UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other than the Registrant
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the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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INTELLICHECK,
INC.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than Registrant)
Payment
of Filing Fee (Check the appropriate box):
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required.
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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Aggregate number
of securities to which transaction applies:
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Per unit price or
other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4)
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Proposed maximum
aggregate value of transaction:
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Total fee paid:
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Fee
paid previously with preliminary materials.
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Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
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Amount
Previously Paid:
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(2)
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Form, Schedule or
Registration Statement No.:
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Filing Party:
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Date Filed:
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To
the Stockholders of
INTELLICHECK,
INC.
Re:
2020 Annual Meeting of Stockholders
Dear
Stockholder:
You
are cordially invited to attend Intellicheck, Inc.’s 2020 Annual Meeting of Stockholders. The meeting will be held Wednesday,
May 13, 2020 at the offices of K&L Gates LLP located at 599 Lexington Avenue, Floor 32, New York, NY 10022. The meeting will
begin promptly at 1:00 p.m., Eastern Time. Please plan to arrive a few minutes before the meeting.
The
formal notice of the meeting follows on the next page. No admission tickets or other credentials are required unless you hold
your shares in street name. If you hold your shares in street name, please follow the directions given in the Proxy Statement.
Some
of our directors and officers will be available before and after the meeting to speak with you. At the meeting, the Company will
answer your questions about our business affairs and will consider the matters explained in the Notice and Proxy Statement that
follow.
Please
vote, sign and return the enclosed proxy card as soon as possible, whether or not you plan to attend the meeting. Your vote is
important.
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Sincerely
yours,
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/s/ Guy L. Smith
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Guy L. Smith
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Chairman of the
Board
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD MAY 13, 2020
To
the Stockholders of
INTELLICHECK,
INC.
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Stockholders of INTELLICHECK, INC. (the “Company”), a Delaware corporation,
will be held Wednesday, May 13, 2020 at 1:00 p.m. Eastern Time, at the offices of K&L Gates LLP located at 599 Lexington Avenue,
Floor 32, New York, NY 10022, for the following purposes:
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1.
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To elect
eight directors to serve for a one-year term or until their respective successors have been duly elected and qualified;
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2.
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To ratify the appointment
of EisnerAmper LLP as the Company’s independent public accountants for the 2020 fiscal year;
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To approve an amendment
to the Intellicheck, Inc. 2015 Omnibus Incentive Plan;
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Advisory vote to
approve the compensation of our named executive officers;
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5.
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Advisory vote to
approve the frequency of future advisory votes to approve of executive compensation; and
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6.
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To transact such
other business as may properly come before the meeting or any adjournment or adjournments thereof.
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The
Board of Directors has fixed the close of business on March 16, 2020 as the record date for the meeting and only record holders
of shares of the Company’s common stock at that time will be entitled to notice of and to vote at the Annual Meeting of
Stockholders or any adjournment or adjournments thereof. This proxy statement and the accompanying proxy will be mailed on or
about April 13, 2020.
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By Order
of the Board of Directors,
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/s/ Bill White
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Bill White
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Chief Financial
Officer, Treasurer and Secretary
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Melville,
NY
April
13, 2020
IMPORTANT
IF
YOU CANNOT PERSONALLY ATTEND THE MEETING, IT IS REQUESTED THAT YOU INDICATE YOUR VOTE ON THE ISSUES INCLUDED ON THE ENCLOSED PROXY
AND DATE, SIGN AND MAIL IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE WHICH
REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER
MEETING HELD ON MAY 13, 2020: The Notice of Annual Meeting of
Stockholders,
Proxy Statement and the Annual Report to Stockholders are available on the following website: www.intellicheck.com/proxy2020
INTELLICHECK,
INC.
535
Broadhollow Road, Suite B51
Melville,
NY 11747
PROXY
STATEMENT
for
ANNUAL
MEETING OF STOCKHOLDERS
to
be held Wednesday, May 13, 2020
SOLICITATION
OF PROXY
The
accompanying proxy is solicited on behalf of the board of directors (the “Board of Directors”) of Intellicheck, Inc.,
a Delaware corporation (“Intellicheck” or the “Company”), for use at the annual meeting of stockholders
of the Company (the “Annual Meeting”) to be held Wednesday, May 13, 2020 at the offices of K&L Gates LLP located
at 599 Lexington Avenue, Floor 32, New York, NY 10022. The meeting will begin promptly at 1:00 p.m., Eastern Time. This proxy
statement contains information about the matters to be considered at the meeting or any adjournments or postponements of the meeting.
In addition to mail, proxies may be solicited by personal interview, telephone or telegraph by our officers and regular employees,
without additional compensation. We will bear the cost of solicitation of proxies. Brokerage houses, banks and other custodians,
nominees and fiduciaries will be reimbursed for out-of-pocket and reasonable expenses incurred in forwarding proxies and proxy
statements. The Board of Directors has set March 16, 2020, as the record date (the “Record Date”) to determine those
holders of record of common stock, par value $0.001 (“Common Stock”) who are entitled to notice of, and to vote at
the Annual Meeting. Each share of Common Stock entitles its owner to one vote. On the Record Date, there were 16,209,627 shares
outstanding. On or about April 13, 2020, this Proxy Statement and the proxy card (the “Proxy Card” or “Proxy”)
are being mailed to stockholders of record as of the close of business on March 16, 2020.
ABOUT
THE MEETING
What
is being considered at the meeting?
You
will be voting on the following:
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The
election of eight directors, each to serve until the next annual meeting;
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The
ratification of the appointment of EisnerAmper LLP, as our independent registered public accountant firm;
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To
approve an amendment to the Company’s 2015 Omnibus Incentive Plan;
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Advisory
vote to approve the compensation of our named executive officers; and
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Advisory
vote to approve the frequency of future advisory votes to approve of executive compensation.
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Who
is entitled to vote at the meeting?
You
may vote if you owned Common Stock as of the close of business on March 16, 2020. Each share of Common Stock is entitled to one
vote.
How
many votes must be present to hold the meeting?
Your
shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a Proxy by
mail. To conduct our meeting, a majority of the combined voting power of our Common Stock as of March 16, 2020, must be present
at the meeting. This is referred to as a quorum. We believe that on March 16, 2020, there were 16,209,627 outstanding shares of
Common Stock entitled to vote.
How
do I vote?
You
can vote in two ways:
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by
attending the meeting in person; or
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by
completing, signing and returning the enclosed Proxy Card.
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Can
I change my mind after I submit my Proxy?
Yes,
you may change your mind at any time before a vote is taken at the meeting. You can do this by (1) signing another Proxy with
a later date and submitting it in the same manner as the prior Proxy was submitted; (2) if you hold your shares in your name,
voting again at the meeting; or (3) if you hold your shares in street name, arranging with your broker to vote your shares at
the annual meeting.
What
if I return my Proxy Card but do not include voting instructions?
Proxies
that are signed and returned but do not include voting instructions will be voted FOR the election of the nominated directors,
and FOR the approval of the appointment of our independent public accountants, but they will not be voted with respect to the
advisory votes with respect to executive compensation and the frequency of such votes.
What
does it mean if I receive more than one Proxy Card?
It
means that you have multiple accounts with brokers and/or our transfer agent. Please vote all of these shares. We recommend that
you contact your broker and/or our transfer agent to consolidate as many accounts as possible under the same name and address.
Our transfer agent is Continental Stock Transfer and Trust Company. The transfer agent’s telephone number is (212) 509-4000.
Will
my shares be voted if I do not provide my Proxy?
If
you hold your shares directly in your own name, they will not be voted if you do not provide a Proxy. Your shares may be voted
under certain circumstances if they are held in the name of a brokerage firm. Brokerage firms generally have the authority to
vote customers’ unvoted shares on certain “routine” matters, including approval of the appointment of independent
public accountants. When a brokerage firm votes its customer’s unvoted shares, these shares are counted for purposes of
establishing a quorum. At our meeting, these shares will be counted as voted by the brokerage firm in the approval of the appointment
of our independent public accountants.
What
vote is required to approve each item?
The
affirmative vote of a plurality of the votes cast at the annual meeting is required for approval of the election of directors
and the affirmative vote of a majority of the votes cast is required for the ratification of the appointment of our independent
public accountants. The advisory vote to approve executive compensation will be approved, on a non-binding, advisory basis, on
the affirmative vote of a majority of the votes cast at the annual meeting. The advisory vote on frequency of approval of executive
compensation will be determined, on a non-binding, advisory basis, by the option (every one year, two years, or three years) that
receives the most votes.
Do
we currently have, or do we intend to submit for stockholder approval, any anti-takeover device?
Our
Certificate of Incorporation, Bylaws and other corporate documents do not contain any provisions that contain material anti-takeover
aspects. We have no plans or proposals to submit any other amendments to the Certificate of Incorporation or Bylaws, or other
measures in the future that have anti-takeover effects.
Proposal
No. 1
ELECTION
OF DIRECTORS
Our
Board of Directors has one class of directors, with each director elected annually for a term of one year. Unless specified to
be voted otherwise, the persons named in the accompanying Proxy will vote for the election of the following persons as directors,
all of whom are presently members of the Board of Directors, to hold office for the terms set forth below or until their respective
successors have been elected and qualified. Each Proxy will be voted for the nominees named below. The nominees have consented
to serve as directors if elected.
The
Board of Directors recommends that you elect the nominees identified below.
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Name
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Age
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Position with the Company
and Principal Occupation
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Director
Since
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New Board
Term Expires
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Guy L. Smith
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70
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Chairman of the Board of Directors
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2005
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2021
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Emil R. Bedard
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75
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Director
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2008
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2021
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Jack A. Davis
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73
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Director
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2014
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2021
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William P. Georges
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66
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Director
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2014
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2021
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Dylan Glenn
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50
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Director
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2020
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2021
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Amelia L. Ruzzo
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66
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Director
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2019
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2021
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David E. Ullman
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62
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Director
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2018
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2021
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Bryan Lewis
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58
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President, Chief Executive Officer and Director
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2020
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2021
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DIRECTORS
AND EXECUTIVE OFFICERS
The
following table sets forth certain information with respect to each director and executive officer as of March 16, 2020:
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Name
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Age
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Position with the Company
and Principal Occupation
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Held
Office
Since
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Current
Board Term Expires
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Guy L. Smith
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70
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Chairman of the Board of Directors
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2005
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2020
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Emil R. Bedard
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75
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Director
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2008
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2020
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Jack A. Davis
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73
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Director
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2014
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2020
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William P. Georges
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66
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Director
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2014
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2020
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Dylan Glenn
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50
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Director
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2020
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2020
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Amelia L. Ruzzo
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66
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Director
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2019
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2020
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David E. Ullman
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62
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Director
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2018
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2020
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Russell T. Embry
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55
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Chief Technology Officer, Senior Vice President
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2001
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N/A
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Bryan Lewis
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58
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President, Chief Executive Officer and Director
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2018
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2020
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Bill White
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59
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Chief Financial Officer, Chief Operating Officer,
Secretary and Treasurer
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2012
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N/A
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Business
Experience
Guy
L. Smith was appointed Chairman of the Board of Directors effective November 14, 2018 and became a member of the Board of
Directors in June 2005. Mr. Smith has been the Executive Vice President of Diageo, the world’s leading premium drinks company,
since 2000 and is responsible for Corporate Relations and Marketing Public Relations. At Diageo, Mr. Smith’s responsibilities
include overseeing the corporation’s civic and social responsibility efforts in North America, including the Diageo Marketing
Code. The code governs the company’s social responsibility activities with regard to the marketing and sale of alcoholic
beverages and the company’s undertakings to reduce underage access and abuse of alcohol. From 1998 to 1999, prior to joining
Diageo, Mr. Smith was Special Advisor to President Clinton on The White House staff, where he served on the impeachment defense
team. Mr. Smith also served as an informal strategic communications advisor to President Clinton from the beginning of the Clinton
Administration. From 1999 to 2000, Mr. Smith was associated with The Hawthorn Group, a Washington-based public affairs firm, as
well as with his own firm, Smith Worldwide Inc., from 1994 to 1996, which focused on reputation and crisis management. He was
Chief Operating Officer of Hill & Knowlton International Public Relations, from 1992 to 1993, where he consulted with the
firm’s largest consumer product, technology, and legal clients. Prior to that Mr. Smith was Vice President-Corporate Affairs,
the senior public affairs and public relations officer, for Philip Morris Companies Inc. from 1975 to 1992. During his 17 years
with Philip Morris, Mr. Smith led the Corporate Affairs departments of the Miller Brewing Company and The Seven-Up Company, both
then Philip Morris operating companies. Mr. Smith began his career as a reporter and assistant city editor for The Knoxville Journal.
He is currently chairman of the Barrier Island Trust, an environmental protection organization and sits on the Board of Advisors
of Mount Vernon, George Washington’s home outside Washington, D.C. Mr. Smith also serves as an Honorary Battalion Chief
of the Fire Department of New York.
Lieutenant
General Emil R. “Buck” Bedard was appointed a member of the Board of Directors on March 14, 2008. General Bedard
was appointed a director of Mobilisa in September 2004. He retired from the U.S. Marine Corps with over 37 years of active duty
service in 2003. General Bedard’s military career included two combat tours in Vietnam, as well as commanding the 7th Marine
Regiment in Somalia and the 1st Marine Expeditionary Force during Operation Desert Storm. General Bedard’s final active
duty tour was as the Deputy Commandant for Plans, Policies and Operations for the US Marine Corps Headquarters in Washington,
D.C., where he served until his retirement in 2003. He has continued to serve with the Marine Corps in Afghanistan and Iraq since
his retirement. General Bedard’s many military awards include a Distinguished Service Medal, Legion of Merit, and Bronze
Star (with Combat V). General Bedard graduated from the University of North Dakota in 1967 with a Masters in Science.
Major
General Jack A. Davis, U.S. Marine Corps, Retired, was appointed a member of the Board of Directors on August 11, 2014. Major
General Davis is a proven leader in the military, law enforcement and business arenas. In a 37-year career in the United States
Marine Corps, during which he rose to the rank of Major General, he commanded at every level from an infantry platoon in Vietnam
to Commanding General of the 4th Marine Division. His final assignment prior to retirement was Vice Commander, Marine Corps Forces
Atlantic/Deputy Commander Marine Corps Forces Europe, for which he received the Distinguished Services Medal. Major General Davis
also served five years in federal law enforcement before joining the North Carolina State Bureau of Investigation in 1979, retiring
in 1999 with a distinguished record of service. He also established JA Davis & Associates, a frontrunner in leadership and
security training development. He holds a Bachelor of Science degree and two master’s degrees. His business experience includes
serving on a number of boards of directors/advisors to include publicly traded companies such as Force Protection (2006-2011).
Major General Davis previously served on Mobilisa’s Board of Directors from October 2005 until the merger with Intellicheck
in March 2008.
William
P. Georges was appointed a member of the Board of Directors on August 11, 2014. Mr. Georges is President and CEO of The Georges
Group, LLC, a provider of strategic consulting services and project management in the areas of corporate operations/relations
to both public and private entities worldwide. Prior to forming the firm, he spent nine years as senior vice president of The
Century Council, overseeing their development of programs to fight alcohol misuse, drunk driving and underage drinking. He is
a retired 25-year veteran of the Albany, NY Police Department where he ultimately achieved the rank of Assistant Chief/Chief of
Patrol where he was responsible for all uniformed police services. Mr. Georges is a life member of the International Association
of Chiefs of Police. He serves on the Traffic Law Enforcement Committee of the Transportation Research Board of the National Academies
and has been recognized by numerous organizations for his dedication to law enforcement.
Dylan
Glenn was appointed a member of the Board of Directors on March 11, 2020. Mr. Glenn is CEO of KBBO Americas, L.P. KBBO Americas
is the U.S.-based investment vehicle for the KBBO Group, a diversified investment company headquartered in the United Arab Emirates.
Prior to joining the KBBO Group, Mr. Glenn was Senior Managing Director of Guggenheim
Partners, where he joined in 2005. Most recently, he worked
in two capacities at the Firm. First, he coordinated the joint venture-Guggenheim KBBO Partners, Ltd.
The joint venture is based in Dubai, UAE and is a partnership between the
Abu Dhabi-based KBBO Group and Guggenheim Partners. Guggenheim KBBO Partners is a merchant banking effort that leverages the Firm’s
investment banking and asset management capabilities with an important strategic partner with deep operating experience throughout
the Middle East. Mr. Glenn continues to serve as Chairman of Guggenheim KBBO Partners.
Additionally, he led the Guggenheim’s Government Relations efforts in Washington and was a Member of the Guggenheim Partners
Public Affairs Committee. Prior to joining Guggenheim, Mr.
Glenn served as Deputy Chief of Staff to Governor Sonny Perdue of Georgia. As a Deputy Chief of Staff,
Mr. Glenn was responsible for all
External Affairs. Mr. Glenn also served in the White House in Washington, D.C.
as Special Assistant for President George W.
Bush for Economic Policy. He
was a member of the National Economic Council team advising the President on various economic issues. He has spent almost two
decades in national and state politics. Mr. Glenn received his B.A. degree from Davidson
College in North Carolina.
Dr.
Amelia L. Ruzzo was appointed a member of the Board of Directors on January 10, 2019. Dr. Ruzzo has over twenty years of deep
experience in technology solutions and solid business management and development expertise. Her experience includes positions
with Thermo Fisher Scientific from 2012 to 2015 and ITT Exelis from 2010 to 2012. In these roles, she was responsible for aligning
IT with business objectives in the development of strategic and tactical plans for segment businesses. Dr. Ruzzo effectively led
teams that developed tactical and strategic solutions to enable strong financial results across the businesses’ portfolios.
At Alliant Techsystems, from 2006 to 2010 she directed and guided successful solutions for business
capture, technology development, execution and customer support. From 2004 to 2005, as Vice President of Information Systems
for multi-billion-dollar international gold mining company Placer Dome, Dr. Ruzzo had responsibility for moving the corporation’s
information technology strategy forward and for oversight of global initiatives of all information systems. Dr. Ruzzo’s
extensive experience in the defense industry includes six years in successive positions at Lockheed Martin culminating in the
Director of the Simulation Technology Group in 2004. Her primary job at Lockheed Martin was to support the executive leadership
and business development areas by providing the most advanced technology solutions for Lockheed Martin customers.
David
E. Ullman was appointed a member of the Board of Directors in January 2018. Mr. Ullman has extensive business expertise with
a strong focus on retail, strategic planning and growth, as well as mergers and acquisitions. A seasoned retail executive, he
spent nearly twenty years as Executive Vice President and Chief Financial Officer for billion-dollar retailer, manufacturer and
e-commerce company, Jos. A. Bank Clothiers. Mr. Ullman had an instrumental role in strategic planning and growth initiatives as
well as mergers and acquisitions, which led to more than a decade of sustained profitable growth and a six-fold increase in sales.
The iconic retailer was acquired by Men’s Wearhouse in 2014 for $1.8 billion. He has also held executive positions with
Arthur Andersen and $750 million catalogue company Hanover Direct. Most recently, Mr. Ullman has served as Chief Operating Officer,
Chief Financial Officer and minority owner of Paul Fredrick Menstyle, a private retail company focused on designer and direct-to-consumer
men’s apparel and related accessories.
Russell
T. Embry was appointed Senior Vice President and Chief Technology Officer in July 2001 and has been Vice President, Information
Technology, since July 1999. From January 1998 to July 1999, Mr. Embry was Lead Software Engineer with RTS Wireless. From April
1995 to January 1998, he served as Principal Engineer at GEC-Marconi Hazeltine Corporation. From August 1994 through April 1995,
he was a staff software engineer at Periphonics Corporation. From September 1989 to August 1994, Mr. Embry served as Senior Software
Engineer at MESC/Nav-Com. From July 1985 through September 1989, he was a software engineer at Grumman Aerospace. Mr. Embry holds
a B.S. in Computer Science from Stony Brook University and an M.S. in Computer Science from Polytechnic University, Farmingdale.
Bryan
Lewis was appointed President and Chief Executive Officer in February 2018. Mr. Lewis has over 30 years of global leadership
positions in sales and operations in the financial services and financial technology sectors with a demonstrated ability to scale
both high-growth and under-performing companies to create significant shareholder value. Prior to joining Intellicheck, he was
Chief Operating Officer of Third Bridge, Inc. where he oversaw the growth of the company from 100 to 600 employees and a CAGR
of 56% in a four-year period. Previously, Mr. Lewis held senior leadership positions at BondDesk (sold to TradeWeb), TheMarkets.com
(sold to Capital IQ), Reuters, Barra (sold to MSCI) and Bloomberg. He began his career as a bond trader.
Bill
White was named interim CEO and President on October 4, 2017, serving in such position until February 21, 2018, and has served
as Chief Financial Officer, Treasurer and Secretary since April 1, 2012. Mr. White was also named Chief Operating Officer on March
11, 2020. Mr. White has more than 30 years of experience in financial management, operations and business development. Prior to
joining Intellicheck, he served 11 years as the Chief Financial Officer, Secretary and Treasurer of FocusMicro, Inc. (“FM”).
As co-founder of FM, Mr. White played an integral role in growing the business from the company’s inception to over $36
million in annual revenue in a five-year period. Mr. White has broad domestic and international experience including managing
rapid and significant growth, import/export, implementing tough cost management initiatives, exploiting new growth opportunities,
merger and acquisitions, strategic planning, resource allocation, tax compliance and organization development. Prior to co-founding
FM, he served 15 years in various financial leadership positions in the government sector. Mr. White started his career in Public
Accounting. Mr. White holds a Bachelor of Arts in Business Administration from Washington State University and is a Certified
Fraud Examiner.
Directors
generally serve for a one-year term and hold office until the next annual meeting of stockholders following the conclusion of
their term and the election and qualification of their successors. Executive officers are appointed by and serve at the discretion
of the Board of Directors.
Board
Leadership Structure
The
current Chairman of the Board of Directors is Guy L. Smith, who is an independent director under Nasdaq listing standards. The
roles of Chairman of the Board and Chief Executive Officer are separate. The Board of Directors believes that the separation of
the offices of the Chairman of the Board and Chief Executive Officer allows the Company’s Chief Executive Officer to focus
primarily on the Company’s business strategy, operations and corporate vision. The Board of Directors consists of a majority
of independent directors, and each of the committees of the Board of Directors is comprised solely of independent directors. The
Company does not have a policy mandating an independent lead director. The independent directors meet at least annually in executive
session without the presence of non-independent directors.
Risk
Oversight
While
management is responsible for assessing and managing risks to the Company, the Board of Directors is responsible for overseeing
management’s efforts to assess and manage risk. Risks are considered in virtually every business decision and as part of
the Company’s overall business strategy. The Board of Directors’ risk oversight areas of focus include, but are not
limited to:
|
|
●
|
managing the Company’s
long-term growth;
|
|
|
|
|
|
|
●
|
strategic and operational
planning, including significant acquisitions and the evaluation of our capital structure; and
|
|
|
|
|
|
|
●
|
legal and regulatory compliance.
|
While
the Board of Directors has the ultimate oversight responsibility for the Company’s risk management policies and processes,
the committees of the Board of Directors also have responsibility for risk oversight. The Audit Committee oversees risks associated
with our financial statements and financial reporting, mergers and acquisitions, credit and liquidity, and business conduct compliance.
The Compensation Committee considers the risks associated with our compensation policies and practices with respect to both executive
compensation and employee compensation generally. The Corporate Governance and Nominating Committee oversee risks associated with
our overall governance practices and the leadership structure of the Board of Directors. The Board of Directors stays informed
of each committee’s risk oversight and other activities via regular reports of the committee chairs to the full Board of
Directors. The Board of Directors’ role in risk oversight is consistent with our leadership structure, with the Chief Executive
Officer and other members of senior management having responsibility for assessing and managing the Company’s risk exposure,
and the Board of Directors and committees providing oversight in connection with those efforts.
Section
16(a) Beneficial Ownership Reporting Compliance
The
Securities and Exchange Commission has adopted rules relating to the filing of ownership reports under Section 16(a) of the Securities
Exchange Act of 1934. One such rule requires disclosure of filings, which under the Commission’s rules, are not deemed to
be timely. During its review, the Company discovered that Mr. Lewis failed to file a timely report regarding the purchase of 185
shares of common stock by his spouse for which he disclaims beneficial ownership; such report was subsequently filed.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
During
the fiscal year ended December 31, 2019, the Board of Directors held four meetings, the Audit Committee held four meetings, the
Nominating and Corporate Governance Committee held four meetings and the Compensation Committee held four meetings in conjunction
with the regular quarterly board meetings. All the directors attended at least 75% of the aggregate of all Board meetings and
meetings of committees on which they served. The Board of Directors has determined that Messrs. Smith, Davis, Georges, Bedard,
Ullman, Glenn and Dr. Ruzzo are each an independent director as defined in Section 5605(b) of the Nasdaq listing standards. The
Company does not have a written policy relating to attendance by members of the Board of Directors at annual stockholder meetings.
However, it is communicated and understood by all directors that they are required to attend barring any unforeseen circumstance.
All directors who were directors at the time of last year’s annual stockholder meeting attended last year’s annual
stockholder meeting.
Compensation
Committee
The
Board of Directors established a Compensation Committee, which is currently comprised of Mr. Georges, chairperson, Mr. Bedard,
Mr. Davis and Mr. Ullman, each of whom is independent as defined in Section 5605(d) of the Nasdaq listing standards. The Compensation
Committee reviews and recommends to the board the compensation for all officers and directors of the Company and reviews general
policy matters relating to the compensation and benefits of all employees. The Compensation Committee also administers the stock
option plans. The Compensation Committee may not delegate its duties. The Compensation Committee has adopted a written charter,
which is available on the Company’s Web site at www.intellicheck.com/about/investor-center. The charter sets forth
responsibilities, authority and specific duties of the Compensation Committee.
Compensation
Committee Report
The
Compensation Committee Report is not to be deemed to be “soliciting material” or to be “filed” with the
SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent that the
Company specifically requests that such information be treated as soliciting material or specifically incorporates it by reference
into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
The
Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K with management. Based on this review and discussion, the Compensation Committee has recommended to the Company’s Board
of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K.
Compensation Committee:
William P. Georges, Chairperson
Emil R. Bedard, Member
Jack A. Davis, Member
David E. Ullman, Member
Corporate
Governance and Nominating Committee
The
Board of Directors established a Corporate Governance and Nominating Committee, which is comprised of Mr. Bedard, chairperson,
Mr. Davis and Dr. Ruzzo, each of whom is independent as defined in Section 5605(b) of the Nasdaq’s listing standards. The
Corporate Governance and Nominating Committee review our internal policies and procedures and by-laws. With respect to nominating
director candidates, this committee identifies and evaluates potential director candidates and recommends candidates for appointment
or election to the Board. The Nominating and Corporate Governance Committee has adopted a written charter, which is available
on the Company’s Web site at www.intellicheck.com/about/investor-center. The charter sets forth responsibilities,
authority and specific duties of the Corporate Governance and Nominating Committee.
The
Corporate Governance and Nominating Committee may consider those factors it deems appropriate in evaluating director nominees,
including judgment, skill, diversity, strength of character, experience with businesses and organizations comparable in size or
scope to the Company, experience and skill relative to other board members, and specialized knowledge or experience. Depending
upon the current needs of our Board of Directors, certain factors may be considered more than others by the Committee in making
its recommendation. In considering candidates for our Board of Directors, the Corporate Governance and Nominating Committee will
evaluate the entirety of each candidate’s credentials and, other than the eligibility requirements established by the Corporate
Governance and Nominating Committee, will not have any specific minimum qualifications that must be met by a nominee. The Corporate
Governance and Nominating Committee will consider candidates for the Board from any reasonable source, including current board
members, stockholders, professional search firms or other persons. The Corporate Governance and Nominating Committee will not
evaluate candidates differently based on who has made the recommendation.
Although
we do not currently have a formal policy or procedure for stockholder recommendations of director candidates, the Board of Directors
welcomes such recommendations and will consider candidates recommended by stockholders. Because we do not prohibit or restrict
such recommendations, we have not implemented a formal policy with respect to stockholder recommendations.
Corporate Governance and Nominating Committee:
Emil R. Bedard, Chairperson
Jack A. Davis, Member
Amelia L. Ruzzo, Member
Audit
Committee
The
Board of Directors has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange
Act, which is currently comprised of David E. Ullman, chairperson, William P. Georges and Amelia L. Ruzzo. The members of the
Audit Committee are independent as defined in Section 5605(c) of the Nasdaq’s listing standards. The Audit Committee recommends
to the Board of Directors the annual engagement of a firm of independent accountants and reviews with the independent accountants
the scope and results of audits, our internal accounting controls and audit practices and professional services rendered to us
by our independent accountants. The Audit Committee has adopted a written charter, which sets forth the responsibilities, authority
and specific duties of the Audit Committee. A copy of the Audit Committee charter is incorporated by reference to Registrant’s
Proxy Statement on Schedule 14A filed April 27, 2007.
The
Board of Directors has determined that it has at least one audit committee financial expert serving on the audit committee. Mr.
Ullman has vast corporate experience including his position as Chief Financial Officer for Jos. A. Bank Clothiers and Chief Financial
Officer of Paul Fredrick Menstyle. He is considered an “audit committee financial expert.”
Audit
Committee Report
The
following shall not be deemed to be “soliciting material” or to be “filed” with the Commission nor shall
such information be incorporated by reference into any future filing of Intellicheck under the Securities Act of 1933 or the Exchange
Act.
With
respect to the audit of the fiscal year ended December 31, 2019, and as required by its written charter which sets forth its responsibilities
and duties, the Audit Committee has reviewed and discussed the Company’s audited financial statements with management.
During
its review, the Audit Committee has discussed with EisnerAmper LLP, the Company’s Independent Registered Public Accounting
Firm, those matters required to be discussed by Statement on Accounting Standards No. 61, as amended, as adopted by the Public
Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.
The
Audit Committee has received from and discussed with EisnerAmper LLP, the written disclosures and the letter required by applicable
requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence and has discussed
with EisnerAmper LLP its independence. These disclosures relate to the firm’s independence from the Company.
Based
on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the financial
statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
Audit Committee:
David E. Ullman, Chairperson
William P. Georges, Member
Amelia L. Ruzzo, Member
Process
for Sending Communications to the Board of Directors
Stockholders
that wish to communicate with the Board of Directors are welcomed to put their comments in writing addressed to the Company’s
Investor Relations Representative, Bill White. Such communications may be sent to Mr. White at Intellicheck, Inc., 535 Broadhollow
Road, Suite B51, Melville, NY 11747. Upon receipt, Mr. White will distribute the correspondence to the directors. All communications
received will be provided to the directors specified in the communication.
VOTING
SECURITIES AND PRINCIPAL STOCKHOLDERS
The
following table sets forth information with respect to the beneficial ownership of the Company’s Common Stock as of March
16, 2020, by each person who is known by Intellicheck to beneficially own more than 5% of Intellicheck’s Common Stock, each
officer, each director and all officers and directors as a group.
Shares
of Common Stock that an individual or group has a right to acquire within 60 days pursuant to the exercise or conversion of options,
warrants or other similar convertible or derivative securities are deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table.
There
are no arrangements known to the Company, including any pledge by any person of securities of the Company, the operation of which
may at a subsequent date result in a change in control of the Company.
The
applicable percentage of ownership is based on 16,209,627 shares outstanding.
|
Name
|
|
Shares
Beneficially Owned
|
|
|
Percent
|
|
|
Russell T. Embry (1)
|
|
|
142,778
|
|
|
|
*
|
|
|
Bryan Lewis (2)
|
|
|
258,647
|
|
|
|
1.60
|
|
|
Bill White (3)
|
|
|
479,223
|
|
|
|
2.96
|
|
|
Emil R. Bedard (4)
|
|
|
137,151
|
|
|
|
*
|
|
|
Jack A. Davis
|
|
|
92,728
|
|
|
|
*
|
|
|
William P. Georges (5)
|
|
|
74,444
|
|
|
|
*
|
|
|
Dylan Glenn
|
|
|
-
|
|
|
|
-
|
|
|
Amelia L. Ruzzo
|
|
|
-
|
|
|
|
-
|
|
|
Guy L. Smith (6)
|
|
|
223,970
|
|
|
|
1.38
|
|
|
David E. Ullman
|
|
|
10,000
|
|
|
|
*
|
|
|
All Executive Officers & Directors as a group (10 persons) (7)
|
|
|
1,418,941
|
|
|
|
8.75
|
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
|
Clear Harbor Asset Management, LLC (8)
|
|
|
1,417,905
|
|
|
|
8.75
|
|
|
Rawleigh Hazen Ralls, IV (9)
|
|
|
1,164,558
|
|
|
|
7.18
|
|
|
Goldberg Capital Management (10)
|
|
|
1,029,798
|
|
|
|
6.35
|
|
|
Bleichroeder LP (11)
|
|
|
2,738,314
|
|
|
|
16.89
|
|
|
*
|
Indicates
beneficial ownership of less than one percent of the total outstanding Common Stock.
|
|
|
|
|
(1)
|
Includes 137,082
shares issuable upon exercise of stock options exercisable within 60 days.
|
|
|
|
|
(2)
|
Includes 258,647
shares issuable upon exercise of stock options exercisable within 60 days.
|
|
|
|
|
(3)
|
Includes 447,315
shares issuable upon exercise of stock options exercisable within 60 days.
|
|
|
|
|
(4)
|
Includes 20,000
shares issuable upon exercise of stock options exercisable within 60 days.
|
|
|
|
|
(5)
|
Includes 50,000
shares issuable upon exercise of stock options exercisable within 60 days.
|
|
|
|
|
(6)
|
Includes 60,638
shares issuable upon exercise of stock options exercisable within 60 days.
|
|
|
|
|
(7)
|
Includes 949,617
shares issuable upon the exercise of stock options exercisable within 60 days.
|
|
|
|
|
(8)
|
The address of Clear
Harbor Asset Management, LLC (“Clear Harbor”) is 420 Lexington Ave., Suite 2006, New York, NY 10170; shares reflected
above for Clear Harbor are based on a Schedule 13G/A filing made February 10, 2020.
|
|
|
|
|
(9)
|
The address of Rawleigh
Hazen Ralls, IV (“Ralls”) is c/o Lacuna, LLC, 1100 Spruce Street, Suite 202, Boulder, Colorado 80303; shares reflected
above for Ralls are based on a Schedule 13G/A filed February 14, 2020.
|
|
|
|
|
(10)
|
The address of Goldberg
Capital Management (“Goldberg”) is 27 Stagecoach Road, Avon, CT 06001; shares reflected above for Goldberg are
based on a Schedule 13G filed January 30, 2019.
|
|
|
|
|
(11)
|
The address of Bleichroeder
LP (“Bleichroeder”) is 1345 Avenue of the Americas, 47th Floor, New York, NY 10105; shares reflected above for
Bleichroeder are based on a Schedule 13G/A filed February 12, 2020.
|
The
address at which our Board of Directors and executive officers can be reached is the address specified in “Process for Sending
Communications to the Board of Directors” above.
EXECUTIVE
COMPENSATION
This
compensation discussion describes the material elements of compensation awarded to, earned by, or paid to each of Intellicheck’s
executive officers who served as named executive officers during the last completed fiscal year. This compensation discussion
focuses on the information contained in the following tables and related footnotes and narrative for primarily the last completed
fiscal year, but also describes compensation actions taken before or after the last completed fiscal year to the extent it enhances
the understanding of Intellicheck’s executive compensation disclosure.
The
Compensation Committee currently oversees the design and administration of Intellicheck’s executive compensation program
and compensation for the Board of Directors.
The
principal elements of Intellicheck’s executive compensation program are base salary, annual cash incentives, long-term equity
incentives in the form of stock options and other benefits. Intellicheck’s other benefits consist of reimbursed business
travel and entertainment expenses, health insurance benefits, vacation and sick pay and a qualified 401(k) savings plan. Intellicheck’s
philosophy is to position the aggregate of these elements at a level that is commensurate with Intellicheck’s size and performance.
Compensation
Program Objectives and Philosophy
In
General. The objectives of Intellicheck’s compensation programs are to:
|
|
●
|
attract,
motivate and retain talented and dedicated executive officers;
|
|
|
|
|
|
|
●
|
provide Intellicheck’s
executive officers with both cash and equity incentives to further Intellicheck’s interests and those of Intellicheck’s
stockholders; and
|
|
|
|
|
|
|
●
|
provide employees
with long-term incentives so Intellicheck can retain them and provide stability during Intellicheck’s growth stage.
|
Generally,
the compensation of Intellicheck’s executive officers is composed of a base salary, an annual incentive compensation award
and equity awards in the form of stock options. In setting base salaries, the Compensation Committee generally reviews the individual
contributions of the particular executive. Annual incentive compensation awards for 2018 and 2019 have been paid in accordance
with the Executive Compensation Bonus Plan approved by the Compensation Committee based on expected Company performance. In addition,
stock options are granted to provide the opportunity for long-term compensation based upon the performance of Intellicheck’s
common stock over time.
Intellicheck
generally intends to qualify executive compensation for deductibility without limitation under Section 162(m) of the Internal
Revenue Code. Section 162(m) provides that, for purposes of the regular income tax and the alternative minimum tax, the otherwise
allowable deduction for compensation paid or accrued with respect to a covered employee of a publicly-held corporation (other
than certain exempt performance-based compensation) is limited to no more than $1.0 million per year. The non-exempt compensation
paid to any of our executive officers for fiscal 2019 as calculated for purposes of Section 162(m) did not exceed the $1.0 million
limit.
Competitive
Marketplace for Talent. Intellicheck defines its competitive marketplace for executive talent and investment capital to
be the technology and business services industries. To date, Intellicheck has not engaged in the benchmarking of executive compensation
but Intellicheck may choose to do so in the future.
Compensation
Process. For each of Intellicheck’s named executive officers, the Compensation Committee reviews and approves all
elements of compensation, taking into consideration recommendations from Intellicheck’s Chief Executive Officer (for compensation
other than his own), as well as competitive marketplace guidance. Based upon its review, the Compensation Committee approves salaries
for executive officers. The Compensation Committee sets the salary level of each executive officer on a case by case basis, considering
the individual’s level of responsibilities and performance. All executive officer salaries are reviewed on an annual basis.
Salary changes for executives are based primarily on their performance in supporting the strategic initiatives of the Chief Executive
Officer, economic and competitive factors, meeting individual goals and objectives set by the Chief Executive Officer, and improving
the operating efficiency of the company. Also, where applicable, changes in the duties and responsibilities of each other executive
officer may be considered in deciding on changes in annual salary. For 2019, the aggregate of the compensation paid to Intellicheck’s
Chief Executive Officer and other executive officers was $1,618,966.
Executive
Officer Bonuses. During 2019, bonuses were paid under the Executive Compensation Bonus Plan to the Chief Executive Officer
and Chief Financial Officer in the amounts of $20,000 and $15,000, respectively. During 2018, no bonuses were paid under the Executive
Compensation Bonus Plan.
Stock
Option Grants. The Compensation Committee currently administers Intellicheck’s stock option and equity incentive
plans for executive officers, employees, consultants and outside directors. Under the plans, the Compensation Committee grants
options to purchase Common Stock with an exercise price of no less than the fair market value of the Common Stock on the date
of grant. The Compensation Committee believes that providing stock options to the executive officers, who are responsible for
Intellicheck’s management and growth, gives them an opportunity to own Intellicheck stock and better aligns their interests
with the interests of the stockholders. It also promotes retention of the officers because of the vesting provisions of the option
grants and the potential for stock price appreciation.
For
these reasons, the Compensation Committee considers stock options as an important element of compensation when it reviews executive
officer compensation. At its discretion, the Compensation Committee also grants options based on individual and corporate achievements.
Normally,
the Chief Executive Officer makes a recommendation to the Committee for awards to be made to executive officers other than the
Chief Executive Officer. The Committee approves grants made to the Chief Executive Officer and other executive officers and, in
certain cases, recommends grants for approval by the entire Board. The Compensation Committee determines the number of shares
underlying each stock option grant based upon the executive officer’s and Intellicheck’s performance, the executive
officer’s role and responsibilities at Intellicheck and the executive officer’s base salary.
Chief
Executive Officer Compensation. Mr. Lewis receives an annual base salary of $250,000. Mr. Lewis may also receive an annual
bonus based on reasonable objectives established by the Company’s Board of Directors. In addition, Mr. Lewis is entitled
to receive benefits in accordance with the Company’s existing benefit policies and is reimbursed for Company expenses in
accordance with the Company’s expense reimbursement policies.
The
determination of the base salary to be paid to the Chief Executive Officer was based on a number of factors including the position’s
historical compensation and the relative compensation in comparison to the other existing senior executives in the Company. In
deciding on future changes in the base salary of the Chief Executive Officer, the Compensation Committee will consider several
performance factors. Among these are operating and administrative efficiency and the maintenance of an appropriately experienced
management team. The Compensation Committee also evaluates the Chief Executive Officer’s performance in the area of finding
and evaluating new business opportunities to establish the most productive strategic direction for Intellicheck.
Chief
Financial Officer. Effective April 1, 2012, Bill White was appointed Chief Financial Officer of the Company. In connection
with his employment at the Company, Mr. White receives a base salary of $215,963. On March 11, 2020, Mr. White was also appointed
Chief Operating Officer.
Severance
and Change-in-Control Agreements
On
November 29, 2017, the Company entered into a Severance Agreement with Mr. Bill White, the Company’s Chief Financial Officer.
Under the agreement, if Mr. White is terminated for any reason other than cause, the Company would pay Mr. White two (2) years
base salary in accordance with the Company’s regular payroll schedule. Mr. White would also be entitled to a gross amount
equal to any quarterly bonus target applicable during the quarter, accelerated vesting of all outstanding stock options and coverage
of health benefits for a period of up to 12 months. The agreement has a term of three years.
Each
of the agreements requires the executive to devote substantially all his time and efforts to our business and contains non-competition
and nondisclosure covenants of the officer for the term of his employment and for a one-year period thereafter. Each agreement
provides that we may terminate the agreement for cause.
INTELLICHECK
SUMMARY COMPENSATION TABLE
The
following table sets forth compensation paid to executive officers whose compensation was more than $100,000 for any of the three
fiscal years ended December 31, 2019. No other executive officers received total salary and bonus compensation more than $100,000
during any of such fiscal years.
|
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards ($) (1)
|
|
|
Option
Awards
($)(1)
|
|
|
All Other Compensation ($)(2)
|
|
|
Total
($)
|
|
|
Russell T. Embry
|
|
|
2019
|
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,186
|
|
|
|
6,000
|
(5)
|
|
|
224,186
|
|
|
Chief Technology Officer
|
|
|
2018
|
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,625
|
(5)
|
|
|
204,625
|
|
|
|
|
|
2017
|
|
|
|
200,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,000
|
(5)
|
|
|
203,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryan Lewis
|
|
|
2019
|
|
|
|
250,000
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
671,360
|
|
|
|
—
|
|
|
|
941,360
|
|
|
President & Chief Executive Officer
|
|
|
2018
|
|
|
|
204,861
|
|
|
|
—
|
|
|
|
—
|
|
|
|
212,740
|
|
|
|
—
|
|
|
|
417,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill White
|
|
|
2019
|
|
|
|
215,963
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
54,558
|
|
|
|
5,399
|
(5)
|
|
|
290,920
|
|
|
Chief Financial Officer
|
|
|
2018
|
|
|
|
215,963
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,479
|
(5)
|
|
|
222,442
|
|
|
and Chief Operating Officer (3)
|
|
|
2017
|
|
|
|
215,463
|
|
|
|
35,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,464
|
(5)
|
|
|
256,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Roof (4)
|
|
|
2019
|
|
|
|
162,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
162,500
|
|
|
Former President &
|
|
|
2018
|
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
Chief Executive Officer
|
|
|
2017
|
|
|
|
300,666
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,938
|
(7)
|
|
|
311,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert N. Williamsen (5)
|
|
|
2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Former Chief Revenue Officer
|
|
|
2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
2017
|
|
|
|
96,875
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
96,875
|
|
|
(1)
|
The
amounts reported in the “Option Awards” and “Stock Awards” columns reflect the aggregate grant date
fair value of awards for the years ended December 31, 2019, 2018 and 2017 computed in accordance with FASB ASC Topic 718.
See Note 10 of the Notes to Financial Statements in our Annual Report on Form 10-K, filed in this report, for information
regarding assumptions underlying the valuation of equity awards.
|
|
|
|
|
(2)
|
No other compensation
more than $10,000, including perquisites, was paid to any of Intellicheck’s named executive officers.
|
|
|
|
|
(3)
|
Mr. White was also
named Chief Operating Officer on March 11, 2020
|
|
|
|
|
(4)
|
Dr.
Roof was named Chief Operating Officer on August 11, 2014 and was appointed Chief Executive Officer on October 1, 2014. Dr.
Roof’s annual salary was $250,000. Effective October 4, 2017 Dr. Roof retired from the Company at the request
of its Board of Directors. Pursuant Dr. Roof’s separation and consulting agreement with the Company, Dr. Roof received
aggregate cash payments of $500,000, subject to all applicable withholding, over a 20-month period beginning effective November
2, 2017.
|
|
|
|
|
(5)
|
Represents matching
contribution under the Company’s 401(K) Plan.
|
|
(6)
|
Mr.
Williamsen was named Chief Revenue Officer on December 12, 2014. Mr. Williamsen’s annual salary was $225,000. Mr. Williamsen
separated from the Company effective May 19, 2016. Pursuant to Mr. Williamsen’s employment agreement with the Company,
Mr. Williamsen received a payment of his monthly salary, subject to all applicable withholdings, for a period of 12 months
following his departure on May 19, 2016.
|
|
|
|
|
(7)
|
Represents compensation
related to an auto allowance made to Dr. Roof in the amount of $5,000 and matching contribution under the Company’s
401(K) Plan in the amount of $5,938.
|
|
|
|
|
(8)
|
Includes $60,125
in accrued paid time off (PTO) payout at separation.
|
Stock
Option and Equity Incentive Plan
The
principal purpose of the Stock Option and Equity Incentive Plan is to attract, motivate, reward and retain selected employees,
consultants and directors through the granting of stock-based compensation awards. The Plan provides for a variety of awards,
including non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Code), stock appreciation
rights, restricted stock awards, performance-based awards and other stock-based awards.
The
Company adopted the 2015 Omnibus Incentive Plan (the “Plan”), which covers up to 3,500,000 of the Company’s
common shares, pursuant to which officers, directors, key employees and consultants to the Company are eligible to receive incentive
stock options, nonqualified stock options and other types of equity incentives such as restricted stock grants. The Compensation
Committee of the Board of Directors administers the Plan and determines the terms and conditions of options granted, including
the exercise price. The Plan generally provides that all stock options will expire within ten years of the date of grant. Incentive
stock options granted under the Plan must be granted at an exercise price that is not less than the fair market value per share
at the date of the grant and the exercise price must not be less than 110% of the fair market value per share at the date of the
grant for grants to persons owning more than 10% of the voting stock of the Company. The Plan also entitles non-employee directors
to receive grants of non-qualified stock options as approved by the Board of Directors.
Administration.
The Plan is currently administered by the Compensation Committee as designated by the Board of Directors. The Compensation Committee
has the power to interpret the Plan and to adopt rules for the administration, interpretation and application per terms of the
Plan.
Grant
of Awards; Shares Available for Awards. Certain employees, consultants and directors are eligible to be granted awards
under the Plan. The Compensation Committee will determine who will receive awards under the Plan, as well as the form of the awards,
the number of shares underlying the awards, and the terms and conditions of the awards consistent with the terms of the Plan.
A
total of 789,463 shares of Intellicheck’s Common Stock are available for issuance or delivery under the existing Plan. The
number of shares of the Company’s Common Stock issued or reserved pursuant to the Plan will be adjusted at the discretion
of the Board of Directors or the Compensation Committee as a result of stock splits, stock dividends and similar changes in the
Company’s Common Stock.
Stock
Options. The Plan permit the Compensation Committee to grant participants incentive stock options, which qualify for special
tax treatment in the United States, as well as non-qualified stock options. The Compensation Committee will establish the duration
of each option at the time it is granted, with maximum ten-year duration for incentive stock options, and may also establish vesting
and performance requirements that must be met prior to the exercise of options. Stock option grants (other than incentive stock
option grants) also may have exercise prices that are less than, equal to or greater than the fair market value of the Company’s
Common Stock on the date of grant. Incentive stock options must have an exercise price that is at least equal to the fair market
value of the Company’s Common Stock on the date of grant. Stock option grants may include provisions that permit the option
holder to exercise all or part of the holder’s vested options, or to satisfy withholding tax liabilities, by tendering shares
of the Company’s Common Stock already owned by the option holder for at least six months (or another period consistent with
the applicable accounting rules) with a fair market value equal to the exercise price.
Other
Equity-Based Awards. In addition to stock options, the Compensation Committee may also grant certain employees, consultants
and directors shares of restricted stock, with terms and conditions as the Compensation Committee may, pursuant to the terms of
the 2015 Plan, establish. The 2015 Plan does not allow awards to be made under terms and conditions which would
cause such awards to be treated as deferred compensation subject to the rules of Section 409A of the Code.
Change-in-Control
Provisions. In connection with the grant of an award, the Compensation Committee may provide that, in the event of a change
in control, any outstanding awards that are unexercisable or otherwise unvested will become fully vested and immediately exercisable.
Amendment
and Termination. The Compensation Committee may adopt, amend and rescind rules relating to the administration of the Plan,
and amend, suspend or terminate the Plan, but no amendment will be made that adversely affects in a material manner any rights
of the holder of any award without the holder’s consent, other than amendments that are necessary to permit the granting
of awards in compliance with applicable laws. Intellicheck attempted to structure the Plan so that remuneration attributable to
stock options and other awards will not be subject to a deduction limitation contained in Section 162(m) of the Code.
The
following table summarizes options and restricted stock units granted during the years ended December 31, 2019 and 2018 to the
named executive officers:
GRANTS
OF PLAN-BASED AWARDS TABLE
|
Name
|
|
Grant
Date
|
|
|
Approval
Date
|
|
|
Number
of
Securities
Underlying
Grant
|
|
|
Exercise
or
Base Price
of Option
Awards
($/Sh)
|
|
|
Fair
Value at
Grant Date
($)(1)
|
|
|
Expiration
Date
|
|
|
Bryan Lewis
|
|
02/21/18
|
|
|
02/21/18
|
|
|
|
100,000
|
|
|
|
2.87
|
|
|
|
212,740
|
(1)
|
|
02/20/23
|
|
|
Bryan Lewis
|
|
03/06/19
|
|
|
03/06/19
|
|
|
|
369,163
|
|
|
|
2.68
|
|
|
|
671,360
|
(1)
|
|
03/06/24
|
|
|
Bill White
|
|
03/06/19
|
|
|
03/06/19
|
|
|
|
30,000
|
|
|
|
2.68
|
|
|
|
54,558
|
(1)
|
|
03/06/24
|
|
|
Russell T. Embry
|
|
03/06/19
|
|
|
03/06/19
|
|
|
|
10,000
|
|
|
|
2.68
|
|
|
|
18,186
|
(1)
|
|
03/06/24
|
|
|
William P. Georges
|
|
03/30/18
|
|
|
03/30/18
|
|
|
|
556
|
|
|
|
1.80
|
|
|
|
1,000
|
(2)
|
|
|
|
|
William P. Georges
|
|
06/29/18
|
|
|
06/29/18
|
|
|
|
435
|
|
|
|
2.30
|
|
|
|
1,000
|
(3)
|
|
|
|
|
William P. Georges
|
|
06/28/19
|
|
|
06/28/19
|
|
|
|
345
|
|
|
|
5.79
|
|
|
|
2,000
|
(6)
|
|
|
|
|
Guy L. Smith
|
|
03/30/18
|
|
|
03/30/18
|
|
|
|
8,333
|
|
|
|
1.80
|
|
|
|
5,000
|
(2)
|
|
|
|
|
Guy L. Smith
|
|
06/29/18
|
|
|
06/29/18
|
|
|
|
6,522
|
|
|
|
2.30
|
|
|
|
15,000
|
(3)
|
|
|
|
|
Guy L. Smith
|
|
09/28/18
|
|
|
09/28/18
|
|
|
|
5,976
|
|
|
|
2.51
|
|
|
|
15,000
|
(4)
|
|
|
|
|
Guy L. Smith
|
|
06/28/19
|
|
|
06/28/19
|
|
|
|
3,454
|
|
|
|
5.79
|
|
|
|
20,000
|
(6)
|
|
|
|
|
Guy L. Smith
|
|
09/30/19
|
|
|
09/30/19
|
|
|
|
4,008
|
|
|
|
4.99
|
|
|
|
20,000
|
(7)
|
|
|
|
|
Guy L. Smith
|
|
12/31/19
|
|
|
12/31/19
|
|
|
|
2,670
|
|
|
|
7.49
|
|
|
|
20,000
|
(8)
|
|
|
|
|
David E. Ullman
|
|
03/30/18
|
|
|
03/30/18
|
|
|
|
7,407
|
|
|
|
1.80
|
|
|
|
13,333
|
(2)
|
|
|
|
|
David E. Ullman
|
|
09/28/18
|
|
|
09/28/18
|
|
|
|
593
|
|
|
|
2.51
|
|
|
|
1,488
|
(4)
|
|
|
|
|
David E. Ullman
|
|
03/29/19
|
|
|
03/29/19
|
|
|
|
2,000
|
|
|
|
3.53
|
|
|
|
7,060
|
(5)
|
|
|
|
|
(1)
|
The
grant fair value of each equity award has been computed in accordance with ASC 718.
|
|
(2)
|
The
grant fair value of each equity award has been computed in accordance with ASC 718. Restricted shares vested and shares of
stock were issued March 30, 2018.
|
|
|
|
|
(3)
|
The grant fair value
of each equity award has been computed in accordance with ASC 718. Restricted shares vested and shares of stock were issued
June 29, 2018.
|
|
|
|
|
(4)
|
The grant fair value
of each equity award has been computed in accordance with ASC 718. Restricted shares vested and shares of stock were issued
September 28, 2018.
|
|
|
|
|
(5)
|
The grant fair value
of each equity award has been computed in accordance with ASC 718. Restricted shares vested and shares of stock were issued
March 29, 2019.
|
|
|
|
|
(6)
|
The grant fair value
of each equity award has been computed in accordance with ASC 718. Restricted shares vested and shares of stock were issued
June 28, 2019.
|
|
|
|
|
(7)
|
The grant fair value
of each equity award has been computed in accordance with ASC 718. Restricted shares vested and shares of stock were issued
September 30, 2019
|
|
|
|
|
(8)
|
The grant fair value
of each equity award has been computed in accordance with ASC 718. Restricted shares vested and shares of stock were issued
December 31, 2019
|
The
following table summarizes unexercised options as of year-end December 31, 2019 for the named executive officers:
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END TABLE
|
|
|
No. of Securities
Underlying Unexercised
Options/Warrants
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Bryan Lewis
|
|
|
25,000
|
|
|
|
75,000
|
(1)
|
|
|
2.87
|
|
|
|
02/20/23
|
|
|
Bryan Lewis
|
|
|
184,582
|
|
|
|
184,581
|
(2)
|
|
|
2.68
|
|
|
|
03/06/24
|
|
|
Russell T. Embry
|
|
|
18,970
|
|
|
|
—
|
|
|
|
1.42
|
|
|
|
05/20/20
|
|
|
Russell T. Embry
|
|
|
92,500
|
|
|
|
—
|
|
|
|
1.15
|
|
|
|
08/11/20
|
|
|
Russell T. Embry
|
|
|
22,279
|
|
|
|
—
|
|
|
|
1.01
|
|
|
|
02/24/21
|
|
|
Russell T. Embry
|
|
|
—
|
|
|
|
10,000
|
(3)
|
|
|
2.68
|
|
|
|
03/06/24
|
|
|
Bill White
|
|
|
18,970
|
|
|
|
—
|
|
|
|
1.42
|
|
|
|
05/20/20
|
|
|
Bill White
|
|
|
391,875
|
|
|
|
—
|
|
|
|
1.15
|
|
|
|
08/11/20
|
|
|
Bill White
|
|
|
45,440
|
|
|
|
—
|
|
|
|
1.01
|
|
|
|
02/24/21
|
|
|
Bill White
|
|
|
—
|
|
|
|
30,000
|
(3)
|
|
|
2.68
|
|
|
|
03/06/24
|
|
|
(1)
|
These
shares shall vest at a rate of 25% per year beginning on the first anniversary of the date of grant.
|
|
|
|
|
(2)
|
These shares shall
vest at a rate of 33.33% per year beginning on the second anniversary of the date of grant.
|
|
|
|
|
(3)
|
These shares shall
vest at a rate of 33.33% per year beginning on the first anniversary of the date of grant.
|
OPTION
EXERCISES AND STOCK VESTED TABLE
|
|
|
|
Stock Options
|
|
|
Stock Awards
|
|
Name
|
|
|
No. of Shares
Acquired
Upon Exercise
(#)
|
|
|
Value
Received
Upon Exercise
($) (1)
|
|
|
No. of Shares
Acquired
Upon Vesting
(#)
|
|
Value
Received
Upon Vesting
($) (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
Represents
the difference between the market price of the underlying shares of the Company’s common stock on the date of exercise
and the exercise price of the options.
|
|
|
|
|
(2)
|
Represents
the aggregate market value of shares on the vesting date.
|
No
other officers named in the Summary Compensation Table exercised stock options or received shares from vested or unrestricted
awards during fiscal year 2019.
Equity
Compensation Plan Information
|
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 Plan (excluding securities reflected in column (a))
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation Plan approved by security holders (1)
|
|
|
1,424,293
|
|
|
$
|
1.79
|
|
|
|
789,463
|
|
|
Equity compensation plans not approved by security holders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Total
|
|
|
1,424,293
|
|
|
$
|
1.79
|
|
|
|
789,463
|
|
|
(1)
|
Represents
1,397,197 options and 2,670 restricted stock units under the 2015 Omnibus Incentive Plan and 24,426 options under the 2006
Equity Incentive Plan.
|
Pension
Benefits
The
Company does not sponsor any qualified or non-qualified defined benefit plans.
Non-qualified
Deferred Compensation
Intellicheck
does not maintain any non-qualified defined contribution or deferred compensation plans. The Compensation Committee, which is
comprised solely of “outside directors” as defined for purposes of Section 162(m) of the Code, may elect to provide
Intellicheck’s officers and other employees with non-qualified defined contribution or deferred compensation benefits if
the Compensation Committee determines that doing so is in the company’s best interests. Intellicheck sponsors a tax qualified
defined contribution 401(k) plan in which Mr. Embry and Mr. White participated in during 2019. Intellicheck made a matching contribution
to the plan equal to 50% of the first 6% an employee contributes into the plan.
Compensation
of Directors
The
following table sets forth certain information concerning compensation of Intellicheck’s directors who served in 2019.
|
Name and Principal Position
|
|
Fees Paid
in Cash
($)
|
|
|
Option
Awards
($) (1)
|
|
|
Stock
Awards
($) (1)
|
|
|
All Other
Compensation
($) (2)
|
|
|
Total
($)
|
|
|
Guy L. Smith, Director
|
|
|
20,000
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
—
|
|
|
|
80,000
|
|
|
Emil Bedard, Director
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
|
Jack A. Davis, Director
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
|
William P. Georges, Director
|
|
|
58,000
|
|
|
|
—
|
|
|
|
2,000
|
|
|
|
—
|
|
|
|
60,000
|
|
|
Amelia L. Ruzzo, Director
|
|
|
58,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
58,500
|
|
|
David E. Ullman, Director
|
|
|
52,940
|
|
|
|
—
|
|
|
|
7,060
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
(1)
|
The
amounts reported in the “Option Awards” and “Stock Awards” columns reflect the aggregate grant date
fair value of awards computed in accordance with FASB ASC Topic 718. See Note 10 of the Notes to Financial Statements in our
Annual Report on Form 10-K, filed in this report, for information regarding assumptions underlying the valuation of equity
awards.
|
|
|
(2)
|
No other compensation,
including perquisites more than $10,000 was paid to any of the directors
|
The
Company reimburses directors for reasonable out-of-pocket expenses incurred in connection with attendance at board meetings.
CERTAIN
RELATED PARTY TRANSACTIONS
The
Corporate Governance and Nominating Committee reviews transactions with firms associated with directors and nominees for director.
Intellicheck’s management also monitors such transactions on an ongoing basis. Executive officers and directors are governed
by Intellicheck’s Code of Business Conduct and Ethics, which provides that waivers may only be granted by the Board of Directors
and must be promptly disclosed to stockholders. No such waivers were granted nor applied for in 2019. Intellicheck’s Corporate
Governance Guidelines require that all directors recuse themselves from any discussion or decision affecting their personal, business
or professional interests.
Proposal
No. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The
Audit Committee of our board of directors has appointed EisnerAmper LLP to serve as the Company’s independent registered
public accounting firm for the fiscal year ending December 31, 2020.
The
Board of Directors recommends that you vote to ratify such appointment.
Representatives
of EisnerAmper LLP are expected to be present at the annual meeting of stockholders with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
For
the fiscal years ended December 31, 2019 and 2018, Intellicheck’s principal independent auditor was EisnerAmper LLP, the
services of which were provided in the following categories and amount:
Audit
Fees
The
aggregate fees billed by EisnerAmper LLP for professional services rendered for the audit of Intellicheck’s annual financial
statements for the fiscal year ended December 31, 2019, and for the reviews of the financial statements included in the Company’s
Quarterly Reports on Form 10-Q for such fiscal year were $173,500.
The
aggregate fees billed by EisnerAmper LLP for professional services rendered for the audit of Intellicheck’s annual financial
statements for the fiscal year ended December 31, 2018, and for the reviews of the financial statements included in the Company’s
Quarterly Reports on Form 10-Q for such fiscal year were $166,000.
Audit-Related
Fees
For
the fiscal year ended December 31, 2019, EisnerAmper LLP billed $9,455 for assurance and related services in connection with the
audit or review of the company’s financial statements. There were no other audit-related fees billed by EisnerAmper LLP
in 2018.
Tax
Fees
EisnerAmper
LLP billed Intellicheck $21,000 and $20,600 for tax related services for each of the fiscal years ended December 31, 2019 and
2018, respectively.
All
Other Fees
For
the fiscal year ended December 31, 2019, EisnerAmper LLP billed $2,750 related to the Company’s filing of its Form S-8 in
May 2019. There were no other fees billed by EisnerAmper LLP in 2018.
Pre-approval
of Services
The
Audit Committee pre-approves all services, including both audit and non-audit services, provided by Intellicheck’s independent
registered public accounting firm. For audit services, each year the independent auditor provides the Audit Committee with an
engagement letter outlining the scope of proposed audit services to be performed during the year, which must be formally accepted
by the Committee before the audit commences. The independent auditor also submits an audit services fee proposal, which also must
be approved by the Committee before the audit commences.
Proposal
No. 3
APPROVAL
OF AMENDMENT TO OUR 2015 OMNIBUS INCENTIVE PLAN
On
March 11, 2020, the Compensation Committee and the Board of Directors adopted, subject to stockholder approval, an amendment to
the Intellicheck, Inc. 2015 Omnibus Incentive Plan (the “2015 Incentive Plan”). The proposed amendment would increase
the total number of shares of Common Stock available for issuance under the 2015 Incentive Plan by 500,000 shares from 3,500,000
to 4,000,000 (the “2015 Incentive Plan Amendment”).
The
2015 Incentive Plan initially authorized the issuance of 2,000,000 shares of Common Stock. Such amount was amended to 3,000,000
in 2016 and was further amended to 3,500,000 in 2019. As of March 16, 2020, there were 774,470 shares remaining available for
issuance under the 2015 Incentive Plan. The Compensation Committee and the Board of Directors believes that the increase in the
aggregate number of shares available for future grants under the 2015 Incentive Plan is appropriate to permit the grant of equity
awards at expected levels for the next two years. If the 2015 Incentive Plan Amendment is not approved by the stockholders, it
will be of no effect and the number of shares available for issuance under the 2015 Incentive Plan will remain unchanged, although
we may have insufficient shares available for future awards which may result in the use of cash-settled or cash-based long-term
incentives rather than equity.
|
|
|
Total Shares Remaining Available for Issuance under the 2015 Incentive Plan as of
March 16, 2020
|
|
|
Prior to Amendment
|
|
|
774,470
|
|
|
Upon Amendment
|
|
|
1,274,470
|
|
The
Compensation Committee believes that equity-based compensation programs are an important element of our company’s continued
financial and operational success. We believe this amendment reflects best practices in our industry and allows the establishment
of a stronger pay-for-performance culture.
You
are being asked to approve the 2015 Incentive Plan Amendment. You should read and understand the terms of the 2015 Incentive Plan
Amendment and 2015 Incentive Plan before you vote. Other than with respect to the increase in the number of shares available under
the 2015 Incentive Plan, the amendment will not affect the terms of the plan, which will remain unchanged from those initially
approved by our stockholders at our 2015 Annual Meeting of Stockholders. A summary of the 2015 Incentive Plan, as it is proposed
to be amended, appears below and the full text of the 2015 Incentive Plan Amendment is attached to this Proxy Statement as Appendix
A. The affirmative vote of the holders of a majority of the outstanding shares of Common Stock present in person or by proxy at
the Meeting will be required to approve the 2015 Incentive Plan Amendment.
Plan
Summary
A
summary of the material features of the 2015 Incentive Plan, which would also apply to the shares that are subject to the 2015
Incentive Plan Amendment, appears below. This Summary does not purport to be exhaustive and is expressly qualified in its entirety
by reference to the full text of the 2015 Incentive Plan, which was filed as Annex A to the definitive proxy statement filed with
the SEC on April 9, 2015.
Eligibility
Awards
may be granted under the 2015 Incentive Plan to officers, employees, consultants and advisors of the Company and its affiliates
and to non-employee directors of the Company. Incentive stock options may be granted only to employees of the Company or its subsidiaries.
As of March 16, 2020, approximately 40 individuals were eligible to receive awards under the 2015 Incentive Plan, including three
executive officers and seven non-employee directors.
Administration
The
2015 Incentive Plan may be administered by the Board of Directors or the Compensation Committee. The Compensation Committee, in
its discretion, selects the individuals to whom awards may be granted, the time or times at which such awards are granted, and
the terms of such awards.
Number
of Authorized Shares
We
are asking our stockholders to approve an amendment to the 2015 Incentive Plan that would increase the number of shares of common
stock authorized for issuance under the 2015 Incentive Plan to a total of 4,000,000 shares, of which 1,313,340 are no longer available
as a result of exercise, expiration or forfeiture, the net representing approximately 16.6% of the common shares and options outstanding
together with options available for future grant. The Board of Directors believes this increased amount is necessary to allow
it to better align employees to the future success of the Company, and to give the Company flexibility going forward to do so.
In addition, as of the date of shareholder approval of the 2015 Incentive Plan, any awards then outstanding under the Predecessor
Plan remain subject to and will be paid under the Predecessor Plan.
If
any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares or if shares are issued under
the 2015 Incentive Plan and thereafter are forfeited to the Company, the shares subject to such awards and the forfeited shares
will not count against the aggregate number of shares of common stock available for grant under the 2015 Incentive Plan. In addition,
the following items will not count against the aggregate number of shares of common stock available for grant under the 2015 Incentive
Plan: (a) the payment in cash of dividends or dividend equivalents under any outstanding award, (b) any award that is settled
in cash rather than by issuance of shares of common stock, (c) shares surrendered or tendered in payment of the option price or
purchase price of an award or any taxes required to be withheld in respect of an award, or (d) awards granted in assumption of
or in substitution for awards previously granted by an acquired company.
Awards
to Non-employee Directors
No
more than $100,000 may be granted in equity-based awards during any one year to a non-employee member of the Board of Directors,
based on the grant date fair value for accounting purposes in the case of stock options or stock appreciation rights and based
on the fair market value of the common stock underlying the award on the grant date for other equity-based awards. This limit
does not apply to shares received by a non-employee director at his or her election in lieu of all or a portion of the director’s
retainer for board service (as described below).
Adjustments
If
certain changes in the common stock occur by reason of any recapitalization, reclassification, stock split, reverse split, combination
of shares, exchange of shares, stock dividend or other distribution payable in stock, or other increase or decrease in the common
stock without receipt of consideration by the Company, or if there occurs any spin-off, split-up, extraordinary cash dividend
or other distribution of assets by the Company, the number and kind of securities for which stock options and other stock-based
awards may be made under the 2015 Incentive Plan, including the individual award limits for “performance-based” compensation
under Code Section 162(m), shall be equitably adjusted by the Company. In addition, if there occurs any spin-off, split-up, extraordinary
cash dividend or other distribution of assets by the Company, the number and kind of securities subject to any outstanding awards
and the exercise price of any outstanding stock options or SARs shall be equitably adjusted by the Company.
Types
of Awards
The
2015 Incentive Plan permits the granting of any or all of the following types of awards:
●
Stock Options. Stock options entitle the holder to purchase a specified number of shares of common stock at a specified
price (the exercise price), subject to the terms and conditions of the stock option grant. The Compensation Committee may grant
either incentive stock options, which must comply with Code Section 422, or nonqualified stock options. The Compensation Committee
sets exercise prices and terms, except that stock options must be granted with an exercise price not less than 100% of the fair
market value of the common stock on the date of grant (excluding stock options granted in connection with assuming or substituting
stock options in acquisition transactions). The fair market value of a shares of our common stock on March 16, 2020 was
$4.68 per share. Unless the Compensation Committee determines otherwise, fair market value means, as of a given date, the
closing price of the common stock. At the time of grant, the Compensation Committee determines the terms and conditions of stock
options, including the quantity, exercise price, vesting periods, term (which cannot exceed ten years) and other conditions on
exercise.
●
Stock Appreciation Rights. The Compensation Committee may grant SARs, as a right in tandem with the number of shares underlying
stock options granted under the 2015 Incentive Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive
payment per share in stock or cash, or in a combination of stock and cash, equal to the excess of the share’s fair market
value on the date of exercise over the grant price of the SAR. The grant price of a tandem SAR is equal to the exercise price
of the related stock option and the grant price for a freestanding SAR is determined by the Compensation Committee in accordance
with the procedures described above for stock options. Exercise of a SAR issued in tandem with a stock option will reduce the
number of shares underlying the related stock option to the extent of the SAR exercised. The term of a freestanding SAR cannot
exceed ten years, and the term of a tandem SAR cannot exceed the term of the related stock option.
●
Restricted Stock, Restricted Stock Units and Other Stock-Based Awards. The Compensation Committee may grant awards of restricted
stock, which are shares of common stock subject to specified restrictions, and restricted stock units, which represent the right
to receive shares of the common stock in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions
at the Compensation Committee’s discretion. The restrictions may be based on continuous service with the Company or the
attainment of specified performance goals, as determined by the Compensation Committee. Stock units may be paid in stock or cash
or a combination of stock and cash, as determined by the Compensation Committee. The Compensation Committee may also grant other
types of equity or equity-based awards subject to the terms of the 2015 Incentive Plan and any other terms and conditions determined
by the Compensation Committee.
●
Performance Awards. The Compensation Committee may grant performance awards, which entitle participants to receive a payment
from the Company, the amount of which is based on the attainment of performance goals established by the Compensation Committee
over a specified award period. Performance awards may be denominated in shares of common stock or in cash, and may be paid in
stock or cash or a combination of stock and cash, as determined by the Compensation Committee. Cash-based performance awards include
annual incentive awards.
No
Repricing
Without
shareholder approval, the Compensation Committee is not authorized to (a) lower the exercise or grant price of a stock option
or SAR after it is granted, except in connection with certain adjustments to our corporate or capital structure permitted by the
2015 Incentive Plan, such as stock splits, (b) take any other action that is treated as a repricing under generally accepted accounting
principles or (c) cancel a stock option or SAR at a time when its exercise or grant price exceeds the fair market value of the
underlying stock, in exchange for cash, another stock option or SAR, restricted stock, restricted stock units or other equity
award, unless the cancellation and exchange occur in connection with a change in capitalization or other similar change.
Clawback
All
cash and equity awards granted under the 2015 Incentive Plan will be subject to the requirements of Section 954 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act regarding the recovery of erroneously awarded compensation, any implementing rules
and regulations under such act, any policies adopted by the Company to implement such requirements, and any other compensation
recovery policies as may be adopted from time to time by the Company.
Performance-Based
Compensation under Section 162(m)
Performance
Goals and Criteria. Under Code Section 162(m), we generally are prohibited from deducting compensation paid to our principal
executive officer and our three other most highly compensated executive officers (other than our principal financial officer)
in excess of $1 million per person in any year. However, compensation that qualifies as “performance-based” is not
subject to the $1 million limit.
If
the Compensation Committee intends to qualify an award under the 2015 Incentive Plan as “performance-based” compensation
under Code Section 162(m), the performance goals selected by the Compensation Committee may be based on the attainment of specified
levels of one, or any combination, of the following performance criteria for the Company and/or specified subsidiaries or business
units, as reported or calculated by the Company (except with respect to the total shareholder return and earnings per share criteria):
(i) cash flow; (ii) earnings per share, as adjusted for any stock split, stock dividend or other recapitalization; (iii) earnings
measures (including EBIT and EBITDA); (iv) return on equity; (v) total shareholder return; (vi) share price performance, as adjusted
for any stock split, stock dividend or other recapitalization; (vii) return on capital; (viii) revenue; (ix) income; (x) profit
margin; (xi) return on operating revenue; (xii) brand recognition/acceptance; (xiii) customer metrics (including customer satisfaction,
customer retention, customer profitability, or customer contract terms); (xiv) productivity; (xv) expense targets; (xvi) market
share; (xvii) cost control measures; (xviii) balance sheet metrics; (xix) strategic initiatives; (xx) implementation, completion
or attainment of measurable objectives with respect to recruitment or retention of personnel or employee satisfaction; (xxi) return
on assets; (xxii) growth in net sales; (xxiii) the ratio of net sales to net working capital; (xxiv) shareholder value added;
(xxv) improvement in management of working capital items (inventory, accounts receivable or accounts payable); (xxvi) sales from
newly-introduced products; (xxvii) successful completion of, or achievement of milestones or objectives related to, financing
or capital raising transactions, strategic acquisitions or divestitures, joint ventures, partnerships, collaborations, or other
transactions; (xxviii) product quality, safety, productivity, yield or reliability (on time and complete orders); (xxix) funds
from operations; (xxx) regulatory body approval for commercialization of a product; (xxxi) debt levels or reduction or debt ratios;
(xxxii) economic value; (xxxiii) operating efficiency; (xxxiv) research and development achievements; or (xxxv) any combination
of the forgoing business criteria. The Compensation Committee can also select any derivations of these business criteria (e.g.,
income shall include pre-tax income, net income, operating income, etc.).
Performance
goals may, in the discretion of the Compensation Committee, be established on a Company-wide basis, or with respect to one or
more business units, divisions, subsidiaries or business segments, as applicable. Performance goals may be absolute or relative
to the performance of one or more comparable companies or indices.
The
Compensation Committee may determine at the time that the performance goals are established the extent to which measurement of
performance goals may exclude the impact of charges for restructuring, discontinued operations, extraordinary items, debt redemption
or retirement, asset write downs, litigation or claim judgments or settlements, acquisitions or divestitures, foreign exchange
gains and losses, and other unusual non-recurring items, and the cumulative effects of tax or accounting changes (each as defined
by generally accepted accounting principles and as identified in the Company’s financial statements or other SEC filings).
In
addition, compensation realized from the exercise of options and SARs granted under the 2015 Incentive Plan is intended to meet
the requirements of the performance-based compensation exception under Code Section 162(m). These awards must have an exercise
price equal at least to fair market value at the date of grant, are granted to covered individuals by a Compensation Committee
consisting of at least two outside directors, and the 2015 Incentive Plan limits the number of shares that may be the subject
of awards granted to any individual during any calendar year.
Limitations.
Subject to certain adjustments for changes in our corporate or capital structure described above, participants who are granted
awards intended to qualify as “performance-based” compensation under Code Section 162(m) may not be granted stock
options or stock appreciation rights for more than 500,000 shares in any calendar year or more than 500,000 shares for all share-based
awards that are performance awards in any calendar year. The maximum dollar value granted to any participant pursuant to that
portion of a cash award granted under the 2015 Incentive Plan for any calendar year to any employee that is intended to satisfy
the requirements for “performance-based compensation” under Code Section 162(m) may not exceed $1,000,000 for an annual
incentive award and $1,000,000 for all other cash-based awards.
Transferability
Awards
are not transferable other than by will or the laws of descent and distribution, except that in certain instances transfers may
be made to or for the benefit of designated family members of the participant for no value.
Change
in Control
Effect
of Change in Control. Under the 2015 Incentive Plan, in the event of a change in control, outstanding awards will be treated
in accordance with the applicable transaction agreement. If no treatment is provided for in the transaction agreement, each award
holder will be entitled to receive the same consideration that stockholders receive in the change in control for each share of
stock subject to the award holder’s awards, upon the exercise, payment or transfer of the awards, but the awards will remain
subject to the same terms, conditions, and performance criteria applicable to the awards before the change in control, unless
otherwise determined by the Compensation Committee. In connection with a change in control, outstanding stock options and SARs
can be cancelled in exchange for the excess of the per share consideration paid to stockholders in the transaction, minus the
option or SARs exercise price.
Subject
to the terms of the applicable award agreements, awards granted to non-employee directors will fully vest on an accelerated basis,
and any performance goals will be deemed to be satisfied at target. For awards granted to all other service providers, vesting
of awards will depend on whether the awards are assumed, converted or replaced by the resulting entity.
●
For awards that are not assumed, converted or replaced, the awards will vest upon the change in control. For performance
awards, the amount vesting will be based on the greater of (1) achievement of all performance goals at the
“target” level or (2) the actual level of achievement of performance goals as of the Company’s fiscal
quarter end preceding the change in control, and will be prorated based on the portion of the performance period that had
been completed through the date of the change in control.
●
For awards that are assumed, converted or replaced by the resulting entity, no automatic vesting will occur upon the change
in control. Instead, the awards, as adjusted in connection with the transaction, will continue to vest in accordance with
their terms. In addition, the awards will vest if the award recipient has a separation from service within two years after
the change in control by the Company other than for “cause” or by the award recipient for “good
reason” (as defined in the applicable award agreement). For performance awards, the amount vesting will be based on the
greater of (1) achievement of all performance goals at the “target” level or (2) the actual level of achievement
of performance goals as of the Company’s fiscal quarter end preceding the change in control, and will be prorated based
on the portion of the performance period that had been completed through the date of the separation from service.
Definition
of Change in Control. A change in control of the Company generally means any single transaction or event, other than an Acquisition,
pursuant to which (i) a majority of the members of the Board resign or are replaced, or (ii) one person or a number of persons
acting together as a group own more than 50 percent of the combined voting power of Company. The term “Acquisition”
means (1) a dissolution, liquidation or sale of all or substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the surviving corporation; or (3) a merger in which the Company is the surviving corporation but the
shares of the Company’s common stock outstanding immediately preceding the merger are converted by virtue of the merger
into other property, whether in the form of securities, cash or otherwise.
Term,
Termination and Amendment of the 2015 Incentive Plan
Unless
earlier terminated by the Board of Directors, the 2015 Incentive Plan will terminate, and no further awards may be granted, ten
years after the date on which it was approved by stockholders. The Board may amend, suspend or terminate the 2015 Incentive Plan
at any time, except that, if required by applicable law, regulation or stock exchange rule, shareholder approval will be required
for any amendment. The amendment, suspension or termination of the 2015 Incentive Plan or the amendment of an outstanding award
generally may not, without a participant’s consent, materially impair the participant’s rights under an outstanding
award.
Plan
Benefits
Future
benefits under the 2015 Incentive Plan are not currently determinable. However, current benefits granted to executive officers,
all other employees and non-employee directors would not have been increased if they had been made following approval of the amendment
to the 2015 Incentive Plan by our stockholders.
Federal
Income Tax Information
The
following is a brief summary of the U.S. federal income tax consequences of the 2015 Incentive Plan generally applicable to the
Company and to participants in the 2015 Incentive Plan who are subject to U.S. federal taxes. The summary is based on the Code,
applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this
Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general
in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S.
gift or estate tax consequences or the consequences of any state, local or foreign tax laws.
Nonqualified
Stock Options. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock
option with an exercise price at least equal to the fair market value of our common stock on the date of grant and no additional
deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable
as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option
on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will
have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant
received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater
of the fair market value of the shares on the exercise date or the exercise price of the stock option.
Incentive
Stock Options. A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a
participant exercises an incentive stock option during employment or within three months after employment ends (12 months in the
case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular
U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes
at that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares
acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the
option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain
or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock
option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these
holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the
participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market
value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount
realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s
gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.
With
respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of common
stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are
subject to a substantial risk of forfeiture by the participant.
Stock
Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant
price at least equal to the fair market value of our common stock on the date of grant and no additional deferral feature. Upon
the exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the
difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR.
Restricted
Stock Awards, Restricted Stock Units, and Performance Awards. A participant generally will not have taxable income upon the
grant of restricted stock, restricted stock units or performance awards. Instead, the participant will recognize ordinary income
at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received
minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the time of grant.
Other
Stock or Cash-Based Awards. The U.S. federal income tax consequences of other stock or cash-based awards will depend upon
the specific terms of each award.
Tax
Consequences to the Company. In the foregoing cases, we generally will be entitled to a deduction at the same time, and in
the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Code.
Code
Section 409A. We intend that awards granted under the 2015 Incentive Plan comply with, or otherwise be exempt from, Code Section
409A, but make no representation or warranty to that effect.
Tax
Withholding. We are authorized to deduct or withhold from any award granted or payment due under the 2015 Incentive Plan,
or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take
such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. We are not required
to issue any shares of common stock or otherwise settle an award under the 2015 Incentive Plan until all tax withholding obligations
are satisfied.
Vote
Required
Approval
of the 2015 Incentive Plan Amendment requires a number of “FOR” votes that is a majority of the votes cast by the
holders of our shares of common stock entitled to vote on the proposal, with abstentions counting as votes against the proposal.
The
Board of Directors recommends a vote FOR the approval of the Amendment to the Intellicheck, Inc. 2015 Omnibus Incentive Plan.
Proposal
No. 4
SAY
ON PAY
ADVISORY
VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT UNDER “EXECUTIVE COMPENSATION”
The
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) provides stockholders with
the opportunity to vote, on an advisory basis, to approve the compensation of Intellicheck’s compensation policies. The
Board of Directors believes that Intellicheck’s compensation policies and procedures are aligned with the long-term interests
of stockholders. As described in detail under the Executive Compensation discussion section of this Proxy Statement, we believe
that our compensation program is designed to support our long-term business strategies and creation of stockholder value by emphasizing
long-term alignment with our stockholders and pay-for-performance. You are encouraged to read the Executive Compensation and analysis
discussion section of this Proxy Statement for additional details on our executive compensation, including our philosophy and
objectives and the 2019 compensation of our named executive officers. This non-binding advisory “say-on-pay” vote
gives you as a stockholder the opportunity to endorse our executive compensation program through the following resolution:
“RESOLVED,
that the compensation paid to the Company’s named executive officers as disclosed pursuant to Item 402 of Regulation S-K,
including the Executive Compensation discussion, compensation tables and narrative discussion is hereby APPROVED.”
As
an advisory vote, this proposal is non-binding. However, the Board of Directors and the Compensation Committee value the opinions
of stockholders and will consider the outcome of the vote when making future compensation decisions for the named executive officers.
Our
Board of Directors recommends a vote “FOR” the advisory approval of the compensation of our named executive officers
as disclosed in this proxy statement under the heading “Executive Compensation.”
Vote
Required
Non-binding,
advisory approval of the advisory proposal on the compensation of our named executive officers as disclosed in this Proxy Statement
under “Executive Compensation” requires the affirmative vote of a majority of the shares of Intellicheck common stock
present in person or represented by proxy at the annual meeting. Abstentions will have the same effect as votes “AGAINST”
this proposal, whereas “broker non-votes” will not be counted for purposes of determining whether this advisory proposal
has been approved.
Proposal
No. 5
SAY
ON FREQUENCY
ADVISORY
VOTE ON THE FREQUENCY (EVERY ONE, TWO, OR THREE YEARS) OF FUTURE ADVISORY VOTES TO APPROVE OF EXECUTIVE COMPENSATION.
The
Dodd-Frank Act also provides stockholders with the opportunity to vote, on an advisory basis, as to the frequency of stockholder
advisory “say-on-pay” votes such as that detailed in Proposal 3 above. You may abstain from voting, or you may select
a recommendation as to the frequency of such votes: every one year, two years, or three years. This non-binding advisory vote
gives you as a stockholder the opportunity to select a frequency of “say-on-pay” votes.
As
an advisory vote, this proposal is non-binding. However, the Board of Directors and the Compensation Committee value the opinions
of stockholders and will consider the outcome of the vote when determining the frequency of “say-on-pay” votes. Nevertheless,
the Board of Directors may decide to hold a non-binding advisory vote on future compensation of future named executive officers
more or less frequently than the option voted by the shareholders.
The
Board of Directors has considered this matter and has determined that a non-binding advisory vote on executive compensation every
year is appropriate to provide stockholders the opportunity to inform Intellicheck of their opinion of our approach to compensation
policies and practices, after having sufficient time to observe its impact on our business.
Our
Board of Directors recommends a vote of “ONE YEAR” with respect to the advisory vote on the frequency of future advisory
votes to approve of executive compensation.
Vote
Required
Pursuant
to this non-binding advisory vote on the frequency of future non-binding advisory votes on named executive officer compensation,
shareholders will be able to specify one of four choices for this proposal on the proxy card or voting instruction: ONE YEAR,
TWO YEARS, THREE YEARS, or ABSTAIN. The option receiving the vote of a plurality of the shares of Intellicheck common stock present
in person or represented by proxy at the annual meeting will be approved on a non-binding, advisory basis. Abstentions and “broker
non-votes” will not be counted for purposes of determining the result of this non-binding advisory vote.
OTHER
MATTERS
The
Board of Directors does not know of any matters other than those mentioned above to be presented at the meeting. However, if other
matters properly come before the meeting, the individual named in the accompanying proxy shall vote on such matters in accordance
with his best judgment.
ANNUAL
REPORT
Our
annual report to stockholders concerning our operations during the fiscal year ended December 31, 2019, including audited financial
statements, has been distributed to all record holders as of the record date. The annual report is not incorporated in the proxy
statement and is not to be considered a part of the soliciting material.
UPON
WRITTEN REQUEST, WE WILL PROVIDE, WITHOUT CHARGE, A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 2019, TO EACH STOCKHOLDER OF RECORD OR TO EACH STOCKHOLDER WHO OWNED OUR COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER,
AS NOMINEE, AT THE CLOSE OF BUSINESS ON MARCH 16, 2020. ANY REQUEST BY A STOCKHOLDER FOR OUR ANNUAL REPORT ON FORM 10-K SHOULD
BE SENT TO INVESTOR RELATIONS AT INTELLICHECK, INC., 535 BROADHOLLOW ROAD, SUITE B51, MELVILLE, NY 11747.
REQUIREMENTS
FOR STOCKHOLDER PROPOSALS TO BE BROUGHT BEFORE THE 2021 ANNUAL MEETING OF STOCKHOLDERS
Stockholders’
proposals intended to be presented at next year’s Annual Meeting of Stockholders must be submitted in writing to INVESTOR
RELATIONS at INTELLICHECK, INC., 535 BROADHOLLOW ROAD, SUITE B51, MELVILLE, NY 11747, no later than January 8, 2021 for inclusion
in the Company’s proxy statement and form of proxy for that meeting. In addition, all proposals will need to comply with
Rule 14a-8 of the Exchange Act, which lists the requirements for the inclusion of stockholder proposals in Company-sponsored proxy
materials.
Notice
of any director nomination or other proposal stockholders intend to present at the 2021 Annual Meeting of Stockholders, but do
not intend to have included in the proxy statement and form of proxy relating to the 2021 Annual Meeting of Stockholders, must
be delivered to the Company’s INVESTOR RELATIONS at INTELLICHECK, INC., 535 BROADHOLLOW ROAD, SUITE B51, MELVILLE, NY 11747,
not later than the close of business on March 1, 2021.
The
proxy solicited by the Company for the 2021 Annual Meeting of Stockholders will confer discretionary authority on the Company’s
proxies to vote on any proposal presented by a stockholder at that meeting for which the Company has not been provided with notice
on or prior to March 1, 2021.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and special reports, proxy statements and other information with the SEC. Stockholders may read and copy
any reports, statements or other information that we file at the SEC’s public reference room in Washington, D.C. Please
call the SEC at 1-800-SEC-0330 for further information about the public reference room. Our public filings are also available
from commercial document retrieval services and at the SEC’s website located at http://www.sec.gov.
STOCKHOLDERS
SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE THEIR SHARES AT THE
ANNUAL MEETING. NO ONE HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT.
THIS PROXY STATEMENT IS DATED APRIL 13, 2020. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT
IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE.
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By
Order of the Board of Directors,
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/s/
Bill White
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Bill
White
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Chief
Financial Officer, Treasurer and Secretary
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ANNEX
A
INTELLICHECK,
INC.
2015
OMNIBUS INCENTIVE PLAN
AS
AMENDED
Intellicheck,
Inc., a Delaware corporation, sets forth herein the terms of its 2015 Omnibus Incentive Plan, as follows:
The
Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability to attract and retain highly
qualified officers, Non-Employee Directors (as defined herein), key employees, consultants and advisors, and to motivate such
officers, Non-Employee Directors, key employees, consultants and advisors to serve the Company and its Affiliates and to expend
maximum effort to improve the business results and earnings of the Company, by providing to such persons an opportunity to acquire
or increase a direct proprietary interest in the operations and future success of the Company. To this end, the Plan provides
for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other
stock-based awards and cash awards. Any of these awards may, but need not, be made as performance incentives to reward attainment
of performance goals in accordance with the terms hereof. Stock options granted under the Plan may be non-qualified stock options
or incentive stock options, as provided herein. Upon becoming effective, the Plan replaces, and no further awards shall be made
under, the Predecessor Plan (as defined herein).
For
purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply:
2.1.
“Affiliate” means any company or other trade or business that “controls,” is “controlled by”
or is “under common control” with the Company within the meaning of Rule 405 of Regulation C under the Securities
Act, including, without limitation, any Subsidiary.
2.2.
“Annual Incentive Award” means a cash-based Performance Award with a performance period that is the Company’s
fiscal year or other 12-month (or shorter) performance period as specified under the terms of the Award as approved by the Committee.
2.3.
“Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Stock-based
Award or cash award under the Plan.
2.4.
“Award Agreement” means a written agreement between the Company and a Grantee, or notice from the Company or an
Affiliate to a Grantee that evidences and sets out the terms and conditions of an Award.
2.5.
“Board” means the Board of Directors of the Company.
2.6.
“Change in Control” shall have the meaning set forth in Section 15.3.2.
2.7.
“Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. References to the Code
shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued
or rendered thereunder.
2.8.
“Committee” means the Compensation Committee of the Board or any committee or other person or persons designated
by the Board to administer the Plan. The Board will cause the Committee to satisfy the applicable requirements of any stock exchange
on which the Common Stock may then be listed. For purposes of Awards to Covered Employees intended to constitute “performance-based
compensation” under Section 162(m), to the extent required by Section 162(m), Committee means all of the members of the
Committee who are “outside directors” within the meaning of Section 162(m). For purposes of Awards to Grantees who
are subject to Section 16 of the Exchange Act, Committee means all of the members of the Committee who are “non-employee
directors” within the meaning of Rule 16b-3 adopted under the Exchange Act. All references in the Plan to the Board shall
mean such Committee or the Board.
2.9.
“Company” means Intellicheck, Inc., a Delaware corporation, or any successor corporation.
2.10.
“Common Stock” or “Stock” means a share of common stock of the Company, par value $0.001 per
share.
2.11.
“Corporate Transaction” means a reorganization, merger, statutory share exchange, consolidation, sale of all or
substantially all of the Company’s assets, or the acquisition of assets or stock of another entity by the Company, or other
corporate transaction involving the Company or any of its Subsidiaries.
2.12.
“Covered Employee” means a Grantee who is a “covered employee” within the meaning of Section 162(m)
as qualified by Section 12.4 herein.
2.13.
“Effective Date” means 6 May, 2015, the date the Plan was approved by the Company’s stockholders.
2.14.
“Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
2.15.
“Fair Market Value” of a share of Common Stock as of a particular date shall mean (i) if the Common Stock is listed
on a national securities exchange, the closing or last price of the Common Stock on the composite tape or other comparable reporting
system for the applicable date, or if the applicable date is not a trading day, the trading day immediately preceding the applicable
date, or (ii) if the shares of Common Stock are not then listed on a national securities exchange, the closing or last price of
the Common Stock quoted by an established quotation service for over-the-counter securities, or (iii) if the shares of Common
Stock are not then listed on a national securities exchange or quoted by an established quotation service for over-the-counter
securities, or the value of such shares is not otherwise determinable, such value as determined by the Board in good faith in
its sole discretion.
2.16.
“Family Member” means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent,
grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the applicable individual, any person sharing the applicable individual’s household
(other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent of the beneficial
interest, a foundation in which any one or more of these persons (or the applicable individual) control the management of assets,
and any other entity in which one or more of these persons (or the applicable individual) own more than fifty percent of the voting
interests.
2.17.
“Grant Date” means, as determined by the Board, the latest to occur of (i) the date as of which the Board approves
an Award, (ii) the date on which the recipient of an Award first becomes eligible to receive an Award under Section 6 hereof,
or (iii) such other date as may be specified by the Board in the Award Agreement.
2.18.
“Grantee” means a person who receives or holds an Award under the Plan.
2.19.
“Incentive Stock Option” means an “incentive stock option” within the meaning of Section 422 of the
Code, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.
2.20.
“Non-Employee Director” means a member of the Board who is not an officer or employee of the Company or any Subsidiary.
2.21.
“Non-qualified Stock Option” means an Option that is not an Incentive Stock Option.
2.22.
“Option” means an option to purchase one or more shares of Stock pursuant to the Plan.
2.23.
“Option Price” means the exercise price for each share of Stock subject to an Option.
2.24.
“Other Stock-based Awards” means Awards consisting of Stock units, or other Awards, valued in whole or in part
by reference to, or otherwise based on, Common Stock, other than Options, Stock Appreciation Rights, Restricted Stock, and Restricted
Stock Units.
2.25.
“Performance Award” means an Award made subject to the attainment of performance goals (as described in Section
12) over a performance period established by the Committee, and includes an Annual Incentive Award.
2.26.
“Person” means an individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act.
2.27.
“Plan” means this Intellicheck Mobilisa, Inc. 2015 Omnibus Incentive Plan, as amended from time to time.
2.28.
“Predecessor Plan” means the Intellicheck Mobilisa, Inc. 2006 Equity Incentive Plan (as amended and restated effective
January 1, 2014).
2.29.
“Purchase Price” means the purchase price for each share of Stock pursuant to a grant of Restricted Stock.
2.30.
“Restricted Period” shall have the meaning set forth in Section 10.1.
2.31.
“Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.
2.32.
“Restricted Stock Unit” means a bookkeeping entry representing the equivalent of shares of Stock, awarded to a
Grantee pursuant to Section 10 hereof.
2.33.
“SAR Exercise Price” means the per share exercise price of a SAR granted to a Grantee under Section 9 hereof.
2.34.
“SEC” means the United States Securities and Exchange Commission.
2.35.
“Section 162(m)” means Section 162(m) of the Code.
2.36.
“Section 409A” means Section 409A of the Code.
2.37.
“Securities Act” means the Securities Act of 1933, as now in effect or as hereafter amended.
2.38.
“Separation from Service” means a termination of Service by a Service Provider, as determined by the Board, which
determination shall be final, binding and conclusive; provided if any Award governed by Section 409A is to be distributed on a
Separation from Service, then the definition of Separation from Service for such purposes shall comply with the definition provided
in Section 409A.
2.39.
“Service” means service as a Service Provider to the Company or an Affiliate. Unless otherwise stated in the applicable
Award Agreement, a Grantee’s change in position or duties shall not result in interrupted or terminated Service, so long
as such Grantee continues to be a Service Provider to the Company or an Affiliate.
2.40.
“Service Provider” means an employee, officer, Non-Employee Director, consultant or advisor of the Company or
an Affiliate.
2.41.
“Stock Appreciation Right” or “SAR” means a right granted to a Grantee under Section 9
hereof.
2.42.
“Subsidiary” means any “subsidiary corporation” of the Company within the meaning of Section 424(f)
of the Code.
2.43.
“Substitute Award” means any Award granted in assumption of or in substitution for an award of a company or business
acquired by the Company or a Subsidiary or with which the Company or an Affiliate combines.
2.44.
“Ten Percent Stockholder” means an individual who owns more than ten percent (10%) of the total combined voting
power of all classes of outstanding stock of the Company, its parent or any of its Subsidiaries. In determining stock ownership,
the attribution rules of Section 424(d) of the Code shall be applied.
2.45.
“Termination Date” means the date that is ten (10) years after the Effective Date, unless the Plan is earlier
terminated by the Board under Section 5.2 hereof.
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3.
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ADMINISTRATION
OF THE PLAN
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3.1.
General.
The
Board shall have such powers and authorities related to the administration of the Plan as are consistent with the Company’s
certificate of incorporation and bylaws and applicable law. The Board shall have the power and authority to delegate its responsibilities
hereunder to the Committee, which shall have full authority to act in accordance with its charter, and with respect to the authority
of the Board to act hereunder, all references to the Board shall be deemed to include a reference to the Committee, to the extent
such power or responsibilities have been delegated. Except as specifically provided in Section 14 or as otherwise may be
required by applicable law, regulatory requirement or the certificate of incorporation or the bylaws of the Company, the Board
shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan,
any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the Plan that the Board deems to be necessary or appropriate
to the administration of the Plan. The Committee shall administer the Plan; provided that, the Board shall retain the right to
exercise the authority of the Committee to the extent consistent with applicable law and the applicable requirements of any securities
exchange on which the Common Stock may then be listed. The interpretation and construction by the Board of any provision of the
Plan, any Award or any Award Agreement shall be final, binding and conclusive. Without limitation, the Board shall have full and
final authority, subject to the other terms and conditions of the Plan, to:
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(i)
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designate
Grantees;
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(ii)
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determine
the type or types of Awards to be made to a Grantee;
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(iii)
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determine
the number of shares of Stock to be subject to an Award;
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(iv)
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establish
the terms and conditions of each Award (including, but not limited to, the Option Price of any Option, the nature and duration
of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture
of an Award or the shares of Stock subject thereto, and any terms or conditions that may be necessary to qualify Options as
Incentive Stock Options);
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(v)
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prescribe
the form of each Award Agreement; and
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(vi)
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amend,
modify, or supplement the terms of any outstanding Award including the authority, in order to effectuate the purposes of the
Plan, to modify Awards to foreign nationals or individuals who are employed outside the United States to recognize differences
in local law, tax policy, or custom.
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To
the extent permitted by applicable law, the Board may delegate its authority as identified herein to any individual or committee
of individuals (who need not be directors), including without limitation the authority to make Awards to Grantees who are not
subject to Section 16 of the Exchange Act or who are not Covered Employees. To the extent that the Board delegates its authority
to make Awards as provided by this Section 3.1, all references in the Plan to the Board’s authority to make Awards
and determinations with respect thereto shall be deemed to include the Board’s delegate. Any such delegate shall serve at
the pleasure of, and may be removed at any time by the Board.
3.2.
No Repricing.
Notwithstanding
any provision herein to the contrary, the repricing of Options or SARs is prohibited without prior approval of the Company’s
stockholders. For this purpose, a “repricing” means any of the following (or any other action that has the same effect
as any of the following): (i) changing the terms of an Option or SAR to lower its Option Price or SAR Exercise Price; (ii) any
other action that is treated as a “repricing” under generally accepted accounting principles; and (iii) repurchasing
for cash or canceling an Option or SAR at a time when its Option Price or SAR Exercise Price is greater than the Fair Market Value
of the underlying shares in exchange for another Award, unless the cancellation and exchange occurs in connection with a change
in capitalization or similar change under Section 15. A cancellation and exchange under clause (iii) would be considered
a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting
principles and regardless of whether it is voluntary on the part of the Grantee.
3.3.
Award Agreements; Clawbacks.
The
grant of any Award may be contingent upon the Grantee executing the appropriate Award Agreement. The Company may retain the right
in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on account of actions taken by the Grantee in violation
or breach of or in conflict with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of
employees or clients of the Company or any Affiliate thereof or any confidentiality obligation with respect to the Company or
any Affiliate thereof or otherwise in competition with the Company or any Affiliate thereof, to the extent specified in such Award
Agreement applicable to the Grantee. Furthermore, the Company may annul an Award if the Grantee is terminated for “cause”
as defined in the applicable Award Agreement.
Awards
shall be subject to the requirements of (i) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding
recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder, (ii) similar rules under
the laws of any other jurisdiction, (iii) any compensation recovery policies adopted by the Company to implement any such requirements
or (iv) any other compensation recovery policies as may be adopted from time to time by the Company, all to the extent determined
by the Committee in its discretion to be applicable to a Grantee.
3.4.
Deferral Arrangement.
The
Board may permit or require the deferral of any Award payment into a deferred compensation arrangement, subject to such rules
and procedures as it may establish and in accordance with Section 409A, which may include provisions for the payment or crediting
of interest or dividend equivalents, including converting such credits into deferred Stock units.
3.5.
No Liability.
No
member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the
Plan, any Award or Award Agreement.
3.6.
Book Entry.
Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to satisfy any requirement under this Plan for the delivery
of stock certificates through the use of book-entry.
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4.
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STOCK
SUBJECT TO THE PLAN
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4.1.
Authorized Number of Shares
Subject
to adjustment under Section 15, the total number of shares of Common Stock authorized to be awarded under the Plan shall
not exceed 4,000,000. In addition, shares of Common Stock underlying any outstanding award granted under the Predecessor Plan
that, following the Effective Date, expires, or is terminated, surrendered or forfeited for any reason without issuance of such
shares shall be available for the grant of new Awards under this Plan. As provided in Section 1, no new awards shall be
granted under the Predecessor Plan following the Effective Date. Shares issued under the Plan may consist in whole or in part
of authorized but unissued shares, treasury shares, or shares purchased on the open market or otherwise, all as determined by
the Company from time to time.
4.2.
Share Counting
4.2.1.
General
Each
share of Common Stock granted in connection with an Award shall be counted as one share against the limit in Section 4.1,
subject to the provisions of this Section 4.2.
4.2.2.
Cash-Settled Awards
Any
Award settled in cash shall not be counted as shares of Common Stock for any purpose under this Plan.
4.2.3.
Expired or Terminated Awards
If
any Award under the Plan expires, or is terminated, surrendered or forfeited, in whole or in part, the unissued Common Stock covered
by such Award shall again be available for the grant of Awards under the Plan.
4.2.4.
Payment of Option Price or Tax Withholding in Shares
If
shares of Common Stock issuable upon exercise, vesting or settlement of an Award, or shares of Common Stock owned by a Grantee
(which are not subject to any pledge or other security interest), are surrendered or tendered to the Company in payment of the
Option Price or Purchase Price of an Award or any taxes required to be withheld in respect of an Award, in each case, in accordance
with the terms and conditions of the Plan and any applicable Award Agreement, such surrendered or tendered shares of Common Stock
shall again be available for the grant of Awards under the Plan. For a share-settled SAR, only the net shares actually issued
upon exercise of the SAR shall be counted against the limit in Section 4.1.
4.2.5.
Substitute Awards
In
the case of any Substitute Award, such Substitute Award shall not be counted against the number of shares reserved under the Plan.
4.3.
Award Limits
4.3.1.
Incentive Stock Options.
Subject
to adjustment under Section 15, 4,000,000 shares of Common Stock available for issuance under the Plan shall be available
for issuance under Incentive Stock Options.
4.3.2.
Individual Award Limits for Section 162(m) – Share-Based Awards.
Subject
to adjustment under Section 15, the maximum number of each type of Award (other than cash-based Performance Awards) intended
to constitute “performance-based compensation” under Section 162(m) granted to any Grantee in any calendar year shall
not exceed the following number of shares of Common Stock: (i) Options and SARs: 500,000 shares; and (ii) all share-based Performance
Awards (including Restricted Stock, Restricted Stock Units and Other Stock-based Awards that are Performance Awards): 500,000
shares.
4.3.3.
Individual Award Limits for Section 162(m) – Cash-Based Awards.
The
maximum amount of cash-based Performance Awards intended to constitute “performance-based compensation” under Section
162(m) granted to any Grantee in any calendar year shall not exceed the following: (i) Annual Incentive Award: $1 million; and
(ii) all other cash-based Performance Awards: $1 million.
4.3.4.
Limits on Awards to Non-Employee Directors.
No
more than $100,000 may be granted in share-based Awards under the Plan during any one year to a Grantee who is a Non-Employee
Director (based on the Fair Market Value of the shares of Common Stock underlying the Award as of the applicable Grant Date in
the case of Restricted Stock, Restricted Stock Units or Other Stock-based Awards, and based on the applicable grant date fair
value for accounting purposes in the case of Options or SARs); provided, however, that share-based Awards made to
a Grantee who is a Non-Employee Director at such Grantee’s election in lieu of all or a portion of his or her Retainer for
service on the Board and any Board committee shall not be counted towards the limit under this Section 4.3.4.
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5.
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EFFECTIVE
DATE, DURATION AND AMENDMENTS
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5.1.
Term.
The
Plan shall be effective as of the Effective Date, provided that it has been approved by the Company’s stockholders. The
Plan shall terminate automatically on the ten (10) year anniversary of the Effective Date and may be terminated on any earlier
date as provided in Section 5.2.
5.2.
Amendment and Termination of the Plan.
The
Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any Awards which have not been made.
An amendment shall be contingent on approval of the Company’s stockholders to the extent stated by the Board, required by
applicable law or required by applicable stock exchange listing requirements. Notwithstanding the foregoing, any amendment to
Section 3.2 shall be contingent upon the approval of the Company’s stockholders. No Awards shall be made after the
Termination Date. The applicable terms of the Plan, and any terms and conditions applicable to Awards granted prior to the Termination
Date shall survive the termination of the Plan and continue to apply to such Awards. No amendment, suspension, or termination
of the Plan shall, without the consent of the Grantee, materially impair rights or obligations under any Award theretofore awarded.
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6.
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AWARD
ELIGIBILITY AND LIMITATIONS
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6.1.
Service Providers.
Subject
to this Section 6.1, Awards may be made to any Service Provider, including any Service Provider who is an officer, Non-Employee
Director, consultant or advisor of the Company or of any Affiliate, as the Board shall determine and designate from time to time
in its discretion.
6.2.
Successive Awards.
An
eligible person may receive more than one Award, subject to such restrictions as are provided herein.
6.3.
Stand-Alone, Additional, Tandem, and Substitute Awards.
Awards
may, in the discretion of the Board, be granted either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any Affiliate, or any business entity to be acquired
by the Company or an Affiliate, or any other right of a Grantee to receive payment from the Company or any Affiliate. Such additional,
tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another
Award, the Board shall have the right to require the surrender of such other Award in consideration for the grant of the new Award.
Subject to Section 3.2, the Board shall have the right, in its discretion, to make Awards in substitution or exchange for
any other award under another plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate.
In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of
the Company or any Affiliate, in which the value of Stock subject to the Award is equivalent in value to the cash compensation
(for example, Restricted Stock Units or Restricted Stock).
Each
Award shall be evidenced by an Award Agreement, in such form or forms as the Board shall from time to time determine. Without
limiting the foregoing, an Award Agreement may be provided in the form of a notice which provides that acceptance of the Award
constitutes acceptance of all terms of the Plan and the notice. Award Agreements granted from time to time or at the same time
need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award
of Options shall specify whether such Options are intended to be Non-qualified Stock Options or Incentive Stock Options, and in
the absence of such specification such options shall be deemed Non-qualified Stock Options.
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8.
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TERMS
AND CONDITIONS OF OPTIONS
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8.1.
Option Price.
The
Option Price of each Option shall be fixed by the Board and stated in the related Award Agreement. The Option Price of each Option
(except those that constitute Substitute Awards) shall be at least the Fair Market Value on the Grant Date of a share of Stock;
provided, however, that in the event that a Grantee is a Ten Percent Stockholder as of the Grant Date, the Option
Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than 110 percent
of the Fair Market Value of a share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the
par value of a share of Stock.
8.2.
Vesting.
Subject
to Section 8.3 hereof, each Option shall become exercisable at such times and under such conditions (including, without
limitation, performance requirements) as stated in the Award Agreement.
8.3.
Term.
Each
Option shall terminate, and all rights to purchase shares of Stock thereunder shall cease, upon the expiration of ten(10)years
from the Grant Date, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed
by the Board and stated in the related Award Agreement; provided, however, that in the event that the Grantee is
a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option at the Grant Date
shall not be exercisable after the expiration of five (5) years from its Grant Date.
8.4.
Limitations on Exercise of Option.
Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in whole or in part, (i) prior to the date the Plan
is approved by the stockholders of the Company as provided herein or (ii) after the occurrence of an event which results in termination
of the Option.
8.5.
Method of Exercise.
An
Option that is exercisable may be exercised by the Grantee’s delivery of a notice of exercise to the Company, setting forth
the number of shares of Stock with respect to which the Option is to be exercised, accompanied by full payment for the shares.
To be effective, notice of exercise must be made in accordance with procedures established by the Company from time to time.
8.6.
Rights of Holders of Options.
Unless
otherwise stated in the related Award Agreement, an individual holding or exercising an Option shall have none of the rights of
a stockholder (for example, the right to receive cash or dividend payments or distributions attributable to the subject shares
of Stock or to direct the voting of the subject shares of Stock) until the shares of Stock covered thereby are fully paid and
issued to him or her. Except as provided in Section 15 hereof or the related Award Agreement, no adjustment shall be made
for dividends, distributions or other rights for which the record date is prior to the date of such issuance.
8.7.
Delivery of Stock Certificates.
Promptly
after the exercise of an Option by a Grantee and the payment in full of the Option Price, such Grantee shall be entitled to the
issuance of a stock certificate or certificates evidencing his or her ownership of the shares of Stock subject to the Option.
8.8.
Limitations on Incentive Stock Options.
An
Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is an employee of the Company or any
Subsidiary of the Company; (ii) to the extent specifically provided in the related Award Agreement; and (iii) to the extent that
the aggregate Fair Market Value (determined at the time the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and
all other plans of the Grantee’s employer and its Affiliates) does not exceed $100,000. This limitation shall be applied
by taking Options into account in the order in which they were granted.
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9.
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TERMS
AND CONDITIONS OF STOCK APPRECIATION RIGHTS
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9.1.
Right to Payment.
A
SAR shall confer on the Grantee a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one share
of Stock on the date of exercise over (ii) the SAR Exercise Price, as determined by the Board. The Award Agreement for a SAR (except
those that constitute Substitute Awards) shall specify the SAR Exercise Price, which shall be fixed on the Grant Date as not less
than the Fair Market Value of a share of Stock on that date. SARs may be granted alone or in conjunction with all or part of an
Option or at any subsequent time during the term of such Option or in conjunction with all or part of any other Award. A SAR granted
in tandem with an outstanding Option following the Grant Date of such Option shall have a grant price that is equal to the Option
Price; provided, however, that the SAR’s grant price may not be less than the Fair Market Value of a share
of Stock on the Grant Date of the SAR to the extent required by Section 409A.
9.2.
Other Terms.
The
Board shall determine at the Grant Date, the time or times at which and the circumstances under which a SAR may be exercised in
whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at
which SARs shall cease to be or become exercisable following Separation from Service or upon other conditions, the method of exercise,
whether or not a SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR.
9.3.
Term of SARs.
The
term of a SAR granted under the Plan shall be determined by the Board, in its sole discretion; provided, however,
that such term shall not exceed ten (10) years.
9.4.
Payment of SAR Amount.
Upon
exercise of a SAR, a Grantee shall be entitled to receive payment from the Company (in cash or Stock, as determined by the Board)
in an amount determined by multiplying:
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(i)
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the
difference between the Fair Market Value of a share of Stock on the date of exercise over the SAR Exercise Price; by
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(ii)
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the
number of shares of Stock with respect to which the SAR is exercised.
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10.
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TERMS
AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS
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10.1.
Restrictions.
At
the time of grant, the Board may, in its sole discretion, establish a period of time (a “Restricted Period”)
and any additional restrictions including the satisfaction of corporate or individual performance objectives applicable to an
Award of Restricted Stock or Restricted Stock Units in accordance with Section 12.1 and 12.2. Each Award of Restricted
Stock or Restricted Stock Units may be subject to a different Restricted Period and additional restrictions. Neither Restricted
Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period or prior to the satisfaction of any other applicable restrictions.
10.2.
Restricted Stock Certificates.
The
Company shall issue stock, in the name of each Grantee to whom Restricted Stock has been granted, stock certificates or other
evidence of ownership representing the total number of shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement that either (i) the Secretary of the Company shall
hold such certificates for the Grantee’s benefit until such time as the Restricted Stock is forfeited to the Company or
the restrictions lapse, or (ii) such certificates shall be delivered to the Grantee; provided, however, that such
certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and make appropriate
reference to the restrictions imposed under the Plan and the Award Agreement.
10.3.
Rights of Holders of Restricted Stock.
Unless
the Board otherwise provides in an Award Agreement and subject to Section 17.12, holders of Restricted Stock shall have
rights as stockholders of the Company, including voting and dividend rights.
10.4.
Rights of Holders of Restricted Stock Units.
10.4.1.
Settlement of Restricted Stock Units.
Restricted
Stock Units may be settled in cash or Stock, as determined by the Board and set forth in the Award Agreement. The Award Agreement
shall also set forth whether the Restricted Stock Units shall be settled (i) within the time period specified for “short
term deferrals” under Section 409A or (ii) otherwise within the requirements of Section 409A, in which case the Award Agreement
shall specify upon which events such Restricted Stock Units shall be settled.
10.4.2.
Voting and Dividend Rights.
Unless
otherwise stated in the applicable Award Agreement and subject to Section 17.12, holders of Restricted Stock Units shall
not have rights as stockholders of the Company, including no voting or dividend or dividend equivalents rights.
10.4.3.
Creditor’s Rights.
A
holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock
Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award
Agreement.
10.5.
Purchase of Restricted Stock.
The
Grantee shall be required, to the extent required by applicable law, to purchase the Restricted Stock from the Company at a Purchase
Price equal to the greater of (i) the aggregate par value of the shares of Stock represented by such Restricted Stock or (ii)
the Purchase Price, if any, specified in the related Award Agreement. If specified in the Award Agreement, the Purchase Price
may be deemed paid by Services already rendered. The Purchase Price shall be payable in a form described in Section 11 or,
in the discretion of the Board, in consideration for past Services rendered.
10.6.
Delivery of Stock.
Upon
the expiration or termination of any Restricted Period and the satisfaction of any other conditions prescribed by the Board, the
restrictions applicable to shares of Restricted Stock or Restricted Stock Units settled in Stock shall lapse, and, unless otherwise
provided in the Award Agreement, a stock certificate for such shares shall be delivered, free of all such restrictions, to the
Grantee or the Grantee’s beneficiary or estate, as the case may be.
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11.
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FORM
OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK
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11.1.
General Rule.
Payment
of the Option Price for the shares purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock
shall be made in cash or in cash equivalents acceptable to the Company, except as provided in this Section 11.
11.2.
Surrender of Stock.
To
the extent the Award Agreement so provides, payment of the Option Price for shares purchased pursuant to the exercise of an Option
or the Purchase Price for Restricted Stock may be made all or in part through the tender to the Company of shares of Stock, which
shares shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price for Restricted Stock
has been paid thereby, at their Fair Market Value on the date of exercise or surrender. Notwithstanding the foregoing, in the
case of an Incentive Stock Option, the right to make payment in the form of already owned shares of Stock may be authorized only
at the time of grant.
11.3.
Cashless Exercise.
With
respect to an Option only (and not with respect to Restricted Stock), to the extent permitted by law and to the extent the Award
Agreement so provides, payment of the Option Price may be made all or in part by delivery (on a form acceptable to the Company)
of an irrevocable direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all
or part of the sales proceeds to the Company in payment of the Option Price and any withholding taxes described in Section
17.3.
11.4.
Other Forms of Payment.
To
the extent the Award Agreement so provides, payment of the Option Price or the Purchase Price for Restricted Stock may be made
in any other form that is consistent with applicable laws, regulations and rules, including, but not limited to, the Company’s
withholding of shares of Stock otherwise due to the exercising Grantee.
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12.
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TERMS
AND CONDITIONS OF PERFORMANCE AWARDS
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12.1.
Performance Conditions.
The
right of a Grantee to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance
conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance
as it may deem appropriate in establishing any performance conditions.
12.2.
Performance Awards Granted to Designated Covered Employees.
If
and to the extent that the Committee determines that a Performance Award to be granted to a Grantee who is designated by the Committee
as having the potential to be a Covered Employee should qualify as “performance-based compensation” for purposes of
Section 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement of pre-established
performance goals and other terms set forth in this Section 12.2. Notwithstanding anything herein to the contrary, the
Committee in its discretion may provide for Performance Awards to Covered Employees that are not intended to qualify as “performance-based
compensation” for purposes of Section 162(m).
12.2.1.
Performance Goals Generally.
The
performance goals for such Performance Awards shall consist of one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by the Committee consistent with this Section 12.2. Performance
goals shall be objective and shall otherwise meet the requirements of Section 162(m) and regulations thereunder including the
requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being
“substantially uncertain.” The Committee may determine that such Performance Awards shall be granted, exercised and/or
settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition
to grant, exercise and/or settlement of such Performance Awards. Performance goals may, in the discretion of the Committee, be
established on a Company-wide basis, or with respect to one or more business units, divisions, subsidiaries or business segments,
as applicable. Performance goals may be absolute or relative (to the performance of one or more comparable companies or indices).
To the extent consistent with the requirements of Section 162(m), the Committee may determine at the time that goals under this
Section 12 are established, the extent to which measurement of performance goals may exclude the impact of charges for
restructuring, discontinued operations, extraordinary items, debt redemption or retirement, asset write downs, litigation or claim
judgments or settlements, acquisitions or divestitures, foreign exchange gains and losses, and other unusual non-recurring items,
and the cumulative effects of tax or accounting changes (each as defined by generally accepted accounting principles and as identified
in the Company’s financial statements or other SEC filings). Performance goals may differ for Performance Awards granted
to any one Grantee or to different Grantees.
12.2.2.
Business Criteria.
One
or more of the following business criteria for the Company, on a consolidated basis, and/or specified subsidiaries or business
units of the Company (except with respect to the total stockholder return and earnings per share criteria), shall be used exclusively
by the Committee in establishing performance goals for such Performance Awards: (i) cash flow; (ii) earnings per share, as adjusted
for any stock split, stock dividend or other recapitalization; (iii) earnings measures (including EBIT and EBITDA)); (iv) return
on equity; (v) total stockholder return; (vi) share price performance, as adjusted for any stock split, stock dividend or other
recapitalization; (vii) return on capital; (viii) revenue; (ix) income; (x) profit margin; (xi) return on operating revenue; (xii)
brand recognition/acceptance; (xiii) customer metrics (including customer satisfaction, customer retention, customer profitability,
or customer contract terms); (xiv) productivity; (xv) expense targets; (xvi) market share; (xvii) cost control measures; (xviii)
balance sheet metrics; (xix) strategic initiatives; (xx) implementation, completion or attainment of measurable objectives with
respect to recruitment or retention of personnel or employee satisfaction; (xxi) return on assets; (xxii) growth in net sales;
(xxiii) the ratio of net sales to net working capital; (xxiv) stockholder value added; (xxv) improvement in management of working
capital items (inventory, accounts receivable or accounts payable); (xxvi) sales from newly-introduced products; (xxvii) successful
completion of, or achievement of milestones or objectives related to, financing or capital raising transactions, strategic acquisitions
or divestitures, joint ventures, partnerships, collaborations, or other transactions; (xxviii) product quality, safety, productivity,
yield or reliability (on time and complete orders); (xxix) funds from operations; (xxx) regulatory body approval for commercialization
of a product; (xxxi) debt levels or reduction or debt ratios; (xxxii) economic value; (xxxiii) operating efficiency; (xxxiv) research
and development achievements; or (xxxv) any combination of the forgoing business criteria; provided, however, that
such business criteria shall include any derivations of business criteria listed above (e.g., income shall include pre-tax income,
net income, operating income, etc.).
12.2.3.
Timing for Establishing Performance Goals.
Performance
goals shall be established not later than 90 days after the beginning of any performance period applicable to such Performance
Awards, or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m).
12.2.4.
Settlement of Performance Awards; Other Terms.
Settlement
of Performance Awards shall be in cash, Stock, other Awards or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Performance Awards.
12.3.
Written Determinations.
All
determinations by the Committee as to the establishment of performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals relating to Performance Awards, shall be made in
writing in the case of any Award intended to qualify under Section 162(m) to the extent required by Section 162(m). To the extent
permitted by Section 162(m), the Committee may delegate any responsibility relating to such Performance Awards.
12.4.
Status of Section 12.2 Awards under Section 162(m).
It
is the intent of the Company that Performance Awards under Section 12.2 hereof granted to persons who are designated by
the Committee as having the potential to be Covered Employees within the meaning of Section 162(m) and regulations thereunder
shall, if so designated by the Committee, constitute “qualified performance-based compensation” within the meaning
of Section 162(m) and regulations thereunder. Accordingly, the terms of Section 12.2, including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner consistent with Section 162(m) and regulations thereunder.
The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Grantee will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only
a person designated by the Committee, at the time of grant of Performance Awards, as having the potential to be a Covered Employee
with respect to that fiscal year or any subsequent fiscal year. If any provision of the Plan or any agreement relating to such
Performance Awards does not comply or is inconsistent with the requirements of Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to conform to such requirements.
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13.
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OTHER
STOCK-BASED AWARDS.
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13.1.
Grant of Other Stock-based Awards.
Other
Stock-based Awards may be granted either alone or in addition to or in conjunction with other Awards under the Plan. Other Stock-based
Awards may be granted in lieu of other cash or other compensation to which a Service Provider is entitled from the Company or
may be used in the settlement of amounts payable in shares of Common Stock under any other compensation plan or arrangement of
the Company. Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine the
persons to whom and the time or times at which such Awards shall be made, the number of shares of Common Stock to be granted pursuant
to such Awards, and all other conditions of such Awards. Unless the Committee determines otherwise, any such Award shall be confirmed
by an Award Agreement, which shall contain such provisions as the Committee determines to be necessary or appropriate to carry
out the intent of this Plan with respect to such Award.
13.2.
Terms of Other Stock-based Awards.
Any
Common Stock subject to Awards made under this Section 13 may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance
or deferral period lapses.
14.1.
General.
The
Company shall not be required to sell or issue any shares of Stock under any Award if the sale or issuance of such shares would
constitute a violation by the Grantee, any other individual exercising an Option, or the Company of any provision of any law or
regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If
at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares subject
to an Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of,
or in connection with, the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the Grantee or
any other individual exercising an Option pursuant to such Award unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby
shall in no way affect the date of termination of the Award. Specifically, in connection with the Securities Act, upon the exercise
of any Option or the delivery of any shares of Stock underlying an Award, unless a registration statement under such Act is in
effect with respect to the shares of Stock covered by such Award, the Company shall not be required to sell or issue such shares
unless the Board has received evidence satisfactory to it that the Grantee or any other individual exercising an Option may acquire
such shares pursuant to an exemption from registration under the Securities Act. Any determination in this connection by the Board
shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, register any securities covered
hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation of any governmental
authority. As to any jurisdiction that expressly imposes the requirement that an Option shall not be exercisable until the shares
of Stock covered by such Option are registered or are exempt from registration, the exercise of such Option (under circumstances
in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability
of such an exemption.
14.2.
Rule 16b-3.
During
any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of
the Company that Awards and the exercise of Options granted to officers and directors hereunder will qualify for the exemption
provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Board or Committee
does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board, and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the
Board may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage
of any features of, the revised exemption or its replacement.
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15.
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EFFECT
OF CHANGES IN CAPITALIZATION
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15.1.
Changes in Stock.
If
(i) the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for
a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification,
stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the
Effective Date or (ii) there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by the
Company, the number and kinds of shares for which grants of Awards may be made under the Plan (including the per-Grantee maximums
set forth in Section 4) shall be equitably adjusted by the Company; provided that any such adjustment shall comply with
Section 409A. In addition, in the event of any such increase or decrease in the number of outstanding shares or other transaction
described in clause (ii) above, the number and kind of shares for which Awards are outstanding and the Option Price per share
of outstanding Options and SAR Exercise Price per share of outstanding SARs shall be equitably adjusted; provided that any such
adjustment shall comply with Section 409A.
15.2.
Effect of Certain Transactions.
Except
as otherwise provided in an Award Agreement and subject to the provisions of Section 15.3, in the event of a Corporate
Transaction, the Plan and the Awards issued hereunder shall continue in effect in accordance with their respective terms, except
that following a Corporate Transaction either (i) each outstanding Award shall be treated as provided for in the agreement entered
into in connection with the Corporate Transaction or (ii) if not so provided in such agreement, each Grantee shall be entitled
to receive in respect of each share of Common Stock subject to any outstanding Awards, upon exercise or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash, property or other consideration that each holder of
a share of Common Stock was entitled to receive in the Corporate Transaction in respect of a share of Common stock; provided,
however, that, unless otherwise determined by the Committee, such stock, securities, cash, property or other consideration
shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to the Awards prior
to such Corporate Transaction. Without limiting the generality of the foregoing, the treatment of outstanding Options and SARs
pursuant to this Section 15.2 in connection with a Corporate Transaction in which the consideration paid or distributed
to the Company’s stockholders is not entirely shares of common stock of the acquiring or resulting corporation may include
the cancellation of outstanding Options and SARs upon consummation of the Corporate Transaction as long as, at the election of
the Committee, (i) the holders of affected Options and SARs have been given a period of at least fifteen days prior to the date
of the consummation of the Corporate Transaction to exercise the Options or SARs (to the extent otherwise exercisable) or (ii)
the holders of the affected Options and SARs are paid (in cash or cash equivalents) in respect of each Share covered by the Option
or SAR being canceled an amount equal to the excess, if any, of the per share price paid or distributed to stockholders in the
Corporate Transaction (the value of any non-cash consideration to be determined by the Committee in its sole discretion) over
the Option Price or SAR Exercise Price, as applicable. For avoidance of doubt, (1) the cancellation of Options and SARs pursuant
to clause (ii) of the preceding sentence may be effected notwithstanding anything to the contrary contained in this Plan or any
Award Agreement and (2) if the amount determined pursuant to clause (ii) of the preceding sentence is zero or less, the affected
Option or SAR may be cancelled without any payment therefore. The treatment of any Award as provided in this Section 15.2
shall be conclusively presumed to be appropriate for purposes of Section 15.1.
15.3.
Change in Control
15.3.1.
Consequences of a Change in Control
For
Awards granted to Non-Employee Directors, except as may otherwise be provided in the applicable Award Agreement, upon a Change
in Control all outstanding Awards that may be exercised shall become fully exercisable, all restrictions with respect to outstanding
Awards shall lapse and become vested and non-forfeitable, and any specified performance goals with respect to outstanding Awards
shall be deemed to be satisfied at target.
For
Awards granted to any other Service Providers, except as may otherwise be provided in the applicable Award Agreement, either of
the following provisions shall apply, depending on whether, and the extent to which, Awards are assumed, converted or replaced
by the resulting entity in a Change in Control:
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(i)
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To
the extent such Awards are not assumed, converted or replaced by the resulting entity in the Change in Control, then upon
the Change in Control such outstanding Awards that may be exercised shall become fully exercisable, all restrictions with
respect to such outstanding Awards, other than for Performance Awards, shall lapse and become vested and non-forfeitable,
and for any outstanding Performance Awards the target payout opportunities attainable under such Awards shall be deemed to
have been fully earned as of the Change in Control based upon the greater of: (A) an assumed achievement of all relevant performance
goals at the “target” level, or (B) the actual level of achievement of all relevant performance goals against
target as of the Company’s fiscal quarter end preceding the Change in Control and the Award shall become vested pro
rata based on the portion of the applicable performance period completed through the date of the Change in Control.
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(ii)
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To
the extent such Awards are assumed, converted or replaced by the resulting entity in the Change in Control, if, within two
years after the date of the Change in Control, the Service Provider has a Separation from Service either (1) by the Company
other than for “cause” or (2) by the Service Provider for “good reason” (each as defined in the applicable
Award Agreement), then such outstanding Awards that may be exercised shall become fully exercisable, all restrictions with
respect to such outstanding Awards, other than for Performance Awards, shall lapse and become vested and non-forfeitable,
and for any outstanding Performance Awards the target payout opportunities attainable under such Awards shall be deemed to
have been fully earned as of the Separation from Service based upon the greater of: (A) an assumed achievement of all relevant
performance goals at the “target” level, or (B) the actual level of achievement of all relevant performance goals
against target as of the Company’s fiscal quarter end preceding the Change in Control and the Award shall become vested
pro rata based on the portion of the applicable performance period completed through the date of the Separation from Service.
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15.3.2.
Change in Control Defined
Except
as may otherwise be defined in an Award Agreement, a “Change in Control” shall mean any single transaction
or event, other than an Acquisition, pursuant to which (i) a majority of the members of the Board resign or are replaced, or (ii)
one person or a number of persons acting together as a group own more than 50 percent of the combined voting power of Company.
The term “Acquisition” means (1) a dissolution, liquidation or sale of all or substantially all of the assets of the
Company; (2) a merger or consolidation in which the Company is not the surviving corporation; or (3) a merger in which the Company
is the surviving corporation but the shares of the Company’s common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise.
Notwithstanding
the foregoing, if it is determined that an Award hereunder is subject to the requirements of Section 409A and payable upon a Change
in Control, the Company will not be deemed to have undergone a Change in Control unless the Company is deemed to have undergone
a “change in control event” pursuant to the definition of such term in Section 409A.
15.4.
Adjustments
Adjustments
under this Section 15 related to shares of Stock or securities of the Company shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any
such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to
the nearest whole share.
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16.
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NO
LIMITATIONS ON COMPANY
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The
making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate,
or to sell or transfer all or any part of its business or assets.
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17.
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TERMS
APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN
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17.1.
Disclaimer of Rights.
No
provision in the Plan or in any Award Agreement shall be construed to confer upon any individual the right to remain in the employ
or service of the Company or any Affiliate, or to interfere in any way with any contractual or other right or authority of the
Company either to increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment
or other relationship between any individual and the Company. In addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award Agreement, no Award granted under the Plan shall be affected by any
change of duties or position of the Grantee, so long as such Grantee continues to be a Service Provider. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company
to transfer any amounts to a third-party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.
17.2.
Nonexclusivity of the Plan.
Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as
creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which
arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual
or particular individuals), including, without limitation, the granting of stock options as the Board in its discretion determines
desirable.
17.3.
Withholding Taxes.
The
Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee
any federal, state, or local taxes of any kind required by law to be withheld (i) with respect to the vesting of or other lapse
of restrictions applicable to an Award, (ii) upon the issuance of any shares of Stock upon the exercise of an Option or SAR, or
(iii) otherwise due in connection with an Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the
Company or the Affiliate, as the case may be, any amount that the Company or the Affiliate may reasonably determine to be necessary
to satisfy such withholding obligation. Subject to the prior approval of the Company or the Affiliate, which may be withheld by
the Company or the Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, or
the Company may require such obligations to be satisfied, in whole or in part, (i) by causing the Company or the Affiliate to
withhold the minimum required number of shares of Stock otherwise issuable to the Grantee as may be necessary to satisfy such
withholding obligation or (ii) by delivering to the Company or the Affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations. The
Fair Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined by the Company or the
Affiliate as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant
to this Section 17.3 may satisfy his or her withholding obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
17.4.
Captions.
The
use of captions in this Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning
of any provision of the Plan or any Award Agreement.
17.5.
Other Provisions.
Each
Award Agreement may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Board,
in its sole discretion. In the event of any conflict between the terms of an employment agreement and the Plan, the terms of the
employment agreement govern.
17.6.
Number and Gender.
With
respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine
gender, etc., as the context requires.
17.7.
Severability.
If
any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and
all provisions shall remain enforceable in any other jurisdiction.
17.8.
Governing Law.
The
Plan shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles
of conflicts of law, and applicable Federal law.
17.9.
Section 409A.
The
Plan is intended to comply with Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted,
the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due
within the “short-term deferral period” as defined in Section 409A shall not be treated as deferred compensation unless
applicable laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated
taxation and tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided
pursuant to the Plan during the six (6) month period immediately following the Grantee’s Separation from Service shall instead
be paid on the first payroll date after the six-month anniversary of the Grantee’s Separation from Service (or the Grantee’s
death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any
action to prevent the assessment of any excise tax or penalty on any Grantee under Section 409A and neither the Company nor the
Committee will have any liability to any Grantee for such tax or penalty.
17.10.
Separation from Service.
The
Board shall determine the effect of a Separation from Service upon Awards, and such effect shall be set forth in the appropriate
Award Agreement. Without limiting the foregoing, the Board may provide in the Award Agreements at the time of grant, or any time
thereafter with the consent of the Grantee, the actions that will be taken upon the occurrence of a Separation from Service, including,
but not limited to, accelerated vesting or termination, depending upon the circumstances surrounding the Separation from Service.
17.11.
Transferability of Awards.
17.11.1.
Transfers in General.
Except
as provided in Section 17.11.2, no Award shall be assignable or transferable by the Grantee to whom it is granted, other
than by will or the laws of descent and distribution, and, during the lifetime of the Grantee, only the Grantee personally (or
the Grantee’s personal representative) may exercise rights under the Plan.
17.11.2.
Family Transfers.
If
authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or part of an Award (other than Incentive
Stock Options) to any Family Member. For the purpose of this Section 17.11.2, a “not for value” transfer is
a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights; or
(iii) a transfer to an entity in which more than fifty percent of the voting interests are owned by Family Members (or the Grantee)
in exchange for an interest in that entity. Following a transfer under this Section 17.11.2, any such Award shall continue
to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred
Awards are prohibited except to Family Members of the original Grantee in accordance with this Section 17.11.2 or by will
or the laws of descent and distribution.
17.12.
Dividends and Dividend Equivalent Rights.
If
specified in the Award Agreement, the recipient of an Award under this Plan may be entitled to receive, currently or on a deferred
basis, dividends or dividend equivalents with respect to the Common Stock or other securities covered by an Award. The terms and
conditions of a dividend equivalent right may be set forth in the Award Agreement. Dividend equivalents credited to a Grantee
may be paid currently or may be deemed to be reinvested in additional shares of Stock or other securities of the Company at a
price per unit equal to the Fair Market Value of a share of Stock on the date that such dividend was paid to stockholders, as
determined in the sole discretion of the Committee. Notwithstanding the foregoing, in no event will dividends or dividend equivalents
on any Award which is subject to the achievement of performance criteria be payable before the Award has become earned and payable.
The
Plan was adopted by the Board of Directors on March 19, 2015 and was approved by
the stockholders of the Company on May 6, 2015.
This
Amendment was approved by the stockholders of the Company on May __, 2020
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