| • | | An initial equity award upon joining the Board in the form of RSUs with an economic value of $145,000. The RSUs vest in three equal annual installments beginning with the first anniversary of the grant date.
| | | | | | INFORMATION REGARDING THE BOARD AND ITS COMMITTEES | | | | | | • | | Thereafter, an annual equity award in the form of RSUs with an economic value of $85,000 that vests in full on the first anniversary of the grant date. |
| | Information Regarding the Board and its Committees |
In February 2020, the Compensation Committee determined based on the foregoing policy that non-management directors would be awarded 11,039 RSUs. Director Compensation Table. The table below summarizes the compensation paid to our non-management directors for service on the Board for the fiscal year ended December 31, 2015.2020. In addition to the payments below, the Company reimburses directors for reasonable out-of-pocket expenses incurred in connection with attending Board and Board committee meetings. | | | | | | | | | | | | | Name(1)(2) | Fees Earned or Paid in Cash | | Stock Awards (3) (4) | | Total | James Ledwith | $ | 66,856 |
| | $ | 84,998 |
| | $ | 151,854 |
| Philip Falcone | $ | 40,000 |
| | $ | 84,998 |
| | $ | 124,998 |
| Robert Pons | $ | 68,486 |
| | $ | 84,998 |
| | $ | 153,484 |
| David Werner | $ | 53,253 |
| | $ | 84,998 |
| | $ | 138,251 |
| Russell Gerns(5) | $ | 37,500 |
| | $ | 84,998 |
| | $ | 122,498 |
|
Name | Fees Earned in Cash ($) | | Stock Awards ($) (1) (2) | | Option Awards ($) (1)(2) | | All Other Compensation ($) | | Total ($) | | James B. Avery(3) | | 56,000 | | | 85,000 | | | – | | | – | | | 141,000 | | Christopher Harland | | 50,000 | | | 85,000 | | | – | | | – | | | 135,000 | | Christopher Lytle(4) | | 10,000 | | | 138,968 | | | – | | | – | | | 148,968 | | Brian Miller(5) | | 50,000 | | | 85,000 | | | – | | | – | | | 135,000 | | Jeffrey Tuder | | 79,000 | | | 85,000 | | | – | | | – | | | 164,000 | |
| | (1) | From January 1, 2015 through October 27, 2015, Sue Swenson, our current Chief Executive Officer, served as a non-management director. During that time, she received compensation for her service on the Board. Subsequent to her appointment to serve as Chief Executive Officer on October 27, 2015, she continued to serve on our Board, but did not accrue or receive additional compensation for her service as a director or as Chair of the Board. The compensation received by Ms. Swenson as an employee of the Company, as well as compensation received as a non-management director prior to becoming an employee, is shown in the Summary Compensation Table in this Proxy Statement.
|
| | (2) | From January 1, 2015 through October 27, 2015, Alex Mashinsky, our former Chief Executive Officer, served as a director. The compensation received by Mr. Mashinsky as an employee of the Company is shown in the Summary Compensation Table in this Proxy Statement. Mr. Mashinsky did not receive additional compensation for his service as a director.
|
| | (3) | Represents the aggregate grant date fair value of the equity awards granted in 20152020 as computed in accordance with ASCAccounting Standards Codification (“ASC”) Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, 8,Share-based Compensation, in the 2015Company’s Annual Report.Report on Form 10-K for the fiscal year ended December 31, 2020. |
| | (4)(2) | The following table shows, for each of our non-management directors, the aggregate number of shares subject to stock and option awards outstanding as of December 31, 2015. All option2020. |
Name | Stock Awards (#) | | Option Awards (#) | | James B. Avery (issued to Tavistock Financial, LLC) | | 25,213 | | | – | | Christopher Harland | | 27,706 | | | – | | Christopher Lytle | | 15,882 | | | – | | Brian Miller | | 25,213 | | | – | | Jeffrey Tuder | | 11,039 | | | 56,912 | |
(3) | As required by the terms of his employment with Tavistock Financial, LLC, all cash director fees earned by Mr. Avery are paid to Tavistock Foundation, Inc., a non-profit incorporated and existing under the laws of the State of Florida, and all equity awards reported into which he would be entitled for service as a director of the table below were vested in full as of December 31, 2015. |
| | | | | | | Name | Option Awards | | Stock Awards | James Ledwith | 38,746 |
| | 57,620 |
| Philip Falcone | — |
| | 38,590 |
| Robert Pons | — |
| | 38,590 |
| David Werner | 38,746 |
| | 57,620 |
| Russell Gerns | 22,862 |
| | — |
|
| Company are issued to Tavistock Financial LLC. | (5)(4) | Mr. Gerns resigned fromLytle was appointed to the Board effective as of October 5, 2015. Upon his resignation,1, 2020. Amounts exclude compensation paid to Mr. Lytle before he became a director for consulting services pursuant to the consulting agreement described below under the heading Transactions with Related Persons. | (5) | Mr. Miller resigned from the Board voted to accelerate the vesting of Mr. Gerns’s outstanding restricted stock awards, which as a result, vested in full on October 5, 2015.effective March 1, 2021. |
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| 21 | |
| | | | EXECUTIVE OFFICERS | | Information Regarding Our Executive Officers |
INFORMATION REGARDING OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to our current executive officers: | | | | | Executive | Age
| | Title | Sue Swenson | 67Age | | Title | Dan Mondor | | 65 | | Chairman and Chief Executive Officer | Michael NewmanAshish Sharma | 47 | 48 | | President, IoT & Mobile Solutions | Doug Kahn | | 62 | | Executive Vice President and Chief Financial Officer | Stephen Sek | 50 | | Senior Vice President and Chief Technology Officer | Lance Bridges | 54 | | Senior Vice President, General Counsel and Secretaryof Operations |
Sue Swenson Dan Mondor’s biographical information is provided in this Proxy Statement under Proposal 1: Election of Directors.
Ashish Sharmahas served as a directorthe Company’s President of IoT & Mobile Solutions since June 2012, as Chair of the Board since April 2014, and as Chief Executive Officer since October 2015. Ms. Swenson has more than 20 years of executive management experience in the telecommunications industry and considerable experience serving on the boards of directors of growing technology companies. Since 1994, she has been a director of Wells Fargo & Company and sits on their Audit and Examination Committee and Governance and Nominating Committee. Ms. Swenson also serves as a director on the boards of directors of Spirent Communications Plc, Harmonic, Inc., and FirstNet, and has previously served on boards of directors of numerous public and private companies, including Leap Wireless International, Inc., mBlox and Palm. Ms. Swenson retired in 2011 as President and Chief Executive Officer of Sage Software, Inc., a position sheFebruary 2020. Prior to that, he had held since 2008. Before joining Sage Software, Ms. Swenson held positions in a variety of telecom companies, including as Chief Operating Officer of Atrinsic, Inc. (formerly known as New Motion, Inc.), Chief Operating Officer of Amp’d Mobile, Inc., President and Chief Executive Officer of Leap Wireless International, Inc., and President and Chief Executive Officer of Cellular One. Ms. Swenson holds a Bachelor of Arts from San Diego State University. Michael Newman has served as ourthe Company’s Executive Vice President and Chief Financial OfficerIoT & Mobile Solutions since September 2014. He also served as Secretary ofjoining the Company from October 2014 until May 2015.in September 2017. Prior to joining the Company,Inseego, Mr. Newman served asSharma was Chief FinancialMarketing Officer at Spectralink Corporation, a provider of Websense, Inc. (now ForcePoint, a Raytheon company), a global leader of advanced IT securityenterprise grade mobile solutions, (“Websense”), from 2011December 2015 to 2014. From 2002 to 2011, he served in several other senior executive level positions at Websense, including General Counsel and Chief Administrative Officer. During his time with Websense, Mr. Newman was responsible for accounting, finance, tax, human resources, legal, information technology, facilities and sales operations functions.September 2017. Prior to joining Websense,that, Mr. Newman managed securities and corporate
development matters in the legal department for Gateway, Inc., a publicly-traded computer manufacturer. Mr. Newman holds a Juris Doctor from Harvard Law School and a Bachelor of Science in Business Administration from Georgetown University.
Stephen Sek hasSharma served as our Senior Vice President and Chief Technology Officer since March 2015. Prior to his appointment to serve as Senior Vice President and Chief Technology Officer, Mr. Sek had been employed by the Company as its Vice President of Global Products since September 2013,General Manager, Americas for Graymatics, Inc. a cognitive media processing company, from January 2015 to December 2015 and had previously worked at the Company from August 2000 to November 2006 serving in various capacities, including as the Company’s director of technology and standards, systems, test and accreditation engineering, general manager of Asia-Pacific, and director of customer technical solutions and technologies. Between 2006 and 2013, he served as Chief TechnologyMarketing Officer for Axesstel, Inc., a San Diego-based provider ofat FreeWave Technologies, an industrial wireless broadband access and connected home and voice solutions for the worldwide telecommunications market. At Axesstel, Inc., he was responsible for leading the office of the Chief Technology Officer, the patent committee, the company’s technology realization and product introduction in all technologiesnetworking company, from November 2010 to customers. From 1990 through 2000,January 2015. Mr. Sek worked at Motorola Inc., where he served in various senior research, engineering and managerial roles for the PCS Advanced Technology Lab, PCS FLEX Technology Systems Division, and Paging and Wireless Data Group. Mr. SekSharma holds a Bachelor of Science from Boston University and a Master of Science in Electrical Engineering from the University of Southern California.
Lance Bridges has servedDistrict of Columbia, a Master of Science in Electrical Engineering from George Mason University and a Master of Business Administration from the UCLA Anderson School of Management in Finance, Marketing and Strategy.Doug Kahn joined the Company in February 2019 as our SeniorExecutive Vice President General Counsel and Secretary since May 2015.of Operations. Prior to joining the Company,Inseego, Mr. Bridges served as SeniorKahn was Vice President of Global Supply Chain at Vispero, Inc., a provider of assistive technology solutions for the visually impaired, from 2018 to 2019. Mr. Kahn was Executive Vice President of Global Operations and General Counsel of Entropic Communications,Customer Support for Tintri, Inc., a semiconductorvirtualized storage and storage company from 20072014 to 2015.2018. Prior to joining Entropic Communications,that, he was Vice President of Global Purchasing and Vice President of Operations for TomTom International BV, a global GPS company, from 2012 to 2014. Mr. Bridges wasKahn has held several additional leadership roles in all major supply chain functions, including Vice President of Supply Chain and IT for Synaptics Inc. Earlier in his career, Mr. Kahn spent 17 years with Hewlett Packard in roles of increasing responsibility in Supply Chain Development and Operations. Mr. Kahn earned a
partner at Cooley LLP, serving as outside general counsel to venture backed private companies and publicly traded companies across multiple industries. Mr. Bridges received his Juris Doctor B.A. from the University of California, Berkeley, School of Law (Boalt Hall)an M.S. in Geophysics and his Master of Business Administrationan M.B.A. in finance and statistics from The Walter A. Haas School of Business Administration,the University of California at Berkeley.
Chicago.There are no family relationships among any of our executive officers. officers and/or directors. There are currently no legal proceedings, and during the past 10 years there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our current executive officers.
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| 22 | |
| | | | COMPENSATION DISCUSSION AND ANALYSIS | | |
COMPENSATION DISCUSSION AND ANALYSIS
Overview
Decisions with respect to compensation for our executive officers, including our Chief Executive Officer, are made by the Compensation Committee. The following discussion and analysis is focused primarily on the compensation of our named executive officers (“NEOs”). The compensation of our NEOs is presented in the tables and related information and discussed in the Compensation of Named Executive Officers section of this Proxy Statement beginning on page 26. Under SEC rules, our NEOs for 2015 were:
| | | | Executive | | Title | Sue Swenson(1)
| | ChiefCompensation of Named Executive Officer | Michael Newman | | Executive Vice President and Chief Financial Officer | Stephen Sek | | Senior Vice President and Chief Technology Officer | Lance BridgesOfficers(2)
| | Senior Vice President, General Counsel and Secretary | Alex Mashinsky(3)
| | Former Chief Executive Officer | Slim Souissi(4)
| | Former President and Chief Operations Officer | John Carney(5)
| | Former Executive Vice President, Sales and Marketing |
| | (1) | Ms. Swenson was appointed to serve as Chief Executive Officer on October 27, 2015. |
| | (2) | Mr. Bridges began serving as Senior Vice President, General Counsel and Secretary on May 7, 2015. |
| | (3) | Mr. Mashinsky was terminated as Chief Executive Officer by the Board on October 27, 2015. |
| | (4) | Dr. Souissi resigned from his position as President and Chief Operations Officer effective as of June 11, 2015. |
| | (5) | Mr. Carney resigned from his position as Executive Vice President, Sales and Marketing effective as of December 1, 2015. |
Compensation Philosophy and Objectives
In making decisions with respect to compensation for our executive officers, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each executive’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our executive officers, the Compensation Committee seeks to achieve the following key objectives:
Motivate Executives.The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals.
Alignment with Stockholders.The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term.
Attract and Retain Talented Executives. The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and
retain qualified executives while maintaining an appropriate cost structure for the Company.
Committee’s Role in Establishing Compensation
Our Compensation Committee is currently comprised of Messrs. Werner, Ledwith and Pons, each of whom is an independent director under the Internal Revenue Code of 1986, as amended (the “Code”), and the rules of the NASDAQ and the SEC. The Compensation Committee makes all compensation decisions for our executive officers, including grants of equity awards. The Compensation Committee believes that one of its key functions is to help ensure that our executives are fairly and reasonably compensated based on their performance and contribution to the Company’s growth and profitability, and it seeks to make compensation decisions that support our compensation philosophy and objectives. The agenda for meetings of the Compensation Committee is determined by its Chair, with the assistance of our Chief Financial Officer, who has responsibility for human resources and compensation matters for non-executive employees of the Company.
The Compensation Committee is authorized to retain advisors with respect to compensation matters. The compensation consultant’s role is to provide
| | | | COMPENSATION DISCUSSION AND ANALYSIS | | |
independent third-party advice to assist the Compensation Committee in evaluating and designing our executive compensation policies and programs, including:
providing recommendations regarding the composition of our comparator group, as described below;
reviewing and assisting with recommendations regarding current executive compensation levels relative to the market and our performance, including with respect to the retention and promotion of executive officers;
advising on trends in executive compensation, including best practices; and
advising on aligning pay and performance.
The Compensation Committee engaged Compensia to advise on compensation matters for newly appointed executive officers and for non-management directors for 2014 and subsequently reengaged Compensia in 2015 and 2016. The Compensation Committee is responsible for reviewing fees paid to compensation consultants to ensure that the consultants maintain their objectivity and independence when rendering advice to the Compensation Committee regarding executive compensation matters.
The Compensation Committee reviewed the services provided by Compensia to the Compensation Committee and based on this review has determined that the provision of such services did not give rise to any conflict of interest, taking into account such factors as required by the SEC and applicable law and such other factors as the Compensation Committee determined to be relevant.
Management’s Role in Establishing Compensation
Our Chief Executive Officer and our Chief Financial Officer attend some Compensation Committee meetings to discuss matters under consideration by the Compensation Committee and to answer questions regarding those matters. The Compensation Committee also regularly meets in executive session without any members of management present.
The Compensation Committee members hold discussions with our Chief Executive Officer concerning the compensation for other executive officers. Our Chief Executive Officer provides her assessment of each individual’s responsibilities,
contribution to the Company’s results and potential for future contributions to the Company’s success. The Compensation Committee considers this input, but has final authority to set the compensation amounts for all executive officers in its discretion. The Compensation Committee discusses proposals for our Chief Executive Officer’s compensation package with her but always makes final decisions regarding her compensation when she is not present. The Compensation Committee also reviews market data and other relevant information provided by the compensation consultant when considering competitive and market factors in compensation, elements of compensation packages and possible changes to the compensation of our executive officers.
With oversight by the Compensation Committee, our human resources department administers our executive compensation program to implement the compensation decisions made by the Compensation Committee for our executive officers.
Consideration of 2015 Stockholder Advisory Vote
At our 2015 annual meeting of stockholders, our stockholders cast an advisory vote on the Company’s executive compensation decisions and policies, as disclosed in the proxy statement issued by the Company in April 2015, pursuant to Item 402 of SEC Regulation S-K (the “Say-on-Pay Vote”). Our stockholders approved the compensation of our executive officers, with over 95% of shares cast voting in favor of the say-on-pay proposal. As we evaluated our compensation practices and talent needs throughout 2015, we were mindful of the support our stockholders expressed for our philosophy of linking compensation to our financial, operational and strategic goals to incentivize the enhancement of stockholder value. As a result, the Compensation Committee decided to retain our general approach with respect to our executive compensation program.
Comparator Group
In late 2014, at the Compensation Committee’s request, Compensia evaluated the continued use of the comparator group used in benchmarking 2014 executive compensation and advised the Compensation Committee to make certain changes to the peer group used for evaluating executive officer and non-management director compensation.
In determining executive officer and non-management director compensation for 2015, the
| | | | COMPENSATION DISCUSSION AND ANALYSIS | | |
Compensation Committee relied upon the new compensation peer group, developed by Compensia and accepted by the Compensation Committee, which consisted of the following 20 publicly traded companies:
| | | | | | | | | | | | | | | | l | 8x8, Inc. | | l | Boingo Wireless, Inc. | | | l | BroadSoft, Inc. | | l | CalAmp, Inc. | | | l | Calix, Inc. | | l | Digi International, Inc. | | | l | Dot Hill Systems Corp. | | l | Emulex Corporation | | | l | Guidance Software, Inc. | | l | Harmonic Inc. | | | l | Jive Software, Inc. | | l | MobileIron, Inc. | | | l | MRV Communications, Inc. | | l | Oclaro, Inc. | | | l | ShoreTel, Inc. | | l | Spok Holdings, Inc. | | | l | Silver Spring Networks, Inc. | | l | TeleCommunication Systems, Inc. | | | l | Telenav, Inc. | | l | United Online, Inc. | | | | | | | | |
Due to changes in the Company’s business, primarily as a result of the acquisitions of Feeney Wireless LLC and DigiCore Holdings, Inc., in late 2015, at the Compensation Committee’s request, Compensia reevaluated the Company’s comparator group and advised the Compensation Committee to make certain changes to the peer group used for evaluating executive officer and non-management director compensation and composition.
In determining executive officer and non-management director compensation for 2016, the Compensation Committee relied upon the new compensation peer group, developed by Compensia and accepted by the Compensation Committee, which consisted of the following 20 publicly traded companies:
| | | | | | | | | | | | | | | | l | 8x8, Inc. | | l | Bazaarvoice | | | l | BroadSoft, Inc. | | l | CalAmp, Inc. | | | l | Calix, Inc. | | l | Digi International, Inc. | | | l | Epiq Systems, Inc. | | l | Fleetmatics Group PLC | | | l | Harmonic Inc. | | l | LivePerson, Inc. | | | l | Jive Software, Inc. | | l | Oclaro | | | l | MobileIron, Inc. | | l | MRV Communications, Inc. | | | l | Oclaro, Inc. | | l | ShoreTel, Inc. | | | l | Silver Spring Networks, Inc. | | l | TeleCommunication Systems, Inc. | | | l | Telenav, Inc. | | l | United Online, Inc. | | | | | | | | |
Review of Compensation Program
In developing an annual compensation program for our executive officers, the Compensation Committee typically considers the following three main factors:
Market Competitiveness. The Compensation Committee reviews market data provided by the compensation consultant to evaluate whether changes to the compensation program and pay levels of our executive officers may be appropriate. The Compensation Committee generally seeks to compensate our executive officers by using median compensation levels of the closest corresponding executive positions among our comparator group companies as a data point in determining target pay opportunities.
Internal Equity. The Compensation Committee considers the level of total compensation opportunity for the executive officers in relation to one another to ensure that each executive’s contribution to Company performance is appropriately reflected.
Individual Performance.The Compensation Committee considers each individual executive’s experience serving in his or her position and the potential for the executive to expand his or her responsibilities and increase his or her contributions to the Company.
Executive Compensation Programs and Policies
The components of our executive compensation program typically provide for a combination of fixed and variable compensation. As described in more detail below, these components are:
base salary;
annual incentive compensation;
long-term incentive awards; and
severance and change-in-control benefits.
The Compensation Committee typically allocates a significant percentage of the total compensation for our executive officers to annual and long-term incentives as a result of the compensation philosophy and objectives described above. In evaluating the levels of total compensation, the Compensation Committee reviews tally sheets for each executive officer. The tally sheets detail current and historical compensation for each officer, including target and actual base and bonus compensation, equity grants and other benefits generally available to Company employees (e.g., life and health insurance).
| | | | COMPENSATION DISCUSSION AND ANALYSIS | | |
Base Salary
The base salary for each of the executive officers is generally paid in cash and represents the fixed portion of his or her total compensation. Base salary compensation is intended to provide a reliable source of income for our executive officers, an important part of retaining our executives, and is not subject to the variability of the annual incentive compensation and long-term incentive compensation components of our executive compensation programs. The base salary of each of our executive officers is reviewed by the Compensation Committee annually. Base salaries are determined on the basis of the factors described above, as well as management responsibilities, level of experience and individual contributions to the Company. In 2014 and 2015, due to cash constraints experienced by the Company, certain executive officers of the Company agreed to accept RSUs in substitution for a portion of their base salary. Beginning January 1, 2016, all of our executive officers receive their total base salary in cash.
Annual Incentive Compensation
The Compensation Committee believes annual incentive compensation should be a key element of the total compensation opportunity of each executive officer. The Compensation Committee also believes that placing a portion of executive compensation at risk each year appropriately motivates executives to achieve Company and individual goals, thereby enhancing stockholder value.
Annually, the Compensation Committee establishes the performance metrics and goals that must be achieved for an executive officer to earn an annual incentive compensation award. In establishing performance metrics for each of our executive officers, the Compensation Committee considers both Company objectives and individual objectives. The Company objectives are based on certain financial, operational and strategic goals of the Company as set forth in our operating plan for that year. Individual objectives may be established for each executive in light of his or her functional group responsibilities and accompanying goals and expectations.
The Compensation Committee assesses performance by comparing actual results to the performance goals established.
The target annual incentive compensation award as a percentage of annual base salary for each executive level at December 31, 2015 was as follows:
| | | | Executive Level | Target | Chief Executive Officer(1)
| — | % | Chief Financial Officer(2)
| 50 | % | Senior Vice President | 35 | % |
| | (1) | Our current Chief Executive Officer receives solely long-term incentive compensation. |
| | (2) | In February 2016, the Compensation Committee increased the target annual incentive compensation award for the Chief Financial Officer to 60% of such executive’s annual base salary. |
In approving annual incentive payouts, the Compensation Committee may use its discretion to determine the amounts that otherwise would be payable based on Company and individual performance, subject to the maximum awards payable. For financial and revenue goals in incentive plans, there may be threshold minimum levels that must be achieved before any payments will be made for the achievement of such goals. In addition, for these types of goals, there may be over-achievement levels specified up to a maximum amount payable if these goals are over-achieved.
Long-Term Incentive Awards
Long-term incentive awards are granted to our executive officers under our 2009 Incentive Plan, which was originally approved by our stockholders in June 2009. These awards are intended to align the interests of our executives with those of our stockholders and are intended as a long-term incentive for future performance. The 2009 Incentive Plan is administered by the Compensation Committee.
Our 2009 Incentive Plan provides for grants of both equity and cash awards, which affords the Compensation Committee the flexibility to design long-term incentive awards that are responsive to our business needs and advance our interests and long-term success. To date, only stock options and RSUs have been granted under the 2009 Incentive Plan. The Compensation Committee believes these forms of equity grants motivate employees and align their interests with the Company’s stockholders. The Compensation Committee also believes that conserving the Company’s cash is important and
| | | | COMPENSATION DISCUSSION AND ANALYSIS | | |
therefore has not made any cash awards under the 2009 Incentive Plan.
The Compensation Committee views long-term incentive awards as a means to encourage executive retention because these awards vest over a specified period of time. The Compensation Committee typically consults with its compensation consultants regarding long-term incentive awards to the Company’s executive officers and considers the level of total compensation opportunity for the executive officers in relation to one another. The Compensation Committee has historically granted the executive officers a mix of stock option and RSU awards. When making long-term incentive award decisions, the Compensation Committee does not consider existing ownership levels because the Compensation Committee does not want to discourage our executive officers from holding significant amounts of the Company’s common stock. To that end, and to better align executives' interests with those of our stockholders, the Board has adopted a stock ownership policy, which sets forth that the Company's executive officers and non-management directors must own a minimum value of the Company's common stock. Our Chief Executive Officer must own at least three times her base salary, all executive officers must own an amount equal to their base salary and non-management directors must own an amount equal to their annual cash retainer. If the Company appoints a the Chief Operating Officer or a President who is not also the Chief Executive Officer, such individuals must own at least two times their base salary. All who are subject to the stock ownership policy must be in compliance with their minimum ownership requirement before the first year end following the fifth anniversary of being subject to the policy.
The Compensation Committee has adopted an equity granting policy that provides for grants to be made to our executive officers and non-management directors on a specific date each year. The Compensation Committee determines the amount and form of the equity to be granted to each individual based on market competitive data, internal equity considerations, management responsibilities, level of experience, and past and expected future contributions to the Company.
Severance and Change-in-Control Benefits
In November 2014, we entered into an employment offer letter agreement with Mr. Mashinsky. For information about the terms of this offer letter
agreement, see Compensation of Named Executive Officers—Employment Agreements beginning on page 29. For information about the severance benefits provided under this agreement, see Compensation of Named Executive Officers—Potential Payments Upon Termination or Change-in-Control—Employment Agreements beginning on page 32.
We have also entered into change-in-control and severance agreements with Dr. Souissi and Messrs. Newman, Sek, Bridges and Carney and Ms. Swenson. For information about the terms of these severance agreements, see Compensation of Named Executive Officers—Potential Payments Upon Termination or Change-in-Control—Severance Agreements beginning on page 33.
Employee Benefits
We do not provide our executive officers or other employees with defined pension benefits, supplemental retirement benefits, post-retirement payments or deferred compensation programs. We do provide a 401(k) defined contribution plan that is available to all of our U.S. employees who meet certain eligibility requirements.
Except as described below, we provide health, life and other insurance benefits to our executive officers on the same basis as our other full-time employees. All of our U.S. employees are eligible to be enrolled in our group disability and life insurance plans. Each of our executive officers is entitled to receive a life insurance benefit upon his or her death equal to two times his or her annual base salary in effect on the date of death, up to a maximum benefit of $500,000. Each of our other salaried employees is entitled to a life insurance benefit equal to two times his or her annual base salary in effect on the date of death, up to a maximum benefit of $300,000.
All of our employees, including our executive officers, are eligible to participate in our Employee Stock Purchase Plan (“ESPP”), which has been designed to comply with Section 423 of the Code. The Compensation Committee believes that the ESPP encourages employees, including our executive officers, to increase their ownership in the Company and further aligns their economic interests with those of our stockholders. The ESPP is designed to appeal primarily to non-executive employees and is not intended to be a meaningful element of our executive compensation program.
| | | | COMPENSATION DISCUSSION AND ANALYSIS | | |
We do not provide other perquisites or personal benefits to our executive officers. The Compensation Committee believes that this policy is consistent with its pay-for-performance philosophy. We also do not provide any additional cash compensation to our executive officers to reimburse them for any income tax liability that may arise and become due and payable as a result of their receipt of any cash or equity compensation or benefits.
Code Section 162(m)
Section 162(m) of the Code provides that compensation in excess of $1 million paid to the Chief Executive Officer or to any of the other three most highly compensated executive officers (other than the Chief Financial Officer) of a public company is not deductible for federal income tax purposes unless the compensation qualifies as “performance-based compensation.”
In reviewing our executive compensation program, the Compensation Committee considers the anticipated tax treatment of various payments and benefits to the Company and our executive officers. However, the deductibility of certain compensation payments depends upon the timing of an executive’s vesting or exercise of previously granted awards, as well as interpretations and changes in the tax laws and other factors beyond the Compensation Committee’s control. For these and other reasons, including the need to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee will not necessarily, or in all circumstances, limit executive compensation to that which is deductible under Section 162(m) of the Code and has not adopted a policy requiring that all compensation be deductible.
Anti-hedging and Pledging Policy
The Company’s Insider Trading Policy prohibits any pledging or hedging activities in the Company’s stock by the Company’s executive officers, members of the Board and certain other Company employees. The prohibited activities include any pledge of Company stock as well as transactions such as short sales, puts or calls.
2015 Compensation
Base Salaries
During the first quarter of 2015, the Compensation Committee reviewed recommendations from
Compensia, based on data from the relevant comparator group and published studies regarding the compensation of executive officers at other public companies, to reevaluate the base salaries of our executive officers.
Annual Incentive Compensation
In connection with the Company’s turnaround efforts beginning in 2014, the Board adopted the 2014 Retention Bonus Plan (the “2014 Plan”) pursuant to which certain of the Company’s full-time employees could become eligible to receive awards from the Company in a total dollar amount equal to 50% of his or her annualized base compensation. Performance milestones and bonus awards under the 2014 Plan related only to the third and fourth quarters of the Company’s 2014 fiscal year and the first quarter of the Company’s 2015 fiscal year (the “2014 Performance Period”).
Under the terms of the 2014 Plan, if the Company achieved both “positive EBITDA” and “increased cash” (both non-GAAP and as defined in the 2014 Plan) in two consecutive quarters during the 2014 Performance Period, then all full-time employees who were employed with the Company for at least four months during the 2014 Performance Period, and who continued to be employed with the Company on any applicable payment dates, would be eligible to receive bonus awards under the 2014 Plan. In July 2015, based on the Company’s financial results for the 2014 Performance Period, the Company paid approximately $540,000 in bonus compensation to our NEOs in the form of fully vested RSUs.
Commencing April 1, 2015, certain officers and employees of the Company (the “2015 Participants”) were eligible to receive bonuses under the 2015 Corporate Bonus Plan (the “2015 Plan”), with target bonus amounts set as a percentage of base salary based on rank or job title within the Company (“2015 Bonus Awards”). The 2015 Bonus Awards related only to the second through fourth quarters of the Company’s 2015 fiscal year (the “2015 Performance Period”); therefore, potential payouts were 75% of the payout that would have been applicable for a bonus plan based on a full fiscal year. The 2015 Bonus Awards were based on the Company meeting its revenue, non-GAAP gross margin and/or adjusted EBITDA objectives for the 2015 Performance Period.
| | | | COMPENSATION DISCUSSION AND ANALYSIS | | |
Under the terms of the 2015 Plan, achievement of at least 85% of the revenue or non-GAAP gross margin performance goals and 50% of the adjusted EBITDA performance goal was required for any payment of the 2015 Bonus Award that was based on achievement by the Company of such goals. The 2015 Bonus Award could be adjusted upward or downward by 25% based on individual performance during the 2015 Performance Period. Only those 2015 Participants who continued to be employed by the Company on any applicable payment dates, were eligible to receive bonus awards under the 2015 Plan. In April 2016, based on the Company’s financial results for the 2015 Performance Period, the Company paid approximately $90,000 in bonus compensation to our NEOs in the form of cash.
From January 1, 2016 through December 31, 2016 (the “2016 Performance Period”), certain non-executive officers and employees of the Company (the “2016 Participants”) will be eligible to receive bonuses under the 2016 Corporate Bonus Plan (the “2016 Plan”), with target bonus amounts set as a percentage of base salary based on the 2016 Participant’s position within the Company (“2016 Bonus Awards”). The 2016 Bonus Awards will be based on the Company meeting its quarterly revenue and adjusted EBITDA objectives, as well as the Company’s other 2016 corporate goals, which the Board has also adopted as the criteria for determining 2016 bonus eligibility for the NEOs under their individual employment agreements.
Under the terms of the 2016 Plan, achievement of at least 85% of the revenue or adjusted EBITDA performance goal is required for any payment of the portion of each 2016 Bonus Award that is based on achievement by the Company of such goals. Achievement of the Company’s other 2016 corporate bonus goals will be determined by the Compensation Committee in consultation with the Chief Executive Officer. The 2016 Bonus Awards may be adjusted upward or downward by 25% based on individual performance during the 2016 Performance Period. Only those 2016 Participants who continue to be employed by the Company on any applicable payment dates, will be eligible to receive bonus awards under the 2016 Plan.
The foregoing descriptions of the 2014 Plan, the 2015 Plan and the 2016 Plan do not purport to be complete and are subject to, and qualified in their entirety by, the terms of such plans which are incorporated herein by reference.
Long-Term Incentive Compensation
In 2015, the Compensation Committee considered several scenarios to address long-term incentive award compensation. The Compensation Committee reviewed the equity grants of the previous several years and received recommendations from Compensia based on the equity compensation practices of the Company’s peer group. Based on these considerations, the Compensation Committee decided to grant long-term incentive awards in a mix of stock options and RSU awards.
The following table sets forth the economic value (at the date of grant) of the long-term incentive awards granted to each of our NEOs in 2015. As described above, Messrs. Mashinsky and Carney and Dr. Souissi are no longer employed by the Company.
| | | | | | | | | | Name | Economic Value of Award at Time of Grant ($) | | Number of Stock Options (#) | Number of Restricted Stock Units (#) | Sue Swenson(1) | $ | 1,363,571 |
| | 951,550 |
| — |
| Michael Newman | $ | 559,494 |
| | 110,650 |
| 68,850 |
| Stephen Sek(1) | $ | 518,893 |
| | 100,000 |
| 50,000 |
| Lance Bridges(1) | $ | 525,540 |
| | 100,000 |
| 50,000 |
| Alex Mashinsky | $ | 2,179,355 |
| | 990,400 |
| 180,713 |
| Slim Souissi | $ | 895,562 |
| | 177,125 |
| 110,200 |
| John Carney(1) | $ | 1,148,064 |
| | 192,000 |
| 96,000 |
|
| | (1) | Includes long-term incentive awards granted to the NEO upon appointment to their executive role during 2015. |
Generally, the stock option awards described above vest over a three-year period, with one-third vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the third anniversary of the grant date. The RSUs described above generally vest in three equal installments on the first, second and third anniversary of the grant date. The Compensation Committee approved equity awards with time-based vesting to create a significant incentive for our NEOs to be employed by the Company for at least three years after the grant date.
| | | | REPORT OF THE COMPENSATION COMMITTEE | | |
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
COMPENSATION COMMITTEE
David Werner, Chair
Robert Pons
James Ledwith
Compensation Committee Interlocks and Insider Participation
No current member of the Compensation Committee was at any time during fiscal 2015 or at any other time an officer or employee of the Company, and no member had any relationship with the Company requiring disclosure as a related person transaction. No executive officer of the Company has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board or Compensation Committee during fiscal 2015.
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | |
COMPENSATION OF NAMED EXECUTIVE OFFICERS The following executive compensation tables and related information are intended to be read with the more detailed disclosure regarding our executive compensation program presented in the Compensation Discussion and Analysis.
Summary Compensation Table The following table sets forth information regarding the compensation of our NEOs for the years ended December 31, 2015, 2014 and 2013: | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary ($) | | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation($)(3) | Total ($) | Sue Swenson(4)(5) Chief Executive Officer | 2015 | — |
| | 84,998 |
| 1,363,571 |
| — |
| 70,890 |
| 1,519,459 |
| | | | | | | | | Michael Newman(6) Executive Vice President and Chief Financial Officer | 2015 | 299,997 |
| (8) | 462,576 |
| 246,915 |
| 42,750 |
| 1,020 |
| 1,053,258 |
| 2014 | 99,999 |
| (8) | 506,250 |
| 237,038 |
| — |
| 178 |
| 843,465 |
| | | | | | | | | Stephen Sek(5) Senior Vice President and Chief Technology Officer | 2015 | 252,000 |
| | 372,399 |
| 272,493 |
| 25,137 |
| 540 |
| 922,569 |
| | | | | | | | | Lance Bridges(5) Senior Vice President, General Counsel and Secretary | 2015 | 179,279 |
| | 254,000 |
| 271,540 |
| 23,949 |
| 555 |
| 729,323 |
| | | | | | | | | Alex Mashinsky(6)(7) Former Chief Executive Officer | 2015 | 439,411 |
| (8) | 1,085,437 |
| 1,358,918 |
| — |
| 214,880 |
| 3,098,646 |
| 2014 | 203,348 |
| (8) | 1,178,406 |
| 1,202,160 |
| — |
| 1,364 |
| 2,585,278 |
| Slim Souissi Former President and Chief Operations Officer | 2015 | 160,803 |
| (8) | 500,308 |
| 395,254 |
| — |
| 39,501 |
| 1,095,866 |
| 2014 | 355,833 |
| | 460,779 |
| 107,754 |
| — |
| 15,912 |
| 940,278 |
| 2013 | 307,500 |
| | — |
| 89,715 |
| 60,600 |
| 10,734 |
| 468,549 |
| John Carney(5) Former Executive Vice President, Sales and Marketing | 2015 | 184,231 |
| | 555,840 |
| 592,224 |
| — |
| 84,246 |
| 1,416,541 |
| | | | | | | |
|
|
named executive officers (“NEOs”).Name and Principal Position | | Year | | Salary ($) | | | Bonus ($)(1) | | | Stock Awards ($)(2) | | Option Awards ($)(2) | | | All Other Compensation ($)(3) | | | Total ($) | | Dan Mondor | | 2020 | | | 549,589 | | | 199,522 | | (4) | | – | | – | | | | 75,881 | | | | 824,992 | | Chairman and Chief Executive Officer | | 2019 | | | 550,000 | | | 563,251 | | (4) | | – | | – | | | | 99,961 | | | | 1,213,212 | | Ashish Sharma(5) | | 2020 | | | 317,153 | | | 81,985 | | (4) | | – | | 1,415,375 | | | | 8,559 | | | | 1,823,072 | | President, IoT & Mobile | | | | | | | | | | | | | | | | | | | | | | | | Doug Kahn(5) | | 2020 | | | 299,776 | | | 66,480 | | (4) | | – | | 272,295 | | | | 8,880 | | | | 647,431 | | Executive Vice President, Operations | | | | | | | | | | | | | | | | | | | | | | | | Stephen Smith(6) | | 2020 | | | 253,077 | | | 69,147 | | (4) | | – | | – | | | | 139,472 | | | | 461,696 | | Former Chief Financial Officer | | 2019 | | | 350,000 | | | 94,075 | | (7) | | – | | – | | | | 9,030 | | | | 453,105 | | Craig Foster(8) | | 2020 | | | 141,907 | | | – | | | | 399,995 | | 2,380,540 | | | | 630 | | | | 2,923,072 | | Former Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | |
| | (1) | Bonus payments were made through an award of immediately vesting RSUs under the Incentive Plan. Represents the aggregate grant date fair value of the RSU awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 8, Share-based Compensation, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. | (2) | Represents the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, 8,Share-based Compensation, in the Company’s 2015 Annual Report.Report on Form 10-K for the fiscal year ended December 31, 2020. |
| | (2) | Represents cash awards under our annual incentive compensation plans. |
| | (4) | Ms. Swenson served asRepresents a non-management director in 2015 from January 1, 2015 through October 27, 2015. During that time, she accrued compensation for her servicebonus payment made during fiscal 2020 based on the Board, which she received in the form of 18,722 RSUs on March 16, 2015individual and $70,810 in the form of cash payments, which included three quarterly cash payments of $21,500 for each of the first, second and third quarters and $6,310 for the period October 1, 2015 through October 27, 2015. This compensation is included in the table above under Stock Awards and All Other Compensation.
|
| Company performance during 2019. | (5) | Ms. SwensonMessrs. Sharma and Messrs. Sek, Bridges and CarneyKahn were not NEOs for the years ended December 31, 2014 or 2013; therefore, compensation of these NEOs is only disclosed for the year ended December 31, 2015. |
| first designated as “executive officers” in 2020. | (6) | Messrs. Newman and Mashinsky were not NEOs forMr. Smith served as the year ended December 31, 2013; therefore, compensation of these NEOs is only disclosed for the years ended December 31, 2015 and 2014. |
| Company’s Chief Financial Officer until August 14, 2020. | (7) | Mr. Mashinsky served asRepresents a non-management director from April 29, 2014 through June 12, 2014. During that time, he accrued compensation for his servicebonus payment made during fiscal 2019 based on the Board, which he received in the form of 55,215 unvested RSUs on April 29, 2014individual and 2,346 fully vested RSUs on September 10, 2014. This compensation is included in the table above under Stock Awards.
|
| Company performance during 2018. | (8) | The Company paid 30% of Mr. Newman’s base salaryFoster served as the Company’s Chief Financial Officer from November 1, 2014August 14, 2020 through December 31, 2015 in the form of RSUs. Mr. Newman’s RSUs for 2015 were granted on January 2, 2015 and vested ratably on a monthly basis until January 2, 2016. The Company paid 30% of Mr. Mashinsky’s base salary from November 1, 2014 through October 27, 2015 in the form of RSUs. Mr. Mashinsky’s RSUs for 2015 were granted on January 2, 2015 and vested ratably on a monthly basis until October 27, 2015, on which date any remaining compensatory RSUs were canceled upon termination of hisApril 5, 2021. |
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | 23 | |
employment. The Company paid a portion of Dr. Souissi’s base salary from March 16, 2015 through June 11, 2015 in the form of RSUs. Dr. Souissi’s RSUs for 2015 were granted on March 16, 2015 and vested ratably on a monthly basis until June 11, 2015, on which date any remaining compensatory RSUs were forfeited upon his resignation.
| | Compensation of Named Executive Officers |
All Other Compensation The following table sets forth information concerning All Other Compensation in the table above:Name | | Year | | Life Insurance Premiums Paid by Company ($) | | 401(k) Employer Match ($) | | Other Compensation ($) | | Total ($) | | Dan Mondor | | 2020 | | | 630 | | | 8,550 | | | 66,701 | (1) | | 75,881 | | | | 2019 | | | 630 | | | 8,400 | | | 90,931 | (1) | | 99,961 | | Ashish Sharma | | 2020 | | | 630 | | | 7,929 | | | – | | | 8,559 | | Doug Kahn | | 2020 | | | 630 | | | 8,250 | | | – | | | 8,880 | | Stephen Smith | | 2020 | | | 630 | | | 7,592 | | | 131,250 | (2) | | 139,472 | | | | 2019 | | | 630 | | | 8,400 | | | – | | | 9,030 | | Craig Foster | | 2020 | | | 630 | | | – | | | – | | | 630 | |
(1) | Living expense allowance plus tax gross-up. | (2) | Severance pay pursuant to the Transition Agreement described below |
Employment Agreements We generally enter into offer letters, rather than formal employment agreements, with our named executive officers. The letters set forth the initial salary and bonus terms for each named executive officer. The current base salaries and bonus targets for the NEOs are set forth below. In addition, the NEOs have each entered into a Change in Control and Severance Agreement with the Company. For a description of the severance benefits provided under these agreements, see —Potential Payments Upon Termination or Change-in-Control—Severance Agreements below. | | | | | | | | | | | | | | | | | | | | | Name | Year | Life Insurance Premiums Paid by Company ($) | Taxable Cell Phone Allowance ($) | Compensation for Service as Non-Management Director ($) | 401(k) Employer Match ($) | Severance ($) | Accrued but Unpaid Vacation Paid Upon Termination ($) | Quarterly Bonus ($) | Patent Bonus ($) | Total ($) | Sue Swenson | 2015 | — |
| 80 |
| 70,810 |
| — |
| — |
| — |
| — |
| — |
| 70,890 |
| Michael Newman | 2015 | 540 |
| 480 |
| — |
| — |
| — |
| — |
| — |
| — |
| 1,020 |
| | 2014 | 178 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 178 |
| Stephen Sek | 2015 | 540 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 540 |
| Lance Bridges | 2015 | 315 |
| 240 |
| — |
| — |
| — |
| — |
| — |
| — |
| 555 |
| Alex Mashinsky | 2015 | 450 |
| — |
| — |
| — |
| 161,618 |
| 52,812 |
| — |
| — |
| 214,880 |
| | 2014 | 267 |
| — |
| — |
| 1,097 |
| — |
| — |
| — |
| — |
| 1,364 |
| Slim Souissi | 2015 | 270 |
| — |
| — |
| — |
| — |
| 39,231 |
| — |
| — |
| 39,501 |
| | 2014 | 534 |
| — |
| — |
| 8,428 |
| — |
| — |
| — |
| 6,950 |
| 15,912 |
| | 2013 | 534 |
| — |
| — |
| 10,200 |
| — |
| — |
| — |
| — |
| 10,734 |
| John Carney | 2015 | 360 |
| — |
| — |
| — |
| — |
| 6,413 |
| 77,473 |
| — |
| 84,246 |
|
Base Salaries and Incentive Compensation The fiscal 2020 base salaries and target annual bonuses for the NEOs are shown in the following table. Actual bonus awards can vary from target based upon Company and individual performance as determined by the Compensation Committee. | | 2020 Base | | | Target Bonus | | | 2020 Bonus | | Name | | Salary (1) | | | % of Salary | | | Dollars | | | Earned (2) | | Dan Mondor | | $ | 550,000 | | | | 65% | (3) | | $ | 357,500 | (3) | | $ | 469,333 | | Ashish Sharma | | $ | 325,000 | | | | 50% | | | $ | 162,500 | | | $ | 175,056 | | Doug Kahn | | $ | 300,000 | | | | 40% | | | $ | 120,000 | | | $ | 182,597 | | Stephen Smith | | $ | 350,000 | | | | 50% | | | $ | 175,000 | | | $ | 109,939 | (4) | Craig Foster | | $ | 375,000 | | | | 50% | | | $ | 187,500 | | | $ | 84,162 | (4) |
(1) | Reflects base salaries effective December 31, 2020. | (2) | Bonuses were paid in March 2021 in the form of immediately vesting RSUs, based upon Company and individual performance during 2020, except for Mr. Smith, who received a cash payment. Represents the aggregate grant date fair value of the RSU awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. | (3) | Mr. Mondor has an annual target bonus equal to 65% of his annual base salary. In addition, he has the potential to receive up to an additional 65% of his base salary (for an aggregate annual bonus of up to 130% of his annual base salary) upon the achievement of certain “stretch goals” to be established by the Compensation Committee from time-to-time. | (4) | For Messrs. Foster and Smith, bonus awards are each pro-rated to reflect the portion of the year for which they were employed. |
| | | | 27 |2016 Proxy Statement
| 24 | |
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | Compensation of Named Executive Officers |
GrantsOutstanding Equity Awards at Fiscal Year-End Indemnification Agreements The Company has entered into indemnification agreements with each of Plan-Based Awards its directors and executive officers (each, an “Indemnitee”). In general, the indemnification agreements provide that, subject to certain limitations, the Company will indemnify and hold harmless each Indemnitee against all expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee or on such Indemnitee’s behalf, in connection with certain pending, completed or threatened proceedings, as defined in the indemnification agreements, if the Indemnitee acted in good faith and reasonably in the best interests of the Company and, with respect to any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.The following table sets forthprovides information regarding the Company’s grants of plan-based awards tostock options and RSUs held by our NEOs during 2015 under the Company’s annual incentive plan and 2009 Incentive Plan (as described above, Messrs. Mashinsky and Carney and Dr. Souissi are no longer employed by the Company). | | | | | | | | | | | | | | | | | | Name | Grant Date | All Other Stock Awards: Shares of Stock or Units (#)(1) | | All Other Option Awards: Securities Underlying Options (#)(2) | | Exercise or Base Price of Option Awards ($) | | Grant Date Fair Value of Stock and Option Awards ($) | | | Sue Swenson | 3/16/2015 | 18,722 |
| | — |
| | $ | — |
| | $ | 84,998 |
| | | 10/29/2015 | — |
| | 951,550 |
| (3) | $ | 2.27 |
| | $ | 1,363,571 |
| | Michael Newman | 1/2/2015 | 27,522 |
| (4) | — |
| | $ | — |
| | $ | 89,997 |
| | | 3/16/2015 | 68,850 |
| | — |
| | $ | — |
| | $ | 312,579 |
| | | 3/16/2015 | — |
| | 110,650 |
| | $ | 4.54 |
| | $ | 246,915 |
| | | 7/22/2015 | 56,390 |
| (5) | — |
| | $ | — |
| | $ | 149,997 |
| | Stephen Sek | 3/16/2015 | 30,000 |
| | — |
| | $ | — |
| | $ | 136,200 |
| | | 3/16/2015 | — |
| | 30,000 |
| | $ | 4.54 |
| | $ | 66,945 |
| | | 4/13/2015 | 20,000 |
| | — |
| | $ | — |
| | $ | 110,200 |
| | | 4/13/2015 | — |
| | 70,000 |
| | $ | 5.51 |
| | $ | 205,548 |
| | | 7/22/2015 | 47,368 |
| (5) | — |
| | $ | — |
| | $ | 125,999 |
| | Lance Bridges | 5/7/2015 | 50,000 |
| | — |
| | $ | — |
| | $ | 254,000 |
| | | 5/7/2015 | — |
| | 100,000 |
| | $ | 5.08 |
| | $ | 271,540 |
| | Alex Mashinsky | 1/2/2015 | 48,623 |
| (4)(6) | — |
| | $ | — |
| | $ | 158,997 |
| | | 1/2/2015 | — |
| | 200,000 |
| (6) | $ | 5.00 |
| | $ | 249,440 |
| | | 1/2/2015 | — |
| | 500,000 |
| (6) | $ | 7.50 |
| | $ | 461,450 |
| | | 3/16/2015 | 180,713 |
| (5) | — |
| | $ | — |
| | $ | 820,437 |
| | | 3/16/2015 | — |
| | 290,400 |
| (6) | $ | 4.54 |
| | $ | 648,028 |
| | | 7/22/2015 | 99,624 |
| (5) | — |
| | $ | — |
| | $ | 265,000 |
| | Slim Souissi | 3/16/2015 | 110,200 |
| (7) | — |
| | $ | — |
| | $ | 500,308 |
| | | 3/16/2015 | 19,094 |
| (8) | — |
| | $ | — |
| | $ | 86,687 |
| | | 3/16/2015 | — |
| | 177,125 |
| (7) | $ | 4.54 |
| | $ | 395,254 |
| | John Carney | 4/20/2015 | 96,000 |
| (7) | — |
| | $ | — |
| | $ | 555,840 |
| | | 4/20/2015 | — |
| | 192,000 |
| (7) | $ | 5.79 |
| | $ | 592,224 |
|
that were outstanding at December 31, 2020. | | | | Option Awards | | | Stock Awards | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | | | Option Exercise Price ($) | | | Option Expiration Date | | Number of shares of stock that have not vested (#)(2) | | | Market value of shares of stock that have not vested ($) | | Dan Mondor | | 6/6/2018 | | | 1,041,666 | | | | 208,334 | (3) | | | 2.00 | | | 6/6/2028 | | | | | | | | | | | 6/6/2017 | | | 750,000 | | | | – | | | | 0.94 | | | 6/6/2027 | | | | | | | | | Ashish Sharma | | 2/5/2020 | | | – | | | | 250,000 | | | | 7.70 | | | 2/5/2030 | | | | | | | | | | | 7/30/2018 | | | 151,042 | | | | 98,958 | | | | 1.80 | | | 7/30/2028 | | | | | | | | | | | 9/25/2017 | | | 112,500 | | | | 37,500 | | | | 1.38 | | | 9/25/2027 | | | | | | | | | Doug Kahn | | 7/29/2020 | | | – | | | | 25,000 | | | | 13.72 | | | 7/29/2030 | | | | | | | | | | | 10/4/2019 | | | – | | | | 35,417 | | | | 4.78 | | | 10/4/2029 | | | | | | | | | | | 2/13/2019 | | | – | | | | 108,333 | | | | 4.84 | | | 2/13/2029 | | | | | | | | | Stephen Smith | | 7/30/2018 | | | 162,083 | | | | – | | | | 1.80 | | | 7/30/2028 | | | | | | | | | | | 8/21/2017 | | | 166,667 | | | | – | | | | 1.16 | | | 8/21/2027 | | | | | | | | | Craig Foster | | 8/4/2020 | | | – | | | | 200,000 | | | | 14.54 | | | 8/4/2030 | | | | | | | | | | | 8/4/2020 | | | | | | | | | | | | | | | | | 27,510 | | | | 425,580 | |
| | (1) | Represents RSUs granted under the 2009 Incentive Plan. Unless otherwise indicated, these stock options are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date. | (2) | RSUs are scheduled to vest over a three-yearfour-year period, with one-thirdone-fourth vesting on eachthe first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date. |
(3) | | (2) | Represents stock options granted under the 2009 Incentive Plan. Unless otherwise indicated, these stockStock options are scheduled to vest over a three-year period, with one-third vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the third anniversary of the grant date. |
| | (3) | These stock options are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date. |
| | (4) | Represents RSUs granted as base salary compensation in lieu of cash. These RSUs are scheduled to vest ratably on a monthly basis over a 12-month period. |
| | (5) | Represents fully vested RSUs granted as bonus compensation under the 2014 Plan. |
| | (6) | Mr. Mashinsky was involuntarily terminated by the Board effective as of October 27, 2015 which, pursuant to his offer letter, resulted in: (i) the cancellation of any outstanding compensatory RSUs, (ii) the cancellation of certain outstanding non-compensatory RSUs and (iii) the cancellation of certain stock options. Information regarding the terms of his severance upon termination is described below under —Potential Payments Upon Termination or Change-in-Control—Employment Agreements.
|
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | 25 | |
| | (7) | Dr. Souissi and Mr. Carney voluntarily terminated their employment with the Company effective asCompensation of June 11, 2015 and December 1, 2015, respectively, on which date they forfeited any unvested portions of these awards.Named Executive Officers |
| | (8) | Represents RSUs granted as base salary compensation in lieu of cash. These RSUs were scheduled to vest ratably on a monthly basis between March 16, 2015 and January 2, 2016. Dr. Souissi voluntarily terminated his employment with the Company effective as of June 11, 2015 and he forfeited any unvested portion of this award on that date. |
Employment Agreements
Sue Swenson.Transition Agreement with Stephen M. Smith On October 29, 2015,August 11, 2020, we entered into a transition and release agreement (the “Transition Agreement”) with Mr. Smith, the Company’s former Chief Financial Officer, in connection with her agreementthe termination of his employment with the Company. The Transition Agreement provides for (i) the termination of Mr. Smith’s employment with the Company as of August 14, 2020; (ii) the release of any claims by Mr. Smith in favor of the Company; (iii) a payment to serve asMr. Smith of $175,000 to be paid in installments over six months; (iv) Mr. Smith to be available to provide consulting services to the Company to assist with the transition through December 31, 2020, during which time his outstanding equity awards will continue to vest; and (v) Mr. Smith to be entitled to a pro rata portion of the bonus, if any, that he would otherwise have been entitled to in connection with the Company’s Chief Executive Officer, the Company granted Ms. Swenson stock options to purchase 951,550 shares of the Company’s common stock, with a per share exercise price of $2.27, the closing price of the Company’s common stock on the grant date, and which may only be exercised after vesting if the price of the Company’s common stock is at least $3.41 per share on the date of exercise. On December 11, 2015, the Company entered into a formal employment offer letter agreement with Ms. Swenson. Under the terms of the offer letter, Ms. Swenson is entitled to receive an annual base salary of $1.00 as compensationfinancial performance for her services as Chief Executive Officer. On January 4, 2016, pursuant to the terms of the offer letter, the Company granted Ms. Swenson stock options to purchase an additional 951,550 shares of the Company’s common stock, with a per share exercise price of $1.66, the closing price of the Company’s common stock on the grant date. For a description of the severance benefits provided under this agreement and our other severance agreements, see —fiscal 2020.
Potential Payments Upon Termination or Change-in-Control —Employment Agreements.Michael Newman.On September 2, 2014, the Board appointed Mr. Newman to serve as the Company’s Executive Vice President and Chief Financial Officer pursuant to the terms of an employment offer letter agreement. Under the terms of the offer letter, Mr. Newman is initially entitled to receive an annual base salary of $300,000 as compensation for his services as Executive Vice President and Chief Financial Officer, of which $90,000 is to be paid through the issuance of RSUs which will vest in 12 monthly installments from the date of grant; provided, however, that beginning in calendar year 2016, Mr. Newman has the right to elect, and did elect, to receive his full annual base salary in cash. For a description of the severance benefits provided under this agreement and our other severanceWe have agreements see —Potential Payments Upon Termination or Change-in-Control—Employment Agreements.In July 2015, Mr. Newman received a $149,997 bonus, paid in the form of fully vestedRSUs, pursuant to the 2014 Plan. In April 2016, Mr. Newman received a $42,750 bonus, paid in the form of cash, pursuant to the 2015 Plan. For subsequent periods commencing January 1, 2016,Mr. Newman will be eligible to receive an annual bonus targeted at 60% of his annual base salary, based on achievement of criteria to be established by the Compensation Committee.
Stephen Sek.On March 13, 2015, the Board appointed Mr. Sek to serve as the Company’s Chief Technology Officer. Upon his appointment, Mr. Sek was initially entitled to receive an annual base salary of $252,000 as compensation for his services as Chief Technology Officer. On April 13, 2015, in connection with his appointment to Chief Technology Officer, the Company granted Mr. Sek 20,000 RSUs and stock options to purchase 70,000 shares of the Company’s common stock, with a per share exercise price of $5.51, the closing price of the Company’s common stock on the grant date. In July 2015, Mr. Sek received a $125,999 bonus, paid in the form of fully vested RSUs, pursuant to the 2014 Plan. In April 2016, Mr. Sek received a $25,137 bonus, paid in the form of cash, pursuant to the 2015 Plan. For subsequent periods commencing January 1, 2016,Mr. Sek will be eligible to receive an annual bonus targeted at 35% of his annual base salary, based on achievement of criteria to be established by the Compensation Committee.
Lance Bridges.On May 7, 2015, the Company entered into an employment offer letter agreement with Mr. Bridges, pursuant to which Mr. Bridges is initially entitled to receive an annual base salary of $275,000 as compensation for his services as Senior Vice President and General Counsel. On May 7, 2015, pursuant to the terms of the offer letter, the Company granted Mr. Bridges 50,000 RSUs and stock options to purchase 100,000 shares of the Company’s common stock, with a per share exercise price of $5.08, the closing price of the Company’s common stock on the grant date. For a description of the severance benefits provided under this agreement and our other severance agreements, see —Potential Payments Upon Termination or Change-in-Control—Employment Agreements.In April 2016,
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | |
Mr. Bridges received a $23,949 bonus, paid in the form of cash, pursuant to the 2015 Plan. For subsequent periods commencing January 1, 2016,Mr. Bridges will be eligible to receive an annual bonus targeted at 35% of his annual base salary, based on achievement of criteria to be established by the Compensation Committee.
Alex Mashinsky. On November 2, 2014, the Company entered into an employment offer letter agreement with Mr. Mashinsky to serve as the Company’s Chief Executive Officer for an initial term of three years. Mr. Mashinsky was entitled to receive an annual base salary of $530,000 as compensation for his services as Chief Executive Officer, of which $159,000 was payable through the issuance of RSUs which would vest in 12 monthly installments from the date of grant; provided, however, that beginning in calendar year 2017, Mr. Mashinsky would have had the right to elect to receive his full annual base salary in cash. In July 2015, Mr. Mashinsky received a $265,000 bonus, paid in the form of fully vested RSUs, pursuant to the 2014 Plan. As previously disclosed, Mr. Mashinsky served as Chief Executive Officer until October 27, 2015.
Slim Souissi.On April 17, 2015, the Company entered into a continued employment offer letter agreement with Dr. Souissi, pursuant to which Dr. Souissi was entitled to receive an annual base salary of $365,000 as compensation for his services as President and Chief Operations Officer. Commencing on March 16, 2015, $255,500 of Dr. Souissi’s annual base salary was payable in cash, and the remaining $109,500 of Dr. Souissi’s annual base salary was payable through the issuance of
RSUs which would vest in monthly installments from the date of grant; provided, however, that beginning in calendar year 2016, Dr. Souissi would have had the right to elect to receive his full annual base salary in cash. As previously disclosed, Dr. Souissi served as President and Chief Operations Officer until his resignation on June 11, 2015.
John Carney.On April 13, 2015, the Company entered into an employment offer letter agreement with Mr. Carney, pursuant to which Mr. Carney was entitled to receive an annual base salary of $300,000 as compensation for his services as Executive Vice President, Sales and Marketing. On the effective date, April 20, 2015, pursuant to the terms of the offer letter, the Company granted Mr. Carney 96,000 RSUs and stock options to purchase 192,000 shares of the Company’s common stock, with a per share exercise price of $5.79, the closing price of the Company’s common stock on the grant date. Mr. Carney had the opportunity to receive a quarterly bonus targeted at 80% of his base salary, based on achievement of criteria to be established by the Compensation Committee. Mr. Carney was guaranteed at least 100% of his target bonus opportunity for the pro-rated portion of his employment during the second quarter of 2015 and guaranteed at least 50% of his target bonus opportunity for the third quarter of 2015; provided, however, that he was employed by the Company on the date the bonus was paid. During 2015, Mr. Carney received a total of $77,473 related to his quarterly bonuses, pursuant to the terms of his offer letter. As previously disclosed, Mr. Carney served as Executive Vice President, Sales and Marketing until December 1, 2015.
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | |
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding the stock options and RSUs held by our NEOs that were outstanding at December 31, 2015 (as described above, Messrs. Mashinsky and Carney and Dr. Souissi are no longer employed by the Company). | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | Market Value of Shares or Units That Have Not Vested ($)(3) | Sue Swenson | — |
| | 951,550 |
| (4) | | $ | 2.27 |
| | 10/29/2025 | | | | | | | | | | | | | | | 5,000 |
| | $ | 8,350 |
| | | | | | | | | | | 33,898 |
| | $ | 56,610 |
| | | | | | | | | | | 18,722 |
| (5) | $ | 31,266 |
| Michael Newman | 72,916 |
| | 102,084 |
| | | $ | 2.25 |
| | 9/2/2024 | | | | | | — |
| | 110,650 |
| | | $ | 4.54 |
| | 3/16/2025 | | | | | | | | | | | | | | | 150,000 |
| | $ | 250,500 |
| | | | | | | | | | | 2,293 |
| (6) | $ | 3,829 |
| | | | | | | | | | | 68,850 |
| | $ | 114,980 |
| Stephen Sek | — |
| | 30,000 |
| | | $ | 4.54 |
| | 3/16/2025 | | | | | | — |
| | 70,000 |
| | | $ | 5.51 |
| | 4/13/2025 | | | | | | | | | | | | | | | 15,000 |
| | $ | 25,050 |
| | | | | | | | | | | 30,000 |
| (7) | $ | 50,100 |
| | | | | | | | | | | 20,000 |
| | $ | 33,400 |
| Lance Bridges | — |
| | 100,000 |
| | | $ | 5.08 |
| | 5/7/2025 | | | | | | | | | | | | | | | 50,000 |
| | $ | 83,500 |
| Alex Mashinsky | 486,111 |
| | — |
| | | $ | 2.85 |
| | 12/31/2015 | | | | | | 208,333 |
| | — |
| | | $ | 5.00 |
| | 12/31/2015 | | | | | | 127,778 |
| | — |
| | | $ | 5.00 |
| | 12/31/2015 | | | | | | 319,444 |
| | — |
| | | $ | 7.50 |
| | 12/31/2015 | | | | | | 169,400 |
| | — |
| | | $ | 4.54 |
| | 12/31/2015 | | | | | Slim Souissi | 25,240 |
| | — |
| | | $ | 10.40 |
| | 12/31/2015 | | | | | | 4,760 |
| | — |
| | | $ | 10.40 |
| | 12/31/2015 | | | | | | 102,273 |
| | — |
| | | $ | 5.51 |
| | 12/31/2015 | | | | | | 53,957 |
| | — |
| | | $ | 6.95 |
| | 12/31/2015 | | | | | | 27,522 |
| | — |
| | | $ | 5.45 |
| | 12/31/2015 | | | | | | 27,522 |
| | — |
| | | $ | 3.44 |
| | 12/31/2015 | | | | | | 56,250 |
| | — |
| | | $ | 2.10 |
| | 12/31/2015 | | | | | | 34,111 |
| | — |
| | | $ | 1.97 |
| | 12/31/2015 | | | | |
| | (1) | Unless otherwise indicated, these stock options are scheduled to vest over a three-year period, with one-third vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the third anniversary of the grant date. |
| | (2) | Unless otherwise indicated, these RSUs are scheduled to vest over a three-year period, with one-third vesting on each anniversary of the grant date. |
| | (3) | Calculated using a market value per share of $1.67, the closing price of our common stock on December 31, 2015. |
| | (4) | These stock options are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date. |
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | |
| | (5) | These RSUs vested in full on March 16, 2016. |
| | (6) | These RSUs were scheduled to vest ratably on a monthly basis over a one-year period ending January 2, 2016. |
| | (7) | These RSUs are scheduled to vest over a four-year period, with one-fourth vesting on each anniversary of the grant date. |
Option Exercises and Stock Vested
The following table sets forth information regarding the vesting of RSU awards for each of our NEOs during 2015 (as described above, Messrs. Mashinsky and Carney and Dr. Souissi are no longer employed by the Company).
| | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | Sue Swenson | — |
| | $ | — |
| | 28,059 |
| $ | 131,117 |
| Michael Newman | — |
| | $ | — |
| | 156,619 |
| $ | 429,323 |
| Stephen Sek | — |
| | $ | — |
| | 54,868 |
| $ | 142,199 |
| Lance Bridges | — |
| | $ | — |
| | — |
| $ | — |
| Alex Mashinsky | — |
| | $ | — |
| | 457,944 |
| $ | 1,084,208 |
| Slim Souissi | — |
| | $ | — |
| | 107,430 |
| $ | 517,120 |
| John Carney | — |
| | $ | — |
| | — |
| $ | — |
|
| | (1) | Represents the number of shares acquired on vesting multiplied by the closing price of our common stock on the applicable vesting date. |
Potential Payments Upon Termination or Change-in-Control
We have historically providedto provide severance benefits to our NEOs in the event the executive’s employment is terminated under certain circumstances following a change-in-controlterminated. A description of the Company. We currently provide these benefits to Ms. Swenson and Messrs. Newman, Sek and Bridges under separate severancematerial terms of the agreements, and previously provided these benefits to Mr. Mashinsky under his offer letter agreement and to Dr. Souissi and Mr. Carney under their separate severance agreements. We also provide severance benefits unrelated to a change-in-control to Ms. Swenson and Messrs. Newman, Sek and Bridges under their separate severance agreements and previously provided these benefits to Mr. Mashinsky under his offer letter agreement and to Dr. Souissi and Mr. Carney under their separate severance agreements. A description ofincluding the severance benefits payable under these agreements if any, is set forth below.
Employment Agreements
Alex Mashinsky.Our offer letter agreement with Mr. Mashinsky provided for payments and benefits to him in the event his employment was terminated under the circumstances described below.
As previously disclosed, Mr. Mashinsky served as Chief Executive Officer until October 27, 2015. Under
the terms of his offer letter agreement, Mr. Mashinsky was entitled to receive the following severance benefits for termination of employment by the Company without cause or if he terminated his employment for good reason; provided, however, that he delivered to the Company a general release of all claims against the Company and its affiliates effective no more than 55 days after the termination of his employment:
an amount equal to his unpaid base salary earned though the date of termination, accrued but unpaid vacation, incurred but unreimbursed business expenses payable in accordance with applicable law or Company policy, or vested benefits (other than severance) under any Company benefit plan;
severance payments paid in cash as salary continuation payments equal, in the aggregate, to the greater of (a) his base salary for the remainder of the initial three-year term of his offer letter agreement and (b) his base salary for 12 months, in each case, assuming his base salary was paid entirely in cash;
immediate vesting of any portion of outstanding equity awards under our compensation plans, other than compensatory RSUs, that would have vested or become exercisable had his employment continued through December 31 of the year following the calendar year in which his
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | |
termination occurred, which stock option awards would remain exercisable until the applicable expiration date and, with respect to compensatory RSUs, immediate vesting of the portion of the equity award that would have vested had his employment continued through the next monthly vesting date;
if he elected to receive continued healthcare coverage pursuant to COBRA, direct payment of premiums for Mr. Mashinsky and his covered dependents through the earliest of (a) 12 months, (b) the date he and his dependents become eligible for coverage through another group plan, and (c) the date he and his dependents become no longer eligible for COBRA; and
any unpaid bonus award earned for the previous year and a bonus award for the year of termination, assuming full achievement of any individual performance goal and criteria, pro-rated through the date of termination.
Sue Swenson. Our Change-in-Control and Severance Agreement with Ms. Swenson provides for payments and benefits to her in the event there is a change-in-control of the Company or if her employment is terminated under the circumstances described below.
Ms. Swenson is entitled to the following severance benefits if her employment is terminated by the Company without cause or if she terminates her employment for good reason:
an amount equal to her unpaid base salary earned though the date of termination, accrued but unpaid vacation, incurred but unreimbursed business expenses payable in accordance with applicable law or Company policy, or vested benefits (other than severance) under any Company benefit plan; and
immediate vesting of outstanding stock options on a proportional basis based on the number of full months she served as Chief Executive Officer following the respective grant dates of the options prior to the termination divided by 48 (“Accelerated Vesting”);
provided, however, that in order to receive the aforementioned severance benefits, Ms. Swenson must deliver to the Company a general release of all claims against the Company and its affiliates effective no more than 55 days after termination of her employment.
Under the agreement, Ms. Swenson will not be entitled to Accelerated Vesting if she terminates her employment for good reason or her employment is terminated by the Company without cause after October 29, 2016 (with respect to the $2.27 stock options) or January 4, 2017 (with respect to the $1.66 stock options), other than during a change-in-control period, which commences 30 days before and ends 12 months after a change-in-control (the “Change-in-Control Period”).
If Ms. Swenson is terminated by the Company without cause or for good reason during a Change-in-Control Period, she will be entitled to receive the benefits listed above, except that each outstanding and unvested stock option granted to her pursuant to the agreement shall automatically become vested and, if applicable, exercisable and any forfeiture restrictions or rights of repurchase thereon shall immediately lapse, as of immediately prior to the termination date.
Michael Newman, Stephen Sek and Lance Bridges.Dan Mondor.The Company entered into a Change-in-Control and Severance Agreement with Mr. Sek in April 2015 and with Mr. Bridges in May 2015 and into an Amended and Restated Change-in-Control and Severance Agreement with Mr. Newman in April 2015 (collectively, the “Executives”).Mondor on June 6, 2018. Under the terms of these agreements,this amended agreement, if theMr. Mondor’s employment of the Executive is terminated by the Company without causeCause or by the ExecutiveMr. Mondor for good reasonGood Reason not in connection with a change-in-control,Change-in-Control, then the ExecutiveMr. Mondor is entitled to the following severance benefits: an amount equal to the Executive’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the Executive | • | | an amount equal to Mr. Mondor’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to Mr. Mondor under our compensation plans; an amount equal to six months of the Executive’s base salary, payable in cash in the form of salary continuation;
immediate vesting of the portion of the Executive’s outstanding equity awards under our compensation plans, other than compensatory RSUs, that would have vested or become exercisable had his employment continued through the next vesting date, which stock option awards will remain exercisable until the applicable expiration date;
a lump-sum bonus payment equal to the pro-rated portion of the target bonus in the year of termination; and
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | | | | | • | | an amount equal to twelve months of Mr. Mondor’s base salary; | | | | | | • | | immediate vesting of the portion of Mr. Mondor’s outstanding equity awards under our compensation plans that would have vested or become exercisable had his employment continued through the next vesting date; | | | | | | • | | a lump-sum bonus payment equal to the pro-rated portion of the target bonus in the year of termination based on actual achievement of corporate performance goals and assumed full achievement of any individual performance goals; and |
continued participation for up to nine months by the ExecutiveMr. Mondor and his dependents in our group health plan, at the same benefit and contribution levels in effect immediately prior to the termination;termination, until up to the last date that severance compensation is paid to Mr. Mondor under the agreement; | | Compensation of Named Executive Officers |
provided, however, that in order to receive the aforementioned severance benefits (other than the ExecutiveMr. Mondor’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to Mr. Mondor under our compensation plans), Mr. Mondor must deliver to the Company a general release of all claims against the Company and its affiliates effective no more than 55 days after termination of his employment. Under these agreements,employment (the “Release Requirement”).Subject to satisfaction of the ExecutiveRelease Requirement (other than with respect to the first severance benefit noted below), Mr. Mondor is entitled to the following severance benefits, in lieu of the benefits described above, if the Executive’sMr. Mondor’s employment is terminated by the Company without causeCause or by the ExecutiveMr. Mondor for good reasonGood Reason during a Change-in-Control Period: an amount equal to the Executive’sMr. Mondor’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the ExecutiveMr. Mondor under our compensation plans; an amount equal to the sum of 18 months of the Executive’sMr. Mondor’s base salary; an amount equal to 12 months of the Executive’sMr. Mondor’s target annual bonus opportunity; immediate vesting of outstanding equity awards under our compensation plans, other than compensatory RSUs, which stock option awards will remain exercisable until the applicable expiration date;plans; and continued participation for up to 18 months by the ExecutiveMr. Mondor and his dependents in our group health plan, at the same benefit and contribution levels in effect immediately before the termination. Slim Souissi and John Carney. Other NEOs.The Company has also entered into Change-in-Control and Severance Agreements with Dr. SouissiMessrs. Foster, Kahn, Sharma and Mr. Carney in April 2015. Smith (the “Other NEOs”), all with substantially identical provisions. Under the terms of the agreements, if Dr. Souissithe employment of an Other NEO is terminated by the Company without Cause or Mr. Carney terminate their employmentby the Other NEO for any or no reason other thanGood Reason not in connection with a covered termination, which includes Dr. Souissi or Mr. Carney’s resignation for good reason, or Dr. Souissi or Mr. Carney’s termination other than for cause,Change-in-Control, then the executiveOther NEO is only entitled to the following severance benefits: an amount equal to the Other NEO’s unpaid base salary and incentive pay through the date of termination and any accrued but unpaidother amounts owed to the Other NEO under our compensation plans; an amount equal to six months of the Other NEO’s base salary, accrued but unused vacationpayable in cash in the form of salary continuation; immediate vesting of the portion of the Other NEO’s outstanding equity awards under our compensation plans that would have vested or become exercisable had his employment continued through the next vesting date; a lump-sum bonus payment equal to the pro-rated portion of the target bonus in the year of termination based on actual achievement of corporate performance goals and vestedassumed full achievement of any individual performance goals; and continued participation for up to nine months by the Other NEO and his dependents in our group health plan, at the same benefit and contribution levels in effect immediately prior to the termination; | | Compensation of Named Executive Officers |
provided, however, that in order to receive the aforementioned severance benefits (other than severance)the Other NEO’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the Other NEO under any Company benefit plan (the “Accrued Amounts”) asour compensation plans), the Other NEO must satisfy the Release Requirement.Under the agreement, subject to satisfaction of the termination date.
Dr. Souissi resigned as President and Chief Operations Officer effective June 11, 2015, on which
date he wasRelease Requirement (other than with respect to the first severance benefit noted below), the Other NEO is entitled to the Accrued Amounts. Mr. Carney resigned as Executive Vice President, Sales and Marketing, effective December 1, 2015, on which date he was entitledfollowing severance benefits, in lieu of the benefits described above, if the Other NEO’s employment is terminated by the Company without Cause or by the Other NEO for Good Reason during a Change-in-Control Period:an amount equal to the Accrued Amounts. “Cause”Other NEO’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the Other NEO under all severance agreements above means:our compensation plans;
any actan amount equal to the sum of material misconduct or material dishonesty18 months of the Other NEO’s base salary;
an amount equal to 12 months of the Other NEO’s target annual bonus opportunity; immediate vesting of outstanding equity awards under our compensation plans; and continued participation for up to 18 months by the Other NEO and his dependents in our group health plan, at the performance of his or her duties; any willful failure, gross neglect or refusal by the NEO to attempt in good faith to perform his or her duties to the Company or to follow the lawful instructions of the Board (except as a result of physical or mental incapacity or illness) which is not promptly cured after written notice;
the NEO’s commission of any fraud or embezzlement against the Company (whether or not a misdemeanor);
any material breach of any written agreement with the Company, which breach has not been cured by the NEO (if curable) within 30 days after written notice thereof to the NEO by the Company;
the NEO’s being convicted of (or pleading guilty or nolo contendere to) any felony or misdemeanor involving theft, embezzlement, dishonesty or moral turpitude; and/or
the NEO’s failure to materially comply with the material policies of the Companysame benefit and contribution levels in effect from time to time relating to conflicts of interest, ethics, codes of conduct, insider trading, or discriminationimmediately before the termination.
The Change-in-Control and harassment, or other breach ofSeverance Agreements described above utilize the following definitions: “Cause” means: | • | | any act of material misconduct or material dishonesty by the NEO in the performance of his or her duties; | | | | | | • | | any willful failure, gross neglect or refusal by the NEO to attempt in good faith to perform his or her duties to the Company or to follow the lawful instructions of the Board (except as a result of physical or mental incapacity or illness) which is not promptly cured after written notice; | | | | | | • | | the NEO’s commission of any fraud or embezzlement against the Company (whether or not a misdemeanor); | | | | | | • | | any material breach of any written agreement with the Company, which breach has not been cured by the NEO (if curable) within 30 days after written notice thereof to the NEO by the Company; | | | | | | • | | the NEO’s being convicted of (or pleading guilty or nolo contendere to) any felony or misdemeanor involving theft, embezzlement, dishonesty or moral turpitude; and/or | | | | | | • | | the NEO’s failure to materially comply with the material policies of the Company in effect from time to time relating to conflicts of interest, ethics, codes of conduct, insider trading, or discrimination and harassment, or other breach of the NEO’s fiduciary duties to the Company, which failure or breach is or could reasonably be expected to be materially injurious to the business or reputation of the Company. |
| | Compensation of Named Executive Officers |
“Good Reason” under all severance agreements aboveReason” means the occurrence, without the NEO’s consent, for more than thirty days after such NEO provides the Company a written notice detailing such conditions of: | • | | a material diminution in his or her base compensation; a material diminution in his or her job responsibilities, duties or authorities; or
a relocation of his or her principal place of work by more than 50 miles.
| | | • | COMPENSATION OF NAMED EXECUTIVE OFFICERS | a material diminution in his or her job responsibilities, duties or authorities; or | | | | | | • | | a relocation of his or her principal place of work by more than 50 miles. |
“ Change-in-ControlChange-in-Control” under all severance agreements above is defined as:a transaction after which an individual, entity or group owns 50% or more of the outstanding shares of our common stock, subject to limited exceptions;
a sale of all or substantially all of the Company’s assets; or means: | • | | a transaction after which an individual, entity or group owns 50% or more of the outstanding shares of our common stock, subject to limited exceptions; | | | | | | • | | a sale of all or substantially all of the Company’s assets; or |
a merger, consolidation or similar transaction, unless immediately following such transaction (a) the holders of our common stock immediately prior to the transaction continue to beneficially own more than 50% of the combined voting power of the surviving entity in substantially the same proportion as their ownership immediately prior to the transaction, (b) no person becomes the beneficial owner, directly or indirectly, of more than 50% of the total voting power of the outstanding shares of the voting securities eligible to elect directors of the surviving entity and (c) at least a majority of the members of the board of directors of the surviving entity immediately following the transaction were also members of the Board at the time the Board approved the transaction. “Change-in-Control Period” means the period commencing 30 days prior to a Change-in-Control and ending on the 12-month anniversary of such Change-in-Control. Equity Award Agreements The following is a summary of the vesting provisionsmaterial terms applicable to the outstanding equity awards held by our NEOs as of December 31, 2015. 2009 2020.Incentive Plan. The award agreements covering grants of stock options and RSUs made to our NEOs under our 2009 Incentive Plan provide that the Board,in its discretion, may accelerate the vesting of any unvested stock options or RSUs in the event of a change-in-control. Under our 2009 Incentive Plan, a “change-in-control”“change-in-control” is defined as:any person becoming the beneficial owner of 50% or more of the combined voting power of the then-outstanding shares of our common stock, subject to certain exceptions; a majority of the Board ceasing to be comprised of directors who (a) were serving as members of the Board on June 18, 2009 or (b) became members of the Board after June 18, 2009 | | Compensation of Named Executive Officers |
| • | | a majority of the Board ceasing to be comprised of directors who (a) were serving as members of the Board on May 11, 2018 or (b) became members of the Board after May 11, 2018 and whose nomination, election or appointment was approved by a vote of two-thirds of the then-incumbent directors; a reorganization, merger, consolidation, sale of all or substantially all of the assets of the Company or similar transaction, unless the holders of our common stock immediately prior to the transaction beneficially own more than 50% of the combined voting power of the shares of the surviving entity and certain other conditions are satisfied; or
a liquidation or dissolution of the Company approved by the Company’s stockholders.
2000 Stock Incentive Plan. The award agreements covering stock option grants previously made to our NEOs under our 2000 Stock Incentive Plan provide that the stock options will remain exercisable for up to 270 days following the date of an executive’s employment termination for any reason.
| | | | COMPENSATION OF NAMED EXECUTIVE OFFICERS | | |
Summary of Potential Termination Benefits
The following table quantifies the compensation and benefits that would have been payable to our NEOs under the agreements described above if the NEOs employment had been terminated on December 31, 2015, given the NEO’s base salary, and, if applicable, the closing price of our common stock, as of that date. The amounts shown in the table do not include certain payments and benefits, such as accrued salary and accrued vacation, to the extent that such payments and benefits are generally provided on a non-discriminatory basis to salaried employees of the Company upon termination of employment.
| | | | | | | | | | | | | | | | | | Named Executive Officer | Benefit | Involuntary Termination Without Cause or Voluntary Termination for Good Reason | Involuntary Termination Without Cause or Voluntary Termination for Good Reason During a Change-in-Control Period | Death | Sue Swenson | Severance | | $ | — |
| | | $ | — |
| | | $ | — |
| | | Bonus | | $ | — |
| | | $ | — |
| | | $ | — |
| | | Accelerated Vesting of Equity Awards | | $ | — |
| | | $ | — |
| | | $ | — |
| | | Health Benefits Continuation | | $ | — |
| | | $ | — |
| | | $ | — |
| | | Insurance Benefits | | $ | — |
| | | $ | — |
| | | $ | — |
| | Michael Newman | Severance | | $ | 150,000 |
| | | $ | 450,000 |
| | | $ | — |
| | | Bonus | | $ | 42,750 |
| | | $ | 150,000 |
| | | $ | — |
| | | Accelerated Vesting of Equity Awards | | $ | 163,577 |
| | | $ | 365,480 |
| | | $ | — |
| | | Health Benefits Continuation | | $ | 14,642 |
| | | $ | 29,285 |
| | | $ | — |
| | | Insurance Benefits | | $ | — |
| | | $ | — |
| | | $ | 500,000 |
| | Stephen Sek | Severance | | $ | 126,000 |
| | | $ | 378,000 |
| | | $ | — |
| | | Bonus | | $ | 25,137 |
| | | $ | 88,200 |
| | | $ | — |
| | | Accelerated Vesting of Equity Awards | | $ | 40,357 |
| | | $ | 108,550 |
| | | $ | — |
| | | Health Benefits Continuation | | $ | 16,756 |
| | | $ | 33,512 |
| | | $ | — |
| | | Insurance Benefits | | $ | — |
| | | $ | — |
| | | $ | 500,000 |
| | Lance Bridges | Severance | | $ | 137,500 |
| | | $ | 412,500 |
| | | $ | — |
| | | Bonus | | $ | 23,949 |
| | | $ | 96,250 |
| | | $ | — |
| | | Accelerated Vesting of Equity Awards | | $ | 27,832 |
| | | $ | 83,500 |
| | | $ | — |
| | | Health Benefits Continuation | | $ | 16,756 |
| | | $ | 33,512 |
| | | $ | — |
| | | Insurance Benefits | | $ | — |
| | | $ | — |
| | | $ | 500,000 |
| |
| | | | | | REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS | | | | | | • | | a reorganization, merger, consolidation, sale of all or substantially all of the assets of the Company or similar transaction, unless the holders of our common stock immediately prior to the transaction beneficially own more than 50% of the combined voting power of the shares of the surviving entity and certain other conditions are satisfied; or | | | | | | • | | a liquidation or dissolution of the Company approved by the Company’s stockholders. |
Equity Compensation Plan Information As of December 31, 2020, the Company’s Amended and Restated 2000 Employee Stock Purchase Plan (the “Purchase Plan”) and the Incentive Plan were the only compensation plans under which securities of the Company were authorized for grant. The Purchase Plan and the Incentive Plan were approved by our stockholders. In 2019, the Board terminated the Company’s 2015 Incentive Compensation Plan (the “2015 Incentive Plan”), which was adopted by the Board without stockholder approval pursuant to NASDAQ Listing Rule 5635. The following table provides information as of December 31, 2020 regarding the Company’s existing and predecessor plans: Plan category | | Number of securities to be issued upon exercise of outstanding options | | | Weighted-average exercise price of options outstanding | | | Number of securities remaining available for future issuance under equity compensation plans | | Equity compensation plans approved by security holders | | | 7,792,347 | | | $ | 3.78 | (1) | | | 3,240,689 | (2) | Equity compensation plans not approved by security holders | | | 687,632 | (3) | | $ | 7.54 | | | | — | |
(1) | Amount is based on the weighted-average exercise price of vested and unvested stock options outstanding under the Incentive Plan and predecessor plans. RSUs, which have no exercise price, are excluded from this calculation. | (2) | Represents shares available for future issuance under the Purchase Plan and the Incentive Plan. As of December 31, 2020, there were 391,201 shares of our common stock available for issuance under the Purchase Plan and 2,849,488 shares of our common stock available for issuance under the Incentive Plan. | (3) | Represents outstanding options under the 2015 Incentive Plan and inducement options and RSUs issued to our former CFO. The 2015 Incentive Plan, which includes the same material terms as the Incentive Plan, could only be used for inducement grants to individuals to induce them to become employees of the Company or any of its subsidiaries, or, in conjunction with a merger or acquisition, to convert, replace or adjust outstanding stock options or other equity compensation awards, or for any other reason for which there is an applicable exception from the stockholder approval requirements of NASDAQ Listing Rule 5635, in each such case, subject to the applicable requirements of the NASDAQ Listing Rules. |
Compensation Committee Interlocks and Insider Participation The Compensation Committee consists of Messrs. Avery and Tuder (Chair). No current member of the Compensation Committee was at any time during fiscal 2020 or at any other time an officer or employee of the Company. Mr. Avery has a relationship with the Company that required disclosure as a related person transaction. For more information, please see below under Transactions with Related Persons. No executive officer of the Company has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board or Compensation Committee during fiscal 2020.
REVIEW AND APPROVAL OF | | Transactions with Related Persons |
TRANSACTIONS WITH RELATED PERSONS Pursuant to the Audit Committee charter, the Audit Committee is responsible for implementing the Company’s written policies and procedures regarding transactions with a related person (as defined in SEC regulations). In considering related person transactions, the Audit Committee takes into account the relevant available facts and circumstances, including: the risks, costs and benefits to the Company;
the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
the terms of the transaction;
the availability of other sources for comparable services or products; and
the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.
| · | the risks, costs and benefits to the Company; |
| · | the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated; |
| · | the terms of the transaction; |
| · | the availability of other sources for comparable services or products; and |
| · | the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. |
In the event a director has an interest in the proposed transaction, the director must recuse himself from the deliberations. When reviewing a related person transaction, the Audit Committee determines in good faith whether the transaction is in, or is not inconsistent with, the best interests of the Company and its stockholders. HC2 Holdings.2018 Private Placement On September 3, 2014, weAugust 6, 2018, the Company entered into a purchase agreement with HC2 Holdingsthe Purchase Agreement, pursuant to which on September 8, 2014, wethe Company issued and sold to HC2 Holdings (i) 7,363,334 sharesGolden Harbor Ltd., an affiliate of ourTavistock Group (“Golden Harbor”), and North Sound Trading, L.P. (“North Sound” and, together with Golden Harbor, the “Investors”), in a private placement transaction (the “2018 Private Placement”), an aggregate of 12,062,000 immediately separable units (the “Units), with each Unit consisting of (a) one share of the Company’s common stock, par value $0.001 per share, (ii)and (b) a warrant to acquire 0.35 of a share of common stock, for a purchase 4,117,647price of $1.63 per Unit. Upon the consummation of the 2018 Private Placement, both Investors held more than five percent of the Company’s outstanding shares of ourcommon stock. Pursuant to the terms of the Purchase Agreement, each Investor is entitled to designate one member of the Board. In addition, if Golden Harbor notifies the Company that it beneficially owns an aggregate of at least 20% of the then-issued and outstanding shares of common stock and wishes to designate an additional member of the Board, then: (i) the Board shall increase the number of seats on the Board to equal seven, and (ii) (A) if the Board is then comprised of 6 members, the Board shall fill the newly created vacancy by appointing the additional designee selected by Golden Harbor; and (B) if the Board is then comprised of 5 members, the Board shall (1) fill one newly created vacancy by appointing the additional designee selected by Golden Harbor; and (2) fill the remaining vacancy by appointing an independent director candidate selected by the Board. If, at any time, either Investor ceases to hold at least 5% of the then-outstanding shares of common stock of the Company, such Investor shall no longer be entitled to designate any members of the Board. On August 6, 2018, in accordance with the terms of the Purchase Agreement, the Board appointed James B. Avery and Brian Miller to fill the two vacant seats on the Board. Mr. Avery is a Vice President of Golden Harbor. Mr. Miller, who is a principle of North Sound Trading, L.P., resigned from the Board effective March 1, 2021. Warrant Transaction On March 28, 2019, the Investors agreed to exercise the warrants issued by the Company to the Investors on August 6, 2018 (the “Existing Warrants”). Upon exercise of the Existing Warrants, Golden Harbor purchased 3,166,275 shares of common stock, and North Sound purchased 1,055,425 shares of common stock, each at an exercise price of $2.26 per share (the “Warrant”) and (iii) 87,196 shares of our Series C Preferred Stock, all at a purchase price of (a) $1.75 per share of common stock plus, in each case, the related Warrant and (b) $17.50 per share of Series C Preferred Stock, for aggregate gross proceeds of approximately $14.4 million (collectively, the “Financing”). On November 17, 2014, each share of Series C Preferred Stock then outstanding automatically converted into ten shares of common stock. On March 26, 2015, HC2 Holdings purchased 3,824,600 shares of common stock pursuant to the exercise of the Warrant, at an exercise price of $2.26$2.52 per share, for aggregate cash proceeds to the Company of approximately $8.64$10.6 million. In order to induce HC2 Holdings to exerciseconnection with the Warrant,Investors exercising the Existing Warrants, on March 26, 2015,28, 2019, the Company issued to HC2HoldingsGolden Harbor a new warrant to purchase 1,593,5831,875,000 shares of common stock at an exercise priceand issued to North Sound a new warrant to purchase 625,000 shares of $5.50 per share. HC2 Holdings owns approximately 24.5%common stock (each a “New Warrant” and, collectively, the “New Warrants”). Each of the Investors held more than five percent of the Company’s outstanding shares of common stock as of the Companydate of the exercise of the Existing Warrants and isissuance of the New Warrants. | | Transactions with Related Persons |
Each New Warrant has an exercise price of $7.00 per share of common stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, will be exercisable at any time on or after September 28, 2019, and will expire on June 30, 2022. Each New Warrant will be exercisable on a wholly owned subsidiarycash basis unless, at the time of HC2. In connection withsuch exercise, the Financing described above,shares of common stock issuable upon exercise of the New Warrants cannot be immediately resold pursuant to an effective registration statement or Rule 144 of the Securities Act of 1933, as amended without volume or manner of sale restrictions, in which case such New Warrant shall also be exercisable on a cashless exercise basis.Except as expressly set forth therein, the New Warrants do not confer upon their holders any voting or other rights as a stockholder of the Company. 2019 Private Placement On August 9, 2019, the Company entered into the Investors’ Rightsa Securities Purchase Agreement, pursuant to which the Company grantedissued and sold to HC2 Holdings certain appointmentGolden Harbor and nomination rights relatedNorth Sound in a private placement transaction (the “2019 Private Placement”), an aggregate of 10,000 shares of the Company’s Series E Fixed-Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”), for an aggregate purchase price of $10.0 million. Each share of Series E Preferred Stock entitles the holder thereof to receive, when, as and if declared by the Company out of assets legally available therefor, cumulative cash dividends at an annual rate of 9.00% payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, beginning on October 1, 2019. If dividends are not declared and paid in any quarter, or if such dividends are declared but holders of the Series E Preferred Stock elect not to receive them in cash, the quarterly dividend will be deemed to accrue and will be added to the Company’sSeries E Base Amount. The Series E Preferred Stock has no voting rights unless otherwise required by law. The Series E Preferred Stock is perpetual and has no maturity date. However, the Company may, at its option, redeem shares of the Series E Preferred Stock, in whole or in part, on or after July 1, 2022, at a price equal to 110% of the Series E Base Amount plus (without duplication) any accrued and unpaid dividends. The “Series E Base Amount” means $1,000 per share, plus any accrued but unpaid dividends, whether or not declared by the Board, as well as rightssubject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the registrationSeries E Preferred Stock. In the event of a liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred Stock will be entitled to receive, after satisfaction of liabilities to creditors and subject to the rights of holders of any senior securities, but before any distribution of assets is made to holders of common stock or any other junior securities, the Series E Base Amount plus (without duplication) any accrued and unpaid dividends. Convertible Notes On March 6, 2020, the Company entered into waiver agreements with the holders of substantially all of the outstanding indebtedness under the Company’s 5.50% Convertible Senior Notes due 2022 (the “2022 Notes”), including Golden Harbor, North Sound and an individual retirement account held by Mr. Lytle’s mother, over which Mr. Lytle has investment discretion (the “Lytle IRA”), pursuant to which each of the holders agreed to waive their optional right to require the Company to repurchase the 2022 Notes on June 15, 2020 (the “Optional Repurchase Date”) at a repurchase price in cash equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the Optional Repurchase Date. On May 12, 2020, the Company entered into separate privately-negotiated exchange agreements (each, an “Exchange Agreement”) with each of Golden Harbor, North Sound and the Lytle IRA with respect to the 2022 Notes, pursuant which they agreed to exchange the 2022 Notes that they held for a combination of cash and the Company’s 3.25% Convertible Senior Notes due 2025 (the “2025 Notes”) in concurrent private placement transactions (the “Private Exchange Transactions”), as follows: Holder | 2022 Notes Exchanged | 2025 Notes Issued | Cash Received | North Sound | $31,116,000 | $55,544,000 | $22,261,000 | Golden Harbor | $13,700,000 | $24,456,000 | $9,801,000 | Lytle IRA | $150,000 | $375,000 | – |
The Company did not receive any cash proceeds from the Investors in connection with the Private Exchange Transactions. | | Transactions with Related Persons |
In connection with the Private Exchange Transactions, the Company filed a registration statement with the SEC in order to effect the registration for resale by the Investors of the 2025 Notes and any shares of common stock issuedissuable upon conversion of the 2025 Notes held by the Investors. During fiscal 2019, the Company made interest payments to Golden Harbor, North Sound and the Lytle IRA in the Financingamounts of $753,500, $1,011,065 and $8,230, respectively, pursuant to the 2022 Notes. During fiscal 2020, the Company made interest payments to Golden Harbor, North Sound and the Lytle IRA in the amounts of $373,124, $847,432, and $5,721 respectively, pursuant to the 2025 Notes. Credit Agreement On March 9, 2020, the Company entered into an amendment to that certain Credit Agreement, dated August 23, 2017, as the same has been amended, supplemented or otherwise modified from time to time (as amended, the “Credit Agreement”), by and among the Company, certain subsidiaries of the Company party thereto, Cantor Fitzgerald Securities, as agent, and certain lenders party thereto to, among other things, amend certain financial covenants set forth therein and to permit the use of the Company’s Series E Preferred Stock to make certain payments, including interest payments, due thereunder. South Ocean Funding, LLC (“South Ocean”), an affiliate of Golden Harbor, held all of the aggregate principal amount then outstanding under the Credit Agreement. During fiscal 2019, all interest owing to South Ocean under the Credit Agreement was accrued. On March 31, 2020, the Company issued 2,330 shares of Series E Preferred Stock to South Ocean in satisfaction of $2,330,000 in deferred interest obligations pursuant to the terms and conditions of the Credit Agreement. On May 7, 2020, the Company entered into a letter agreement (the “Letter Agreement”) with Cantor Fitzgerald Securities and South Ocean. Pursuant to the Letter Agreement, South Ocean, among other things, consented to the issuance by the Company of up to $218,750,000 in aggregate principal amount of the 2025 Notes so long as a portion of the proceeds were used to prepay the Credit Agreement in full and substantially concurrently with the receipt of cash proceeds in respect of the issuance of the 2025 Notes (the date of such prepayment, the “Prepayment Date”). The Company also agreed to (i) pay, on the Prepayment Date, the prepayment and exit fees due under the Credit Agreement in cash, rather than making payment of such fees in shares of Series E Preferred Stock, and (ii) redeem, in cash, on the Prepayment Date, the shares of the Series E Preferred Stock previously issued to South Ocean in satisfaction of certain deferred interest obligations pursuant to the terms and conditions of the Credit Agreement. On May 12, 2020, in accordance with the Letter Agreement, the Company paid South Ocean $2,354,408 to redeem 2,330 shares of Series E Preferred Stock. | | Transactions with Related Persons |
On May 12, 2020, the Company repaid in full and terminated the Credit Agreement. The amounts paid included $47,500,000 in outstanding principal, approximately $500,000 in interest accrued thereon, a prepayment fee of $760,000 and an exit fee of $570,000. In accordance with the terms of the Letter Agreement, the prepayment and exit fees were paid in cash to South Ocean. Consulting Agreements On September 30, 2019, the Company entered into a written Consulting Agreement (the “Pons Consulting Agreement”) with Robert Pons, a former member of the Board. The consulting services to be provided by Mr. Pons include advisory services in connection with the Company’s business strategy and such other services as the Company’s Chief Executive Officer may request from time to time. The Pons Consulting Agreement is for a term of 30 months and provides for the following compensation: (1) cash retainer of $17,250 on the date of each regularly scheduled quarterly meeting of the Company’s Board of Directors through June 30, 2021, up to a maximum of 7 meetings, subject to continuous service under the Pons Consulting Agreement through the date of each such meeting; (2) on the first date in 2020 that the Company’s Board of Directors grants annual equity awards to all non-employee members of the Board of Directors, restricted stock units with a value equal to $85,000 (based on the closing price of the Company’s stock as of the prior trading day), vesting on the date one year following the date of grant; and (3) on the first date in 2021 that the Company’s Board of Directors grants annual equity awards to all non-employee members of the Board of Directors, restricted stock units with a value equal to $35,417 (based on the closing price of the Company’s stock as of the prior trading day), vesting on June 30, 2021. Mr. Lytle previously served as the Company’s Chief Strategy Officer and Executive Vice President of Enterprise SaaS Solutions from August 2017 to October 2018. He has also served as a consultant to the Company from June 2017 to August 2017 and again from October 2018 to September 2020. Since the beginning of the Company’s fiscal year 2019, the Company paid Mr. Lytle $229,741 in consulting fees and expenses and issued Mr. Lytle an aggregate of 14,644 immediately vested restricted stock units for consulting services. Parents of the Company The Company has no parents except to the extent that either of the Investors may be deemed a parent by virtue of their ownership of the Company’s outstanding shares of common stock, underlyingand their Board nomination and appointment rights under the Warrant and the Series C Preferred Stock. Effective as of October 14, 2014, the Board appointed Philip Falcone and Robert Pons to the Board. Mr. Falcone is the Chairman of the Board, President and Chief Executive Officer of HC2. Mr. Pons is the Executive Vice President of Business Development and a director of HC2. In addition, Mr. Pons serves on the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee, and was recently appointed to serve as lead independent director. On September 18, 2013, the United States District Court for the Southern District of New York entered a final Judgment (the “Final Judgment”) approving a settlement between the SEC and Harbinger Capital, Harbinger Capital Partners Special Situations GP, LLC, Harbinger Capital Partners Offshore Manager, L.L.C., and Mr. Falcone (collectively, the “HCP Parties”), in connection with two civil actions previously filed against the HCP Parties by the SEC. One civil action alleged that Harbinger Capital Partners Special Situations GP, LLC, Harbinger Capital Partners Offshore Manager, L.L.C., and Mr. Falcone violated the anti-fraud provisions of the federal securities laws by engaging in market manipulation in connection with the trading of the debt securities of a particular issuer from 2006 to 2008. The other civil action alleged that Harbinger Capital and Mr. Falcone violated the anti-fraud provisions of the federal securities laws in connection with a loan made by Harbinger Capital Partners Special Situations Fund, L.P. to Mr. Falcone in October 2009 and in connection with the circumstances and disclosure regarding alleged preferential treatment of, and agreements with, certain fund investors. The Final Judgment bars and enjoins Mr. Falcone for a period of five years (after which he may seek to have the bar and injunction
Purchase Agreement. | | | | 37 |2016 Proxy Statement
| 34 | |
| | | | | | REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS | | | Security Ownership of Management and Certain Beneficial Owners |
lifted) from acting as or being an associated person of any “broker,”“dealer,”“investment adviser,”“municipal securities dealer,”“municipal adviser,”“transfer agent,” or “nationally recognized statistical rating organization” (as those terms are defined under the federal securities laws). Additionally, on October 7, 2013, Mr. Falcone delivered a commitment
to the Department of Financial Services of the State of New York pursuant to which Mr. Falcone agreed for a period of up to seven years that he will not, directly or indirectly, individually or through any person or entity, exercise control over any New York-licensed insurer.
| | | | | | SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS | | | |
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS The tables below provide information regarding the beneficial ownership of our common stock as of March 31, 2016June 1, 2021 by: (i) each of our directors; (ii) each of our NEOs; (iii) all current directors and executive officers as a group; and (iv) each beneficial owner of more than five percent of our common stock. Beneficial ownership is determined in accordance with SEC rules and regulations, and generally includes voting power or investment power with respect to securities held. Unless otherwise indicated and subject to applicable community property laws, we believe that each of the stockholders named in the table below has sole voting and investment power with respect to the shares shown as beneficially owned. Securities that may be beneficially acquired within 60 days after March 31, 2016June 1, 2021 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the ownership of such person, but are not treated as outstanding for the purpose of computing the ownership of any other person. The address for directors and executive officers is 9710 Scranton Road, Suite 200, San Diego, California 92121. The tables below list the number and percentage of shares beneficially owned based on 53,378,947103,026,837 shares of common stock outstanding as of March 31, 2016. June 1, 2021. The Company is not aware of any arrangements that have resulted, or may at a subsequent date result, in a change of control of the Company.Directors and Named Executive Officers | | | | | | | | | | | | | | Name of Beneficial Owner | Directly or Indirectly Held (#) | Option Awards (#)(1) | Stock Awards (#)(2) | Total Shares of Common Stock Beneficially Owned (#) | | Percentage | Sue Swenson | 73,852 |
| — |
| — |
| 73,852 |
| | 0.1 | % | | Michael Newman | 134,980 |
| 140,252 |
| — |
| 275,232 |
| | 0.5 | % | | Stephen Sek | 64,966 |
| 36,945 |
| 6,666 |
| 108,577 |
| | 0.2 | % | | Lance Bridges | 5,000 |
| 33,333 |
| 16,666 |
| 54,999 |
| | 0.1 | % | | James Ledwith | 131,815 |
| 38,746 |
| — |
| 170,561 |
| | 0.3 | % | | Philip Falcone | 28,655 |
| — |
| — |
| 28,655 |
| | 0.1 | % | | Robert Pons | 28,655 |
| — |
| — |
| 28,655 |
| | 0.1 | % | | David Werner | 138,783 |
| 38,746 |
| — |
| 177,529 |
| | 0.3 | % | | Russell Gerns(3) | 163,700 |
| 22,862 |
| — |
| 186,562 |
| | 0.3 | % | | Alex Mashinsky(4) | 670,586 |
| — |
| — |
| 670,586 |
| | 1.3 | % | | Slim Souissi(5) | 406,951 |
| — |
| — |
| 406,951 |
| | 0.8 | % | | John Carney(6) | — |
| — |
| — |
| — |
| | — | % | | All current directors and executive officers as a group of 8 persons | 606,706 |
| 288,022 |
| 23,332 |
| 918,060 |
| | 1.7 | % | |
Name of Beneficial Owner | | Shares Owned (#) | | | Right to Acquire (#)(1) | | | Total Shares of Common Stock Beneficially Owned (#) | | | | Percentage | | Dan Mondor | | 181,317 | | | | 1,850,000 | | | | 2,031,317 | | | | 1.9% | | Ashish Sharma | | 40,019 | | | | 388,542 | | | | 428,561 | | | | * | | Doug Kahn | | 19,767 | | | | 32,291 | | | | 52,058 | | | | * | | Stephen Smith | | – | | | | – | | | | – | | | | * | | Craig Foster | | 4,785 | | | | – | | | | 4,785 | | | | * | | James B. Avery | | – | | (2) | | – | | (2) | | – | | | | * | | Stephanie Bowers | | 524 | | | | – | | | | 524 | | | | * | | Christopher Harland | | 19,372 | | | | 6,242 | | | | 25,614 | | | | * | | Christopher Lytle | | 248,092 | | | | 35,976 | | | | 284,068 | | (3) | | * | | Jeffrey Tuder | | 90,585 | | | | 63,154 | | | | 153,739 | | | | * | | All directors and executive officers as a group (seven persons) | | 599,676 | | | | 2,376,205 | | | | 2,975,881 | | | | 2.8% | |
* | Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. | | | (1) | Represents shares of common stock that may be acquired pursuant to stock options or warrants that are or will become exercisable within 60 days after March 31, 2016. |
| June 1, 2021. | (2) | RepresentsDoes not include shares of common stock or warrants held by Braslyn, Ltd., Golden Harbor Ltd. or Tavistock Financial, LLC, in which Mr. Avery disclaims beneficial ownership, which are reported in the table below under Five Percent Holders. Mr. Avery is obligated to betransfer any shares issued uponpursuant to any equity awards made to him by the vesting of RSUs within 60 days after March 31, 2016. |
| Company, or the economic benefits thereof, to Tavistock Financial, LLC. | (3) | In a Form 4 filed on October 12, 2015,Includes 29,722 shares of common stock issuable upon the conversion outstanding 2022 Notes held in an individual retirement for the benefit of Mr. Gerns reportedLytle’s mother. Mr. Lytle has investment power with respect to such shares and may be deemed to be the beneficial owner thereof. Mr. Lytle disclaims beneficial ownership of 163,700 shares of common stock. Mr. Gerns retired as a director effective as of October 5, 2015. |
| | (4) | In a Form 4 filed on September 16, 2015, Mr. Mashinsky reported beneficial ownership of 885,973 shares of common stock. Mr. Mashinsky was terminated from his position as Chief Executive Officer effective as of October 27, 2015. The Company believes, but has not been able to confirm, that Mr. Mashinsky’s beneficial ownership had declined to 670,586 shares as of March 31, 2016. |
| | (5) | In a Form 4 filed on June 3, 2015, Dr. Souissi reported beneficial ownership of 525,466 shares of common stock. Dr. Souissi resigned from his position as President and Chief Operations Officer effective as of June 11, 2015. The Company believes, but has not been able to confirm, that Dr. Souissi’s beneficial ownership had declined to 406,951 shares as of March 31, 2016. |
| | | | | | SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERSsuch shares. | | |
| | (6) | In a Form 4 filed on April 22, 2015, Mr. Carney reported beneficial ownershipSecurity Ownership of 96,000 shares of common stock. Mr. Carney resigned from his position as Executive Vice President, SalesManagement and Marketing, effective as of December 1, 2015. The Company believes, but has not been able to confirm, that Mr. Carney’s beneficial ownership had declined to 0 shares as of March 31, 2016.Certain Beneficial Owners |
The following table sets forth information regarding the number and percentage of shares of common stock held by all persons and entities known by us to beneficially own five percent or more of our outstanding common stock. The information regarding beneficial ownership of the persons and entities identified below is included in reliance on reports filed by the persons and entities with the SEC, except that the percentage is based upon our calculations made in reliance upon the number of shares reported to be beneficially owned by such person or entity in such report and the number of shares of common stock outstanding on March 31, 2016. | | | | | | | Name and Address of Beneficial Owner | Shares of Common Stock Beneficially Owned (#) | Percentage | HC2 Holdings 2, Inc.(1) 505 Huntmar Park Drive, Suite 325 Herndon, VA 20170 | 13,067,382 |
| 24.5 | % | | Bruce A. Karsh(2) 333 S. Grand Ave., Suite 2800 Los Angeles, CA 90071 | 4,590,945 |
| 8.6 | % | | Timothy Maguire(3) 1819 Ocean Way Laguna Beach, CA 92651 | 3,393,943 |
| 6.4 | % | |
June 1, 2021.Name and Address of Beneficial Owner | | Shares Owned (#) | | | Right to Acquire (#) | | | Total Shares of Common Stock Beneficially Owned (#) | | | Percentage | | Golden Harbor Ltd.(1) Cay House EP Taylor Drive N7776 Lyford Cay New Providence C5 | | | 19,626,243 | | | 3,820,348 | | | | | 23,446,591 | | | | 21.9 | % | North Sound Management, Inc.(2) c/o Edward E. Murphy 115 East Putnam Avenue Greenwich, CT 06830 | | | 4,220,133 | | | 5,029,758 | | | | | 9,249,891 | | | | 8.6 | % |
| | (1) | According to a Schedule 13D/A filed by HC2 Holdings 2, Inc.Golden Harbor Ltd., Braslyn Ltd., Tavistock Financial, LLC and Joe Lewis with the SEC on March 22, 2016, HC2 Holdings and HC2 haveDecember 16, 2020, Golden Harbor Ltd. has shared voting power and shared dispositive power with respect to 13,067,382over 13,840,504 shares of common stock, the Continental Insurance Group,Braslyn Ltd. and the Continental Insurance, Inc. havehas shared voting power and shared dispositive power with respect to 11,473,799over 7,614,830 shares of common stock, the United Teacher Associates Insurance CompanyTavistock Financial, LLC has shared voting power and shared dispositive power with respect to 8,338,270over 45,909 shares of common stock and the Continental General Insurance CompanyJoe Lewis has shared voting power and shared dispositive power with respect to 3,135,529over 21,501,243 shares of common stock. |
| Includes (a) 1,875,000 shares of the Company’s common stock issuable upon exercise of warrants and (b) 45,909 shares of common stock subject to restricted stock units. Also includes 1,939,106 shares of common stock issuable upon the conversion outstanding 2022 Notes that were not included in the beneficial ownership amounts disclosed in the Schedule 13D/A filed on December 16, 2020 but are currently exercisable because the ownership limitation in the 2022 Notes has terminated. | (2) | According to a Schedule 13D/A filed by Bruce A. KarshNorth Sound Management, Inc., North Sound Trading, LP and Brian Miller with the SEC on February 26, 2015, Mr. KarshMarch 2, 2021, North Sound Management, Inc. has sole voting power and sole dispositive power with respect to 3,264,945over 4,788,213 shares of common stock, North Sound Trading, LP has sole voting and dispositive power over 4,788,213 shares of common stock and Mr. Miller has shared voting power and shared dispositive power with respect to 1,326,000over 4,845,133 shares of common stock. The 1,326,000Includes (a) 56,920 shares of common stock with shared votingheld directly by Mr. Miller and shared dispositive power are also beneficially owned by The Karsh Family Foundation,(b) 625,000 shares of common stock that may be acquired pursuant to outstanding warrants. Also included 4,404,758 shares of common stock issuable upon the trustees of which are Mr. Karsh and his wife Martha L. Karsh. |
| | (3) | According to aconversion outstanding 2022 Notes that were not included in the beneficial ownership amounts disclosed in the Schedule 13D/A filed by Timothy Maguire and Maguire Asset Management, LLC withon March 2, 2021 but are currently exercisable because the SEC on August 3, 2015, 3,393,943 shares are beneficially owned by Timothy Maguire. Of these, 2,952,229 shares are owned by Maguire Financial, LP and Maguire Asset Management, LLC (which amount includes 503,400 shares underlying call options exercisable within 60 days of August 3, 2015),141,714 shares are owned byownership limitation in the Timothy Maguire Foundation and 300,000 shares are owned by The Timothy J. and Julia Maguire 2015 Family Trust. Maguire Asset Management, LLC, Maguire Financial, LP and Mr. Maguire have the sole power to vote or direct the vote of and to dispose or direct the disposition of the shares owned by Maguire Financial, LP. The Timothy Maguire Foundation and Mr. Maguire have the sole power to vote or direct the vote of and to dispose or direct the disposition of the shares owned by the Timothy Maguire Foundation. The Timothy J. and Julia Maguire 2015 Family Trust and Mr. Maguire have the sole power to vote or direct the vote of and to dispose or direct the disposition of the shares owned by The Timothy J. and Julia Maguire 2015 Family Trust.2022 Notes has terminated. |
| | | | | | Proposal 2: AMENDMENT TO 2009 OMNIBUS INCENTIVE COMPENSATION PLAN
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| Proposal 2: Ratification of the Appointment of the Company’s Independent Registered Public Accounting Firm |
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee has appointed Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. The Board is asking stockholders to ratify this appointment. Although SEC regulations require the Company’s independent registered public accounting firm to be engaged, retained and supervised by the Audit Committee, the Board considers the selection of an independent registered public accounting firm to be an important matter to stockholders and considers a proposal for stockholders to ratify such appointment to be an opportunity for stockholders to provide input to the Audit Committee and the Board on a key corporate governance issue. In the event that our stockholders do not ratify the appointment, it will be considered as a direction to our Audit Committee to consider the selection of a different firm. Marcum LLP has been the Company’s independent registered public accounting firm since 2018. Representatives of Marcum LLP are expected to be present at the Annual Meeting and will be offered the opportunity to make a statement if they so desire. They will also be available to answer questions. Principal Accountant Fees and Services The following table sets forth fees for services rendered by Marcum LLP for 2020 and 2019. | | 2020 | | | 2019 | | Audit Fees(1) | | $ | 868,290 | | | $ | 946,127 | | Audit-Related Fees(2) | | $ | 86,906 | | | $ | 14,935 | | Tax Fees | | | – | | | | – | | All Other Fees | | | – | | | | – | | | | | | | | | | | Total | | $ | 955,196 | | | $ | 961,062 | |
(1) | Audit fees consist principally of fees for the audits of our annual consolidated financial statements and internal control over financial reporting, and review of our interim consolidated financial statements. | (2) | Audit-related fees consist primarily of fees for accounting consultations, comfort letters, consents and any other audit attestation services. |
Pre-Approval Policies and Procedures The Audit Committee annually reviews and pre-approves certain audit and non-audit services that may be provided by our independent registered public accounting firm and establishes and pre-approves the aggregate fee level for these services. Any proposed services that would cause us to exceed the pre-approved aggregate fee amount must be pre-approved by the Audit Committee. All audit and non-audit services for 2019 and 2020 were pre-approved by the Audit Committee. | Proposal 2: Ratification of the Appointment of the Company’s Independent Registered Public Accounting Firm |
Recommendation and Vote Required Assuming that a quorum is present, the affirmative vote of the holders of a majority of the shares of our outstanding common stock present, virtually or represented by proxy, and entitled to vote at the Annual Meeting is required to ratify the appointment of Marcum LLP. Abstentions will have the same effect as votes AGAINST this proposal. The ratification of the appointment of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021, is considered a routine matter under applicable rules. A broker, dealer, bank or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected in connection with this proposal. ü | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”THIS PROPOSAL. |
| Proposal 3: Advisory Vote to Approve the Compensation of our Named Executive Officers |
PROPOSAL 3: Advisory Vote to Approve the Compensation of our Named Executive Officers In accordance with Section 14A of the Exchange Act, we are asking stockholders to approve an advisory resolution on our executive compensation as reported in this Proxy Statement. In making decisions with respect to compensation for our executive officers, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each executive’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our executive officers, the Compensation Committee seeks to achieve the following key objectives: Motivate Executives. The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals. Align Interests with Stockholders. The compensation program should align the interests of our executive officers with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term. Attract and Retain Talented Executives. The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain qualified executives while maintaining an appropriate cost structure for the Company. We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. Accordingly, we are asking stockholders to approve the following advisory resolution at the Annual Meeting: “RESOLVED, that the stockholders of Inseego Corp. (the “Company”) approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers, as disclosed in this Proxy Statement.” Effect of Proposal 2: The result of the say-on-pay vote is non-binding on us and our Board and Compensation Committee. As a result, the Board and Compensation Committee retain discretion to change executive compensation from time to time if they conclude that such a change would be in the best interest of the Company. No determination has been made as to what action, if any, would be taken if our stockholders fail to approve our executive compensation. However, our Board and Compensation Committee value the opinions of stockholders and will carefully consider the result of the say-on-pay vote. We currently conduct say-on-pay votes on an annual basis. We are also required to hold an advisory vote on the frequency of the Say-on-Pay Votes (the “Frequency of Say-on-Pay Vote”) at least once every six years, pursuant to Rule 14a-21(a) of the Exchange Act. We held our last Frequency of Say-on-Pay Vote at our annual meeting of stockholders in June 2017 and a majority of the votes were cast in favor of holding Say-on-Pay Votes every year. In line with the preference of our stockholders, our Board determined that it will include the Say-on-Pay Vote in our proxy materials each year until the next Frequency of Say-on-Pay Vote, which will occur no later than our 2023 annual meeting of stockholders. Recommendation and Vote Required Assuming that a quorum is present, approval of this proposal requires the affirmative vote of the holders of a majority of the shares of our outstanding common stock present virtually or represented by proxy and entitled to vote on this proposal at the Annual Meeting. Because abstentions are counted as present for purposes of the vote on this matter but are not votes FOR this proposal, they have the same effect as votes AGAINST this proposal. Broker non-votes will not have any effect on this proposal. ü | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”THIS PROPOSAL. |
| Proposal 4: Approval of the Amendment of the Incentive Plan |
PROPOSAL 4: APPROVAL OF THE AMENDMENT OF THE NOVATEL WIRELESS, INC. 2009 OMNIBUS INCENTIVE COMPENSATION PLAN TO INCREASE THE NUMBER OF SHARES ISSUABLE UNDER THE PLAN BY 3,000,000 SHARES The Board approved the 2009 Incentive Plan was initially adopted by our predecessor issuer, Novatel Wireless, Inc., in April 20092009. In July 2018, the Incentive Plan was amended and subsequently approved amendmentsrestated and among other things, was renamed as the Inseego Corp. 2018 Omnibus Incentive Plan. In June 2019, the Incentive Plan was amended to transfer into the plan in June 2013, November 2014 and March 2015. Incentive Plan the 2,053,085 shares that remained available for issuance under the Company’s 2015 Incentive Compensation Plan, which was terminated. In July 2020, the Incentive Plan was amended to increase the number of shares authorized for issuance under the Incentive Plan by 1,500,000 shares. The 2009 Incentive Plan affords the Board the ability to design compensatory awards that are responsive to ourthe Company’s needs, and includes authorization for a variety of awards designed to advance ourthe Company’s interests and long-term success by encouraging stock ownership among our directors, officers, employees and consultants. These awards include equity awards intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code. The 2009 Incentive Plan currently authorizes the issuance of up to 12,000,00021,753,085 shares of our common stock, plus an additional 323,000 shares that may be issued for inducement grants pursuant to NASDAQ Listing Rule 5635, of which 261,1582,403,128 shares were available for issuance under the plan as of March 31, 2016.In April 2016, theJune 1, 2021.The Board has approved an amendment of the 2009 Incentive Plan, subject to stockholder approval at the Annual Meeting, to increase the number of shares availableauthorized for issuance under the planIncentive Plan by 3,000,000 shares. The Board has determined that the amendment of the planIncentive Plan is advisable and in the best interests of the Company and ourits stockholders and has submitted the amendment for approval by our stockholders at the Annual Meeting. The amendment toof the 2009 Incentive Plan will be effective as of the date it is approved by our stockholders. In approving this amendment, the Board considered information related to the 2009 Incentive Plan including burn rate, overhang and forecasts for share usage. As of March 31, 2016,June 1, 2021, under the Company’s 2009 Incentive Plan and its predecessor equity compensation plans, there were outstanding RSU awardsRSUs for 3,570,249415,502 shares of our common stock and outstanding stock options for 6,723,9547,753,932 shares of our common stock. These outstanding options have a weighted-average exercise price per share of $2.79$3.92 and a weighted-average term of 8.657.23 years. On April 22, 2016,June 1, 2021, the closing market price of a share of our common stock was $1.67. $8.72.A summary of the 2009 Incentive Plan, as proposed to be amended, appears below and is qualified by the full text of the 2009 Incentive Plan. APlan, as proposed to be amended, a copy of the 2009 Incentive Planwhich is attached as Appendix A to this Proxy Statement and indicates the change proposed to be made. The 2009 Incentive Plan is administered by the Board, which may delegate all or any part of its authority under the 2009 Incentive Plan to a committee of one or more members of the Board. This authority includes, among other things, selecting award recipients, establishing award terms and conditions, granting awards, construing any ambiguous provision of the 2009 Incentive Plan or in any award agreement, and adopting modifications and amendments to the 2009 Incentive Plan or any award agreement, subject to the terms of the 2009 Incentive Plan. To the extent permitted by applicable law, the Board may also delegate its duties under the 2009 Incentive Plan to one or more senior officers of the Company, referred to as a secondary committee. This delegation of authority is subject to any conditions and limitations set by the Board or set forth in the 2009 Incentive Plan, and may not include the authority to grant an award to a director or executive officer, orany participant that is subject to grant awards designed to satisfy the requirements for “qualified performance-based compensation” under Section 162(m)16 of the Code.The 2009 Incentive Plan provides for grants of both equity and cash awards, including stock options, stock appreciation rights, restricted stock, RSUs, annual incentive awards, performance shares, performance units and other forms of awards. The principal terms and features of the various forms of awards are set forth below: | Proposal 4: Approval of the Amendment of the Incentive Plan |
Stock OptionsOptions.. Stock options entitle the participant to purchase shares of our common stock at a price not less than the market value per share on the grant date. Stock options may be incentive stock options or non-qualified stock options under Section 422 of the Code.Code or non-qualified stock options. Each grant will specify whether the exercise price is payable in cash or by check, by a cashless
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broker-assisted exercise, by the transfer to the Company of shares of our common stock owned by the participant, by the Company withholding shares of our common stock otherwise deliverable to the participant upon the exercise of the stock option, by a combination of these payment methods, or by any other methods that the Board may approve. Each grant will specify the periods of continuous service by the participant with the Company necessary before the stock options become exercisable. Stock option grants may specify management objectives that must be achieved as a condition to exercise. No stock option will be exercisable more than 10 years after the grant date. No stock option will include terms entitling the participant to a grant of stock options or stock appreciation rights on exercise of the stock option.The Board may substitute, without the participant’s permission, stock appreciation rights for outstanding stock options. However, the terms of the substituted stock appreciation rights must be substantially the same as the terms of the stock options at the date of substitution. Additionally, the difference between the market value of the underlying shares of our common stock and the base price of the stock appreciation rights must be equivalent to the difference between the market value of the underlying shares of our common stock and the exercise price of the stock options. Limitations on Incentive Stock Options. Incentive stock options may only be granted to employees of the Company or a subsidiary of the Company. Subject to certain limited exceptions, incentive stock options may not be granted to any person who, at the time of grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any affiliate unless the following conditions are satisfied: | · | the exercise price of the incentive stock options must be at least 110% of the fair market value of the common stock subject to the incentive stock options on the date of grant; and |
| · | the term of the incentive stock options must not exceed five years from the date of grant. |
Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options under the Incentive Plan is 7,000,000 shares. Stock Appreciation RightsRights.. A stock appreciation right is a right to receive from the Company a dollar amount up to the spread between a base price (which may not be less than the market value per share of our common stock on the grant date or, for a stock appreciation right substituted for an option, on the option grant date) and the market value of the shares of our common stock on the exercise date. The amount payable by the Company on exercise of a stock appreciation right may be paid in cash, shares of our common stock, or any combination of the two. Any grant of stock appreciation rights may specify that the amount payable on exercise may not exceed a maximum specified by the Board. Any grant may also specify management objectives that must be achieved as a condition to exercise, waiting periods before exercise and permissible exercise dates or periods. Each grant will specify the periods of continuous service by the participant with the Company that are necessary before the stock appreciation rights become exercisable. No stock appreciation right will be exercisable more than 10 years after the grant date. No stock appreciation right will include terms entitling the participant to a grant of stock options or stock appreciation rights on exercise of the stock appreciation right.Restricted StockStock.. A grant of restricted stock constitutes an immediate transfer to the participant of the ownership of shares of our common stock in consideration for the performance of services. Restricted stock entitles a participant to voting, dividend and other ownership rights. However, these rights will be subject to any restrictions and conditions, such as the achievement of management objectives, during the restriction period as determined by the Board. For Each grant will provide that transfer of the restricted stock that vests uponwill be prohibited or restricted during the passagerestricted period in the manner and to the extent prescribed by the Board on the date of time, eachgrant, and may provide for such prohibitions and restrictions after the restricted period. | Proposal 4: Approval of the Amendment of the Incentive Plan |
Each grant will provide that the restricted stock will be subject to a “substantial“substantial risk of forfeiture”forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Board on the grant date.date with respect to restricted stock that vests upon the passage of time, or upon achievement of management objectives that, if achieved, will result in termination or early termination of the restriction applicable to the restricted stock. Each grant will provide that so long as the award is subject to a substantial risk of forfeiture, the transfer of the restricted stock will be prohibited or restricted in the manner and to the extent prescribed by the Board on the grant date.Grants of restricted stock may require that any or all dividends or other distributions paid during the period of the restrictions be automatically deferred and reinvested in additional shares of restricted stock or paid in cash, which may be subject to the same restrictions as the underlying award. Dividends or other distributions on restricted stock subject to management objectives will be deferred and paid in cash upon the achievement of the management objectives and the lapse of all restrictions. Restricted Stock UnitsUnits.. A grant of RSUs is an agreement by the Company to deliver shares of our common stock or cash equal to the value of such shares to the participant at the end of a specified period, subject to transfer restrictions and other conditions as determined by the Board. During the restriction period, the participant may not transfer any rights under his or her award and haswill have no rights of ownership, including voting rights, in the RSUs. However, on the grant date, the Board may authorize the payment of dividend equivalents on the RSUs on either a current, deferred or contingent basis, either in cash, in additional RSUs or in shares of our common stock. Dividend equivalents on RSUs subject to management objectives will be deferred and paid in cash upon the achievement of the management objectives and the lapse of all restrictions. A grant of RSUs may provide for the earlier lapse or modification of the restriction period in the event of the retirement, death or disability, or other termination of employment of the participant, or on a change in control of the Company.Performance Shares and Performance UnitsUnits.. A performance share is the equivalent of one share of our common stock. A performance unit is the equivalent of $1.00 or such other value as determined by the Board. Each grant of performance shares or performance units will specify either the number of
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shares, or amount of cash, payable with respect to the performance shares or performance units to which the grant pertains. Any grant of performance shares or performance units may specify that the amount payable may be paid in cash, in shares of our common stock or in any combination of the two. Any grant of performance shares or performance units will specify the management objectives that, if achieved, will result in payment or early payment of the award and may set forth a formula for determining the number of shares, or amount of cash, payable with respect to the performance shares or performance units that will be earned if performance is at or above threshold levels. Any grant of performance shares or performance units may specify that the amount payable or the number of shares issued with respect thereto may not exceed a maximum specified by the Board. The performance period will be determined by the Board at the time of grant, but may not be less than one year. year, and may be subject to earlier lapse or other modification in the event of the retirement, death or disability, or other termination of employment of the participant, or a change in control of the Company.The Board may, on the grant date, provide for the payment of dividend equivalents to the holder of the performance shares on either a current, deferred or contingent basis, either in cash or in additional shares of our common stock. Dividend equivalents on performance shares subject to management objectives will be deferred and paid in cash upon the achievement of the applicable management objectives. Annual Incentive AwardsAwards.. An annual incentive award is a cash award based on the achievement of management objectives with a performance period of one year or less.less, which will be determined by the Board at the time of grant. The performance period determined by the Board at the time of grant may be subject to earlier lapse or other modification in the event of the retirement, death or disability, or other termination of employment of the participant, or a change in control of the Company. Any grant of an annual incentive award will specify management objectives that, if achieved, will result in payment or early payment of the award and may set forth a formula for determining the amount payable if performance is at or above threshold levels. The performance period with respect to each annual incentive award will be determined by the Board at the time of grant. Each grant will specify the time and manner of payment of annual incentive awards that have been earned. The Board may establish a maximum amount payable under any annual incentive award on the grant date. | Proposal 4: Approval of the Amendment of the Incentive Plan |
Other AwardsAwards.. The Board may, subject to limitations under applicable law, grant to any participant other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of our common stock. These awards may include convertible or exchangeable securities, purchase rights or awards with value and payment contingent upon performance of the Company, the book value of our shares, or any other factors designated by the Board. Except as otherwise provided in the 2009 Incentive Plan, cash awards, as independent awards or as an element of or supplement to any other award granted under the 2009 Incentive Plan, also may be granted. The Board may grant shares of our common stock as a bonus, or may grant other awards in lieu of obligations of the Company to pay cash or deliver other property under the 2009 Incentive Plan or under other plans or compensatory arrangements, subject to terms that will be determined by the Board in a manner intended to comply with Section 409A of the Code. Subject to the terms of the 2009 Incentive Plan, the Board may grant awards to any of our employees, directors, officers, employeesconsultants or any other person who provides servicesthat is expected to us. However, incentive stock optionsbecome an employee, director, or consultant. In addition, in December 2019, the Board amended the Incentive Plan to provide that the Board may be granted onlygrant awards to our employees. On March 31, 2016,any investor in the Company (or the affiliate of an investor in the Company) that has an employee, direct or indirect owner, or service provider of such investor serving on the Board as a director, provided that such director has agreed with the investor that such investor or its affiliate will receive any awards that the director otherwise would receive. Currently, approximately 1,2501,000 persons wereare eligible to receive awards under the 2009 Incentive Plan. Shares Available for Grants Currently, 12,000,000If Proposal 4 is approved by the Company’s stockholders at the Annual Meeting, 24,753,085 shares of our common stock arewill be authorized under the 2009 Incentive Plan, plus an additional 323,000 shares that may be issued for inducement grants pursuant to NASDAQ Listing Rule 5635, subject to adjustment as provided in the 2009 Incentive Plan. Shares of our common stock issued in connection with inducement grants pursuant to Nasdaq Listing Rule 5635 or under any plan assumed by the Company in any corporate transaction will not count against this share limit. Shares of our common stock covered by an award under the 2009 Incentive Plan are not counted against the aggregate share limit until the award is issued and delivered to a participant. In addition,As a result, the total number of shares of our common stock available under the 2009 Incentive Plan is not reduced by any shares of our common stock relating to prior awards that have expired or have been forfeited or canceled.cancelled. To the extent of payment in cash of the benefit provided by any award granted under the 2009 Incentive Plan, any shares of our common stock that were covered by that award will again be available for issue or transfer under the 2009 Incentive Plan. If, under the 2009 Incentive Plan, a participant has elected to give up the right to receive compensation in exchange for shares of our common stock based on market value, the shares will not count against the aggregate share limit. In addition, shares delivered or relinquished to pay the exercise or purchase price of an award or to satisfy
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tax withholding obligations will also be available for future awards under the 2009 Incentive Plan, as will shares subject to restricted stock awards that never vest. Award Limits
Awards under the 2009 Incentive Plan are subject to the following limitations:
the aggregate number of shares of our common stock issued upon the exercise of incentive stock options will not exceed 7,000,000;
no participant will be granted stock options or stock appreciation rights, in the aggregate, for more than 1,000,000 shares of our common stock during any calendar year;
no participant will be awarded qualified performance-based awards of restricted stock, RSUs, performance shares or other awards, in the aggregate, for more than 500,000 shares of our common stock during any calendar year; and
in no event will any participant in any calendar year receive a qualified performance-based award of performance units or a qualified performance-based cash award having an aggregate maximum value in excess of $2,500,000.
The 2009 Incentive Plan requires that the Board establish management objectives for awards of performance shares, performance units and annual incentive awards. The Board may also establish management objectives for stock options, stock appreciation rights, restricted stock, RSUs or other awards. These management objectives may be described in terms of Company-wide objectives or objectives related to performance of an individual participant or a subsidiary, division, business unit, region or function of the Company, and may be made relative to the performance of other companies. The management objectives applicable to any qualified performance-based award to a “covered employee,” as defined in Section 162(m) of the Code, willmay be based on specified levels of or changes in, one or more ofany criteria selected by the following criteria:Profits.Operating income, earnings before interest and taxes, earnings before taxes, net income, cash net income, earnings per share, residual or economic earnings or economic profit;
Cash Flow. Earnings before interest, taxes, depreciation and amortization, referred to as EBITDA,
free cash flow, free cash flow with or without specific capital expenditure targets or ranges, including or excluding divestments and/or acquisitions, total cash flow, cash flow in excess of cost of capital, residual cash flow or cash flow return on investment;
Returns. Economic value added or profits or cash flow returns on sales, assets, invested capital, net capital employed or equity;
Working Capital.Working capital divided by sales, days’ sales outstanding, days’ sales in inventory or days’ sales in payables;
Profit Margins. Profits divided by revenues or sales, gross margins divided by revenues or sales, or operating margin divided by revenues or sales;
Liquidity Measures. Debt-to-capital ratios, debt-to-EBITDA ratios or total debt;
Sales Growth, Margin Growth, Unit Growth, Cost Initiative and Stock Price Metrics. Revenues, revenue growth, sales, sales growth, gross margin, operating margin, shipment volume, unit growth, stock price appreciation, total return to stockholders, expense targets, productivity targets or ratios, sales and administrative expenses divided by sales, or sales and administrative expenses divided by profits; and
Strategic Initiative Key Deliverable Metrics. Product development or launch, strategic partnering, research and development, regulatory compliance or submissions, vitality or sustainability index, market share, geographic business expansion goals, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, or goals relating to acquisitions or divestitures of subsidiaries, affiliates or joint ventures.
Board.The Board will have the authority to make equitable adjustments to the management objectives, including the related minimum, target and maximum levels of achievement or performance, for specified events set forth in the 2009 Incentive Plan to the extent allowed by Section 162(m) of the Code.Plan. | Proposal 4: Approval of the Amendment of the Incentive Plan |
Amendment and Termination The Board may amend the 2009 Incentive Plan in whole or in part, except that any amendment to the 2009 Incentive Plan that requires stockholder approval under applicable law will not be effective until we obtain stockholder approval. No grant will be
| | | | | | Proposal 2: AMENDMENT TO 2009 OMNIBUS INCENTIVE COMPENSATION PLAN
| | | |
made under the 2009 Incentive Plan more than 10 years after the effective date of the 2009 Incentive Plan,May 11, 2028, but all grants made on or prior to such date will continue in effect thereafter subject to the terms of the applicable award agreement and of the 2009 Incentive Plan. Except in connection with certain corporate transactions or a change-in-control,change in control, the terms of outstanding awards may not be amended to reduce the exercise price of outstanding stock options or the base price of outstanding stock appreciation rights, or canceland no outstanding stock options or stock appreciation rights may be cancelled in exchange for other awards, cash, or stock options or stock appreciation rights with an exercise price or base price, as applicable, that is less than the exercise price of the original stock options or base price of the original stock appreciation rights, as applicable, without stockholder approval. The plan prohibits all repricings of awardsunderwater stock options or stock appreciation rights without shareholder approval, regardless of whether an amendment is considered a repricing under generally accepted accounting principles. Grants of restricted stock, RSUs, performance shares, performance units and annual incentive awards may provide for earlier termination of restrictions in the event of the retirement, death or disability, or other termination of employment, of a participant, or a change-in-controlchange in control of the Company. In addition, if permitted by Section 409A of the Code, the Board may accelerate the vesting of or waive any other limitations requirementrequirements under any outstanding award in the event of the retirement, death or disability, or other termination of employment, of a participant. However, in either case, the restrictions on an award intended to be “qualified performance-based compensation” under Section 162(m) of the Code may not be terminatedparticipant, or in the eventcase of retirementunforeseeable emergency or other termination of employment to the extent the provision would cause the award to fail to qualify.special circumstances.The Board may amend the terms of any award granted under the 2009 Incentive Plan prospectively or retroactively, provided that such an amendment does not constitute a repricing prohibited by the 2009 Incentive Plan. However, no amendment may impair the rights of any participant without his or her consent, except as necessary to comply with changes in law or accounting rules applicable to the Company. The Board may terminate the 2009 Incentive Plan at any time. Termination of the 2009 Incentive Plan will not affect the rights of participants or their successors under any awards outstanding on the date of termination. Change-in-Control
Change in Control In the event a change-in-controlchange in control of the Company occurs, the Board may substitute each award outstanding under the 2009 Incentive Plan immediately prior to the change-in-controlchange in control with such alternative consideration (including cash), if any, as it may determine to be equitable in the circumstances and may require the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each stock option or stock appreciation right with an exercise price or base price greater than the consideration offered in connection with any change-in-control,change in control, the Board may elect to cancel the stock option or stock appreciation right without any payment to the person holding the stock option or stock appreciation right. The Board may also adjust the aggregate number of shares available under the 2009 Incentive Plan and the individual participant limits as the Board deems appropriate.appropriate to reflect a change in control of the Company. However, any adjustment to the number of shares available for incentive stock options will be made only if, and to the extent that, the adjustment would not cause any stock option intended to qualify as an incentive stock option to fail to qualify. U.S. Federal Income Tax Consequences The following is a brief summary of some of the U.S. federal income tax consequences of certain transactions under the 2009 Incentive Plan based on U.S. federal income tax laws in effect on January 1, 2016.2021. This summary is not intended to be complete and does not describe state or local tax consequences. | Proposal 4: Approval of the Amendment of the Incentive Plan |
Tax Consequences to Participants Incentive Stock OptionsOptions. .No income generally will be recognized by an optionee upon the grant or exercise of an incentive stock option. The exercise of an incentive stock option, however, may result in alternative minimum tax liability. If shares of our common stock are issued to the optionee pursuant to the exercise of an incentive stock option, and if no disqualifying disposition of such shares is made by such optionee within two years after the date of grant nor within one year after the transfer of such shares to the optionee, then upon the sale of such shares, any amount realized in excess of the exercise price will be taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss.
| | | | | | Proposal 2: AMENDMENT TO 2009 OMNIBUS INCENTIVE COMPENSATION PLAN
| | | |
If shares of our common stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of either holding period described above, the optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess, if any, of the market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares inif a sale or exchange) over the exercise price. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period. Non-Qualified Stock Options. In general,
no income will be recognized by an optionee at the time a non-qualified option right is granted;
at the time of exercise, ordinary income will be recognized in an amount equal to the difference between the exercise price and the market value of the shares, if unrestricted, on the date of exercise; and
at the time of sale of shares acquired pursuant to the exercise of a non-qualified option right, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.
Non-Qualified Stock Options. In general, | · | no income will be recognized by an optionee at the time a non-qualified option right is granted; |
| · | at the time of exercise, ordinary income will be recognized by the optionee in an amount equal to the difference between the exercise price and the market value of the shares, if unrestricted, on the date of exercise; and |
| · | at the time of sale of shares acquired pursuant to the exercise of a non-qualified option right, appreciation (or depreciation) in value of the shares after the date of exercise will be realized by the optionee as either short-term or long-term capital gain (or loss) depending on how long the shares have been held. |
Stock Appreciation RightsRights.. No income will be recognized by a participant in connection with the grant of a stock appreciation right. When the stock appreciation right is exercised, the participant normally will be required to include as taxablerecognize ordinary income in the year of exercise in an amount equal to the amount of cash received and the market value of any unrestricted shares of our common stock received on the exercise. exercise, and, if settled in unrestricted shares, the capital gain/loss holding period for such shares generally will commence on the date the participant receives the shares.Restricted StockStock. . The recipient of restricted stock generally will be subject to tax at ordinary income rates on the market value of the restricted stock (reduced by any amount paid by the participant for such restricted stock) at such time as the shares are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code referred to as Restrictions. (the “Restrictions”), which is also generally when the capital gain/loss holding period for such shares will commence. However, a recipient who so elects under Section 83(b) of the Code within 30 days of the date of grant of the shares will have taxablerecognize ordinary income on the date of grant of the shares equal to the excess of the market value of such shares (determined without regard to the Restrictions) over the purchase price, if any, of such restricted stock.stock and the capital gain/loss holding period for such shares generally will commence on the grant date. Any dividends received with respect to restricted stock that is subject to the Restrictions generally will be treated as compensation that is taxable as ordinary income to the participant.
Restricted Stock Units. No income generally will be recognized upon the award of RSUs. The recipient of aan RSU award generally will be subject to tax atrecognize ordinary income rates on the market value of unrestricted shares of our common stock on the date that such shares are transferred to the participant or settled in cash, as the case may be, to the participant under the award (reduced by any amount paid by the participant for such RSUs)RSU), and the capital gain/loss holding period for such shares will also commence on such date. | Proposal 4: Approval of the Amendment of the Incentive Plan |
Performance Shares, Performance Units and Annual Incentive AwardsAwards.. No income generally will be recognized upon the grant of performance shares, performance units or annual incentive awards. Upon payment in respect of the earn-out of performance shares, performance units or annual incentive awards, the recipient generally will be required to include as taxablerecognize ordinary income in the year of receipt in an amount equal to the amount of cash received and the market value of any unrestricted shares of our common stock received. received and, if settled in unrestricted shares, the capital gain/loss holding period for such shares generally will commence on the date the participant receives the shares.Tax Consequences to the Company To the extent that a participant recognizes ordinary income in the circumstances described above, the Company generally will be entitled to a corresponding deduction, provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess“excess parachute payment”payment” within the meaning of Section 280G of the Code and is not disallowed by the $1 million limitation on certain executive compensation under Section 162(m) of the Code.
| | | | | | Proposal 2: AMENDMENT TO 2009 OMNIBUS INCENTIVE COMPENSATION PLAN
| | | |
Equity Compensation Plan Information AsPlease refer to the table above under the heading Compensation of March 31, 2016, the ESPP, the 2009 Incentive Plan and the 2015 IncentiveNamed Executive Employees—Equity Compensation Plan (the “2015 Incentive Plan”) were the only compensation plans under which securities of the Company were authorized for grant. The ESPP and the 2009 Incentive Plan, including all amendments thereto (other than the March 2015 amendment approving the issuance of inducement shares under the 2009 Incentive Plan), were approved by our stockholders. The 2015 Incentive Plan was adopted by the Board without stockholder approval pursuant to NASDAQ Listing Rule 5635. The 2015 Incentive Plan may only be used for inducement grants to individuals to induce them to become employees of the Company or any of its subsidiaries, or, in conjunction with a merger or acquisition, to convert, replace or adjust outstanding stock options or other equity compensation awards, or for any other reason for which there is an applicable exception from the stockholder approval requirements of NASDAQ Listing Rule 5635, in each such case, subject to the applicable requirements of the NASDAQ Listing Rules. The following table provides information as of March 31, 2016 regarding the Company’s existing and predecessor plans: | | | | | | | | | | | | | | Plan category | Number of securities to be issued upon exercise of outstanding options | | Weighted-average exercise price of options outstanding | | Number of securities remaining available for future issuance under equity compensation plans | Equity compensation plans approved by security holders | 6,723,954 |
| (1) | | | $ | 2.79 |
| | 2,408,401 |
| (2) |
| | (1) | There are 3,570,249 shares issuable upon vesting of RSU awards outstanding under the Company’s existing and predecessor plans which are not included in this table. |
| | (2) | Represents shares available for future issuance under the ESPP, the 2009 Incentive Plan and the 2015 Incentive Plan. As of March 31, 2016, there were 879,241 shares of our common stock available for issuance under the ESPP, 261,158 shares of our common stock available for issuance under the 2009 Incentive Plan and 1,268,002 shares of our common stock available for issuance under the 2015 Incentive Plan. |
Awards Granted to Certain Persons
The following table sets forth information regarding the total stock options and stock awards granted to the following persons or groups under the 2009 Incentive Plan since the inception of the 2009 Incentive Plan through March 31, 2016 (as described above, Messrs. Mashinsky and Carney and Dr. Souissi are no longer employed by the Company):
| | | | | | | | | | | | | | | Executive | Number of Stock Options Granted (#) | Weighted-Average per Share Exercise Price ($) | Number of Stock Awards Granted (#) | | Dollar Value of Stock Awards Granted ($) | Sue Swenson | 1,903,100 |
| | $ | 1.97 |
| | 1,068,606 |
| | $ | 1,829,237 |
| Michael Newman | 285,650 |
| | $ | 3.14 |
| | 746,095 |
| | $ | 1,663,923 |
| Stephen Sek | 100,000 |
| | $ | 5.22 |
| | 277,368 |
| | $ | 701,199 |
| Lance Bridges | 100,000 |
| | $ | 5.08 |
| | 300,000 |
| | $ | 659,000 |
| Alex Mashinsky | 1,990,400 |
| | $ | 4.80 |
| | 799,092 |
| | $ | 2,454,688 |
| Slim Souissi | 448,838 |
| | $ | 3.91 |
| | 545,772 |
| | $ | 1,949,377 |
| John Carney | 192,000 |
| | $ | 5.79 |
| | 96,000 |
| | $ | 555,840 |
| All current executive officers as a group | 2,388,750 |
| | $ | 2.37 |
| | 2,392,069 |
| | $ | 4,853,359 |
| All current directors as a group (excluding executive officers) | 21,582 |
| | $ | 6.95 |
| | 535,712 |
| | $ | 1,531,184 |
| All current employees as a group (excluding executive officers) | 795,386 |
| | $ | 4.71 |
| | 3,904,419 |
| | $ | 10,109,798 |
|
| | | | | | Proposal 2: AMENDMENT TO 2009 OMNIBUS INCENTIVE COMPENSATION PLAN
| | | |
Information.New Plan Benefits Because benefits under the 2009 Incentive Plan depend onupon the Board’s actions, the market value of the shares of our common stock in the future and/or the future performance of the Company, it is not possible to determine the value of the benefits that will be received by participants in the 2009 Incentive Plan with respect to any awards made in the future. Benefits under the 2009 Incentive Plan will, however, be subject to the limits described above under Award Limits.Potential Effects of Proposal 2 4Approval of Proposal 24 will enable the Company to: | | (i) | provide annual equity awards to existing employees; and |
| | (ii) | grant equity awards to new employees, including potentially meaningful upfront grants to principals who may be hired as part of future acquisitions in situations where the exception for inducement |
(i) pay portions of the bonus compensation due to employees, if any, under the Company’s bonus compensation plans with equity rather than cash; (ii) provide equity awards to existing employees on an annual or more frequent basis; (iii) pay portions of salary and bonus compensation to executives with equity rather than cash; and (iv) grant equity awards to new employees, including potentially meaningful upfront grants to principals who may be hired as part of future acquisitions in situations where the exception for inducement grants pursuant to NASDAQNasdaq Listing Rule 5635 is unavailable. If Proposal 24 is not approved, the Company may not have sufficient stock issuable under the 2009 Incentive Plan to satisfy these requirements in the foreseeable future and may need to pay significant portions of such compensation and earned bonuses in cash. Recommendation and Vote Required Vote TheAssuming that a quorum is present, the affirmative vote of the holders of a majority of the shares of our outstanding common stock present, in personvirtually or represented by proxy, and entitled to vote at the Annual Meeting, is required to approve the amendment of the 2009 Incentive Plan. Because abstentions are counted as present for purposes of the vote on this matter but are not votes FOR this proposal, they have the same effect as votes AGAINST this proposal. Broker non-votes will not have any effect on this proposal.
| | | ü | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”THIS PROPOSAL. |
| | | | Proposal 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION
| 46 | |
Proposal 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, we are asking stockholders to approve an advisory resolution on our executive compensation as reported in this Proxy Statement.
In making decisions with respect to compensation for our executive officers, the Compensation Committee is guided by a pay-for-performance philosophy. The Compensation Committee believes that a significant portion of each executive’s total compensation opportunity should vary with achievement of the Company’s annual and long-term financial, operational and strategic goals. In designing the compensation program for our executive officers, the Compensation Committee seeks to achieve the following key objectives:
Motivate Executives. The compensation program should encourage our executive officers to achieve the Company’s annual and long-term goals.
Alignment with Stockholders. The compensation program should align the interests of our executives with those of our stockholders, promoting actions that will have a positive impact on total stockholder return over the long term.
Attract and Retain Talented Executives. The compensation program should provide each executive officer with a total compensation opportunity that is market competitive. This objective is intended to ensure that we are able to attract and retain executives while maintaining an appropriate cost structure for the Company.
We believe our executive compensation is structured in the manner that best serves the interests of the Company and its stockholders. We encourage stockholders to read the Compensation Discussion and Analysis section of this Proxy Statement which provides a more thorough review of our compensation philosophy and how that philosophy was implemented in 2015.
Effect of Proposal
The result of the Say-on-Pay Vote is non-binding on us and our Board and Compensation Committee. As a result, the Board and Compensation Committee retain discretion to change executive compensation from time to time if they conclude that such a change would be in the best interest of the Company. No determination has been made as to what action, if any, would be taken if our stockholders fail to approve executive compensation. However, our Board and Compensation Committee value the opinions of stockholders and will carefully consider the result of the Say-on-Pay Vote.
We currently conduct Say-on-Pay Votes on an annual basis, and we expect to conduct our next Say-on-Pay Vote at our 2017 annual meeting of stockholders.
We are also required to hold an advisory vote on the frequency of the Say-on-Pay Votes (the “Frequency of Say-on-Pay Vote”) at least once every six years, pursuant to Rule 14a-21(a) of the Exchange Act. We held our initial Frequency of Say-on-Pay Vote at our annual meeting of stockholders in June 2011 and a majority of the votes were cast in favor of holding Say-on-Pay Votes every year. In line with the preference of our stockholders, our Board determined that it will include the Say-on-Pay Vote in our proxy materials each year until the next Frequency of Say-on-Pay Vote, which will occur no later than our 2017 annual meeting of stockholders.
Required Vote
Approval of this proposal requires the affirmative vote of a majority of the outstanding shares of common stock present in person or represented by proxy and entitled to vote on this proposal at the Annual Meeting. Because abstentions are counted as present for purposes of the vote on this matter but are not votes FOR this proposal, they have the same effect as votes AGAINST this proposal. Broker non-votes will not have any effect on this proposal.
| | | ü | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
|
| | | | 49 |2016 Proxy Statement
| | Report of the Audit Committee |
| | | | Proposal 4: RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| | |
Proposal 4: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2016
The Audit Committee has appointed Ernst & Young LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2016. The Board is asking stockholders to ratify this appointment. Although SEC regulations require the Company’s independent registered public accounting firm to be engaged, retained and supervised by the Audit Committee, the Board considers the selection of an independent registered public accounting firm to be an important matter to stockholders and considers a proposal for stockholders to ratify such appointment to be an opportunity for stockholders to provide input to the Audit Committee and the Board on a key corporate governance issue. In the event that our stockholders do not ratify the appointment, it will be considered as a direction to our Audit Committee to consider the selection of a different firm.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will be offered the opportunity to make a statement if they so desire. They will also be available to answer questions.
The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting is required to ratify the appointment of Ernst & Young LLP. Abstentions will have the same effect as votes AGAINST this proposal. The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016 is considered a routine matter under applicable rules. A broker, dealer, bank or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected in connection with this proposal.
| | | ü | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
|
| | | | Proposal 4: RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| | |
Principal Accountant Fees and Services
The following table sets forth fees for audit services rendered by Ernst & Young LLP for the audit of our consolidated financial statements for 2015 and 2014, and fees for other services rendered by Ernst & Young LLP.
| | | | | | | | | | 2015 | | 2014 | Audit Fees(1) | $ | 1,562,066 |
| | $ | 1,001,806 |
| Audit-Related Fees | 230,400 |
| | — |
| Tax Fees | — |
| | — |
| All Other Fees | — |
| | — |
| Total | $ | 1,792,466 |
| | $ | 1,001,806 |
| | | | |
| | (1) | Audit fees consist principally of fees for the audit of our annual consolidated financial statements, review of our interim consolidated financial statements and the audit of internal control over financial reporting. |
Pre-Approval Policies and Procedures
The Audit Committee annually reviews and pre-approves certain audit and non-audit services that may be provided by our independent registered public accounting firm and establishes and pre-approves the aggregate fee level for these services. Any proposed services that would cause us to exceed the pre-approved aggregate fee amount must be pre-approved by the Audit Committee. All audit services for 2015 were pre-approved by the Audit Committee.
| | | | REPORT OF THE AUDIT COMMITTEE | | |
REPORT OF THE AUDIT COMMITTEE The Audit Committee assists the Board in fulfilling its responsibility to oversee management’s implementation of the Company’s financial reporting process. The Audit Committee Charter can be viewed on the Company’s Websitewebsite at www.novatelwireless.cominvestor.inseego.com under “Corporate Governance” and is available in print upon request. In discharging its oversight role, the Audit Committee reviewed and discussed the audited financial statements contained in the 2015Company’s Annual Report on Form 10-K for the year ended December 31, 2020 with the Company’s management and its independent registered public accounting firm. Management is responsible for the financial statements and the reporting process, including the system of disclosure controls and procedures and internal control over financial reporting. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of the Company’s financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting.The Audit Committee met with the independent registered public accounting firm and discussed issues deemed significant by the accounting firm, and the Audit Committee has discussed with the independent auditors the matters required to be discussed pursuant to Auditing Standard No. 1301, Communications with Audit Committee, as adopted by the applicable requirements of the Public Company Accounting Oversight Board.Board and the SEC. In addition, the Audit Committee discussed with the independent registered public accounting firm its independence from the Company and its management; received the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence; and considered whether the provision of non-audit services was compatible with maintaining the accounting firm’s independence.In reliance on the reviews and discussions outlined above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015,2020, for filing with the SEC. AUDIT COMMITTEE
James Ledwith, Chair
David Werner
Robert Pons
| | | | | | 2016 Proxy Statement|52
AUDIT COMMITTEE Jeffrey Tuder, Chair James B. Avery Christopher Harland |
The foregoing Report of the Audit Committee is not “soliciting material,” is not deemed “filed” with the SEC, and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing of ours under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this report by reference. | | | | | | SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
| | 47 | |
| | Stockholder Proposals |
STOCKHOLDER PROPOSALS Stockholder Proposals for Inclusion in 2022 Proxy Statement. In order to be included in our proxy materials for our 2022 annual meeting of stockholders, a stockholder proposal or information about a proposed director candidate must be timely received in writing by the Company at Inseego Corp., Attention: Secretary, 9710 Scranton Road, Suite 200, San Diego, California 92121, by February 17, 2022, and otherwise comply with all requirements of the SEC, the General Corporation Law of Delaware and the Bylaws. Stockholder Proposals to be presented at the 2022 Annual Meeting of Stockholders. If you do not wish to submit a proposal or information about a proposed director candidate for inclusion in next year’s proxy materials, but instead wish to present it directly at the 2022 annual meeting of stockholders, you must give timely written notice of the proposal to our Secretary. To be timely, the notice must be received no earlier than March 31, 2022 and no later than the close of business on April 30, 2022. The notice must describe the stockholder proposal in reasonable detail and provide certain other information required by our Bylaws, a copy of which is available upon request from our Secretary at the above address. DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE REPORTSSection 16(a)16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our common stock to file initial reports of beneficial ownership and reports of changes in beneficial ownership with the SEC. These reporting persons are required by SEC rules to furnish us with copies of all Section 16(a)16(a) forms they file. Based solely on a review of the copies of such forms furnished to us and written representations from our directors and executive officers, we believe that all Section 16 (a)16(a) filing requirements applicable to our directors, executive officers and greater than 10% stockholders were complied with during the 20152017 fiscal year.STOCKHOLDER PROPOSALS
Stockholder Proposalsyear, except that one Form 3 for Inclusion in 2017 Proxy Statement. In order to be included in our proxy materialsTavistock Financial, LLC and one Form 4 for our 2017 annual meeting of stockholders, a stockholder proposal or information about a proposed director candidate must be timely received in writing by the Company at Novatel Wireless, Inc., Attention: Secretary, 9645 Scranton Road, Suite 205, San Diego, California 92121, by December 30, 2016, and otherwise comply with all requirements of the SEC, the General Corporation Law of Delaware and the Bylaws.
Stockholder Proposals to be presented at the 2017 Annual Meeting of Stockholders. If you do not wish to submit a proposal or information about a proposed director candidate for inclusion in next year’s proxy materials, but instead wish to present it directly at the 2017 annual meeting of stockholders, you must give timely written notice of the proposal to our Secretary. To be timely, the notice must be received no earlier than February 16, 2017 and no later than March 18, 2017. The notice must describe the stockholder proposal in reasonable detail and provide certain other information required by our Bylaws, a copy of which is available upon request from our Secretary at the above address.
Doug Kahn were filed late.
| | | | MISCELLANEOUS AND OTHER MATTERS | | |
MISCELLANEOUS AND OTHER MATTERS The Board knows of no other matters to be presented for stockholder action at the Annual Meeting. However, if other matters do properly come before the Annual Meeting or any adjournment or postponements thereof, the Board intends that the persons named in the proxies will vote upon such matters in accordance with their best judgment. | | By Order of the Board of Directors, | | | Lance BridgesSan Diego, California | Dan Mondor | Senior Vice President, General CounselJune 18, 2021 | Chairman and SecretaryChief Executive Officer |
San Diego, California
April 29, 2016
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR SHARES THROUGH THE INTERNET,ONLINE, BY TELEPHONE OR, IF YOU REQUESTED PRINTED COPIES OF THESE MATERIALS, BY SIGNING AND PROMPTLY RETURNING YOUR PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
| | | | | 48 | 2016 Proxy Statement|54
|
| Appendix A |
INSEEGO CORP.
Appendix A
NOVATEL WIRELESS, INC.
Amended and Restated
20092018 Omnibus Incentive Compensation Plan
1. Purpose. The purpose of the Novatel Wireless, Inc. 2009 Omnibus Incentive Compensation Plan is to promote the long-term success of the Company and the creation of stockholder value by offering directors, officers, employees and consultants of the Company an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, and to encourage such selected persons to continue to provide services to the Company and to attract new individuals with outstanding qualifications.
2. Definitions. As used in the Plan,
1. | Purpose. Inseego Corp. hereby amends and restates the Inseego Corp. 2009 Omnibus Incentive Compensation Plan into this Inseego Corp. 2018 Omnibus Incentive Compensation Plan. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by offering directors, officers, employees and consultants of the Company an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, and to encourage such selected persons to continue to provide services to the Company and to attract new individuals with outstanding qualifications. |
2. | Definitions. As used in the Plan, |
(a) “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries owns not less than 50 percent of such entity. (b) “Aggregate Share Limit” means the aggregate maximum number of shares available under the Plan pursuant to Section 3(a)(i) of the Plan. (c) �� “Annual Incentive Award” means a cash award granted pursuant to Section 8 of the Plan, where such award is based on Management Objectives and a Performance Period of one year or less. (d) “Appreciation Right” means a right granted pursuant to Section 5 of the Plan. (e) “Award” means any Annual Incentive Award, Option Right, Restricted Stock, Restricted Stock Unit, Appreciation Right, Performance Share, Performance Unit or Other Award granted pursuant to the terms of the Plan. (f) “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of an Appreciation Right. (g) “Beneficial Owner” or “Beneficial Ownership” has the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. (h) “Board” means the Board of Directors of NWI,Inseego, as constituted from time to time. (i) “Change in Control” means, except as may otherwise be provided in an Evidence of Award or in a Participant’s written employment agreement, change-in-control agreement, severance agreement, or other similar written agreement or arrangement that expressly provides that such definition applies with respect to this Plan, the first to occur of the following events: (i) any Person is or becomes the Beneficial Owner of 50 percent or more of the combined voting power of the then-outstanding Voting Stock of NWI;Inseego; provided, , however, , that: (1) the following acquisitions will not constitute a Change in Control: (A) any acquisition of Voting Stock of NWIInseego directly from NWIInseego that is approved by a majority of the Incumbent Directors, (B) any acquisition of Voting Stock of NWIInseego by the Company, (C) any acquisition of Voting Stock of NWIInseego by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company, and (D) any acquisition of Voting Stock of NWIInseego by any Person pursuant to a Business Transaction (as defined below) that complies with clauses (A), (B) and (C) of Section 2(i)(iii) below; | Appendix A |
(2) if any Person is or becomes the Beneficial Owner of 50 percent or more of the combined voting power of the then-outstanding Voting Stock of NWIInseego as a result of a transaction described in clause (A) of Section 2(i)(i)(1) above and such Person thereafter becomes the Beneficial Owner of any additional shares of Voting Stock of NWIInseego representing one percent or more of the then-outstanding Voting Stock of NWI,Inseego, other than in an acquisition directly from NWIInseego that is approved by a majority of the Incumbent Directors or other than as a result of a stock dividend, stock split or similar transaction effected by NWIInseego in which all holders of Voting Stock are treated equally, such subsequent acquisition will be treated as a Change in Control; (3) a Change in Control will not be deemed to have occurred if a Person is or becomes the Beneficial Owner of 50 percent or more of the Voting Stock of NWIInseego as a result of a reduction in the number of shares of Voting Stock of NWIInseego outstanding pursuant to a transaction or series of transactions that is approved by a majority of the Incumbent Directors unless and until such Person thereafter becomes the Beneficial Owner of any additional shares of Voting Stock of NWIInseego representing one percent or more of the then-outstanding Voting Stock of NWI,Inseego, other than as a result of a stock dividend, stock split or similar transaction effected by NWIInseego in which all holders of Voting Stock are treated equally; and
(4) if at least a majority of the Incumbent Directors determine in good faith that a Person has acquired Beneficial Ownership of 50 percent or more of the Voting Stock of NWIInseego inadvertently, and such Person divests as promptly as practicable but no later than the date, if any, set by the Incumbent BoardDirectors a sufficient number of shares so that such Person has Beneficial Ownership of less than 50 percent of the Voting Stock of NWI,Inseego, then no Change in Control will have occurred as a result of such Person’s acquisition; or (ii) a majority of the Board ceases to be comprised of Incumbent Directors; or (iii) the consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of NWIInseego or the acquisition of the stock or assets of another corporation, or other transaction (each, a “Business Transaction”), unless, in each case, immediately following such Business Transaction (A) the Voting Stock of NWIInseego outstanding immediately prior to such Business Transaction continues to represent (either by remaining outstanding or by being converted into Voting Stock of the surviving entity or any parent thereof), more than 50 percent of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Transaction (including, without limitation, an entity which as a result of such transaction owns NWIInseego or all or substantially all of NWI’sInseego’s assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Transaction, of the Voting Stock of NWI,Inseego, (B) no Person (other than NWI,Inseego, such entity resulting from such Business Transaction, or any employee benefit plan (or related trust) sponsored or maintained by the Company or such entity resulting from such Business Transaction) has Beneficial Ownership, directly or indirectly, of 50 percent or more of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Transaction, and (C) at least a majority of the members of the Board of Directors of the entity resulting from such Business Transaction were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Transaction; or (iv) approval by the stockholders of NWI ofInseego implements a completeplan for liquidation or dissolution of NWI,Inseego, except pursuant to a Business Transaction that complies with clauses (A), (B) and (C) of Section 2(i)(iii). (j) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, as such law and regulations may be amended from time to time. (k) “Committee” means a committee consisting of one or more members of the Board that is appointed by the Board (as described in Section 12) to administer the Plan. (l) “Company” means, collectively, NWIInseego and its Subsidiaries. | Appendix A |
(m) “Covered Employee”“Consultant” means a Participantan individual who is,performs bona fide services to the Company or is determined by the Board to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision). an Affiliate, other than as an Employee or Director.(n) “Date of Grant” means the date specified by the Board on which a grant of an Award will become effective (which date with respect to an Option Right or an Appreciation Right will not be earlier than the date on which the Board takes action with respect thereto). (o) “Director” means a member of the Board of Directors of NWI. Inseego.(p) “EBIT”“Employee” means earnings before interest and taxes. (q) “EBITDA” means earnings before interest, taxes, depreciation and amortization.
(r) “EBT” means earnings before taxes.
(s) “Effective Date” meansan individual who is an employee of the date that the Plan is approved by the stockholders of NWI.
(t)Company or an Affiliate.(q) “Evidence of Award” means an agreement, certificate, resolution, notification or other type or form of writing or other evidence approved by the Board that sets forth the terms and conditions of the Awards granted. An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of NWIInseego and, unless otherwise determined by the Board, need not be signed by a representative of NWIInseego or a Participant. (u)(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time. (v) “Existing Plan” means the Amended and Restated Novatel Wireless, Inc. 2000 Stock Incentive Plan.
(w)(s) “GAAP” means accounting principles generally accepted in the United States of America as in effect from time to time.
(x)(t) “Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock options” under Section 422 of the Code or any successor provision. (y)(u) “Incumbent Directors” means the individuals who, as of the date hereof,this amended and restated plan was adopted by the Board, are Directors of NWIInseego and any individual becoming a Director subsequent to the date hereof whose election, nomination for election by NWI’sInseego’s stockholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of NWIInseego in which such person is named as a nominee for director,Director, without objection to such nomination); provided, , however, , that an individual will not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board. (z)(v) “Inseego” means Inseego Corp., a Delaware corporation, and any successors thereto. (w) “Investor Director Provider” means any investor in the Company (or the Affiliate of an investor in the Company) that has an employee, direct or indirect owner, or service provider of such investor serving on the Board as a Director, provided that such Director has agreed with the investor (or Affiliate) that such investor (or Affiliate of such investor) will receive any Awards that such Director otherwise would receive. (x) “Management Objectives” means the performance objective or objectives established pursuant to the Plan for Participants who have received grants of Annual Incentive Awards, Performance Shares or Performance Units or, when so determined by the Board, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend equivalents or Other Awards pursuant to the Plan. Management Objectives may be described in terms of NWI-wideInseego-wide objectives or objectives that are related to the performance of the individual Participant or a Subsidiary, division, business unit, region or function within NWIInseego or any Subsidiary. The Management Objectives may be made relative to the performance of other companies. The Management Objectives applicable to any Qualified Performance-Based Award to a Covered Employee willmay be based on specified levels of or changes in one or more ofany criteria selected by the following criteria:Board. (i) Profits: Operating income, EBIT, EBT, net income, cash net income, earnings per share, residual or economic earnings or economic profit;(ii) Cash Flow: EBITDA, free cash flow, free cash flow with or without specific capital expenditure targets or ranges, including or excluding divestments and/or acquisitions, total cash flow, cash flow in excess of cost of capital, residual cash flow or cash flow return on investment;
(iii) Returns: Economic value added (EVA) or profits or cash flow returns on: sales, assets, invested capital, net capital employed or equity;
(iv) Working Capital: Working capital divided by sales, days’ sales outstanding, days’ sales inventory or days’ sales in payables;
(v) Profit Margins: Profits divided by revenues or sales, gross margins divided by revenues or sales, or operating margin divided by revenues or sales;
(vi) Liquidity Measures: Debt-to-capital ratios, debt-to-EBITDA ratios or total debt;
(vii) Sales Growth, Margin Growth, Unit Growth, Cost Initiative and Stock Price Metrics: Revenues, revenue growth, sales, sales growth, gross margin, operating margin, shipment volume, unit growth, stock price appreciation, total return to stockholders, expense targets, productivity targets or ratios, sales and administrative expenses divided by sales, or sales and administrative expenses divided by profits; and
(viii) Strategic Initiative Key Deliverable Metrics: Consisting of one or more of the following: product development or launch, strategic partnering, research and development, regulatory compliance or submissions, vitality or sustainability index, market share or penetration, geographic business expansion goals, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, or goals relating to acquisitions or divestitures of subsidiaries, affiliates or joint ventures.
| Appendix A |
At the Board’s discretion, any Management Objective may be measured before special items, and may or may not be determined in accordance with GAAP. The Board shall have the authority to make equitable adjustments to the Management Objectives (and to the related minimum, target and maximum levels of achievement or performance) as follows: in recognition of unusual or non-recurring events affecting NWIInseego or any Subsidiary or Affiliate or the financial statements of NWIInseego or any Subsidiary or Affiliate; in response to changes in applicable laws or regulations; to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles; or in recognition of any events or circumstances (including, without limitation, changes in the business, operations, corporate or capital structure of the Company or the manner in which it conducts its business) that render the Management Objectives unsuitable; provided , however , that no such adjustment shall be made to any Management Objective applicable to a Qualified Performance-Based Award to the extent such adjustment would cause such Award to fail to meet the requirements for “qualified performance-based compensation” under Section 162(m) of the Code, unlessunsuitable, as determined by the Board determines that the satisfaction of such requirements is neither necessary or appropriate. (aa)in its sole discretion.(y) “Market Value perPer Share” means as of any particular date the closing sale price of a Share as reported on the Nasdaq Stock Market or, if not listed on such exchange, on any other national securities exchange on which the Shares are listed. If the
Shares are not traded as of any given date, the Market Value perPer Share means the closing price for the Shares on the principal exchange on which the Shares are traded for the immediately preceding date on which the Shares were traded. If there is no regular public trading market for the Shares, the Market Value perPer Share of the Shares shall be the fair market value of the Shares as determined in good faith by the Board. The Board is authorized to adopt another fair market value pricing method, provided such method is in compliance with the fair market value pricing rules set forth in Section 409A of the Code. (bb) “NWI” means Novatel Wireless, Inc., a Delaware corporation, and any successors thereto.
(cc) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.
(dd)(z) “Option Price” means the purchase price payable on exercise of an Option Right. (ee)(aa) “Option Right” means the right to purchase Shares upon exercise of an option granted pursuant to Section 4 of the Plan. (ff)(bb) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right. (cc) “Other Award” means an Award granted pursuant to Section 9 of the Plan. (gg)(dd) “Participant” means a person who is selected by the Board to receive Awards under the Plan and who is (i)or is expected to become an employee of the CompanyEmployee, Director, or any oneConsultant, or more of its Affiliates, (ii) a member of the Board, or (iii) an individual who performs bona fide services to the Company or any one or more of its Affiliates. (hh)Investor Director Provider.(ee) “Performance Period” means, in respect of an Award, a period of time within which the Management Objectives relating to such Award are to be achieved. (ii)achieved, as determined by the Board in its sole discretion. The Board may establish different Performance Periods for different Participants, and the Board may establish concurrent or overlapping Performance Periods.(ff) “Performance Share” means an Award under the Plan equivalent to the right to receive one Share awarded pursuant to Section 8 of the Plan. (jj)(gg) “Performance Unit” means a unit awarded pursuant to Section 8 of the Plan that is equivalent to $1.00 or such other value as is determined by the Board. (kk)(hh) “Person” shall have the meaning set forth in Section 3(a)(9) of the Exchange Act or any successor provision thereto, as modified and used in Sections 13(d) and 14(d) thereof and the rules thereunder. (ll)(ii) “Plan” means this Novatel Wireless, Inc. 2009Inseego Corp. 2018 Omnibus Incentive Compensation Plan. (mm) “Qualified Performance-Based Award” means any Award or portion of an Award that is intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.
(nn)Plan, as amended.(jj) “Restricted Stock” means Shares granted pursuant to Section 6 of the Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired. (kk) “Restricted Stock Unit” means an Award made pursuant to Section 7 of the Plan. | Appendix A |
(ll) “Restriction Period” means the period of time during which Restricted Stock or Restricted Stock Units may be subject to restrictions, as provided in Section 6 and Section 7 of the Plan. (pp) “Restricted Stock Unit” means an Award made pursuant to Section 7 of the Plan.
(qq)(mm) “Secondary Committee” means one or more senior officers of NWIInseego (who need not be members of the Board), acting as a committee established by the Board pursuant to Section 12(b) of the Plan, subject to such conditions and limitations as the Board shall prescribe. (rr)(nn) “Shares” means the shares of common stock, par value $0.001 per share, of NWIInseego or any security into which such Shares may be changed by reason of any transaction or event of the type referred to in Section 11 of the Plan. (ss)(oo) “Spread” means the excess of the Market Value perPer Share on the date when an Appreciation Right is exercised, or on the date when Option Rights are surrendered in payment of the Option Price of other Option Rights, over the Option Price or Base Price provided for in the related Option Right or Appreciation Right, respectively. (tt)(pp) “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by NWI;Inseego; except that, for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time NWIInseego owns or controls, directly or indirectly, more than 50 percent of the total combined voting power represented by all classes of stock issued by such corporation.
(uu)(qq) “Voting Stock” means securities entitled to vote generally in the election of directors. (rr) “10% Shareholder” means a Person who, as of a relevant date, owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. 3. Shares Available Under the Plan.(a) Maximum Shares Available Under Plan. (i) Subject to adjustment as provided in Section 11 of the Plan, the maximum number of Shares that may be issued (A) upon the exercise of Option Rights or Appreciation Rights, (B) in payment or settlement of Restricted Stock and released from substantial risks of forfeiture thereof, (C) in payment or settlement of Restricted Stock Units, (D) in payment or settlement of Performance Shares or Performance Units that have been earned, (E) in payment or settlement of Other Awards, or (F) in payment of dividend equivalents paid with respect to Awards made under the Plan, in the aggregate will not exceed 15,000,00021,753,085 Shares (the “Aggregate Share Limit”), plus an additional 323,000 . Shares that may beare issued forin connection with inducement grants pursuant to Nasdaq Listing Rule 5635 (“Inducement Shares”).and Shares issued under any plan assumed by NWIInseego in any corporate transaction will not count against the Aggregate Share Limit. (ii) Shares covered by an Award granted under the Plan shall not be counted against the Aggregate Share Limit unless and until they are actually issued and delivered to a Participant and, therefore, the total number of Shares available under the Plan as of a given date shall not be reduced by any Shares relating to prior Awards that have expired or have been forfeited or cancelled or terminated for any other reason other than being exercised or settled, and to the extent of payment in cash of the benefit provided by any Award granted under the Plan, any Shares that were covered by that Award will be available for issue or transfer hereunder. If, under the Plan, a Participant has elected to give up the right to receive compensation in exchange for Shares based on fair market value, such Shares will not count against the Aggregate Share Limit. In addition, upon the full or partial payment of any Option Price by the transfer to the Company of Shares or upon satisfaction of tax withholding provisions in connection with any such exercise or any other payment made or benefit realized under this Plan by the transfer or relinquishment of Shares, there shall be deemed to have been issued under this Plan only the net number of Shares actually issued by the Company. | Appendix A |
(iii) Subject to adjustment as provided in Section 11 of the Plan, the aggregate number of Shares actually issued by the Company upon the exercise of Incentive Stock Options will not exceed 7,000,000 Shares. (b) Individual Participant Limits. Notwithstanding anything in this Section 3, or elsewhere in the Plan, to the contrary, and subject to adjustment as provided in Section 11 of the Plan:
(i) No Participant will be granted 4. Option Rights or Appreciation Rights, in the aggregate, for more than 1,000,000 Shares during any calendar year; (ii) No Participant will be awarded Qualified Performance Based-Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Other Awards, in the aggregate, for more than 500,000 Shares during any calendar year;
(iii) In no event will any Participant in any calendar year receive a Qualified Performance-Based Award of Performance Units having an aggregate maximum value in excess of $2,500,000;
(iv) In no event will any Participant in any calendar year receive a Qualified Performance-Based Award that is an Annual Incentive Award having an aggregate maximum value in excess of $2,500,000; and
(v) In no event will any Participant in any calendar year receive a Qualified Performance-Based Award in the form of Other Awards of cash under Section 9(b) having an aggregate maximum value in excess of $2,500,000.
4. Option Rights.. The Board may, from time to time, authorize the granting to Participants of Option Rights upon such terms and conditions consistent with the following provisions as it may determine:
(a) Each grant will specify the number of Shares to which it pertains subject to the limitations set forth in Section 3 of the Plan. (b) Each grant will specify an Option Price per share, which may not be less than (i) the Market Value perPer Share on the Date of Grant or (ii) if the Person to whom an Incentive Stock Option is granted is a 10% Shareholder on the Date of Grant, 110% of the Market Value Per Share on the Date of Grant. However, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Incentive Stock Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424 of the Code or if the Award is designated as a “Section 409A Award” and has either a fixed exercise date or a fixed delivery date.(c) Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to NWIInseego or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to NWIInseego of Shares owned by the Optionee (or other consideration authorized pursuant to Section 4(d)) having a value at the time of exercise equal to the total Option Price, (iii) by withholding by NWIInseego from the Shares otherwise deliverable to the Optionee upon the exercise of such Option Rights, a number of Shares having a value at the time of exercise equal to the total Option Price, (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Board. (d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to NWIInseego of some or all of the Shares to which such exercise relates.
(e) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised. (f) Each grant will specify the period or periods of continuous service by the Optionee with NWIInseego or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable. exercisable; provided, however, that in the case of an Investor Director Provider, service will be deemed continuous as long as such Investor Director Provider has at least one representative on the Board who is an employee, direct or indirect owner, or service provider of such Investor Director Provider.(g) Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights. (h) Option Rights granted under the Plan may be (i) Incentive Stock Options, (ii) options that are not intended to qualify as Incentive Stock Options, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who are “employees” (under Section 3401(c) of the Code) of NWIInseego or a subsidiary of NWIInseego (under Section 424 of the Code). Any Option Right designated as an Incentive Stock Option will not be an Incentive Stock Option to the extent the Option Right fails to meet the requirements of Section 422 of the Code. Each grant will specify whether the Option Right is an Incentive Stock Option or an option that is not intended to qualify as an Incentive Stock Option.(i) The Board may substitute, without receiving Participant permission, Appreciation Rights payable only in Shares (or Appreciation Rights payable in Shares or cash, or a combination of both, at the Board’s discretion) for outstanding Option Rights; provided, , however, , that the terms of the substituted Appreciation Rights are substantially the same as the terms for the Option Rights at the date of substitution and the difference between the Market Value Per Share of the underlying Shares and the Base Price of the Appreciation Rights is equivalent to the difference between the Market Value Per Share of the underlying Shares and the Option Price of the Option Rights. If the Board determines, based upon advice from NWI’sInseego’s accountants, that this provision creates adverse accounting consequences for NWI,Inseego, it shall be considered null and void. | Appendix A |
(j) No Option Right will be exercisable more than 10 years from the Date of Grant. Grant; provided, however, that with respect to Incentive Stock Options issued to 10% Shareholders, the term of each such Option Right shall not exceed five (5) years from the date it is granted.(k) No grant of Option Rights may provide for dividends, dividend equivalents or other similar distributions to be paid on such Option Rights. (l) No Option Right shall include terms entitling the Participant to a grant of Option Rights or Appreciation Rights on exercise of the Option Right. 5. Appreciation Rights. Rights. The Board may, from time to time, authorize the granting to any Participant of Appreciation Rights upon such terms and conditions consistent with the following provisions as it may determine:(a) An Appreciation Right will be a right of the Participant to receive from NWIInseego an amount determined by the Board, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise. (b) Each grant will specify the Base Price, which may not be less than the Market Value Per Share on the Date of Grant. (c) Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by NWIInseego in cash, in Shares or in any combination thereof and may retain for the Board the right to elect among those alternatives. (d) Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Board at the Date of Grant. (e) Any grant may specify waiting periods before exercise and permissible exercise dates or periods. (f) Each grant will specify the period or periods of continuous service by the Participant with NWIInseego or any Subsidiary that is necessary before such Appreciation Right or installments thereof will become exercisable. exercisable; provided, however, that in the case of an Investor Director Provider, service will be deemed continuous as long as such Investor Director Provider has at least one representative on the Board who is an employee, direct or indirect owner, or service provider of such Investor Director Provider.(g) Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights. (h) Successive grants may be made to the same Participant regardless of whether any Appreciation Rights previously granted to the Participant remain unexercised. (i) No Appreciation Right granted under the Plan may be exercised more than 10 years from the Date of Grant. (j) No grant of Appreciation Rights may provide for dividends, dividend equivalents or other similar distributions to be paid on such Appreciation Rights. (k) No Appreciation Right shall include terms entitling the Participant to a grant of Option Rights or Appreciation Rights on exercise of the Appreciation Right. 6. Restricted Stock. Stock. The Board may, from time to time, authorize the granting of Restricted Stock to Participants upon such terms and conditions consistent with the following provisions as it may determine:determine | Appendix A |
(a) Each such grant will constitute an immediate transfer of the ownership of Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but such rights shall be subject to such restrictions and the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Board may determine.
(b) Each such grant may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value perPer Share at the Date of Grant. (c) Each such grant will provide that the Restricted Stock covered by such grant that vests upon the passage of time will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a Restriction Period to be determined by the Board at the Date of Grant or upon achievement of Management Objectives referred to in subparagraph (e) below. (d) Each such grant will provide that during, and may provide that after, the Restriction Period, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Board at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in NWIInseego or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee). (e) Any grant of Restricted Stock may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Stock. (f) Notwithstanding anything to the contrary contained in the Plan, any grant of Restricted Stock may provide for the earlier termination of restrictions on such Restricted Stock in the event of the retirement, death or disability, or other termination of employment of a Participant, or a Change in Control; provided , however , that no Award intended to be a Qualified Performance-Based Award shall provide for such early termination of restrictions in the event of retirement or other termination of employment to the extent such provision would cause such Award to fail to be a Qualified Performance-Based Award. Control.(g) Any such grant of Restricted Stock may require that any or all dividends or other distributions paid thereon during the Restriction Period be automatically deferred and reinvested in additional shares of Restricted Stock or paid in cash, which may be subject to the same restrictions as the underlying Award; provided, however, , that dividends or other distributions on Restricted Stock subject to Management Objectives shall be deferred and paid in cash upon the achievement of the applicable Management Objectives and the lapse of all restrictions on such Restricted Stock. (h) Unless otherwise directed by the Board, (i) all certificates representing shares of Restricted Stock will be held in custody by NWIInseego until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Shares, or (ii) all shares of Restricted Stock will be held at NWI’sInseego’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such shares of Restricted Stock. 7. Restricted Stock Units. Units. The Board may, from time to time, authorize the granting of Restricted Stock Units to Participants upon such terms and conditions consistent with the following provisions as it may determine:(a) Each such grant will constitute the agreement by NWIInseego to deliver Shares or cash to the Participant in the future in consideration of the performance of services, but subject to such restrictions and the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Board may specify. (b) Each such grant may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value perPer Share at the Date of Grant. (c) Notwithstanding anything to the contrary contained in the Plan, any grant of Restricted Stock Units may provide for the earlier lapse or modification of the Restriction Period in the event of the retirement, death or disability, or other termination of employment of a Participant, or a Change in Control; provided , however , that no Award intended to be a Qualified Performance-Based Award shall provide for such early lapse or modification in the event of retirement or other termination of employment to the extent such provision would cause such Award to fail to be a Qualified Performance-Based Award.Control. | Appendix A |
(d) During the Restriction Period, the Participant will have no right to transfer any rights under his or her Award and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Board may at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current, deferred or contingent basis either in cash, additional Restricted Stock Units or in additional Shares; provided, , however, , that dividend equivalents on Restricted Stock Units subject to Management Objectives shall be deferred and paid in cash upon the achievement of the applicable Management Objectives and the lapse of all restrictions on such Restricted Stock Units. (e) Each grant of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have been earned.
8. Annual Incentive Awards, Performance Shares and Performance Units. Units. The Board may, from time to time, authorize the granting of Annual Incentive Awards, Performance Shares and Performance Units that will become payable to a Participant upon achievement of specified Management Objectives during the Performance Period, upon such terms and conditions consistent with the following provisions as it may determine:(a) Each grant will specify either the number of shares, or amount of cash, payable with respect to Annual Incentive Awards, Performance Shares or Performance Units to which it pertains, which number or amount payable may be subject to adjustment to reflect changes in compensation or other factors. (b) The Performance Period with respect to each Annual Incentive Award, Performance Share or Performance Unit will be such period of time (not less than one year in the case of each Performance Share and Performance Unit), as will be determined by the Board at the time of grant, which Performance Period may be subject to earlier lapse or other modification in the event of the retirement, death or disability, or other termination of employment of a Participant, or a Change in Control; provided , however , that no Award intended to be a Qualified Performance-Based Award shall provide for such early lapse or modification in the event of retirement or other termination of employment to the extent such provision would cause such Award to fail to be a Qualified Performance-Based Award. Control.(c) Any grant of Annual Incentive Awards, Performance Shares or Performance Units will specify Management Objectives that, if achieved, will result in payment or early payment of the Award and may set forth a formula for determining the number of shares,Shares, or amount of cash, payable with respect to Annual Incentive Awards, Performance Shares or Performance Units that will be earned if performance is at or above the minimum or threshold level or levels. (d) Each grant will specify the time and manner of payment of Annual Incentive Awards, Performance Shares or Performance Units that have been earned. Any grant of Performance Shares or Performance Units may specify that the amount payable with respect thereto may be paid by NWIInseego in cash, in Shares or in any combination thereof and will retain in the Board the right to elect among those alternatives. (e) Any grant of Annual Incentive Awards, Performance Shares or Performance Units may specify that the amount payable or the number of Shares issued with respect thereto may not exceed maximums specified by the Board at the Date of Grant. (f) The Board may at the Date of Grant of Performance Shares provide for the payment of dividend equivalents to the holder thereof on either a current, deferred or contingent basis, either in cash or in additional Shares; provided, however, , that dividend equivalents on Performance Shares shall be deferred and paid in cash upon the achievement of the applicable Management Objectives. (a) The Board may, subject to limitations under applicable law, grant to any Participant such other awardsOther Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of such Shares, including, without limitation, awards consisting of securities or other rights convertible or exchangeable into Shares, purchase rights for Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, Affiliates or other business units thereof or any other factors designated by the Board, and awards valued by reference to the book value of Shares or the value of securities of, or the performance of specified Subsidiaries or Affiliates or other business units of NWI.Inseego. The Board shall determine the terms and conditions of such awards. Shares delivered pursuant to an awardAward in the nature of a purchase right granted under this Section 9 shall be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, cash, Shares, Other awards,Awards, notes or other property, as the Board shall determine. | Appendix A |
(b) Except as otherwise provided in Section 15(b), cash awards,Awards, as independent awardsAwards or as an element of or supplement to any other Award granted under the Plan, may also be granted pursuant to this Section 9. (c) The Board may grant Shares as a bonus, or may grant other Awards in lieu of obligations of NWIInseego or a Subsidiary to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Board in a manner that complies with Section 409A of the Code. (a) Except as otherwise determined by the Board, no Awards granted under the Plan and no rights under any such Awards shall be assignable, alienable, saleable, or transferable by the Participant except by will or the laws of descent and distribution, and in no event shall any such Award granted under the Plan be transferred for value. Except as otherwise determined by the Board, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by
his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law and/or court supervision. (b) The Board may specify at the Date of Grant that part or all of the Shares that are to be issued by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock or Restricted Stock Units or upon payment under any grant of Performance Shares, Performance Units or Other Awards will be subject to further restrictions on transfer. 11. Adjustments. Adjustments. The Board shall make or provide for such adjustments in the numbersnumber of Shares covered by outstanding Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of Shares covered by Other Awards, in the Option Price and Base Price provided in outstanding Option Rights or Appreciation Rights, and in the kind of Shares covered thereby, as the Board, in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event or in the event of a Change in Control, the Board, in its discretion, may provide in substitution for any or all outstanding Awards under the Plan such alternative consideration (including cash), if any, as it in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all Awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each Option Right or Appreciation Right with an Option Price or Base Price greater than the consideration offered in connection with any such transaction or event or Change in Control, the Board may in its sole discretion elect to cancel such Option Right or Appreciation Right without any payment to the person holding such Option Right or Appreciation Right. The Board shall also make or provide for such adjustments in the numbersnumber of sharesShares specified in Section 3 of the Plan as the Board in its sole discretion, exercised in good faith, may determine is appropriate to reflect any transaction or event described in this Section 11; provided, , however, , that any such adjustment to the number specified in Section 3(a)(iii) will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail so to qualify.12. Administration of the Plan. Plan(a) The Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under the Plan to the Committee. To the extent of any such delegation, references in the Plan to the Board will be deemed to be references to such Committee. A majority of the Committee will constitute a quorum, and the action of the members of the Committee present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the Committee. | Appendix A |
(b) To the extent permitted by applicable law, including any rule of the Nasdaq Stock Market, the Board or Committee may delegate its duties under the Plan to a Secondary Committee, subject to such conditions and limitations as the Board or Committee shall prescribe; provided, , however, , that: (i) only the Board or Committee may grant an Award to a Participant who is subject to Section 16 of the Exchange Act; (ii) only the Board or Committee may grant an Award designed to be a Qualified Performance-Based Award; (iii) no Secondary Committee may grant an Award to a member of such Secondary Committee; (iv) the resolution providing for such delegation sets forth the total number of Shares and/or the pool dollar value of the Awards such Secondary Committee may grant; and (v)(ii) the Secondary Committee shall report periodically to the Board or the Committee, as the case may be, regarding the nature and scope of the Awards granted pursuant to the authority delegated. To the extent of any such delegation, references or deemed references in the Plan to the Committee will be deemed to be references to such Secondary Committee. A majority of the Secondary Committee will constitute a quorum, and the action of the members of the Secondary Committee present at any meeting at which a quorum is present, or acts unanimously approved in writing, will be the acts of the Secondary Committee. (c) The Board shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Evidence of Award or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Board may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in an Evidence of Award, granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of the Plan or any Evidence of Award, and, subject to Sections 15 and 18, adopting modifications and amendments to this Plan or any Evidence of Award, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which NWI,Inseego, its Affiliates, and/or its Subsidiaries operate. The grant of any Award that specifies Management Objectives that must be achieved before such Award can be earned or paid will
specify that, before such Award will be earned and paid, the Board must certify that the Management Objectives have been satisfied. (d) The interpretation and construction by the Board of any provision of this Plan or of any Evidence of Award or other agreement or document ancillary to or in connection with this Plan and any determination by the Board pursuant to any provision of the Plan or of any such Evidence of Award or other agreement or document ancillary to or in connection with this Plan will be final and conclusive. No member of the Board will be liable for any such action or determination made in good faith. (e) Any Participant who believes he or she is being denied any benefit or right under the Plan or under any Award or Evidence of Award may file a written claim with the Committee. Any claim must be delivered to the Committee within six month of the specific event giving rise to the claim. Untimely claims will not be processed and shall be deemed denied. The Committee, or its designee, generally will notify the Participant of its decision in writing as soon as administratively practicable. Claims shall be deemed denied if the Committee does not respond in writing within 180 days of the date the written claim is delivered to the Committee. The Committee’s decision is final and conclusive and binding on all Persons. No lawsuit or arbitration relating to the Plan may be filed or commenced before a written claim is filed with the Committee and is denied or deemed denied, and any lawsuit must be filed within one year of such denial or deemed denial or be forever barred. 13. Non U.S. Participants. Participants. In order to facilitate the making of any grant or combination of grants under the Plan, the Board may provide for such special terms for Awards to Participants who are foreign nationals or who are employed by NWIInseego or any Subsidiary outside of the United States of America, as the Board may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Board may approve such supplements to or amendments, restatements or alternative versions of the Plan (including without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan as in effect for any other purpose, and the Secretary or other appropriate officer of NWIInseego may certify any such document as having been approved and adopted in the same manner as the Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of the Plan as then in effect unless the Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of NWI.Inseego. | Appendix A |
14. Withholding Taxes.Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other personPerson under the Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other personPerson make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Board) may include relinquishment of a portion of such benefit. If a Participant’s benefit is to be received in the form of Shares, and such Participant fails to make arrangements for the payment of tax, the Company shall withhold such Shares having a value that shall not exceed the statutory minimummaximum amount requiredpermitted to be withheld. Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income and employment tax laws, the Participant may elect, or the Company may require the Participant, to satisfy the obligation, in whole or in part, by electing to have withheld, from the Shares required to be delivered to the Participant, Shares having a value equal to the amount required to be withheld, or by delivering to the Company other Shares held by such Participant. The Shares used for tax withholding will be valued at an amount equal to the Market Value perPer Share of such Shares on the date the benefit is to be included in Participant’s income. In no event will the Market Value per Share of the Shares to be withheld or delivered pursuant to this Section 14 to satisfy applicable withholding taxes exceed the minimum amount of taxes required to be withheld. Participants shall also make such arrangements as the Company may require for the payment of any withholding tax obligation that may arise in connection with the disposition of Shares acquired upon the exercise of Option Rights. (a) The Board may at any time and from time to time amend the Plan in whole or in part; provided, , however, , that if an amendment to the Plan must be approved by the stockholders of NWIInseego in order to comply with applicable law or the rules of the Nasdaq Stock Market or, if the Shares are not traded on the Nasdaq Stock Market, the principal national securities exchange upon which the Shares are traded or quoted, then, such amendment will be subject to stockholder approval and will not be effective unless and until such approval has been obtained. (b) Except in connection with a corporate transaction or event described in Section 11 of the Plan, the terms of outstanding Awards may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights, and no outstanding Option Rights or Appreciation Rights may be cancelled in exchange for other Awards, or cancelled in exchange for Option Rights or Appreciation Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base Price of the original Appreciation Rights, as applicable, or cancelled in exchange for cash, without stockholder approval. This Section 15(b) is intended to prohibit (without stockholder approval) the repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 11 of the Plan. Notwithstanding any provision of the Plan to the contrary, this Section 15(b) may not be amended without approval by NWI’sInseego’s stockholders. (c) If permitted by Section 409A of the Code, and Section 162(m) in the case of a Qualified Performance-Based Award, in case of termination of employment by reason of death, disability or normal or early retirement, or in the case of unforeseeable emergency or other special circumstances, of a Participant who holds an Option Right or Appreciation Right not immediately exercisable in full, or any Shares of Restricted Stock or any Restricted Stock Units as to which the Restriction Period has not
been completed, or any Annual Incentive Awards, Performance Shares or Performance Units which have not been fully earned, or any Other Awards subject to any vesting schedule or transfer restriction, or who holds Shares subject to any transfer restriction imposed pursuant to Section 10(b) of the Plan, the Board may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or Other Award may be exercised or the time when such Restriction Period will end or the time at which such Annual Incentive Awards, Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such Award. (d) Subject to Section 16(b)16(d) of the Plan, the Board may amend the terms of any awardAward theretofore granted under the Plan prospectively or retroactively, but subject to Section 11 of the Plan, no such amendment shall impair the rights of any Participant without his or her consent, except as necessary to comply with changes in law or accounting rules applicable to NWI.Inseego. The Board may, in its discretion, terminate the Plan at any time. | Appendix A |
Termination of the Plan will not affect the rights of Participants or their successors under any Awards outstanding hereunder on the date of termination. 16. Compliance with Section 409A of the Code. (a) To the extent applicable, it is intended that the Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1)409A of the Code do not apply to the Participants. The Plan and any grants made hereunder shall be administered in a manner consistent with this intent. Any reference in the Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. (b) Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under the Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under the Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Affiliates. (c) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by NWIInseego from time to time) and (ii) NWIInseego shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then NWIInseego shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest, on the tenth business day of the month after such six-month period. (d) Notwithstanding any provision of the Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, NWIInseego reserves the right to make amendments to the Plan and grants hereunder as NWIInseego deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.Code, or adverse tax consequences under another Code provision, without Participant consent. In any case, a Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with the Plan and grants hereunder (including any taxes, penalties, and penaltiesinterest under Section 409A of the Code)Code or another Code provision), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold a Participant nor anyone other than a Participant, including a Participant’s estate or beneficiaries, harmless from any or all of such taxes or penalties. 17. Governing Law. Law. The Plan and all grants and Awards and actions taken thereunder shall be governed by and construed in accordance with the internal substantive laws of the State of Delaware, without regard to principles of conflicts of laws.18. Effective Date/Termination. Termination. The Plan will beoriginally became effective as of June 18, 2009. This amendment and restatement was adopted by the Effective Date. No grants will be madeBoard on or after the Effective Date under the Existing Plan, except that outstanding Awards granted under the Existing Plan will continue unaffected, in accordance with the terms of the Existing Plan as in effectMay 11, 2018 and became effective on the Effective Date, following the Effective Date.July 13, 2018. No grant will be made under the Plan more than 10 years after the Effective Date,May 11, 2018, but all grants made on or prior to such date will continue in effect thereafter subject to the terms of the Evidence of Award conveying such grants and of the Plan.(a) Each grant of an Award will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with the Plan, as the Board may approve.
(b) NWIInseego will not be required to issue any fractional Shares pursuant to the Plan. The Board may provide for the elimination of fractional Shares or for the settlement of fractional Shares in cash. | Appendix A |
(c) The Plan will not confer upon any Participant any right with respect to continuance of employment or other service with NWIInseego or any Subsidiary or Affiliate, nor will it interfere in any way with any right NWIInseego or any Subsidiary or Affiliate would otherwise have to terminate such Participant’s employment or other service at any time. (d) No person shall have any claim to be granted any Award under the Plan. Without limiting the generality of the foregoing, the fact that a target Award is established for the job value or level for an employeeEmployee shall not entitle any employeeEmployee to an Award hereunder. Except as provided specifically herein, a Participant or a transferee of an Award shall have no rights as a stockholder with respect to any Shares covered by any Award until the date as of which he or she is actually recorded as the holder of such Shares upon the stock records of the Company. (e) Determinations by the Board or the Committee under the Plan relating to the form, amount and terms and conditions of grants and Awards need not be uniform, and may be made selectively among persons who receive or are eligible to receive grants and Awards under the Plan, whether or not such persons are similarly situated. (f) To the extent that any provision of the Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of the Plan. (g) No Award under the Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Board, contrary to law or the regulations of any duly constituted authority having jurisdiction over the Plan. (h) Absence or leave approved by a duly constituted officer of NWIInseego or any of its Subsidiaries shall not be considered interruption or termination of service of any employeeEmployee for any purposes of the Plan or Awards granted hereunder. (i) The Board may condition the grant of any Award or combination of Awards authorized under the Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by NWIInseego or a Subsidiary to the Participant. (j) If any provision of the Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Board, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Board, it shall be stricken and the remainder of the Plan shall remain in full force and effect. (k) Any Evidence of Award may: (i) provide for recoupment by the Company of all or any portion of an Award upon such terms and conditions as the Board or Committee may specify in such Evidence of Award; or (ii) include restrictive covenants, including, without limitation, non-competition, non-disparagement and confidentiality conditions or restrictions, that the Participant must comply with during employment by or service to the Company and/or within a specified period after termination as a condition to the Participant’s receipt or retention of all or any portion of an Award. This Section 19(k) shall not be the Company’s exclusive remedy with respect to such matters. This Section 19(k) shall not apply after a Change in Control, unless otherwise specifically provided in the Evidence of Award. | | | | | | | | | | | Your vote matters – here’s how to vote! | | You may vote online or by phone instead of mailing this card. | | | | | | | | | | Online Go to www.investorvote.com/INSG or scan the QR code – login details are located in the shaded bar below. | | | | | | Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada | | | Using a black ink pen, mark your votes with an X as shown in this example. ☒ Please do not write outside the designated areas. | | | | Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/INSG | | |
▼ IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼ | | | | | | A | | Proposals – The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 - 4. | | | | | 1. Elect two directors to serve until the 2023 Annual Meeting of Stockholders | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Withhold | | | | | | | | For | | Withhold | | | | | | | | | | | | | | | | | 01 - Christopher Harland | | ☐ | | ☐ | | | | | | 02 - Christopher Lytle | | ☐ | | ☐ | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | 2. Ratify the appointment of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. | | ☐ | | ☐ | | ☐ | | | | 3. Approve, in an advisory vote, the compensation paid to the Company’s named executive officers, as presented in the proxy statement. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | 4. Approve an amendment of the Company’s 2018 Omnibus Incentive Compensation Plan to increase the number of shares issuable under the plan by 3,000,000 shares. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | |
| | | | | | | B | | Authorized Signatures – This section must be completed for your vote to count. Please date and sign below. |
| | | | | | | | | | | | | | | | | | | Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | | |
| | | | | | | Date (mm/dd/yyyy) – Please print date below. | | Signature 1 – Please keep signature within the box. | | Signature 2 – Please keep signature within the box. | | |
The 2021 Annual Meeting of Stockholders of Inseego Corp. will be held on
Wednesday, July 28, 2021 at 7:00 A.M. Pacific Time, virtually via the internet at www.meetingcenter.io/245781706.To access the virtual meeting, you must have the information that is printed in the shaded bar
located on the reverse side of this form.The password for this meeting is – INSG2021. | | | | | | | Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/INSG | | |
▼ IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.▼ | | | Inseego Corp. | | |
2021 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting – July 28, 2021 Dan Mondor and Kurt Scheuerman, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Inseego Corp. to be held on July 28, 2021 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as directed herein or, if not otherwise indicated, the Proxies will have authority to vote FOR the director nominees in Proposal 1 and FOR Proposals 2-4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) | | | Change of Address – Please print new address below. | | Comments – Please print your comments below. |
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