common stock underlying the stock appreciation right, multiplied by the excess of the fair market value of the shares of the Company’s common stock on the date of exercise over the exercise price of the stock appreciation right. Payment to a grantee upon the exercise of a stock appreciation right may be either in shares of the Company’s common stock, cash or other securities or property, or a combination of the foregoing, as reported on The NASDAQGM was $21.20.

Special Limitations

determined by the Compensation Committee.

The ESPP imposes certain limitations upon a participant’s right to acquire Common Stock,repricing of stock appreciation rights, including the following limitations:

Termination of Purchase Rights

A participant’s purchase right immediately terminates upon such participant’s loss of eligible employee status, and his or her accumulated payroll deductionsthrough amendment, cancellation in exchange for the offeringgrant of a substitute award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), is not permitted without the approval of our stockholders. We will not grant any stock appreciation rights with automatic reload features.

Restricted Shares

Restricted shares are shares of the Company’s common stock that are registered in the recipient’s name, but are subject to transfer and/or other restrictions for a period of time. Restricted shares may be granted in whichsuch amounts and with such terms and conditions as are determined by the purchase right terminates are refunded. A participantCompensation Committee. The Compensation Committee will issue a certificate in respect of restricted shares granted under the 2021 Plan, unless the Compensation Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of such shares of the Company’s common stock. In the event a certificate is issued, it may withdraw from an offeringbe registered in the name of the grantee, and we will hold the certificate until the restrictions upon the award have lapsed.

During the period by giving advance noticethat any restrictions apply, the transfer of restricted shares is generally prohibited. Grantees have full voting rights with respect to their restricted shares during the restricted period. If provided in the applicable award agreement, all ordinary cash dividend payments or other ordinary distributions paid upon any restricted share will be paid to the applicable grantee during the restricted period. The fair market value of the restricted shares upon vesting will be determined based on the closing price per share of our common stock on the trading day immediately prior to the endvesting date.

Restricted Stock Units

A restricted stock unit is an unfunded, unsecured right to receive a share of that period and histhe Company’s common stock, cash or her accumulated payroll for the offering period in which withdrawal occursother property at a future date. Restricted stock units may be refunded.granted in such amounts and with such terms and conditions as are determined by the Compensation Committee.

Assignability

No purchase rightDuring the period that any restrictions apply, the transfer of restricted stock units is generally prohibited. Grantees only have the rights of a general unsecured creditor until delivery of the shares of the Company’s common stock, cash or other property is made as specified in the applicable award agreement. On the delivery date, the grantee of each restricted stock unit not previously forfeited or terminated will receive one share of the Company’s common stock, cash or other securities or property that is equal in value to such share of common stock or a combination thereof, as determined by the Compensation Committee, unless otherwise prescribed in the applicable award agreement. The fair market value of the restricted stock units upon vesting and delivery will be assignablebased on the closing price per share of our common stock on the trading day immediately prior to such date.

Dividend Equivalent Rights

The Compensation Committee may, in its discretion, include in the award agreement with respect to any award a dividend equivalent right entitling the recipient to receive amounts equal to all or transferable (other thanany portion of the regular cash dividends that are paid on the shares of the Company’s common stock underlying a grant while the grant is outstanding. Grantees only have the right of a general unsecured creditor until payment of such amounts is made.

Dividend equivalent rights may be paid in cash, in shares of the Company’s common stock or in another form, as determined by the Compensation Committee and specified in an award agreement. In addition, the Compensation Committee will determine the time or times at which payments will be made and such other terms and conditions as the lawsCompensation Committee will deem appropriate; provided, that in no event may such payments be made unless and until the award to which they relate vests.

Performance-Based and distribution)Other Share-Based or Cash-Based Awards

Under the 2021 Plan, the Compensation Committee may grant other types of equity-based, equity-related or cash-based awards, including awards subject to performance-based criteria, in such amounts and subject to such terms and conditions that the Compensation Committee may determine. Such awards may include the grant or offer for sale of unrestricted shares of the Company’s common stock, performance share awards and performance units settled in cash.

Change of Control

Unless otherwise provided in an award agreement, the Compensation Committee will determine the treatment of a grantee’s award in the event of a change in control. Unless the Compensation Committee determines otherwise or as otherwise provided in the applicable award agreement, as of the change in control date, any outstanding performance-based awards shall be deemed earned at the target level with respect to all open performance periods and will cease to be exercisable only bysubject to any further performance conditions but will continue to be subject to time-based vesting following the participant.

Corporate Transaction

change in control in accordance with the original performance period.

In the event of a proposedchange in control, the Compensation Committee has the sole discretion, to the extent determined by the Compensation Committee to be permitted under Section 409A of the Code and subject to the applicable award agreement, to (i) settle awards for an amount equal to their value of cash or securities (in the case of stock options and stock appreciation rights that are settled in cash, the amount paid will be equal to their in-the-money spread value (if any), (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted under the 2021 Plan, (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of employment within a specified period after a change in control) upon which the vesting of such awards or lapse of restrictions thereon will accelerate, (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue (as is or as adjusted by the Compensation Committee) after closing or (v) provide that for a period of 20 days prior to the change in control, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the change in control will be exercisable as to all shares of the Company’s common stock subject thereto (provided, that any such exercise will be contingent upon and subject to the occurrence of the change in control and if the change in control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the change in control will terminate and be of no further force and effect as of the consummation of the change in control.

For purposes of the 2021 Plan, “change in control” generally includes (a) a majority of the individuals constituting the Board of Directors is replaced during any 24-month period by directors whose appointment or election is not endorsed by at least two-thirds of the members of the Board of Directors before the date of the appointment or election, (b) a person or entity acquiring more than 50% of the combined voting power of the Company’s outstanding voting securities eligible to vote for the election of the Board of Directors, (c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of our stockholders, unless, among other requirements, immediately following any such transaction, more than 50% of the total voting power of the entity resulting from such transaction is represented by the Company’s voting securities that were outstanding immediately prior to such transaction, and such voting power is in substantially the same proportion of the voting power of such Company voting securities among the Company’s stockholders immediately prior to such transaction, (d) the consummation of a sale of all or substantially all of the Company’s and its subsidiaries’ assets on a consolidated basis to a third party, or (e) the approval of a plan of complete liquidation or dissolution of the Company or certain mergers, (each, a “Corporate Transaction”) during an offering period, all outstanding purchase rights shall be assumed by the successor corporationCompany’s stockholders.

Effectiveness

The 2021 Plan will become effective only upon its approval by the Company’s stockholders.

Amendment; Termination

The Board of Directors may amend or terminate the 2021 Plan at any time; provided, that no such amendment may materially adversely impair the rights of any grantee of any award without the grantee’s consent. Our stockholders must approve any amendment to the extent required to comply with applicable laws, regulations or rules of a securities

exchange or self-regulatory agency. Unless terminated sooner by the Board of Directors or extended with stockholder approval, the 2021 Plan will terminate on the day immediately preceding the tenth anniversary of the date on which our stockholders approve the 2021 Plan, but any awards made under the 2021 Plan before its termination will remain in effect until such awards have been satisfied or terminated in accordance with the 2021 Plan and the applicable award agreements.

Tax Withholding and Right of Offset

Grantees will be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt, vesting or exercise of any award granted under the 2021 Plan. As a condition to the delivery of shares of the Company’s common stock, cash or other securities or property pursuant to any award or the lifting or lapse of restrictions on any award, or in connection with any other event that gives rise to federal or government tax withholding obligations on the part of the Company relating to an award (including, without limitation, the Federal Insurance Contributions Act (FICA) tax), (a) the Company may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a parentgrantee whether or subsidiary thereof), unlessnot pursuant to the 2021 Plan, Administrator determines,(b) the Compensation Committee will be entitled to require that the grantee remit cash to the Company (through payroll deduction or otherwise) or (c) the Company may enter into any other suitable arrangements to withhold, in each case, in the Company’s discretion the amount of such taxes to be withheld based on the individual tax rates applicable to the grantee.

The Company will have the right to offset against its obligation to deliver any shares of the Company’s common stock (or other property or cash) under the 2021 Plan or any award agreement any outstanding amounts that the grantee then owes to the Company and any amounts the Compensation Committee deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an award provides for the deferral of compensation within the meaning of Section 409A of the Code, the Compensation Committee will have no right to offset against its obligation to deliver shares of the Company’s common stock (or other property or cash) under the 2021 Plan or any award agreement if such offset could subject the grantee to additional tax imposed under Section 409A of the Code in respect of an outstanding award.

Assignability and Transferability

Unless otherwise determined by the Compensation Committee, no award granted under the 2021 Plan will be transferable or assignable by a grantee, other than by will, the laws of descent and distribution, or to any trust established solely for the benefit of the applicable grantee or such grantee’s immediate family. All awards will be exercisable during the life of the grantee only by the grantee or the grantee’s legal representative or trustee, as applicable. The Compensation Committee may permit, under such terms and conditions as it deems appropriate in its sole discretion, to shorten the offering period then in-effecta grantee to a new purchase date. Iftransfer any award to any person or entity that the Plan Administrator shortensCompensation Committee so determines.

Clawback

All awards under the offering period then in progress to a new purchase date, the2021 Plan Administrator will provide notice to each participant that (i) his or her purchase right will be automatically exercised on the new purchase date or (ii) the Company will pay to him or her, on the new purchase date, cash, cash equivalents, or property as determined by the Plan Administrator that is equal to the difference in the fair market value of the shares of Common Stock covered by his or her purchase right and the purchase price due had the purchase right been automatically exercised on the new purchase date.

Changes in Capitalization

In the event any change is made to the outstanding shares of Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, other increases or decreases in the number of shares of Common Stock outstanding effected without the Company’s receipt of consideration or similar transactions, appropriate adjustments will be made to (i) the maximum number of securities issuable under the ESPP and (ii) the number of securities subject to each outstanding purchase right and the purchase price payable per share thereunder.any clawback or recapture policy that we may adopt from time to time.

Amendment and Termination

The ESPP will generally terminate ten (10) years following the date of the original adoption of the ESPP.

The Plan Administrator may at any time terminate or amend the ESPP. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law), the Company shall obtain stockholder approval in such a manner and to such a degree as required.

New Plan Benefits

Because the number of shares of Common Stock issued under the ESPP depends on the level of participation by its participants, we cannot determine the number of shares of Common Stock that may be awarded in the future to eligible employees.

U.S. Federal Income Tax Consequences

Considerations

The following summary briefly describesis a brief description of the principal U.S. federal income tax consequences generally arising with respect to the grant of rightsawards under the ESPP, but2021 Plan based on an analysis of the current provisions of the Code and the regulations promulgated thereunder, all of which are subject to change, possibly on a retroactive basis. This summary is not a detailed or complete description of all U.S. federal tax laws or regulations that may apply, and does not address any local, state or other country laws. Therefore, participants should not rely on this summary for individual tax compliance, planning or decisions. Participants in the ESPP should consult their own professional tax advisors concerning tax aspects of rights under the ESPP. Nothing in this Proxy Statement is written or intended to be used, and cannot be used, for the purposesinformation of avoiding taxpayer penalties. The discussion below concerning tax deductions that may become availableour stockholders considering how to vote at the Company under U.S. federal tax lawAnnual Meeting. This summary is not intended to imply that the Company will necessarily obtain aconstitute tax benefit or asset from those deductions. Taxation of equity-based payments in other countriesadvice, is complex, does not generally correspond to U.S. federal tax laws, and is not covered by the summary below.

The ESPP is intended to be an “employee stock purchase plan” withinexhaustive and, among other things, does not describe state, local or foreign tax consequences or withholding and other payroll tax matters. Different tax rules may apply to variations on transactions that are permitted under the meaning of Section 423 of the Internal Revenue Code. Under a plan which so qualifies, no taxable income will be recognized by a participant, and no deductions will be allowable2021 Plan. Participants are advised to consult with their own independent tax advisors with respect to the Companyspecific tax consequences that, in light of their particular circumstances, might arise in connection with their receipt of awards under the 2021 Plan, including any state, local or foreign tax consequences and the effect, if any, of gift, estate and inheritance taxes.

Incentive Stock Options

A grantee will not be subject to tax upon the grant of an incentive stock option or upon the exercise of an outstanding purchase right.

Taxable income will not be recognized until there is a sale or other dispositionincentive stock option. However, the excess of the shares acquired under the ESPP or in the event the participant should die while still owning the purchased shares.

If the participant sells or otherwise disposes of the purchased shares within two (2) years after the start date of the offering period in which such shares were acquired or within one (1) year after the actual purchase date of those shares, then the participant will recognize ordinary income in the year of such sale or disposition equal to the amount by which the fair market value of the shares on the purchase date exceeded the purchase price paid for those shares, and the Company will be entitled to an income tax deduction, for the taxable year in which such sale or disposition occurs, equal in amount to such excess.

If the participant sells or disposes of the purchased shares more than two (2) years after the start date of the offering period in which such shares were acquired and more than one (1) year after the actual purchase date of those shares, then the participant will recognize ordinary income in the year of such sale or disposition equal to the lesser of (i) the amount by which the fair market value of the shares on the sale or disposition date exceeds the purchase price paid for those shares or (ii) 15% of the fair market value of the shares on the start date of the offering period, and any additional gain upon the disposition will be taxed as long-term capital gain. The Company will not be entitled to any income tax deduction with respect to such sale or disposition.

If the participant still owns the purchased shares at the time of his or her death, the lesser of (i) the amount by which the fair market value of the shares on the date of death exceedsexercise over the purchaseexercise price paid will be included in such grantee’s alternative minimum taxable income. Whether a grantee is subject to the alternative minimum tax will depend on such grantee’s particular circumstances. A grantee’s basis in the shares received will be equal to the exercise price paid, and the holding period in such shares will begin on the day following the date of exercise.

If a grantee disposes of the shares on or after the later of (i) the second anniversary of the date of grant of the incentive stock option and (ii) 15%the first anniversary of the date of exercise of the incentive stock option (the “Statutory Holding Period”), such grantee will recognize a capital gain or loss in an amount equal to the difference between the amount realized on such disposition and the basis in such shares. Such capital gain or loss will be subject to the rules set forth under “Disposition of Shares” below.

If a grantee disposes of the shares before the end of the Statutory Holding Period, such grantee will have engaged in a “disqualifying disposition.” As a result, such grantee will be subject to tax:

•        on the excess of the fair market value of the shares on histhe date of exercise (or the amount realized on the disqualifying disposition, if less) over the exercise price paid, as ordinary income, and

•        on the excess, if any, of the amount realized on such disqualifying disposition over the fair market value of the shares on the date of exercise, as capital gain. Such capital gain will be subject to the rules set forth under “Disposition of Shares” below.

If the amount a grantee realizes from a disqualifying disposition is less than the exercise price paid (i.e., a grantee’s basis) and the loss sustained upon such disposition would otherwise be recognized, such grantee will not recognize any ordinary income from such disqualifying disposition and instead such grantee will recognize a capital loss. In the event of a disqualifying disposition, the amount recognized by a grantee as ordinary income is generally deductible by the Company.

The current position of the Internal Revenue Service is that income tax withholding and FICA and FUTA taxes (“Employment Taxes”) do not apply upon the exercise of an incentive stock option or her entryupon any subsequent disposition, including a disqualifying disposition, of Shares acquired pursuant to the exercise of the incentive stock option.

Non-Qualified Stock Options

A grantee will not be subject to tax upon the grant of a stock option which is not intended to be (or does not qualify as) an incentive stock option. Upon exercise of a non-qualified stock option, an amount equal to the excess of the fair market value of the shares acquired on the date intoof exercise over the offeringexercise price paid is taxable to a grantee as ordinary income, and such amount is generally deductible by the Company. This amount of income will be subject to income tax withholding and Employment Taxes. A grantee’s basis in the shares received will equal the fair market value of the shares on the date of exercise, and a grantee’s holding period in which thosesuch shares will begin on the day following the date of exercise.

Exercise of Stock Options with Previously Acquired Shares

If a grantee uses previously acquired shares to pay all or a portion of the exercise price on the exercise of an incentive stock option or a non-qualified stock option, such grantee will not be subject to tax with respect to the shares that the grantee transfers to the Company. Instead, the number of shares the Company delivers to the grantee upon exercise of the stock option that equals the number of shares such grantee transferred to the Company (the “Substitute Shares”) will have the same basis and holding period as the shares the grantee transferred to the Company.

However, where a grantee uses shares that were acquired pursuant to the previous exercise of an incentive stock option (the “First Incentive Stock Option”) to acquire shares under another incentive stock option (the “Second Incentive Stock Option”), and the Statutory Holding Period discussed above has not been met with respect to the shares that such grantee transfer to the Company, the exchange will constitutebe deemed a disqualifying disposition and the grantee

will recognize ordinary income to the extent the fair market value of the shares on the date of exercise of the First Incentive Stock Option (or, if less, the fair market value of the shares on the date of exercise of the Second Incentive Stock Option) exceeds the exercise price paid pursuant to the exercise of the First Incentive Stock Option. In such a case, the grantee’s basis in the Substitute Shares received will be equal to the basis of the shares that such grantee transferred to the Company plus the ordinary income taxable to the grantee as a result of the disqualifying disposition, and the grantee’s holding period in the Substitute Shares received will be the same as the holding period in the shares that the grantee transferred to the Company. However, the grantee’s Statutory Holding Period in the Substitute Shares received will begin on the date of exercise of the Second Incentive Stock Option.

If the grantee uses previously acquired shares to pay the entire option exercise price of a non-qualified stock option, then the fair market value of the shares received which are not Substitute Shares (the “Additional Shares”) is taxable to the grantee as ordinary income, and such amount will generally be deductible by the Company. The grantee’s basis in the Additional Shares will be equal to the fair market value of the shares on the date of exercise, and the grantee’s holding period in the Additional Shares will begin on the day following the date of exercise. In the event the grantee uses previously acquired shares to pay a portion of the exercise price of a non-qualified option and the grantee uses cash to pay the remainder of such exercise price, then the exercise shall be bifurcated into (i) an exercise using previously acquired shares which will be subject to the tax rules in the two immediately preceding paragraphs and (ii) an exercise using cash which will be subject to the tax rules under “Non-Qualified Stock Options” above.

If the grantee uses previously acquired shares to pay the entire stock option exercise price of an incentive stock option, then the grantee will have a zero basis in the Additional Shares received, and the grantee’s holding period in the Additional Shares will begin on the day such shares are transferred to the grantee. However, for purposes of determining whether the grantee has held the additional shares for the Statutory Holding Period, the date of exercise of the incentive stock option will be counted towards meeting such holding period. In the event the grantee uses previously acquired shares to pay a portion of the exercise price of an incentive stock option and the grantee uses cash to repay the remainder of such exercise price, then the exercise shall be bifurcated into (i) an exercise using previously acquired shares which will be subject to the tax rules in the two immediately preceding paragraphs and (ii) an exercise using cash which will be subject to the tax rules under “Incentive Stock Options” above.

Share Appreciation Rights

A grantee will not be subject to tax upon the grant of a share appreciation right. Upon exercise of a share appreciation right, an amount equal to the cash and/or the fair market value (measured on the date of exercise) of the shares received will be taxable to such grantee as ordinary income, and such amount generally will be deductible by the Company. This amount of income will be subject to income tax withholding and Employment Taxes. A grantee’s basis in any shares received will be equal to the fair market value of such shares on the date of exercise, and the holding period in such shares will begin on the day following the date of exercise.

Restricted Shares

A grantee will not be subject to tax upon receipt of an award of shares subject to forfeiture conditions and transfer restrictions (the “restrictions”) under the Plan unless such grantee makes the election referred to below. Upon lapse of the restrictions, a grantee will recognize ordinary income equal to the fair market value of the shares on the date of lapse (less any amount such grantee may have paid for the shares), and such income will be subject to income tax withholding and Employment Taxes. A grantee’s basis in the shares received will be equal to the fair market value of the shares on the date the restrictions lapse, and the holding period in such shares begins on the day after the restrictions lapse. If any dividends are paid on such shares prior to the lapse of the restrictions they will be includible in a grantee’s income during the restricted period as additional compensation (and not as dividend income) and will be subject to income tax withholding and Employment Taxes.

If permitted by the applicable award agreement and the 2021 Stock Incentive Plan, a grantee may elect, within 30 days after the date of the grant of the restricted shares, to recognize immediately (as ordinary income) the fair market value of the restricted shares awarded (less any amount such grantee may have paid for the shares), determined on the date of grant (without regard to the restrictions). Such income will be subject to income tax withholding and

Employment Taxes at such time. This election is made pursuant to Section 83(b) of the Code and the regulations thereunder. If a grantee makes this election, the holding period will begin the day after the date of grant, dividends paid on the shares will be subject to the normal rules regarding distributions on stock, and no additional income will be recognized by such grantee upon the lapse of the restrictions. However, if a grantee forfeits the restricted shares before the restrictions lapse, no deduction or capital loss will be available to such grantee (even though such grantee previously recognized income with respect to such forfeited shares).

In the taxable year in which a grantee recognizes ordinary income on account of shares awarded to such grantee, the Company generally will be entitled to a deduction equal to the amount of income recognized by the grantee. In the event that the restricted shares are forfeited by a grantee after having made the Section 83(b) election referred to above, the Company generally will include in its income the amount of the Company’s original deduction.

Restricted Stock Units

A grantee will not be subject to tax upon the grant of a restricted stock unit. Upon vesting of the restricted stock unit, the fair market value of the shares covered by the award on the vesting date will be subject to Employment Taxes. Upon distribution of the cash and/or shares underlying the restricted stock units, a grantee will recognize as ordinary income an amount equal to the cash and/or fair market value (measured on the distribution date) of the shares received, and such amount will generally be deductible by the Company. This amount of income will generally be subject to income tax withholding on the date of distribution. A grantee’s basis in any shares received will be equal to the fair market value of the shares on the date of distribution, and the holding period in such shares will begin on the day following the date of distribution. If any dividend equivalent amounts are paid to a grantee, they will be includible in such grantee’s income as additional compensation (and not as dividend income) and will be subject to income and Employment Tax withholding.

Dividend Equivalent Rights

A grantee will not be subject to tax upon the grant of a dividend equivalent right. Upon payment of any dividend equivalent amounts, a grantee will recognize such payment as ordinary income (and not as dividend income).

Performance-Based and Other Share-Based or Cash-Based Awards

The income tax consequences of other share-based awards will depend on how such awards are structured. A grantee who receives a cash-based award will not recognize any taxable income for federal income tax purposes at grant. Any cash received pursuant to the award will be treated as compensation income received by the grantee generally in the year in which such grantee receives the cash, and such amount will generally be deductible by the Company.

Disposition of death.Shares

Unless stated otherwise above, upon the subsequent disposition of shares acquired under any of the preceding awards, a grantee will recognize capital gain or loss based upon the difference between the amount realized on such disposition and a grantee’s basis in the shares, and such amount will be long-term capital gain or loss if such shares were held for more than 12 months. Capital gain is generally taxed at a maximum rate of 20% if the property is held more than one year. These tax consequences are subject to change, possibly on a retroactive basis.

Section 409A

If an award is subject to Section 409A of the Code, but does not comply with the requirements of Section 409A of the Code, the taxable events as described above could apply earlier than described, and could result in the imposition of additional taxes and penalties. Grantees are urged to consult with their tax advisors regarding the applicability of Section 409A of the Code to the awards.

New Plan Benefits

The benefits or amounts that will be awarded under the 2021 Plan for 2021 cannot currently be determined because awards made by the Compensation Committee will be subject to the Compensation Committee’s discretion. Therefore, such awards cannot be calculated at this time. The awards granted for the 2020 year, which would not have changed if the 2021 Plan had been in place instead of the Current Plan, are set forth in the following table.

Vote Required and Board of Directors’ Recommendation

Approval of this proposalthe 2021 Plan requires the affirmative vote of the holders of a majority in voting power of our common stockthe shares present in person or represented by proxy at a meeting at whichthe Annual Meeting (assuming a quorum is present.present) and entitled to vote on this proposal. Abstentions and broker non-voteswill not be counted as present for purposes of determining the presence of a quorumvotes cast and will have no effect on the same effect as a vote againstoutcome of the voting on this proposal. Broker non-votes will not result from the vote on Proposal No. 4.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTEFOR THE APPROVAL OF THE ADOPTION OF THE 2018 EMPLOYEE STOCK PURCHASE2021 PLAN

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MANAGEMENT AND EXECUTIVE COMPENSATION

Executive officers are elected by our Board and serve at its discretion. There are no family relationships between any director or executive officer and any other directors or executive officers. Set forth below is information regarding our executive officers as of MayMarch 31, 2018.

2021.

Messrs. Riley Kelleher and Gumaer’sKelleher’s biographical information is included with those of the other members of our Board.

Kenneth Young has served as our President since July 2018, and previously served as a director of the Company from May 2015 to October 2016, during which he was chair of the Board’s Audit Committee and on the Board’s Compensation and Corporate Governance committees. Mr. Young also has served as Chief Executive Officer of B. Riley Principal Investments, LLC since October 2016. He previously served as Chief Executive Officer of B. Riley Principal Merger Corp., from October 2018 to February 2020, at which time it completed its business combination with Alta Equipment Group, Inc. (NYSE: ALTG) and Chief Executive Officer of B. Riley Principal Merger Corp II from May 2020 to November 2020 at which time it completed its business combination with Eos Energy Enterprises (Nasdaq: EOSE). Mr. Young serves as Chairman and is a member of the board at Babcock & Wilcox Enterprises, Inc. (NYSE:BW) since September 2020; he also has served as Chief Executive Officer since November 2018. Mr. Young has served as a member of the board of Sonim Technologies, Inc. (NASDAQ: SONM) since 2018. He also served on the board of bebe stores, inc. (OTC:BEBE) from January 2018 to April 2019, Standard Diversified (NYSE:SDI) from 2015 to 2017, Globalstar, Inc. (NYSE: GSAT) from November 2015 to December 2018, Orion Energy Systems, Inc. (NASDAQ: OESX), from August 2017 to May 2020, and Franchise Group, Inc. (NASDAQ: FRG) (fka Liberty Tax, Inc.), from 2018 to 2020. From August 2008 to March 2016, Mr. Young served as the President and Chief Executive Officer of Lightbridge Communications Corporation. Mr. Young holds a Master’s in Business Administration from the University of Southern Illinois and a Bachelor of Science in Computer Sciences from Graceland University.

Phillip J. Ahnhas served as our Chief Financial Officer and Chief Operating Officer since April 2013 and previously served as our Senior Vice President, Strategy and Corporate Development from February 2010 to April 2013. Prior to joining B. Riley, Mr. Ahn served as Vice President of Altpoint Capital Partners from June 2009 to February 2010 and as Vice President of Stone Tower Equity Partners from June 2007 to June 2009. Prior to 2007, Mr. Ahn served as Senior Investment Officer at the NY State Common Retirement Fund and also held investment banking positions at both Salomon Smith Barney and CIBC World Markets. Prior to starting his investment banking career, Mr. Ahn was a research analyst at Standard & Poor’s J.J. Kenny division. Mr. Ahn received his Bachelor of Arts in Economics from the University of Michigan in 1992 and his MBA in Finance from Columbia University in 1997, graduating with Beta Gamma Sigma honors. Mr. Ahn is a CFA charterholder and member of the CFA Society New York.

Andrew Moore was appointed Chief Executive Officer of B. Riley Securities, Inc. (fka B. Riley FBR, Inc.) on July 10, 2018, prior to which he served as President of B. Riley Securities, Inc. from 2016 to 2018. In 2006, Mr. Moore joined B. Riley & Co., LLC as an institutional sales professional, promoted to Director of Sales in 2011. During his tenure with B. Riley Securities, Inc., Mr. Moore has played a critical role structuring Issuer financings, placing the related instruments into the firm’s proprietary institutional client base, and ensuring appropriate secondary market support. Previously, Mr. Moore held sales positions at Roth Capital Partners and Bear Stearns & Co. Mr. Moore received a Bachelor of Science in Business Administration from the University of Kansas and a Master’s in Business Administration in Finance from the University of Southern California, Marshall School of Business.