UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
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ULTRALIFE CORPORATION
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Draft – May23rd 2017
ULTRALIFE CORPORATION |
2000 Technology Parkway |
Newark, New York 14513 |
June 1, 2017
To Our Shareholders:
You are cordially invited to attend the 20142017 Annual Meeting of Shareholders of Ultralife Corporation on Tuesday, June 3, 2014July 18, 2017 at 9:00 A.M. local time at theThe Westin Crystal City, Marriott at Reagan National Airport, 19991800 Jefferson Davis Highway, Arlington, VA 22202-3526.
This year, we are again providing our proxy materials over the Internet. Accordingly, we are mailing to many of our shareholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our Proxy Statement and our 20132016 Annual Report to Shareholders. The Notice of Internet Availability of Proxy Materials contains instructions about how to access those documents and vote online. The Notice of Internet Availability of Proxy Materials also contains instructions about how each of our shareholders can also receive a paper copy of our proxy materials, including the Proxy Statement, our 20132016 Annual Report to Shareholders and a form of proxy card or voting instruction card. By taking advantage of this distribution process, we will not only conserve natural resources, but we will also reduce our costs of printing and distributing proxy materials.
We look forward to a productive annual meeting.
Very truly yours, | |
Michael D. Popielec, President and Chief Executive Officer |
ULTRALIFE CORPORATION |
2000 Technology Parkway |
Newark, New York 14513 |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
JULY 18, 2017 |
Notice is hereby given that the 20142017 Annual Meeting of Shareholders of Ultralife Corporation will be held on Tuesday, June 3, 2014July 18, 2017 at 9:00 A.M. local time at theThe Westin Crystal City, Marriott at Reagan National Airport, 19991800 Jefferson Davis Highway, Arlington, VA 22202-352622202 for the following purposes:
1. | To elect six directors for a term of one year and until their successors are duly elected and qualified; |
2. | To ratify the selection of |
3. | To |
4. | To vote on a non-binding advisory resolution on the frequency of future advisory votes on executive compensation (“Say-When-on-Pay”); |
5. | To vote on a shareholder proposal of a non-binding advisory resolution entitled “Shareholder Proxy Access”; and |
6. | To transact such other business as may properly come before the meeting and any adjournments thereof. |
Only shareholders of record of our common stock, par value $.10 per share, at the close of business on April 11, 2014May 22, 2017 are entitled to receive notice of, and to vote at and attend our Annual Meeting. Your vote is important. Whether or not you plan to attend our Annual Meeting, we hope that you will vote as soon as possible. If you received only a Notice of Internet Availability of Proxy Materials by mail, you may vote your shares at the Internet site address listed on your Notice of Internet Availability. You may also request a paper copy of our proxy materials by visiting the Internet site address listed on your Notice of Internet Availability, by calling the toll-free number or by sending an e-mail to the e-mail address listed on your Notice of Internet Availability. If you received a paper copy of the proxy materials by mail, you may vote your shares by proxy by doing any one of the following: vote at the Internet site address listed on your proxy or voting instruction card; call the toll-free number listed on your proxy or voting instruction card; or sign, date and return in the pre-addressed envelope provided the enclosed proxy or voting instruction card.
By Order of the Board of Directors
Bradford T. Whitmore,
Dated: April 21, 2014
TABLE OF CONTENTS
INFORMATION CONCERNING SOLICITATION AND VOTING | 1 |
Quorum | 2 |
Vote Required | 3 |
Abstentions | 3 |
Broker Voting | 3 |
PROPOSAL 1 ELECTION OF DIRECTORS | 4 |
CORPORATE GOVERNANCE | 6 |
General | 6 |
Committees of the Board of Directors | 7 |
Shareholder Recommendations and Standards for Director Nominations | 8 |
Annual Meeting Attendance | 8 |
Executive Sessions | 9 |
Communicating with the Board of Directors | 9 |
Code of Ethics | 9 |
Related Party Transactions | 9 |
Risk Management | 9 |
DIRECTOR COMPENSATION | 10 |
Annual Retainers | 10 |
Director Compensation Table | 11 |
EXECUTIVE OFFICERS | 12 |
Executive OFFICER compensation | 13 |
Summary Compensation Table | 13 |
Narrative to Summary Compensation Table | 14 |
Outstanding Equity Awards | 16 |
Employment Arrangements | 17 |
Retirement Benefits and Potential Payments upon Termination or Change in Control | 18 |
Stock Ownership Guidelines | 18 |
Proposal 2 Ratify the selection of our independent registered public accounting firm | 19 |
Principal Accountant Fees and Services | 19 |
REPORT OF THE AUDIT AND FINANCE COMMITTEE | 20 |
Proposal 3 | |
21 | |
Proposal 4 ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE | 22 |
Proposal 5 shareholder proposal entitled shareholder proxy access | 23 |
Other Matters | 24 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL | 25 |
SECURITY OWNERSHIP OF | 26 |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 26 |
Submission of Shareholder Proposals | 27 |
IMPORTANT | |
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, WE ENCOURAGE YOU TO VOTE IN ANY OF THE MANNERS DESCRIBED IN THIS PROXY STATEMENT. WE ALSO ENCOURAGE BENEFICIAL OWNERS TO FOLLOW THE INSTRUCTIONS PROVIDED BY YOUR BROKER REGARDING HOW TO VOTE. YOUR BROKER CANNOT VOTE YOUR SHARES FOR DIRECTOR NOMINEES OR | |
ULTRALIFE CORPORATION | |
2000 Technology Parkway | |
Newark, New York 14513 | |
(315) 332-7100 | |
Proxy Statement | |
Annual Meeting of Shareholders | |
JULY 18, 2017 | |
INFORMATION CONCERNING SOLICITATION AND VOTING
We are furnishing this proxy statement to our shareholders in connection with our Board of Directors’ solicitation of proxies for use at our 20142017 Annual Meeting of Shareholders, which we refer to in this proxy statement as the Meeting, to be held on Tuesday, June 3, 2014,July 18, 2017, at 9:00 A.M. local time and at any adjournments or postponements thereof. The Meeting will be held at theThe Westin Crystal City, Marriott at Reagan National Airport, 19991800 Jefferson Davis Highway, Arlington, VA 22202-3526.
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission which we refer to in this proxy statement as the SEC,(the “SEC”) instead of mailing a printed copy of our proxy materials to each shareholder of record, we are now furnishing proxy materials to our shareholders on the Internet. If you received only a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request a copy. Instead, the Notice of Internet Availability of Proxy Materials will instruct you how to access and review the proxy materials over the Internet. The Notice of Internet Availability of Proxy Materials will also instruct you as to how you may submit your proxy or voting instruction card over the Internet. If you received only a Notice of Internet Availability of Proxy Materials by mail and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting those materials included in the Notice of Internet Availability of Proxy Materials.
The Notice of Internet Availability of Proxy Materials is first being sent to our shareholders on or about April 21, 2014June 1, 2017 and our proxy materials are first being made available to our shareholders on or about April 21, 2014.
You may vote by proxy or in person at the Meeting. If you received only a Notice of Internet Availability of Proxy Materials by mail, you may vote your shares online by proxy at the Internet site address listed on your Notice of Internet Availability. You may also request a paper copy of our proxy materials by (i) visiting the Internet site address, (ii) calling the toll-free number or (iii) by sending an email to the email address listed on your Notice of Internet Availability of Proxy Materials. If you received a paper copy of the proxy materials by mail, you may vote your shares by proxy by doing any one of the following: vote at the Internet site address listed on your proxy or voting instruction card; call the toll-free number listed on your proxy or voting instruction card; or mail your signed and dated proxy or voting instruction card to our tabulator in the self-addressed envelope provided. Even if you plan to attend the Meeting in person, we recommend that you vote by proxy prior to the Meeting. You can always change your vote as described below.
When a proxy card is returned properly signed and dated, the shares represented thereby will be voted in accordance with the shareholder’s directions. If the proxy is signed, dated and returned without choices having been specified, the shares will be votedFOR the election of each director-nominee named therein andFOR the other proposals identified therein.
You may receive more than one Notice of Internet Availability of Proxy Materials or more than one paper copy of the proxy materials, including multiple paper copies of this proxy statement and multiple proxy or voting instruction cards, depending on how you hold your shares. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice of Internet Availability of Proxy Materials, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold your shares. If you are a shareholder of record and your shares are registered in more than one name, you may receive more than one Notice of Internet Availability of Proxy Materials, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must (i) vote at the Internet site address listed on your Notice of Internet Availability of Proxy Materials, proxy or voting instruction card;card, (ii) call the toll-free number listed on your proxy or voting instruction card;card, or (iii) sign, date and return each proxy card and voting instruction card that you receive.
If for any reason any of the nominees for election as directors become unavailable for election, the holders of the proxies will exercise discretionary authority may be exercised by the proxies to vote for substitute nominees proposed by our Board of Directors. A shareholder has the right to revoke a previously granted proxy at any time before it is voted by filing with our Corporate Secretary a written notice of revocation, or a duly executed later-dated proxy, or by requesting return of the proxy and voting in person at the Meeting.
We will bear the cost of soliciting proxies. In addition to the solicitation of proxies by use of the mails, some of our officers, directors and regular employees, without extra remuneration, may solicit proxies personally or by telephone, email or similar transmission. We have not engaged a proxy solicitation firm, but we may decide to retain the services of a proxy solicitation firm in the future if we believe it is appropriate under the circumstances. In those situations where the beneficial owner of shares is not the record holder, we will reimburse record holders for reasonable expenses in forwarding proxies and proxy soliciting material to the beneficial owners of the shares.
Only shareholders of record at the close of business on April 11, 2014May 22, 2017 are entitled to notice of, and to vote at, the Meeting. As of April 11, 2014,May 22, 2017, there were 17,526,22915,499,305 shares of our common stock, par value $.10 per share, issued and outstanding, each entitled to one vote per share at the Meeting.
Quorum
A majority of the outstanding shares of our common stock, represented in person or by proxy at the Meeting, will constitute a quorum with respect to the voting of proposals submitted to the shareholders, as described in this proxy statement. For purposes of determining whether a quorum is present, shareholders of record who are present at the Meeting in person or by proxy are considered to be present at the Meeting.
Vote Required
The table below shows the vote required at the Meeting to approve each of the proposals described in this proxy statement, assuming the presence of a quorum:
Proposal | Vote Required | ||
1. | Election of directors | Plurality of the shares present in person or by proxy at the Meeting and entitled to vote | |
2. | Ratification of the selection of | Majority of the shares present in person or by proxy at the Meeting and entitled to vote* | |
3. | To vote on a | Majority of the shares present in person or by proxy at the Meeting and entitled to vote | |
4. | To vote on a non-binding advisory resolution on the frequency of future advisory votes on execution compensation (“Say-When-on-Pay”) | Majority of the shares present in person or by proxy at the Meeting and entitled to vote | |
5. | A shareholder proposal by Mr. Kenneth Steiner of a non-binding advisory resolution entitled “Shareholder Proxy Access” | Majority of the shares present in person or by proxy at the Meeting and entitled to vote |
* | The selection of |
Abstentions
Shares that abstain from voting on one or more proposals to be acted on at the Meeting are considered to be present for the purpose of determining whether a quorum exists. Abstentions will have no effect on the election of directors; however, abstentions will have the effect of voting against the other proposals set forth in this proxy statement, because abstentions are deemed to be present and entitled to vote but do not count toward the affirmative vote required to approve the proposal.
Broker Voting
If you own your shares through a broker and do not provide your broker with specific voting instructions, your broker will have the discretion under the rules governing brokers who have record ownership of shares that they hold in street name for their clients to vote your shares on routine matters but not otherwise. The only proposal being submitted to the shareholders whichthat is considered routine and as to which brokers may exercise discretion to vote is ratification of the selection of our independent registered public accounting firm. Brokers will not be permitted to vote shares they hold as nominee in their discretion in the election of directors or in approving the LTIP. directors.If you want your broker-owned shares held in your broker account to be counted in the election of directors and/or proposals 3, 4 and in approving the LTIP, 5,you must provide instructions to your broker on how to vote your shares..
A broker non-vote occurs when shares held by a broker are not voted on a non-routine proposal because the broker has not received voting instructions from the beneficial owner and the broker lacks discretionary authority to vote the shares in the absence of such instructions. Shares subject to broker non-votes are considered to be present for the purpose of determining whether a quorum exists and thus count towards satisfying the quorum requirement, but are not counted for purposes of determining the number of shares entitled to vote on non-routine matters. A broker non-vote will have no effect on the election of directors or on the approval of the LTIPadvisory resolutions on executive compensation since, with respect to non-routine matters, broker non-votes will not be counted for purposes of determining the number of shares entitled to vote on such proposals.
PROPOSAL 1
Our Board of Directors currently has six directors, sixeach of whom havehas been nominated to serve for an additional one-year term. If elected, each director standing for election shall serve until the next annual meeting of shareholders and until his or her successor shall have been duly elected and qualified. The names of, and certain information with respect to, the persons nominated for election as directors are presented below.
Name | Age | Present Principal Occupation, Employment History and Expertise | ||
Steven M. Anderson | 60 | Brigadier General (Ret.) Anderson has been a director of the Company since April 13, 2010. General (Ret.) Anderson |
Name | Age | Present Principal Occupation, Employment History and Expertise | ||
Michael D. Popielec | 55 | Mr. Popielec | ||
Thomas L. Saeli | 60 | Mr. Saeli has been a director of the Company since March 5, 2010. Since | ||
Robert W. Shaw II | 60 | Mr. Shaw has been a director of the Company since June 8, 2010. | ||
Name | Age | Present Principal Occupation, Employment History and Expertise | ||
Ranjit C. Singh | 64 | Mr. Singh has been a director of the Company since August 2000, and served as Chair of | ||
Bradford T. Whitmore | 59 | Mr. Whitmore has been a director of the Company since June 2007 and Chair of |
Our Board of Directors has approved the above-named nominees for directors. Our Board of Directors recommends a voteFOR all each of these nominees. Unless otherwise directed on your proxy, your shares will be votedFOR each of the above-named nominees for directors.
CORPORATE GOVERNANCE
General
Pursuant to the General Corporation Law of the State of Delaware, the state underin which we were organized, and our By-laws, our business, property and affairs are managed by or under the direction of our Board of Directors. Members of our Board of Directors are kept informed of Company business through regular discussions with our President and Chief Executive Officer and our Chief Financial Officer, Treasurer and Treasurer,Secretary, by reviewing materials provided to them by the Company’s management and by participating in meetings of the Board and its committees.
Our Board of Directors has determined that all but one of our directors, (other than Michael D. Popielec, who serves as our President and Chief Executive Officer)Officer, are “independent” for purposes of NASDAQ listing standards. Ourstandards applicable to the Corporate Development and Governance Committee and the Compensation and Management Committee. In addition, our Board of Directors has also determined that all but two of our Directors, Michael D. Popielec and Bradford T. Whitmore, our Board Chair, are independent for purposes of NASDAQ listing standards applicable to the Chair of the Board of Directors should be an independent director.Audit and Finance Committee. We believe that the segregation of the roles of Board Chair from that of the President and Chief Executive Officer ensures better overall governance of our Company and provides meaningful checks and balances regarding our overall performance. This structure allows our President and Chief Executive Officer to focus on our business while the Board Chair leads our Board of Directors in establishing corporate policy and enhancing our governance structure and practices.
Our Board of Directors has three standing committees: an Audit and Finance Committee, a Corporate Development and Governance Committee, and a Compensation and Management Committee. During 2013,2016, our Board of Directors held eightsix meetings and the committees of our Board of Directors held a total of twenty-fiveeighteen meetings. During 2013,2016, Bradford T. Whitmore served as our Board Chair. As Board Chair, Mr. Whitmore served as a non-voting ex-officio member of all of our Board committees. Each director attended at least 75% of the aggregate of: (1) the total number of meetings of the Board; and (2) the total number of meetings held by all committees of the Board on which he or she served.
Our Board of Directors has adopted a charter for each of the three standing committees that addresses the composition and function of each committee and has also adopted Corporate Governance Principles that address the composition and function of the Board of Directors. These charters and Corporate Governance Principles are available on our website athttp://investor.ultralifecorporation.com under the subheading “Corporate Governance.” Pursuant to our Corporate Governance Principles, it is our policy that directors retire from service at the annual meeting following a director’stheir 70th birthday.
Our Board of Directors has determined that all of the directors who serve on these committees are “independent” for purposes of NASDAQ listing standards, and that the members of the Audit and Finance Committee are also “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, which we refer to in this proxy statement as the Exchange Act. Our Board of Directors based these determinations primarily on a review of the responses of the directors to questions regarding employment, compensation history, affiliations and family and other relationships, and on follow-up discussions.
Committees of the Board of Directors
The composition and the functions of our three standing committees of our Board of Directors are set forth below. Our Board of Directors will meet aftersubsequent to the Meeting to appoint members of the committees and designate Chairs of those committees from among those individuals elected at the Meeting to serve on our Board of Directors until the 2015 annual meeting2018 Annual Meeting of shareholders.
Audit and Finance Committee
The current members of the Audit and Finance Committee are Thomas L. Saeli (Chair), Steven M. Anderson and Robert W. Shaw II.Ranjit C. Singh. This committee selects our independent registered public accounting firm, subject to ratification of our full Board of Directors, and has oversight responsibility for reviewing the scope and results of the independent registered public accounting firm’s annual examinationaudit of our financial statements and the quality and integrity of those financial statements. Further, the committee reviews the qualifications and independence of the independent registered public accounting firm, and meets with our Chief Financial Officer and Treasurer and the independent registered public accounting firm to review matters relating to internal accounting controls, our accounting practices and procedures and other matters relating to our financial condition. The committee also reviews and monitors areas of financial risk that could have a material impact on our Company. The Audit and Finance Committee met elevensix times during 2013.
Our Board of Directors has determined that each of the members of the Audit and Finance Committee is “financially literate” in accordance with NASDAQ listing standards. In addition, our Board of Directors has determined that Mr. Saeli qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K.
Corporate Development and Governance Committee
The current members of the Corporate Development and Governance Committee are Robert W. Shaw IIRanjit C. Singh (Chair), Steven M. Anderson and Ranjit C. Singh.Robert W. Shaw II. This committee works with management to develop corporate strategy and to identify and evaluate acquisition opportunities, reviews the performance and compensation of our directors, makes recommendations to our Board of Directors for membership and committee assignments and for the compensation of our directors, and manages the annual evaluation of the performance of our President and Chief Executive Officer.Officer and our Board Chair. The Corporate Development and Governance Committee met fiveseven times during 2013. The Corporate Development and Governance Committee was formed on June 4, 2013 by merging the pre-existing Strategy and Corporate Development Committee with the Governance Committee. Prior to the merger of committees on June 4, 2013, the Strategy and Corporate Development Committee met one time and the Governance Committee met three times in 2013.
The Corporate Development and Governance Committee identifies potential nominees for directorsdirector based on its own research for appropriate candidates as well as on recommendations received by directors or from shareholders as described below. The Corporate Development and Governance Committee may retain an executive search firm to assist in the identification of potential director nominees. The evaluation process and the factors considered in undertaking that evaluation are set forth under the caption “Shareholder Recommendations and Standards for Director Nominations” below.
The Corporate Development and Governance Committee also has overall responsibility for assessing and managing our exposure to risks associated with the conduct of our business.
Compensation and Management Committee
The current members of the Compensation and Management Committee are Ranjit C. SinghRobert W. Shaw II (Chair), Steven M. Anderson and Thomas L. Saeli. The Compensation and Management Committee has ultimate responsibility for determining the compensation of officers elected by our Board of Directors, granting stock options and restricted stockother equity awards and otherwise administering our equity compensation plans, and approving and administering any other compensation plans or agreements. The Compensation and Management Committee has the authority to retain outside experts in making compensation determinations. Our proposed 2014 Long-Term Incentive Plan (LTIP),(“2014 LTIP”) is administered by the Compensation and Management Committee. The Compensation and Management Committee met five times during 2013.
Shareholder Recommendations and Standards for Director Nominations
As noted above, the Corporate Development and Governance Committee considers and establishes procedures regarding recommendations for nomination to our Board of Directors, including nominations submitted by shareholders. Such recommendations, if any, should be sent to Corporate Secretary, Attn: Philip A. Fain, Ultralife Corporation, 2000 Technology Parkway, Newark, New York 14513. Any recommendations submitted to the Corporate Secretary should be in writing and should include any material the shareholder considers appropriate in support of that recommendation, but must include the information that would be required under the rules of the SEC in a proxy statement soliciting proxies for the election of such candidate and a signed consent of the candidate to serve as a director, ifshould he or she be elected. The Corporate Development and Governance Committee evaluates all potential candidates in the same manner, regardless of the source of the recommendation.
Based on the information provided to the Corporate Development and Governance Committee with respect to director candidates, the Corporate Development and Governance Committee will make an initial determination whether to conduct a full evaluation of a candidate. The Corporate Development and Governance Committee considers the composition and size of the existing Board of Directors, along with other factors, in making its determination to conduct a full evaluation of a candidate. As part of the full evaluation process, the Corporate Development and Governance Committee may conduct interviews, obtain additional background information and conduct reference checks of candidates. The Corporate Development and Governance Committee may also ask the candidate to meet with management and other members of our Board of Directors. In evaluating a candidate, our Board of Directors, with the assistance of the Corporate Development and Governance Committee, takes into account a variety of factors as described in our Corporate Governance Principles, including the particular experience, attributes and skills that would qualify the candidate to serve as a director. The criteria for selection to our Board of Directors include character and leadership skills; general business acumen and executive experience; knowledge of strategy, finance and relations between business and government; and internal business operations – all to ensure an active Board of Directors whose members work well together and possess the collective knowledge and expertise required.required to meaningfully contribute as directors. Our Corporate Development and Governance Committee reviews the qualifications of director candidates with those of itsour current directors to augment and complement the skill sets of our current Board members. We believe that it is important for our Board of Directors to be comprised of individuals with diverse backgrounds, skills and experiences. Although we do not have a formal diversity policy and identify qualified potential candidates without regard to any particular classification, we believe that thepossessing a breadth of experience and qualifications, ofas our Board membersdoes, promotes Board diversity.
Annual Meeting Attendance
Our policy is that all of the directors, absent special circumstances, should attendparticipate in our Annual Meeting of Shareholders. A regular meeting of the Board of Directors is typically scheduledShareholders, either in conjunction with the Annual Meeting of Shareholders.person or telephonically. All directors but one attendedparticipated in last year’s Annual Meeting of Shareholders.
Executive Sessions Our Corporate Governance Principles require our independent directors to meet in executive session regularly by requiring them to have at least four Communicating with the Board of Directors Shareholders interested in communicating directly with our Board of Directors as a group or individually may do so in writing to our Corporate Secretary, Attn. Philip A. Fain, Ultralife Corporation, 2000 Technology Parkway, Newark, New York 14513. The Corporate Secretary will review all such correspondence and forward to our Board of Directors a summary of that correspondence and copies of any correspondence that, in his opinion, deals with the functions of the Board of Directors or that he otherwise determines requires their attention. Directors may at any time review a log of all correspondence received by us that is addressed to members of the Board of Directors and request copies of any such correspondence. Any concerns relating to accounting, internal controls or auditing matters will be brought to the attention of the Audit and Finance Committee and handled in accordance with the procedures established by the Audit and Finance Committee with respect to such matters. Code of Ethics We have a Code of Ethics applicable to all employees, including our Our Code of Ethics emphasizes our commitment to conducting business in a legal and ethical manner and encourages prompt and confidential reporting of any suspected violations of law or the Code of Ethics. As part of our Code of Ethics, directors and employees are expected to make business decisions and to take actions based upon the best interests of our Company and not based upon personal relationships or benefits. In conjunction with our Code of Ethics, our General Counsel conducts an annual training session with our Board of Directors with emphasis on all facets of compliance with new and existing regulations and best practices. Any potential conflict of interest, and any transaction or relationship involving our officers or directors that could give rise to a conflict of interest, must be reviewed and resolved by our Corporate Development and Governance Committee. Related Party Transactions We have adopted written policies and procedures for the review and approval or ratification of any “related party transaction,” as defined by Regulation S-K, Item 404. The policy provides that each related party transaction must be reviewed by our Audit and Finance Committee. The Audit and Finance Committee reviews the relevant facts and circumstances of the transaction, including if the transaction is on terms comparable to those that could be obtained in arms-length dealings with an unrelated third party and the extent of the related party’s interest in the transaction, taking into account the conflicts of interest and corporate opportunity provisions of our Code of Ethics, and either recommends that the Board of Directors approve or disapprove the related party transaction. We will disclose all related party transactions, as required, in our filings with the SEC. Risk Management Our management team is responsible for assisting the Corporate Development and Governance Committee in its assessment of our exposure to risks associated with the conduct of business. We have an enterprise risk management process to identify, assess and manage the most significant risks facing our regularly-scheduledregularly scheduled meetings per year without management present. Our independent directors met in executive session six times during 2014.2016. In addition, our standing committees meet in executive session on a regular basis.9Principal Executive Officer and our Principal Financial Officer (who is also our Principal Accounting Officer)executive officers and all members of our Board of Directors. Our Code of Ethics incorporates the elements of a code of ethics specified in Item 406 of Regulation S-K and also complies with NASDAQ requirements for a code of conduct. Shareholders can find a link to this Code of Ethics on our website at http://investor.ultralifecorporation.com under the subheading “Corporate Governance.” We intend to post amendments to or waivers (whether express or implied) from the Code of Ethics (to the extent applicable to our Principal Executive Officer or Principal Financial Officer) at the same location on our website as the Code of Ethics.To our knowledge, noNo reportable transaction existedtransactions occurred during 2013,2016 and 2015, and there are currently no such proposed transactions.company.Company. Our Corporate Development and Governance Committee has overall responsibility to review management’s risk management process, including the policies and guidelines used by management to identify, assess and manage our exposure to risk. Our Audit and Finance Committee has oversight responsibility for financial risks and other risks that could have a material impact on our Company. Our management reviews these financial risks with our Audit and Finance Committee regularly and reviews the risk management process, as it affects financial risks, with our Audit and Finance Committee on an on-going basis.
DIRECTOR COMPENSATION
We presently use a combination of cash compensation and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board of Directors. Our practice is to resurveysurvey our peer group companies every twothree to threefour years to ascertain whether our overall director compensation is appropriate and balanced. If we perceive that there has been a major change in our Company or the market, we may conduct a more frequent survey.reduce the period of time between surveys. In setting director compensation, we consider the amount of time that directors spend fulfilling their duties to us, the skill-level required by members of our Board of Directors, and, based on an independent review by our external compensation consultant and other publicly available director compensation data, the compensation paid to directors in similar sized organizations in our industry. Our program is designed to deliver annual director compensation at the median levels of director compensation for companies in similar industries and of similar size. As our directors are elected annually in June of each year, ourOur annual director compensation period runs from July 1 to June 30.
Annual Retainers
Each non-employee director will receive an annual cash retainer of $20,000,$65,000, except for the Board Chair, who will receive an annual cash retainer of $24,000$95,000 for the period July 1, 20132016 through June 30, 2014. The annual cash retainers were identical to the year earlier period, except the2017. Each non-employee director received an annual cash retainer for the director compensation period ending June 30, 2013of $60,000, except for the Board Chair, was $28,000.who received an annual cash retainer of $90,000 for the period July 1, 2015 through June 30, 2016. In addition, each director who is a member of a Board committee receives an additional cash retainer for such committee service. Annual retainers for Board committee service as summarized infor the tables below.
Annual Retainer for Committee Members | Annual Retainer for Committee Chair | |||||||
Audit and Finance Committee | $6,750 | $16,750 | ||||||
Compensation and Management Committee | $5,250 | $13,250 | ||||||
Governance Committee | $4,500 | $9,500 | ||||||
Strategy and Corporate Development Committee | $5,250 | $13,250 |
Annual Retainer for | Annual Retainer for | |||||||
Audit and Finance Committee | $6,750 | $16,750 | ||||||
Compensation and Management Committee | $5,250 | $13,250 | ||||||
Corporate Development and Governance Committee | $6,750 | $16,750 |
Annual retainers for both committee members and committee chairs are paid quarterly in cash. For Board and committee service during the fiscal year ended December 31, 2013,2016, we paid our non-employee directors an aggregate $230,268.
Our non-employee directors have stock ownership guidelines that in lieurequire them to maintain ownership of quarterly stock payments due directors on February 15, 2013 and May 15, 2013, we would pay our directors in cash rather than in sharesat least $40,000 of our common stock. For each director other than the Board Chair, this would mean an additional $20,000 of cash compensation in lieu of shares of common stock valued at $20,000, and for the Board Chair an additional $33,000 of cash compensation in lieu of shares of common stock valued at $33,000.
Director Compensation for 2013
The table below summarizes the compensation paid by us to our non-employee directors for their service during the fiscal year ended December 31, 2013.
Name (1) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(3)(4) | Total ($) | |||||||||
Steven M. Anderson | 55,753 | 20,002 | 75,755 | |||||||||
Patricia C. Barron (2) | 43,439 | - | 43,439 | |||||||||
James A. Croce (2) | 42,878 | - | 42,878 | |||||||||
Thomas L. Saeli | 61,440 | 20,002 | 81,442 | |||||||||
Robert W. Shaw II | 60,879 | 20,002 | 80,881 | |||||||||
Ranjit C. Singh | 58,879 | 20,002 | 78,881 | |||||||||
Bradford T. Whitmore | 60,000 | 32,951 | 92,951 |
Fees | Non- Equity | Nonqualified | |||||||||||||||||||||||||||
Earned or | Incentive | Deferred | |||||||||||||||||||||||||||
Paid in | Stock | Option | Plan | Compensation | All Other | ||||||||||||||||||||||||
Name | Cash ($) | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
(1) | (2) | (3) | (4) | (5) | (6) | ||||||||||||||||||||||||
Steven. M. Anderson | 81,256 | - | - | - | - | - | 81,256 | ||||||||||||||||||||||
Thomas L. Saeli | 84,504 | - | - | - | - | - | 84,504 | ||||||||||||||||||||||
Robert W. Shaw II | 84,254 | - | - | - | - | - | 84,254 | ||||||||||||||||||||||
Ranjit C. Singh | 84,254 | - | - | - | - | - | 84,254 | ||||||||||||||||||||||
Bradford T. Whitmore | 92,500 | - | - | - | - | - | 92,500 |
(1) | Michael D. Popielec, our President and Chief Executive Officer, is ineligible to receive compensation for his service as a director because he is also an |
(2) |
There were no stock |
(3) | There were no option awards granted to our non-employee directors during 2016 or outstanding at |
(4) | There was no |
(5) | There were no deferred compensation earnings for our non-employee |
(6) | ||||
There was no other compensation paid to our non-employee directors for the fiscal year ended December 31, 2016. |
Date of Grant | Number of Shares | Exercise Price | Vesting Schedule |
December 30, 2010 | 50,000 | $6.4218 | Twenty five percent of the shares will vest on each of the four anniversaries of the date of grant. |
January 3, 2011 | 50,000 | $6.5820 | Twenty five percent of the shares will vest on each of December 30, 2011, December 30, 2012, December 30, 2013 and December 30, 2014. |
Date of Grant | Number of Shares | Exercise Price | Vesting Schedule |
December 30, 2010 | 250,000 | $6.4218 | Twenty five percent of the shares will vest on each of the four anniversaries of the date of grant. |
December 30, 2010 | 200,000 | $10.00 | Vesting begins on the date our stock first reaches a closing price equal to the exercise price for 15 trading days in a 30 trading-day period, with such vesting in equal amounts over the four anniversary dates of that date. |
December 30, 2010 | 200,000 | $15.00 | Vesting begins on the date the stock first reaches a closing price equal to the exercise price for 15 trading days in a 30 trading-day period, with such vesting in equal amounts over the four anniversary dates of that date. |
The aggregate incremental costs of the personal benefits provided to our Named Executive Officers are included in the “All Other Compensation” column of the 2013 Summary Compensation Table.EXECUTIVE OFFICERS
Our executive officers are as follows:
Name and Principal Position | Year | Salary ($) | Bonus ($)(2) | Option Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||
Michael D. Popielec | 2013 | 463,507 | 0 | - | 36,487 | 499,994 | ||||||||||||||||
President and Chief | 2012 | 459,265 | 0 | - | 158,996 | 618,261 | ||||||||||||||||
Executive Officer | ||||||||||||||||||||||
Philip A. Fain | 2013 | 267,500 | 10,000 | - | 21,686 | 299,186 | ||||||||||||||||
Chief Financial Officer, | 2012 | 256,801 | 0 | 37,418 | 10,892 | 305,111 | ||||||||||||||||
Treasurer and Secretary | ||||||||||||||||||||||
Peter F. Comerford (1) | 2013 | 122,453 | 0 | - | 13,726 | 136,179 | ||||||||||||||||
Vice President of | 2012 | 236,535 | 0 | - | 8,064 | 244,599 | ||||||||||||||||
Administration, Secretary and General Counsel |
401(k) Plan Employer Match ($) | Other Benefits (a) ($) | Total ($) | ||||||||||
Michael D. Popielec | 5,100 | 31,387 | 36,487 | |||||||||
Philip A. Fain | 5,100 | 16,586 | 21,686 | |||||||||
Peter F. Comerford | 1,802 | 11,924 | 13,726 |
Option Awards | Stock Awards | ||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | |
Michael D. Popielec | 37,500 | 12,500 (1) | $6.4218 | 12/30/2017 | 30,000 (9) | 106,500 | 60,000 (10) | 213,000 | |
187,500 | 62,500 (2) | 6.4218 | 12/30/2017 | ||||||
37,500 | 12,500 (3) | 6.5820 | 12/30/2017 | ||||||
0 | 200,000 (4) | 10.0000 | 01/24/2019 | ||||||
0 | 200,000 (5) | 15.0000 | 01/14/2020 | ||||||
Philip A. Fain | 10,000 | 0 | 11.4217 | 09/07/2014 | |||||
50,000 | 0 | 12.7385 | 03/07/2015 | ||||||
7,976 | 0 | 12.1848 | 01/14/2016 | ||||||
33,000 | 0 | 3.9085 | 12/04/2016 | ||||||
25,000 | 0 | 6.9061 | 12/03/2017 | ||||||
33,333 | 16,667 (6) | 4.4218 | 12/09/2018 | ||||||
6,667 | 13,333 (7) | 3.9797 | 01/03/2019 | ||||||
Peter F. Comerford | 6,000 | 0 | 13.4338 | 12/07/2014 | |||||
3,988 | 0 | 12.1848 | 01/14/2016 | ||||||
24,000 | 0 | 3.9085 | 12/04/2016 | ||||||
20,000 | 0 | 6.9061 | 12/03/2017 | ||||||
17,334 | 8,666 (8) | 4.4218 | 12/09/2018 |
BDO USA, LLP | Bonadio & Co., LLP | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Audit Fees | $365,618 | $49,929 | $0 | $172,878 | ||||||||||||
Audit – Related Fees | 0 | 0 | 0 | 8,250 | ||||||||||||
Tax Fees | 0 | 0 | 74,004 | 40,275 | ||||||||||||
All Other Fees | 0 | 0 | 84,370 | 0 | ||||||||||||
Total | $365,618 | $49,929 | $158,374 | $221,403 |
Plan Category | Number of securities to be used upon exercise of outstanding options (a) | Weighted-average exercise price of outstanding options (b) | Number of securities remaining available for future issuance under equity compensation plans, excluding securities reflected in column (a) (c) |
Equity Compensation Plans approved by security holders | 2,079,622 | $6.85 | 255,678 |
Equity compensation plans not approved by security holders | 50,000(1) | $12.74 | — |
Total | 2,391,000 | $7.24 | 255,678 |
● | Michael D. Popielec, President and Chief Executive Officer |
● | Philip A. Fain, Chief Financial Officer, Treasurer and Secretary |
Other than for Mr. Popielec, whose information is set forth with the other directors standing for election, the names of, and certain information with respect to Philip A. Fain, our other executive officers areofficer, is presented below.
Name | Age | Present Principal Occupation and Employment History |
Philip A. Fain | 62 | Mr. Fain was named Chief Financial Officer in November 2009, Treasurer in December 2009 and Corporate Secretary in April 2013. He previously served as Vice President of Business Development, having joined us in February 2008. Prior to joining us, he was Managing Partner of CXO on the GO, LLC, a management-consulting firm, which he co-founded in November 2003 and which we retained in connection with our acquisition activity. Prior to founding CXO on the GO, LLC, Mr. Fain served as Vice President of Finance - RayBan Sunoptics for Luxottica, SpA. Prior to the acquisition of Bausch & Lomb’s global eyewear business by Luxottica, Mr. Fain served as Bausch & Lomb’s Senior Vice President Finance - Global Eyewear from 1997 to 1999 and as Vice President and Controller for the US Sunglass business from 1993 to 1996. In these roles, he led the process to acquire some of the World’s most sought after sunglass companies and brands for Bausch & Lomb. From 1983 to 1993, Mr. Fain served in various positions with Bausch & Lomb including executive positions in corporate accounting, finance and audit. Mr. Fain began his career as a CPA and consultant with Arthur Andersen & Co. in 1977. He received his B.A. in Economics from the University of Rochester and an MBA from the William E. Simon Graduate School of Business Administration of the University of Rochester. |
Executive OFFICER compensation
This proxy statement provides certain information relating to the compensation of our named executive officers. We have determined that Messrs. Popielec and Fain were our only named executive officers for 2016.
As a smaller reporting company under the Securities Exchange Act of 1934, as amended, we are providing executive compensation information in accordance with the scaled disclosure requirements of Regulation S-K. As a result, Compensation Disclosure and Analysis (“CD&A”) and certain other disclosures are not included.
Summary Compensation Table
The following table sets forth information concerning the compensation earned by or awarded to our executive officers for their services in all capacities to us during 2016 and 2015:
Stock | Option | All Other | ||||||||||||
Name and | Salary ($) | Bonus ($) | Awards ($) | Awards ($) | Compensation ($) | Total | ||||||||
Principal Position | Year | (1) | (2) | (3) | (4) | (5) | ($) | |||||||
Michael D. Popielec | 2016 | 500,160 | - | - | 75,398 | 18,166 | 593,724 | |||||||
President and Chief Executive Officer | 2015 | 505,401 | 236,455 | - | 86,600 | 18,075 | 846,531 | |||||||
Philip A. Fain | 2016 | 309,311 | - | - | 37,969 | 9,769 | 357,049 | |||||||
Chief Financial Officer, Treasurer and Secretary | 2015 | 303,737 | 87,738 | - | 41,283 | 10,040 | 442,798 |
(1) | Amounts shown represent base salary cash compensation paid during the respective years. Amounts may differ from amounts earned due to timing of payroll periods. Refer to the “Narrative to Summary Compensation Table” for further information. |
(2) | Amounts shown represent short-term incentive plan (“STIP”) cash awards earned during the respective years and paid in the subsequent year. Refer to the “Narrative to Summary Compensation Table” for further information. |
(3) | There were no stock awards granted during fiscal years 2016 and 2015. |
(4) | Amounts shown represent the aggregate grant date fair value of stock options awarded during the respective years computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). See Note 8 and Note 9 to our audited financial statements included in our Annual Reports on Form 10-K for the fiscal years ended December 31, 2016 and December 31, 2015, respectively, for the assumptions used in valuing these stock options in accordance with ASC 718. Refer to the “Narrative to Summary Compensation Table” for further information. |
(5) | Amounts shown as “All Other Compensation” consist of the following: |
401(k) Plan Employer Match ($) Other Benefits(a) ($) Total ($) Michael D. Popielec 2016 2015 Philip A. Fain 2016 2015 5,300 12,866 18,166 5,200 12,875 18,075 5,300 4,469 9,769 5,300 4,740 10,040
(a) | The “Other Benefits” column of the above table includes premiums paid for group medical and dental coverage and long-term care insurance, reimbursement for tax preparation and certain financial planning expenses. |
Narrative to Summary Compensation Table
Compensation Overview
Our executive compensation program is evaluated and approved each year by our Compensation and Management Committee. Annual total compensation for our executive officers is comprised of the following key components:
● | Base salary; |
● | Short-term incentive plan (“STIP”); |
● | Long-term incentive plan (“LTIP”); and |
● | Limited perquisites and other benefits. |
Our executive compensation program is structured to align the interests of our executive officers with those of our shareholders by rewarding performance that achieves successful execution of our business strategy, grows our business and increases shareholder value. Our executive rewards program is designed to incentivize our executive officers to achieve strong financial, operational and strategic performance and to provide a link between the compensation earned by our executives and the creation of long-term sustainable value. The Compensation and Management Committee establishes specific annual, long-term and strategic goals and seeks to reward our executive officers for performance that meets or exceeds those goals. In addition, we expect our executive officers to work toward achievement of these goals while maintaining the highest ethical standards.
Base Salary
The Compensation and Management Committee evaluates the performance of Mr. Popielec, our President and Chief Executive Officer, and presents its evaluation and recommendation for base salary adjustment, if any, to the Board of Directors for approval. Mr. Popielec evaluates the performance of Mr. Fain, our Chief Financial Officer, Treasurer and Secretary, and presents his evaluation and recommendation for a base salary adjustment, if any, to the Compensation and Management Committee, which, in turn, may recommend acceptance of or adjustment to such base salary recommendation to the Board of Directors. If adjustments to base salaries are recommended and approved, the adjustments are made to be effective for a period ranging from twelve to fifteen months from the date of the last salary adjustment.
In May 2016, the Board of Directors, at the recommendation of the Compensation and Management Committee, approved a base salary increase of 4.0% for Mr. Popielec ($486,683 to $506,150) and for Mr. Fain ($300,976 to $313,015). The salary increases were approved by the Committee based on a number of factors including individual and Company performance. Other than these adjustments, no further changes were made to the base salaries of our executive officers during 2016.
In March 2015, the Board of Directors, at the recommendation of the Compensation and Management Committee, approved a base salary increase of 5% for Mr. Fain ($286,650 to $300,976). Mr. Popielec’s base salary was not adjusted during 2015.
Short-Term Incentive Plan
Our Compensation Committee establishes a STIP each fiscal year to provide our executive officers an opportunity to earn an annual cash award in addition to their base salaries. The STIP is designed to place “at risk” a significant portion of the annual total cash compensation of our executive officers to incentivize them to achieve our short-term financial objectives while making progress toward our longer term goals. Generally, the STIP target levels are set such that, assuming achievement of pre-established performance metrics, the combined annual base salary and STIP award for our executive officers will be at or near the 50th percentile for executive officers at the companies in our peer group.
For 2016, the STIP target bonus levels for Messrs. Popielec and Fain were 75% and 50% of their respective base salaries. The performance goals to be achieved to be awarded the STIP targeted bonus for 2016 were consolidated operating profit and revenue goals of $7.1 million and $102.6 million, respectively, as measured pursuant to generally accepted accounting standards. The STIP award was structured with a 70% weighting on the consolidated operating profit goal and a 30% weighting on the consolidated revenue goal. Achievement of less than 75% of the operating profit goal or less than 90% of the revenue goal would result in no award being earned with respect to that metric. Achievement of 75% to 100% of the operating profit goal and achievement of 90% to 100% of the revenue goal would result in an award ranging from 50% to 100% of the target award with respect to the metric for which such performance levels had been achieved. Achievement of over 100% to 135% of the operating profit goal and over 100% to 125% of the revenue goal would result in an award ranging from 101% to 150% of the target award with respect to the metric for which such performance levels had been achieved. Our executive officers were eligible for a partial award if one of the two metrics was achieved.
Based on our 2016 financial performance, our executive officers did not earn a STIP award for 2016.
For 2015, the STIP target bonus levels for Mr. Popielec and Mr. Fain were 75% and 45% of their respective base salaries. The STIP target bonus levels were based on pre-established 2015 consolidated operating profit and revenue goals of $3.75 million and $80.3 million, respectively. The STIP was structured with 70% of the award weighted on the consolidated operating profit goal and 30% weighted on the consolidated revenue goal. Achievement of less than 75% of the operating profit goal or less than 89% of the revenue goal would result in no award being earned with respect to that metric. Achievement of 75% to 100% of the operating profit goal and achievement of 89% to 100% of the revenue goal would result in an award ranging from 50% to 70% of the target award with respect to the metric for which such performance levels had been achieved. Achievement of 127% to 160% of the operating profit goal and 107% to 118% of the revenue goal would result in an award ranging from 100% to 150% of the target award with respect to the metric for which such performance levels had been achieved. Our executive officers were eligible for partial awards if one of the two metrics was achieved.
Based on our 2015 financial performance, Messrs. Popielec and Fain earned STIP awards for 2015 of $236,455 and $87,738, respectively, which were paid in March 2016.
Long-Term Incentive Plan
Stock options and other equity awards are used to align the interests of our executive officers with those of our shareholders by incentivizing our executive officers to achieve long-term growth and sustainable shareholder value.
Refer to “Outstanding Equity Awards” for stock options granted during 2016 and 2015. There were no other equity-based awards granted to our executive officers during 2016 and 2015.
Retirement Benefits
We provide a tax-qualified 401(k) plan to all active employees that provides for both employer and employee contributions. Under this plan, employees may contribute a portion of their eligible cash compensation to the plan. We provide a company match of 50% of an employee’s contributions, up to a maximum of 4% of the employee’s annual salary.
Perquisites and Other Personal Benefits
We provide our executive officers with certain perquisites and other personal benefits which are consistent with the objectives of our overall compensation program to better enable us to attract and retain superior employees for key positions. The Compensation and Management Committee periodically reviews the levels of such perquisites and other personal benefits to ensure they remain at appropriate levels. The aggregate incremental costs of the perquisites and other personal benefits provided to our executive officers are included in the “All Other Compensation” column of the Summary Compensation Table.
Outstanding Equity Awards
The following table sets forth information concerning the number of shares underlying exercisable and non-exercisable stock option awards outstanding at December 31, 2016 for our executive officers.
Equity Incentive | ||||||||||||||||||
Plan Awards: | ||||||||||||||||||
Number of | Number of | Number of | ||||||||||||||||
Securities | Securities | Securities | ||||||||||||||||
Underlying | Underlying | Underlying | ||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Option | ||||||||||||||
Options (#) | Options (#) | Unearned | Exercise | Expiration | ||||||||||||||
Name | Exercisable | Unexercisable | Options (#) | Price ($) | Date | |||||||||||||
Michael D. Popielec | 50,000 | - | - | 6.4218 | 12/30/2017 | (1) | ||||||||||||
250,000 | - | - | 6.4218 | 12/30/2017 | (1) | |||||||||||||
50,000 | - | - | 6.5820 | 12/30/2017 | ||||||||||||||
- | - | 200,000 (2) | 10.0000 | 12/30/2020 | ||||||||||||||
- | - | 200,000 (2) | 15.0000 | 12/30/2020 | ||||||||||||||
13,334 | 26,666 (3) | - | 3.7103 | 3/3/2022 | ||||||||||||||
6,667 | 13,333 (4) | - | 3.7876 | 3/5/2022 | ||||||||||||||
- | 40,000 (5) | - | 4.2902 | 6/1/2023 | ||||||||||||||
Philip A. Fain | 25,000 | - | - | 6.9061 | 12/3/2017 | |||||||||||||
50,000 | - | - | 4.4218 | 12/9/2018 | ||||||||||||||
20,000 | - | - | 3.9797 | 1/3/2019 | ||||||||||||||
46,667 | 23,333 (6) | - | 3.9384 | 3/4/2021 | ||||||||||||||
10,000 | 20,000 (7) | - | 3.7103 | 3/3/2022 | ||||||||||||||
- | 20,000 (8) | - | 4.2902 | 6/1/2023 |
(1) | On April 19, 2017, our Board of Directors, on recommendation of the Compensation and Management Committee, extended the option expiration date from December 30, 2017 to December 30, 2020, pursuant to the Company’s Amended and Restated 2004 Long-Term Incentive Plan. |
(2) | Stock options were granted to Mr. Popielec under the terms of his employment agreement and begin to vest on the date our common stock first reaches a closing price equal to the exercise price for 15 trading days in a 30-day trading period, with such vesting in equal amounts on the four anniversary dates of that date. All such options expire as of the later of December 31, 2017 and five years after the initial vesting commences, but in no event later than December 31, 2020. |
(3) | On March 3, 2015, our Board of Directors, on recommendation of the Compensation and Management Committee, granted to Mr. Popielec the option to purchase 40,000 shares of our common stock. This option vested with respect to 13,334 shares and 13,333 shares on March 3, 2016 and March 3, 2017, respectively, and will vest with respect to 13,333 shares on March 3, 2018. |
(4) | On March 5, 2015, our Board of Directors, on recommendation of the Compensation and Management Committee, granted to Mr. Popielec the option to purchase 20,000 shares of our common stock. This option vested with respect to 6,667 shares and 6,667 shares on March 5, 2016 and March 5, 2017, respectively, and will vest with respect to 6,666 shares on March 5, 2018. |
(5) | On June 1, 2016, our Board of Directors, on recommendation of the Compensation and Management Committee, granted to Mr. Popielec the option to purchase 40,000 shares of our common stock. This option will vest with respect to 13,334 shares on June 1, 2017, 13,333 shares on June 1, 2018 and 13,333 shares on June 1, 2019. |
(6) | On March 4, 2014, our Board of Directors, on recommendation of the Compensation and Management Committee, granted to Mr. Fain the option to purchase 70,000 shares of our common stock. This option vested with respect to 23,334 shares on March 4, 2015, 23,333 shares on March 4, 2016 and 23,333 shares on March 4, 2017. |
(7) | On March 3, 2015, our Board of Directors, on recommendation of the Compensation and Management Committee, granted to Mr. Fain the option to purchase 30,000 shares of our common stock. This option vested with respect to 10,000 shares on March 3, 2016 and 10,000 shares on March 3, 2017, and will vest with respect to 10,000 shares on March 3, 2018. |
(8) | On June 1, 2016, our Board of Directors, on recommendation of the Compensation and Management Committee, granted to Mr. Fain the option to purchase 20,000 shares of our common stock. This option will vest with respect to 6,667 shares on June 1, 2017, 6,667 shares on June 1, 2018 and 6,666 shares on June 1, 2019. |
There were no other equity awards outstanding at December 31, 2016 for our executive officers.
Employment Arrangements
On December 6, 2010, the Company entered into an employment agreement with Mr. Popielec, providing that Mr. Popielec would become our President and Chief Executive Officer effective December 30, 2010. Mr. Popielec’s annual base salary was set at $450,000 subject to adjustment. Mr. Popielec is also eligible to receive an annual cash bonus under our short-term incentive plan if we meet or exceed certain quantitative and qualitative performance metrics to be agreed upon and approved by the Compensation Committee no later than January 31 of the year for which the bonus applies. The bonus goals and payout ranges for 2016 are set forth on Page 15.
Pursuant to the terms of his employment agreement, Mr. Popielec was granted options to purchase shares of our common stock. Certain of the options granted were conditional and subject to shareholder approval to increase the number of shares available under our Amended and Restated 2004 Long-Term Incentive Plan (“Restated 2004 LTIP”). Shareholder approval was obtained in June 2011. All options awarded to Mr. Popielec pursuant to the terms of his employee agreement were outstanding as of December 31, 2016. Refer to the Outstanding Equity Awards section.
Mr. Popielec is also entitled to receive the retirement benefits, perquisites and other personal benefits described in this proxy statement under the sections entitled “Retirement Benefits” and “Perquisites and Other Personal Benefits”.
The employment agreement provides that Mr. Popielec’s employment is “at will.” Mr. Popielec is entitled to certain severance benefits if we terminate his employment without Business Reasons or a Constructive Termination occurs (as those terms are defined in the employment agreement), including (i) salary continuation for a period of 12 months following the termination date; (ii) a pro rata amount (calculated on a per diem basis) of the full-year bonus which Mr. Popielec would have earned for the calendar year in which the termination of employment occurs; (iii) acceleration of vesting of all outstanding stock options and other equity awards to the extent that the outstanding options and other equity awards would otherwise have vested no more than 18 months after the date of termination, and all such options and other equity awards shall remain exercisable for one year following the termination date or through the original expiration date, if earlier; (iv) continuation of health benefits for Mr. Popielec, his spouse and any dependent children for a period of 12 months after the termination date followed by 18 months of executive-paid COBRA eligibility. In addition, if we terminate the employment of Mr. Popielec within 12 months following the occurrence of a Change in Control, without Business Reasons or if a Constructive Termination occurs (as those terms are defined in the employment agreement), then Mr. Popielec shall be entitled to receive (i) any earned but unpaid salary, any unpaid bonus from the prior year plus an amount equal to 18 months of his base salary as then in effect, payable immediately upon the termination date; (ii) one and one-half times his target bonus for the calendar year in which the termination date occurs; (iii) acceleration of vesting of all outstanding stock options and other equity awards, which are to remain exercisable for 18 months following the termination date, or through the original expiration date, if earlier; (iv) continuation of health benefits for Mr. Popielec, his spouse and any dependent children for a period of 24 months after the termination date. To the extent the vesting and/or accelerated payment of outstanding stock options would subject Mr. Popielec to the imposition of tax and/or penalties under Section 409A of the Internal Revenue Code (the “Code”), the vesting and/or payment of such stock options and other equity shall be delayed to the extent necessary to avoid the imposition of such tax and/or penalties. The employment agreement also provides for the continuation of certain benefits in the event Mr. Popielec’s employment is terminated for Disability (as defined in the employment agreement) or by his death. Mr. Popielec has also executed an Employee Confidentiality Non-Disclosure, Non-Compete, Non-Disparagement and Assignment Agreement in our standard form.
We do not have an employment agreement with Mr. Fain.
Retirement Benefits and Potential Payments upon Termination or Change in Control
The only arrangement that we maintain that provides for retirement benefits is our tax-qualified defined contribution 401(k) plan. The material terms of our tax-qualified defined contribution 401(k) plan are summarized above under the heading “Retirement Benefits.”
All of the potential payments and benefits payable by us to those of our executive officers in the event of various circumstances involving either a termination of employment or change in control are determined pursuant to the employment agreement with Mr. Popielec or the Restated 2004 LTIP. The employment agreement with Mr. Popielec is summarized above under the heading “Employment Arrangements”. We do not have an employment agreement with Mr. Fain. Under the Restated 2004 LTIP and 2014 LTIP, all outstanding unvested stock options and other equity awards immediately vest upon the occurrence of a “Change in Control” (as defined by the respective plan).
Stock Ownership Guidelines
In order to better align the interests of our executive officers and shareholders, the Compensation Committee implemented stock ownership requirements for our executive officers. The stock ownership requirements for our executive officers are as follows:
President & CEO | 1.00 times salary | |
Chief Financial Officer | 0.50 times salary |
For 2016, the Compensation Committee established the presumed share price to be used for purposes of determining the minimum number of shares to be owned by the executive officers. This presumed price was $4.98 per share, which was based on the volume weighted average price (“VWAP”), calculated as an amount equal to the sum of all dollars traded for every transaction in our common stock for the two-year period ended December 31, 2015 divided by the total shares traded for such two-year period. Each year the Compensation Committee will establish a new price per share to be used to determine the minimum number of shares required to be held which will be based on the VWAP of our common stock for the preceding two-year period. Executive officers have three years from the date of hire to achieve the required holdings, which are based on the price per share as calculated above. Additionally, our stock ownership policy requires that until the share ownership guidelines are met, executive officers are prohibited from disposing of more than 50% of vested shares received from restricted share grants (on an after tax basis) and 50% of shares received on exercise of stock options. Shares owned by an executive, as well as shares underlying awards of stock options and restricted stock are treated as owned by the executive for purposes of determining whether required ownership has been achieved. Our executive officers have met their respective stock ownership requirement.
Proposal 2
Ratify the selection of our independent
registered public accounting firm
The firm of Bonadio & Co., LLP served as our independent registered public accounting firm for the year ended December 31, 2015 and the firm of Freed Maxick CPAs P.C. served as our independent registered public accounting firm for the year ended December 31, 2016.
The selection of Freed Maxick CPAs P.C. to serve as our independent registered public accounting firm for 2017 will be presented to our shareholders for ratification at the Meeting. Our Board of Directors recommends a vote in favor of the proposal to ratify this selection, and the persons named in the enclosed proxy (unless otherwise instructed therein) will vote such proxiesFOR this proposal. If the shareholders do not ratify this selection, the Audit and Finance Committee will seek to identify and address the reason or reasons why the shareholders did not ratify the committee’s selection and will consider such reason or reasons in selecting an independent registered public accounting firm for 2017.
We have been advised by Freed Maxick CPAs, P.C. that they will have a representative present at the Meeting who will be available to respond to appropriate questions. In addition, we intend to give such representative an opportunity to make any statements if the representative should so desire.
Principal Accountant Fees and Services
Aggregate fees for professional services rendered for us for 2015 and 2016 were:
2015 | 2016 | |||||||
Audit Fees | $ | 200,000 | $ | 192,800 | ||||
Audit - Related Fees | 13,750 | 11,800 | ||||||
Tax Fees | 24,375 | - | ||||||
All Other Fees | - | - | ||||||
Total Fees | $ | 238,125 | $ | 204,600 |
Audit Fees
Audit fees were for professional services rendered for the audit of our consolidated financial statements and reviews of our quarterly consolidated financial statements.
Audit-Related Fees
Audit-related fees were for the annual audit of our 401(k) defined contribution plan. Also included in the audit-related fees for 2016 is an amount related to a review of our 8-K filing related to our acquisition of Accutronics and for 2015 is an amount related to a review of our S-8 filing.
Tax Fees
Tax fees relate to tax compliance services, including the preparation of corporate and state tax returns.
Our Audit and Finance Committee has not adopted pre-approval policies and procedures for audit and non-audit services. Although no pre-approval policy was in effect, all audit, audit-related and permitted non-audit services for which our independent registered public accounting firm was engaged were reviewed and approved prior to the commencement of the services by our Audit and Finance Committee in compliance with applicable SEC requirements.
REPORT OF THE AUDIT AND FINANCE COMMITTEE
The duties and responsibilities of the Audit and Finance Committee are set forth in our Audit and Finance Committee Charter, a copy of which is available on our website at http://investor.ultralifecorporation.com under the subheading “Corporate Governance.” Among other things, the Audit and Finance Committee reviews the adequacy of our system of internal control regarding financial reporting, disclosure controls and procedures and preparing our consolidated financial statements. In addition, the Audit and Finance Committee recommends to our Board of Directors that our audited financial statements be included in our Annual Report on Form 10-K, approves our quarterly filings on Form 10-Q and selects the independent registered public accounting firm to audit our books and records.
The Audit and Finance Committee has:
● | Reviewed and discussed our audited financial statements for 2016 with our management and with Freed Maxick CPAs P.C., our independent registered public accounting firm for 2016; |
● | Discussed with Freed Maxick CPAs P.C., our independent registered public accounting firm for 2016, the matters required to be discussed by statement on Auditing Standards No. 61, as amended (AICPA,Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; and |
● | Received from Freed Maxick CPAs P.C. the written disclosures and the letter from Freed Maxick CPAs P.C. required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit and Finance Committee concerning independence, and has discussed with Freed Maxick CPAs P.C. their independence. |
The Audit and Finance Committee met with our independent accountants with and without management present and discussed with them the results of their examinations, their evaluations of our internal control over financial reporting, our disclosure controls and procedures and the quality of our financial reporting. Based on the review and discussions referred to above, the Audit and Finance Committee concluded that Freed Maxick CPAs P.C. is independent and recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.
The Audit and Finance Committee:
Thomas L. Saeli, Chair
Steven M. Anderson
Ranjit C. Singh
Proposal 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are asking our shareholders to vote on a non-binding advisory resolution on the compensation of our executive officers, commonly referred to as the “Say-on-Pay” resolution.
As discussed within this proxy statement, our Compensation and Management Committee has structured our executive compensation program to align the interests of our executive officers with those of our shareholders and reward our executive officers for the achievement of both short-term and long-term strategic and operational goals while promoting the achievement of sustainable long-term shareholder value. At the same time, our executive compensation program is designed to avoid encouraging unnecessary or excessive risk-taking by our executive officers.
The vote on this advisory resolution is not intended to address any specific component of our executive compensation. It is meant to address the overall compensation program for our executive officers as described in this proxy statement.
We are asking our shareholders to approve the following advisory resolution at the Meeting:
Resolved, that the shareholders of Ultralife Corporation (the “Company”) approve, on an advisory basis, the 2016 compensation of the Company’s executive officers disclosed in the proxy statement for the Company’s 2017 Annual Meeting of Shareholders, pursuant to SEC compensation disclosure rules.
This advisory resolution, commonly referred to as the “Say-on-Pay” resolution, is non-binding on our Company and our Board of Directors. Although it is non-binding, the Board of Directors and the Compensation and Management Committee will review and consider the voting results when making future decisions regarding the compensation of our executive officers.
Recommendation of the Board
The Board of Directors recommends that shareholders voteFOR the approval of the advisory resolution on executive compensation.
Proposal 4
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY
VOTES ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking our shareholders to vote on a non-binding, advisory basis on a resolution on the frequency of future advisory votes on our executive compensation, commonly referred to as the “Say-When-on-Pay” resolution.
After careful consideration and input from our shareholders, various proxy advisory organizations and various institutional shareholder representative organizations, our Board of Directors has established a policy of holding an advisory vote on executive compensation every three years. Our Board of Directors has determined that such policy continues to be appropriate and recommends that shareholders vote for future advisory votes on executive compensation to occur every three years.
As discussed within this proxy statement, our executive compensation program is structured to align the interests of our executive officers with those of our shareholders and reward our executive officers for the achievement of both short-term and long-term strategic and operational goals while promoting the achievement of sustainable shareholder value. The most recent advisory vote on executive compensation was held during the 2015 Annual Meeting of Shareholders with shareholder support of over 98%. We will hold the next advisory “Say-on-Pay” vote at the 2020 Annual Shareholder Meeting.
Shareholders are cautioned that they are not voting to approve or disapprove the recommendation of our Board of Directors. Shareholders will be able to specify one of four choices for this proposal on the proxy card or voting instruction card: One year, Two years, Three years, or Abstain.
Although this advisory vote is non-binding, the Board of Directors and our Compensation and Management Committee will carefully review the voting results. Notwithstanding the recommendation of the Board of Directors and the outcome of the shareholder advisory vote, the Board of Directors may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors not known to the Board of Directors at this time.
Recommendation of the Board
The Board of Directors recommends that shareholders voteTHREE YEARS for the frequency of future advisory votes on executive compensation.
Proposal 5
shareholder proposal entitled shareholder proxy access
The Company has been advised that Mr. Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021 who has indicated that he is a beneficial owner of at least $2,000 in market value of the Company’s common stock, intends to submit the following proposal at the Annual Meeting:
“Proposal 5 -Shareholder Proxy Access
RESOLVED: Shareholders ask the Board of Directors to provide proxy access for shareholder nominees for election to the Board, with the following essential elements:
1. | Nominating shareholders or shareholder groups (“Nominators”) must beneficially own 3% of more of the Company’s outstanding common stock (“Required Stock”) continuously for at least three years and pledge to hold such stock through the annual meeting. |
2. | Nominators may submit a statement not exceeding 500 words in support of each nominee to be included in the Company proxy materials. |
3. | The number of shareholder-nominated candidates eligible to appear in Company proxy materials shall be one-quarter of the directors then serving or two, whichever is greater. |
4. | No limitation shall be placed on the number of shareholders who can aggregate their shares to achieve the challenging 3% of required stock for a continuous 3-years. |
5. | No limitation shall be placed on the re-nomination of shareholder nominees by Nominators based on the number or percentage of votes received in any election. |
6. | The Company shall not require that Nominators pledge to hold stock after the meeting if their nominees fail to win election. |
7. | Loaned securities shall be counted as belonging to any nominating shareholder who represents it has the legal right to recall those securities for voting purposes and will hold those securities through the date of the meeting. |
Proxy access is a fundamental shareholder right that will make directors more accountable and enhance shareholder value. A 2014 Chartered Financial Analyst Institute study concluded that proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption” and could raise overall US market capitalization by up to $140 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1).
Shareholder proposals calling for proxy access have recently received overwhelming shareholder support, gaining a majority at 123 companies out 198 facing such a proposal since 2015. Kaye Scholar partner Nicholas O’Keefe recently observed, “Companies are going to lose trying to fight proxy access”. Of the 72 similar proposals presented by the New York Comptroller in 2016, the vast majority were withdrawn when companies agreed to adopt a similar version of proxy access.
In addition to public pension fund support, at an SEC Investor Advisory Committee meeting a representative from BlackRock, the largest asset manager in the world, stated the firm supports proxy access as a fundamental right, generally on terms consistent with the proposed 2011 SEC rule. TIAA-CREF sent a letter to its 100 largest holdings requesting that they adopt proxy access bylaws consistent with the 3% ownership threshold included in the 2011 SEC rule.
Please vote to enhance shareholder value: Shareholder Proxy Access – Proposal 5” |
The Company’s Statement of Opposition to Proposal 5
The Board recommends a voteAGAINST Proposal 5.
The Company’s Corporate Development and Governance Committee assists the Board in identifying qualified individuals to become directors, including considering candidates proposed by shareholders. In identifying nominees, the Committee considers, among other things, a candidate’s independence, character, ability to exercise sound judgment, diversity, demonstrated leadership skills, including financial literacy, and experience in the context of the needs of the Board. The Board believes that the Board and the Corporate Development and Governance Committee are best situated to assess the particular qualifications of potential director nominees and determine whether they will contribute to an effective Board that addresses the evolving needs of the Company and represents the best interests of the Company’s shareholders. The Board believes that providing access to the Company’s proxy as set forth in the proposal will undermine the value to the Company’s shareholders of the selection and nomination process undertaken by the Corporate Development and Governance Committee and the Board.
Members of the Board and the Corporate Development and Governance Committee have a fiduciary duty to act in the best interests of the Company and its shareholders. The Board is also accountable to the Company’s shareholders through the Company’s corporate governance documents and policies, including having all directors elected annually by the shareholders. Instead of this system of accountability, the proposal would provide for access to the Company’s proxy by individual shareholders or relatively small groups of shareholders who do not have a similar fiduciary duty, are not bound by the Company’s corporate governance policies and practices, and may nominate directors who advance their own specific agenda without regard to the best interests of the Company or its shareholders.
With respect to the proponent’s specific proposal, the Board believes that the proposed thresholds for proxy access are inappropriately low and not in the best interests of the Company or its shareholders. In particular, the thresholds in the proposal would provide access to shareholders with an extremely limited interest in the Company, relative to the overall size of the Company and the total number of shareholders. The thresholds in the proposal would only require that one or more shareholders own at least 3% of the outstanding shares of the Company for a minimum of three years continuously.
These low thresholds do not demonstrate a significant and sustained long-term commitment to the Company sufficient to justify the costs and disruption of this kind of broadly available access to the Company’s proxy statement. Further, the low thresholds could result in the inclusion of multiple proxy access nominees in the Company’s proxy materials, leading to significant additional expense and diversion of the Board’s and management’s time and energy supporting the Board’s nominees in contested elections.
For all of the reasons above, the Board recommends a voteAGAINST Proposal 5.
Vote Required
Approval of Proposal 5 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.
Recommendation of the Board
The Board recommends a voteAGAINST Proposal 5.
Other Matters
Our Board of Directors does not intend to present, and has not been informed that any other person intends to present, any matters for action at the Meeting other than those specifically referred to in this proxy statement. If any other matters properly come before the Meeting, it is intended that the holders of the proxies will act in respect thereof in accordance with their best judgment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The table below shows certain information regarding the beneficial ownership of shares of our common stock as of Name and Address of Beneficial Owner Number of Shares Beneficially Owned Percent of Class Bradford T. Whitmore (1) 5,363,073 34.6% 1560 Sherman Avenue, Suite 900 Evanston, IL 60201 NGP Energy Technology Partners II, L.P. (2) 950,721 6.1% 1700 K Street NW, Suite 750 Washington, D.C. 20006 _______________________ (1) This information as to the beneficial ownership of shares of our common stock is based on the Form 4 dated February (2) This information as to the beneficial ownership of shares of our common stock is based on Amendment No. 2 to Schedule 13G dated SECURITY OWNERSHIP OF MANAGEMENT The table below shows certain information regarding the beneficial ownership of shares of our common stock as of Name of Beneficial Owner (1) Number of Shares Beneficially Owned (1) Percent of Class Beneficially Owned (2) Steven M. Anderson 18,500 * Michael D. Popielec 673,623 (3) 1.7% (7) Thomas L. Saeli 52,246 * Robert W. Shaw II 46,280 * Ranjit C. Singh 79,801 * Bradford T. Whitmore 5,363,073 (4) 34.6% Philip A. Fain 258,115 (5) * All Directors and Executive Officers as a group (7 persons) 6,491,638 (6) 38.1% (7) ___________________________ *Less than 1% (1) Except as otherwise indicated, the shareholders named in this table have sole voting and investment power with respect to the shares of our common stock beneficially owned by them. The information provided in this table is based upon information provided to us by such shareholders. The table reports beneficial ownership for our directors and executive officers in accordance with Rule 13d-3 under the Exchange Act. This means all our securities over which directors and executive officers directly or indirectly have or share voting or investment power are listed as beneficially owned. The amounts also include shares that may be acquired by exercise of stock options prior to (2) Based on (3) The amount shown includes (4) The amount shown includes 518,616 shares beneficially owned by Grace Brothers, Ltd., an Illinois limited partnership, held in a margin account, and Spurgeon Corporation, which is a general partner of Grace Brothers, Ltd. Mr. Whitmore is a general partner of Grace Brothers, Ltd. See “Security Ownership of Certain Beneficial Owners” above for more information about Grace Brothers, Ltd. (5) The amount shown includes (6) The amount shown includes (7) Percentages exclude shares subject to options that may be exercised by Directors and Executive Officers. SECTION Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our common stock to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of our common stock and our other equity securities. To our knowledge, based solely on the written representations of our directors and executive officers and the copies of such reports filed with the SEC during Submission of Shareholder Proposals Under Rule 14a-8 of the Exchange Act, shareholder proposals intended for inclusion in the proxy statement for our Any shareholder proposal submitted for consideration at our Our Annual Report on Form 10-K for the year ended December 31, June 1, 2017 By Order of the Board of Directors Bradford T. Whitmore, Chair of the Board of Directors April 11, 2014May 22, 2017 by each person known by us to beneficially own more than five percent of the outstanding shares of our common stock, with percentages based on 17,526,22915,499,305 shares issued and outstanding.Name and Address of Beneficial Owner Number of Shares Beneficially Owned Bradford T. Whitmore (1) 5,156,034 29.4% 1560 Sherman Avenue, Suite 900 Evanston, IL 60201 NGP Energy Technology Partners II, L.P. (2) 950,721 5.4% 1700 K Street NW, Suite 750 Washington, D.C. 20006
Beneficially Owned 18, 201424, 2016 filed with the SEC by Grace Brothers, Ltd., an Illinois limited partnership, Bradford T. Whitmore individually and as general partner of Grace Brothers, Ltd. and as manager and sole voting member of Sunray I, LLC, Spurgeon Corporation, as general partner of Grace Brothers, Ltd. and Sunray I, LLC, a Delaware limited liability company that reports beneficial ownership of 5,156,0345,298,229 shares of our common stock. In the Schedule 13D/A dated February 17, 2014, Mr. Whitmore reports sole voting and dispositive power with respect to 4,637,4184,844,457 of such shares, of which 4,452,283 shares are held in the name of Sunray I, LLC. Grace Brothers, Ltd., Mr. Whitmore and Spurgeon Corporation report shared voting and dispositive power with respect to 518,616 of such shares.February 14, 2013April 5, 2016 filed with the SEC by NGP Energy Technology Partners II, L.P. (a Delaware limited partnership which owns the reported securities), NGP ETP II, L.L.C., the general partner of NGP Energy Technology Partners II, L.P, Energy Technology Partners, L.L.C., the sole manager of NGP ETP II, L.L.C., and Philip J. Deutch, the sole member and manager of Energy Technology Partners, L.L.C. and the manager of NGP ETP II, L.L.C. Mr. Deutch is also a member of the investment committee of NGP ETP II, L.L.C. NGP Energy Technology Partners II, L.P. reports sole voting and dispositive power with respect to all 950,721 shares. By virtue of the relationships between and among the reporting persons, NGP ETP II, L.L.C., Energy Technology Partners, L.L.C. and Mr. Deutch may be deemed to have the power to direct the voting and disposition of the shares of common stock beneficially owned by NGP Energy Technology Partners II, L.P. NGP ETP II, L.L.C., Energy Technology Partners, L.L.C. and Mr. Deutch disclaim beneficial ownership of the reported securities except to the extent of their pecuniary interest therein.35April 12, 2014May 22, 2017 by (1) each of our directors, (2) each of our Named Executive Officers (as defined under the heading “Executive Compensation”),executive officers, and (3) all of our directors and executive officers as a group.Name of Beneficial Owner (1) Number of Shares Beneficially Owned (1) Steven M. Anderson 32,938 * Michael D. Popielec 466,280 (3) 1.2 % (7) Thomas L. Saeli 42,188 * Robert W. Shaw II 34,563 * Ranjit C. Singh 74,284 * Bradford T. Whitmore 5,156,034 (4) 29.4 % Philip A. Fain 227,262 (5) * All Directors and Executive Officers as a group (7 persons) 6,038,549 (6) 32.0 % (7) June 11, 2014,July 21, 2017, which shares are referred to in the footnotes to this table as “shares subject to options that may be exercised.”17,526,22915,499,305 shares issued and outstanding.262,500403,335 shares subject to options that may be exercised by Mr. Popielec prior to June 11, 2014.July 21, 2017.36165,976191,667 shares subject to options that may be exercised by Mr. Fain.Fain prior to July 21, 2017.433,476595,002 shares subject to options that may be exercised by Directors and Executive Officers.executive officers.16(a)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE2013,2016, all Section 16(a) filings applicable to our officers, directors and more than 10% beneficial owners were filed in a timely manner.SUBMISSION OF SHAREHOLDER PROPOSALS20152018 Annual Meeting of Shareholders must be submitted in writing to us to our Corporate Secretary (Attn: Philip A. Fain) at 2000 Technology Parkway, Newark, New York 14513, and must have been received by December 22, 2014.20142018 Annual Meeting of Shareholders butnot submitted for inclusion in the proxy statement for that meeting that is received by us after December, 2014February 1, 2018 will not be considered filed on a timely basis with us under Rule 14a-4(c)(1) of the Exchange Act. For such proposals that are not timely filed, we retain discretion to vote proxies we receive. For such proposals that are timely filed, we retain discretion to vote proxies we receive provided that we include in our proxy statement advice on the nature of the proposal and how we intend to exercise our voting discretionand the proponent of any such proposal does not issue its own proxy statement.2013,2016, as filed with the SEC, is included in the 20132016 Annual Report to Shareholders which accompanies this proxy statement.April 21, 201437APPENDIX AULTRALIFE CORPORATION2014 LONG-TERM INCENTIVE PLANSection l. Purpose.Effective June 10, 2004, Ultralife Corporation (hereinafter the “Corporation”) adopted a long term incentive plan known as 2004 Long Term Incentive Plan (the “Predecessor Plan”). The Predecessor Plan will expire by its terms on June 10, 2014. All awards granted pursuant to the terms of the Predecessor Plan shall continue in full force and effect according to their respective terms. The Ultralife 2014 Long Term Incentive Plan (hereinafter the “Plan”) replaces the Predecessor Plan and provides the Corporation a vehicle which will enable it to provide Employees, Directors and Consultants of the Corporation and its Subsidiaries, who are in a position to contribute to the long-term success of the Corporation, with equity based incentive awards in accordance with the terms specified herein. The Corporation believes that the incentive program which is available to the Corporation under the terms of the Plan will cause those persons to increase their interest in the Corporation’s welfare and aid in attracting and retaining Employees, Directors and Consultants of outstanding ability.Section 2. Definitions.Unless the context clearly indicates otherwise, the following terms, when used in the Plan, shall have the meanings set forth in this Section 2:(a) “Award” shall mean any Option, SAR, Stock Award, Restricted Stock Units or other incentive award granted under the Plan, whether singly, in combination, or in tandem, to a Grantee by the Committee pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee may establish by the Award Agreement or otherwise.(b) “Award Agreement” shall mean the document establishing the terms, conditions, restrictions and limitations of an Award in addition to those established by the Plan and by the Committee’s exercise of its administrative powers.(c) “Board” shall mean the Board of Directors of the Corporation.(d) “CEO” shall mean the Chief Executive Officer of the Corporation.(e) “Change in Control” shall mean the occurrence of any of the following: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act (hereinafter a “Person”)) is or becomes a “beneficial owner” (as defined in Rule l3d-3 under the Exchange Act (hereinafter a “Beneficial Owner”), directly or indirectly, of securities of the Corporation representing more than fifty percent (50%) of the voting power of the then outstanding securities of the Corporation; and (ii) the consummation of (A) a merger or consolidation of the Corporation with another corporation where the stockholders of such corporation, immediately after the merger orconsolidation, own shares entitling such stockholders to more than fifty percent (50%) of all votes (without consideration of the rights of any class of stock to elect Directors by separate class vote) to which all stockholders of the corporation issuing cash or securities in the merger or consolidation would be entitled in the election of directors or where the members of the board of directors of such corporation, immediately after the merger or consolidation, constitute a majority of the board of directors of the corporation issuing cash or securities in the merger or consolidation, or (B) the sale or other disposition of all or substantially all the assets of the Corporation, or a liquidation, dissolution or statutory exchange of the Corporation.(f) “Code” shall mean the Internal Revenue Code of 1986 as it may be amended from time to time.(g) “Committee” shall mean the Compensation and Management Committee of the Board, or such other Board committee as may be designated by the Board to administer the Plan; provided that the Committee shall consist of not less than two Directors who are “Non-Employee Directors,” as that term is defined and interpreted pursuant to Rule l6b-3 under the Exchange Act. The Committee shall be appointed by and serve at the pleasure of the Board.(h) “Consultant” shall mean any consultant, advisor or independent contractor retained by the Corporation or its Subsidiaries.(i) “Control Person” shall mean any person who, as of the date of grant of an Option, owns (within the meaning of Section 422A(b)(6) of the Code) stock possessing more than l0% of the total combined voting power or value of all classes of stock of the Corporation or of any Parent or Subsidiary.(j) “Corporation” shall mean Ultralife Corporation, a Delaware corporation.(k) “Director” shall mean any member of the Board.(1) “Disability” shall mean permanent and total disability as defined by Section 22(e)(3) of the Code.(m) “Employee” shall mean any person employed by the Corporation or its Subsidiaries on a full or part-time basis, including Directors who are otherwise employed by the Corporation or its Subsidiaries.(n) “Exchange Act” shall mean the Securities Exchange Act of 1934 as it may be amended from time to time, including the rules thereunder and any successor provisions and the rules thereto.(o) “Fair Market Value” shall mean for any day (i) if the Corporation is a registrant under Section 12 of the Exchange Act, the volume weighted average price (“VWAP”) of the Stock in the over-the-counter market, as determined in accordance with the trading rules of the National Association of Securities Dealers Automated Quotation System or, if the Stock is listed or admitted to trading on any national securities exchange, the VWAP as determined in accordance with the trading rules on such exchange or, (ii) if the Corporation is not a registrant under Section 12 of the Exchange Act, the price of the Stock will be determined by the Board on the date of grant but will2not be less than the par value of such Stock.(p) “Grantee” shall mean an Employee, Director or Consultant granted an Award under the Plan.(q) “Immediate Family Member” shall mean the transferor and his or her spouse, children or grandchildren, whether natural, step or adopted children or grandchildren.(r) “ISO” shall mean an Option granted pursuant to the Plan to purchase shares of Stock and intended to qualify as an incentive stock option under Section 422 of the Code, as now or hereafter constituted.(s) “NQSO” shall mean an Option granted pursuant to the Plan to purchase shares of the Stock that is not an ISO.(t) “Non-Employee Director” shall mean a “non-employee director” within the meaning of Rule l6b-3 under the Exchange Act.(u) “Options” shall refer collectively to NQSOs and ISOs subject to the Plan.(v) “Parent” shall mean any parent (as defined in Section 425 of the Code) of the Corporation.(w) “Plan” shall mean the Ultralife Corporation 2014 Long-Term Incentive Plan as set forth herein and as amended from time to time.(x) “SAR” shall mean a stock appreciation right granted pursuant to Section 8 hereof; a stock appreciation right shall entitle the Grantee to receive a payment equal to the appreciation in a stated number of shares of Stock from the exercise price for that stock appreciation right to the Fair Market Value of the stated number of shares of Stock on the date of exercise.(y) “Securities Act” shall mean the Securities Act of 1933 as it may be amended from time to time, including the rules thereunder and any successor provisions and the rules thereto.(z) “Stock” shall mean shares of the Common Stock, par value $.10 per share, of the Corporation.(aa) “Stock Award” shall mean an award of shares of Stock or restricted shares of Stock granted pursuant to Section 9 hereof.(bb) “Subsidiary” shall mean any subsidiary (as defined in Section 425 of the Code) of the Corporation.Section 3. Shares of Stock Subject to the Plan.(a) In General. The maximum number of shares of Stock which shall be available for the grant or issuance of Awards under the Plan (including ISOs) during its term shall be equal to 1,750,000, which shares shall also be available for the grant or issuance of Awards under the Plan);3provided, however, that no more than 800,000 shares of Stock may be used for Awards other than Options or SARs. Such amounts shall be subject to adjustment as provided in Section 3(c) hereof. Any shares of Stock related to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such shares, are settled in cash in lieu of Stock, or are exchanged with the Committee’s permission for Awards not involving Stock, shall be available again for grant under the Plan. Moreover, if the exercise price of any Award granted under the Plan or the tax withholding requirements with respect to any Award granted under the Plan are satisfied by tendering shares of Stock to the Corporation (by either actual delivery or by attestation), only the number of shares of Stock issued net of the shares of Stock tendered will be deemed delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. The shares of Stock available for issuance under the Plan may be authorized and unissued shares or treasury shares, including shares purchased in open market or private transactions. For the purpose of computing the total number of shares of Stock granted under the Plan, where one or more types of Awards, both of which are payable in shares of Stock, are granted in tandem with each other, such that the exercise of one type of Award with respect to a number of shares cancels an equal number of shares of the other, the number of shares granted under both Awards shall be deemed to be equivalent to the number of shares under one of the Awards.(b) Maximum Awards Payable. Subject to Section 3(c) hereof, and notwithstanding any provision contained in the Plan to the contrary, the maximum Award payable (or granted, if applicable) to any one Grantee under the Plan for a calendar year shall be 150,000 shares of Stock; provided, however, that the 150,000 share limitation shall not apply to inducement grants to Grantees who are new executives or key employees that do not exceed 700,000 shares of Stock.(c) Adjustment Upon Changes in Capitalization. In the event of any reclassification, recapitalization, merger, consolidation, reorganization, issuance of warrants, rights or debentures, stock dividend, stock split or reverse stock split, cash dividend, property dividend, combination or exchange of shares, repurchase of shares or any other change in corporate structure which in the judgment of the Committee materially affects the value of shares, then the Committee may determine the substitutions or adjustments to the maximum number of shares available for the grant or issuance of Awards under the Plan pursuant to Section 3(a) hereof, the maximum Award payable under Section 3(b) hereof, the number and class of shares and the exercise price per share set forth in any Award theretofore granted, or any other affected terms of an Award or the Plan as the Committee, in its sole discretion and without liability to any person, deems equitable or appropriate; provided, however, that no such adjustments shall be made to any ISO without the Grantee’s consent, if such adjustment would cause such ISO to fail to qualify as such.Section 4. Administration of the Plan.(a) In General. The Committee shall have total and exclusive responsibility to control, operate, manage and administer the Plan in accordance with its terms. The Committee may act only by a majority of its members. Any determination of the Committee may be made, without a meeting, by a writing or writings signed by all of the members of the Committee. The decisions of the Committee and its actions with respect to the Plan shall be final, binding and conclusive upon all persons having or claiming to have any right or interest in or under the Plan.(b) Authority. The Committee shall have all the authority that may be necessary or helpful to enable it to discharge its responsibilities with respect to the Plan. Without limiting the4generality of the preceding sentence, the Committee shall have the exclusive right to:(i) determine eligibility for participation in the Plan;(ii) select the Grantees and determine the type of Awards to be made to Grantees, the number of shares of Stock subject to Awards and the terms, conditions, restrictions and limitations of the Awards, including, but not by way of limitation, restrictions on the transferability of Awards and conditions with respect to continued employment or performance criteria;(iii) interpret the Plan or any Award Agreement;(iv) construe any ambiguous provision, correct any default, supply any omission, and reconcile any inconsistency of the Plan or an Award Agreement;(v) issue administrative guidelines as an aid to administer the Plan and make changes in such guidelines as it from time to time deems proper;(vi) promulgate regulations for carrying out the Plan and make changes in such regulations as it from time to time deems proper;(vii) to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions, and limitations;(viii) promulgate rules and regulations regarding treatment of Awards of a Grantee under the Plan in the event of such Grantee’s death, disability, retirement, termination from the Corporation or breach of agreement by the Grantee, or in the event of a Change in Control of the Corporation;(ix) to the extent permitted under the Plan, accelerate the vesting, exercise, or payment of an Award when such action or actions would be in the best interest of the Corporation;(x) subject to Section 4(d) hereof, grant Awards in replacement of Awards previously granted under the Plan or any other executive compensation plan of the Corporation;(xi) determine the terms and provisions of any Award Agreements entered into hereunder, including, a provision in an Award Agreement that requires, upon the occurrence of a Change in Control specified in Section 2(e)(iii) hereof, the cancellation for cash of outstanding Awards or the issuance of comparable replacement Awards granted by the successor entity in such event;(xii) take any and all other action it deems necessary or advisable for the proper operation or administration of the Plan; and(xiii) make all other determinations it deems necessary or advisable for the administration of the Plan, including factual determinations.5(c) Delegation. The Committee may allocate all or any portion of its responsibilities and powers under the Plan to any one or more of its members, the CEO or other senior members of management as the Committee deems appropriate and may delegate all or any part of its responsibilities and powers to any such person or persons, provided that any such allocation or delegation be in writing; provided, however, that only the Committee, or other committee consisting of two or more Non-Employee Directors may select and grant Awards to Grantees who are subject to Section 16 of the Exchange Act. The Committee may revoke any such allocation or delegation at any time for any reason with or without prior notice.(d) Repricing. Except for adjustments pursuant to Section 3(c) hereof, the Committee shall not reprice any Options or SARs unless such action is approved by the stockholders of the Corporation. For purposes of the Plan, the term “reprice” shall mean: (i) the reduction, directly or indirectly, in the per-share exercise price of an outstanding Option or SAR by amendment, cancellation or substitution; (ii) any action that is treated as a repricing under United States generally accepted accounting principles; (iii) canceling an Option or SAR when its exercise price exceeds the fair market value of the underlying Stock in exchange for another Option, SAR or other equity security (unless the cancellation and exchange occurs in connection with a merger, acquisition, or similar transaction); and (iv) any other action that is treated as a repricing by the rules or regulations of any stock exchange on which the securities of the Corporation are traded. Any amendment or repeal of this provision shall require the affirmative vote of a majority of shares of voting capital stock present at a stockholders meeting in person or by proxy and entitled to vote thereon.Section 5. Awards.(a) Eligibility. Subject to Section 4 hereof, all Employees, Directors and Consultants are eligible to participate in the Plan; provided, however, only Employees are eligible to receive ISOs. The Committee shall determine and designate from time to time those Employees, Directors and Consultants who are to be granted Awards, the nature of each Award granted and the number of shares of Stock subject to each such Award.(b) In General. Awards may, at the Committee’s sole discretion, be paid in the form of Options pursuant to Section 6 hereof, SARs pursuant to Section 7 hereof, Stock Awards or Restricted Stock Units pursuant to Section 8 hereof, or a combination thereof. Each Award shall be subject to the terms, conditions, restrictions and limitations of the Plan and the Award Agreement for such Award. Awards under a particular Section of the Plan need not be uniform and Awards under two or more Sections may be combined into a single Award Agreement. Any combination of Awards may be granted at one time and on more than one occasion to the same Grantee.(c) Foreign Jurisdictions. With respect to Grantees who reside or work outside of the United States, the Committee may, in its sole and absolute discretion, amend the terms of the Plan or Awards with respect to such Grantees in order to conform such terms with the provisions of local law and practice or otherwise as deemed necessary or desirable by the Committee.Section 6. Stock Options.(a) In General. Awards may be granted in the form of Options. Options granted under6the Plan may be of two types: ISOs and NQSOs. The Committee shall have the authority and discretion to grant to an eligible Employee either ISOs, NQSOs, or both, but shall clearly designate the nature of each Option at the time of grant. Consultants and Directors shall only receive NQSOs.(b) Terms of Options. An Option shall be exercisable in accordance with such terms and conditions and at such times and during such periods as may be determined by the Committee. In addition to any such terms and conditions, the following terms and conditions shall apply to all Options granted under the Plan:(i) The exercise price per share of Stock subject to an Option shall be not less than 100% of the Fair Market Value of a share of the Stock on the date such Option is granted, except for Options granted in assumption of or substitution for outstanding awards previously granted by the Corporation or its affiliates or an entity that the Corporation acquires or with which the Corporation combines, in any case in a transaction contemplated by Section 3(c); provided, however, that the exercise price for any ISO granted to a Control Person shall not be less than 110% of such Fair Market Value.(ii) The term of each Option shall be determined by the Committee, provided that no Option shall be exercisable more than ten years from the date such Option is granted, and provided further that no ISO granted to a Control Person shall be exercisable more than five years from the date of Option grant.(iii) Notwithstanding any other provisions hereof, the aggregate Fair Market Value (determined at the time the ISO is granted) of the Stock with respect to which ISOs are exercisable for the first time by any Employee during any calendar year under all plans of the Corporation and any Parent or Subsidiary corporation shall not exceed $100,000. In the event that the aggregate Fair Market Value (determined at the time of grant of an ISO) of the Stock with respect to which ISOs are exercisable for the first time by an Employee for any calendar year under all plans of the corporation and any Parent or Subsidiary corporation exceeds $100,000.00, then to the extent that the aggregate Fair Market Value of the Stock with respect to ISOs exercisable for the first time by an Employee in such a calendar year exceeds $100,000.00, the ISOs providing for the purchase of such Stock shall automatically be converted into and shall be deemed to be NQSOs.(c) Exercise of Options. Except as provided in Section 10 hereof, no Option granted to an Employee or Consultant shall be exercised unless at the time of such exercise the Grantee is then an Employee or Consultant. Upon exercise, the exercise price of an Option may be paid in cash, or, to the extent permitted by the Committee, by tendering, by either actual delivery of shares or by attestation, shares of Stock, a combination of the foregoing, or such other consideration as the Committee may deem appropriate. The Committee shall establish appropriate methods for accepting Stock, whether restricted or unrestricted, and may impose such conditions as it deems appropriate on the use of such Stock to exercise an Option. Options awarded under the Plan may also be exercised by way of a broker-assisted stock option exercise program, if any, provided such program is available at the time of the Grantee’s exercise. Notwithstanding the foregoing or the provision of any Award Agreement, a Grantee may not pay the exercise price of an Option using shares of Stock if, in the opinion of counsel to the Corporation, (i) the Grantee is, or within the six months preceding such exercise was, subject to reporting under Section 16(a) of the Exchange Act, (ii) there is a substantial likelihood that the use of such form of payment or the timing of such form of payment would subject the Grantee to a substantial risk of liability under Section 16 of the7Exchange Act, or (iii) there is a substantial likelihood that the use of such form of payment would result in accounting treatment to the Corporation under generally accepted accounting principles that the Committee reasonably determines is adverse to the Corporation.Section 7. Stock Appreciation Rights.(a) In General. Awards may be granted in the form of SARs. SARs granted under the Plan may be of two types: an SAR granted in tandem with all or a portion of a related Option under the Plan (“Tandem SARs”) or granted separately (“Freestanding SARs”). A Tandem SAR may be granted either at the time of the grant of the related Option or at any time thereafter during the term of the Option.(b) Tandem SARs. A Tandem SAR shall be exercisable to the extent, and only to the extent, that the related Option is exercisable, and the “exercise price” of such a SAR (the base from which the value of the SAR is measured at its exercise) shall be the exercise price under the related Option. However, at no time shall a Tandem SAR be issued if the exercise price of its related Option is less than the Fair Market Value of the Stock, as determined by the Committee, on the date that the Tandem SAR is granted. If a related Option is exercised as to some or all of the shares covered by the Award, the related Tandem SAR, if any, shall be canceled automatically to the extent of the number of shares covered by the Option exercise. Upon exercise of a Tandem SAR as to some or all of the shares covered by the Award, the related Option shall be canceled automatically to the extent of the number of shares covered by such exercise. All Tandem SARs shall expire not later than ten years from the date of the grant of the SAR.(c) Freestanding SARs. Freestanding SARs shall be exercisable or automatically mature in accordance with such terms and conditions and at such times and during such periods as may be determined by the Committee. The exercise price of a Freestanding SAR shall be defined in the Award Agreement for that SAR and shall be not less than 100% of the Fair Market Value of a share of Stock on the date of the grant of the Freestanding SAR. All Freestanding SARs shall expire not later than ten years from the date of grant of the SAR.(d) Exercise of SARs. Except as provided in Section 10 hereof, no SAR granted to an Employee or Consultant shall be exercised unless at the time of such exercise the Grantee is then an Employee or Consultant. The Committee may provide that an SAR shall be deemed to be exercised at the close of business on the scheduled expiration date of such SAR if at such time the SAR by its terms remains exercisable and, if so exercised, would result in a payment to the holder of such SAR. Unless otherwise provided in an Award Agreement, an SAR may be paid in cash, shares of Stock or any combination thereof, as determined by the Committee, in its sole and absolute discretion, at the time that the SAR is exercised.8Section 8. Stock Awards and Restricted Stock Units.(a) In General. Awards may be granted in the form of Stock Awards or Restricted Stock Units. Stock Awards and Restricted Stock Units shall be awarded in such numbers and at such times during the term of the Plan as the Committee shall determine. “Restricted Stock Unit” means an Award that is valued by reference to Stock, which value may be paid to the Grantee by delivery of such property as the Committee shall determine, including, without limitation, cash or Stock, or any combination thereof, and that has such restrictions as the Committee, in its sole discretion, may impose.(b) Restrictions. The Committee may condition, restrict or limit the grant of a Stock Award or Restricted Stock Units on the achievement of enumerated performance objectives or, with respect to Stock Awards or Restricted Stock Units issued to an Employee or a Consultant, on such Employee’s or Consultant’s continued employment or service to the Corporation through a specified period of time. The restricted period specified in respect of any Stock Award or Restricted Stock Unit shall not be less than three years, except that the Committee may (i) provide for the restricted period to terminate at any time after one year upon the attainment of performance-based objectives, and (ii) grant Stock Awards or Restricted Stock Units of up to 30,000 shares of Stock without regard to this limitation. Furthermore, the Committee may not terminate the restrictions applicable to outstanding Stock Awards or Restricted Stock Units except in connection with a Change in Control. The Committee may grant an unrestricted Stock Award or Restricted Stock Units only if the Committee determines that such Stock Award is made in lieu of all or a portion of salary or cash bonus of comparable value.(c) Rights of Holders of Restricted Stock. During the period in which any shares of Stock received pursuant to a Stock Award are subject to any restrictions, the Committee may, in its sole and absolute discretion, deny the Grantee to whom such shares have been awarded all or any of the rights of a stockholder with respect to such shares, including, but not by way of limitation, limiting the right to vote such shares or the right to receive dividends on such shares.(d) Rights of Holders of Restricted Stock Units. A Grantee receiving an Award of Restricted Stock Units shall not possess voting rights, nor the right to receive cash dividends with respect to such Award, unless a right to Dividend Equivalents is included in the Award Agreement for such Award of Restricted Stock Units. If a right to Dividend Equivalents is included in the Award Agreement for an Award of Restricted Stock Units, then any Stock or any other property distributed as a dividend or otherwise with respect to the Stock underlying such Award as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Award of Restricted Stock Units, and may either be automatically deemed invested in additional Restricted Stock Units or held by the Company in escrow for the Grantee, and shall be paid to the Grantee at the same time as the Restricted Stock Units. “Dividend Equivalents” means an amount credited under a Grantee’s Restricted Stock Unit, which amount is equal to the dividends paid on the Stock, if any, determined as if the Restricted Stock Unit was shares of Stock on the record date of any such dividend.”Section 9. Payment of Awards.(a) In General. Absent a Plan or Award Agreement provision to the contrary, payment of Awards may, at the discretion of the Committee, be made in cash, Stock, a combination of cash9and Stock, or any other form of property as the Committee shall determine. In addition, payment of Awards may include such terms, conditions, restrictions and/or limitations, if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture provisions; provided, however, such terms, conditions, restrictions and/or limitations are not inconsistent with the Plan.(b) Withholding. The Corporation shall be entitled to deduct from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the Grantee to pay to the Corporation such tax prior to and as a condition of the making of such payment. In accordance with any applicable administrative guidelines it establishes, the Committee may allow a Grantee to pay the amount of taxes required by law to be withheld from an Award by withholding from any payment of shares of Stock due as a result of such Award, or by permitting the Grantee to deliver to the Corporation, shares of Stock having a Fair Market Value equal to the minimum amount of such required withholding taxes. Notwithstanding the foregoing or the provision of any Award Agreement, a Grantee may not pay the amount of taxes required by law to be withheld using shares of Stock if, in the opinion of counsel to the Corporation, (i) the Grantee is, or within the six months preceding such exercise was, subject to reporting under Section 16(a) of the Exchange Act, (ii) there is a substantial likelihood that the use of such form of payment or the timing of such form of payment would subject the Grantee to a substantial risk of liability under Section 16 of the Exchange Act, or (iii) there is a substantial likelihood that the use of such form of payment would result in accounting treatment to the Corporation under generally accepted accounting principles that the Committee reasonably determines is adverse to the Corporation.Section 10. Effect of Termination of Relationship with the Corporation.(a) Committee Rules. The Committee shall have the authority to promulgate rules and regulations to determine the treatment of a Grantee’s Awards under the Plan in the event of such Grantee’s death, Disability, and termination. In addition, notwithstanding the provisions of this Section 10, the terms of an Award Agreement or the rules and regulations promulgated by the Committee and in effect from time to time, the Committee shall have the right to extend the period for exercise of any Option or SAR, provided such extension does not exceed the term of such Option or SAR.(b) Death. Unless otherwise decided by the Committee and provided in an Award Agreement, upon a Grantee’s death prior to the complete exercise of the Options or SARs granted to him or her under the Plan, any remaining Options or SARs may be exercised in whole or in part within one year after the date of the Grantee’s death and then only:(i) by the beneficiary designated by the Grantee in a writing submitted to the Corporation prior to the Grantee’s death, or in the absence of same, by the Grantee’s estate or by or on behalf of such person or persons to whom the Grantee’s rights pass under his or her will or the laws of descent and distribution,(ii) to the extent that the Grantee would have been entitled to exercise the Option or SAR at the date of his or her death and subject to all of the conditions on exercise imposed by the Plan and the Award Agreement, and(iii) prior to the expiration of the term of the Option or SAR.10(c) Disability. Unless otherwise decided by the Committee and provided in an Award Agreement, upon a Grantee’s Disability prior to the complete exercise of the Options or SARs granted to him or her under the Plan, any remaining Options or SARs may be exercised in whole or in part within one year after the date of the Grantee’s Disability and then only:(i) by the Grantee or his or her legal representative,(ii) to the extent that the Grantee would have been entitled to exercise the Option or SAR on the date of his or her Disability, subject to all of the conditions on exercise imposed by the Plan and the Award Agreement, and(iii) prior to the expiration of the term of the Option or SAR.(d) Other Termination. Unless otherwise decided by the Committee and provided in an Award Agreement, the termination of a Grantee’s employment, consulting relationship or term of directorship with the Corporation for a reason other than the Grantee’s death or Disability and prior to the complete exercise of the Options or SARs granted to him or her under the Plan, any remaining Options or SARs may be exercised in whole or in part within three months after the date of the Grantee’s termination and then only:(i) by the Grantee or his or her legal representative,(ii) to the extent that the Grantee would have been entitled to exercise the Option or SAR on the date of his or her termination, subject to all of the conditions on exercise imposed by the Plan and the Award Agreement, and(iii) prior to the expiration of the term of the Option or SAR.(e) Treatment of Intra-Corporation Transfers. In the case of an Employee or Consultant, the transfer between the Corporation and any Subsidiary shall not be deemed to be a termination of employment or consulting relationship, and a change from the status of an Employee to a Consultant or from a Consultant to an Employee shall not be deemed to be a termination of employment or consulting relationship.Section 11. General Provisions.(a) Award Agreement. Each Award grant shall be evidenced by a written Award Agreement containing such terms and conditions, not inconsistent with the Plan, as the Committee shall approve. The terms and provisions of Award Agreements may vary among Grantees and among different Awards granted to the same Grantee. Any Stock Award granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates, with such restrictive legends and/or stop transfer instructions as the Committee deems appropriate.(b) No Right to Further Awards or Continued Service. The grant of an Award in any year shall not give the Grantee any right to similar grants in future years or any right to continue such Grantee’s employment or consultant relationship with the Corporation or its Subsidiaries. All Grantees shall remain subject to discharge to the same extent as if the Plan were not in effect.11(c) No Right, Title, or Interest in Corporation Assets. No Grantee shall have any rights as a stockholder as a result of participation in the Plan until the date of issuance of a stock certificate in his or her name, and, in the case of restricted shares of Stock, such rights are granted to the Grantee under the Plan. To the extent any person acquires a right to receive payments from the Corporation under the Plan, such rights shall be no greater than the rights of an unsecured creditor of the Corporation and the Grantee shall not have any rights in or against any specific assets of the Corporation. All of the Awards granted under the Plan shall be unfunded and the Corporation shall not be required to establish any fund or make any other segregation of assets to assure the payment of any Award.(d) Nonassignability.(i) Except as otherwise determined by the Committee or as otherwise provided in Section 11(d)(ii) hereof, no Award or other right under the Plan shall be subject to anticipation, sale, assignment, pledge, encumbrance, or charge except by will or the laws of descent and distribution, and an Award shall be exercisable during the Grantee’s lifetime only by the Grantee.(ii) The Committee shall have the discretionary authority to grant NQSOs or amend outstanding NQSOs to provide that they be transferable, subject to such terms andconditions as the Committee shall establish. In addition to any such terms and conditions, the following terms and conditions shall apply to all transfers of NQSOs:(A) Except as otherwise permitted by the Committee, in its sole and absolute discretion, only Directors and corporate officers of the Corporation shall be permitted to transfer their NQSOs, and such individuals must be a Director or a corporate officer on the date of transfer.(B) Transfers shall only be permitted to: (1) the transferor’s Immediate Family Members; (2) a trust or trusts for the exclusive benefit of the transferor’s Immediate Family Members; or (3) a family partnership or family limited partnership in which each partner is, at the time of transfer and all time subsequent thereto, either an Immediate Family Member or a trust for the exclusive benefit of one or more Immediate Family Members.(C) All transfers shall be made for no consideration.(D) Once a NQSO is transferred, any subsequent transfer of such transferred NQSO shall, notwithstanding Section 11(d)(i) hereof to the contrary, be permitted; provided, however, such subsequent transfer complies with all of the terms and conditions of this Section 11(d)(ii), with the exception of Section 11(d)(ii)(A) hereof.(E) In order for a transfer to be effective, the Committee’s designated transfer agent must be used to effectuate the transfer. The costs of such transfer agent shall be borne solely by the transferor.(F) In order for a transfer in accordance with Section 11(d)(ii) to be effective, the transferor must agree in writing prior to the transfer on a form provided12by the Corporation to pay any and all payroll and withholding taxes due upon exercise of the transferred NQSO. In addition, prior to the exercise of the transferred NQSO by the transferee, arrangements must be made by the Grantee with the Corporation for the payment of any and all payroll and withholding taxes.(G) Upon transfer, a NQSO continues to be governed by and subject to the terms and conditions of the Plan. A transferee of a NQSO is entitled to the same rights as the Grantee to whom such NQSO was originally granted, as if no transfer had taken place. Accordingly, the rights of the transferee are subject to the terms and conditions of the original grant of the NQSO, including provisions relating to expiration date, exercisability, exercise price and forfeiture.(H) The Corporation shall be under no obligation to provide a transferee with any notice regarding the transferred NQSO held by the transferee upon forfeiture or any other circumstance.(e) Regulatory Approvals and Listings. Notwithstanding any other provision of the Plan or Award Agreements made pursuant thereto, the Corporation shall not be required to issue or deliver any certificate or certificates for shares of Stock under the Plan prior to fulfillment of all of the following conditions:(i) The listing, or approval for listing upon notice of issuance, of such shares on any securities exchange on which the Stock may then be traded;(ii) Any registration or other qualification of such shares under any state or federal law or regulation, or other qualification which the Board shall, in its absolute discretion and upon the advice of counsel, deem necessary or advisable;(iii) The obtaining of any other consent approval or permit from any state or federal government agency which the Board shall, in its absolute discretion and upon the advice of counsel, determine to be necessary or advisable; and(iv) The execution by the Grantee (or the Grantee’s legal representative) of such written representation that the Committee may in its sole discretion deem necessary or advisable to the effect that the shares then being purchased are being purchased for investment with no present intention of reselling or otherwise disposing of such shares in any manner which may result in a violation of the Securities Act and the placement upon certificates for such shares of an appropriate legend in connection therewith.(f) In the case of a grant of an Option to any Employee or Consultant of a Subsidiary, the Corporation may, if the Committee so directs, issue or transfer the shares covered by the Option to the Subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Subsidiary will transfer the shares to the Employee or Consultant in accordance with the terms of the Plan and the Award Agreement relating to such Option.(g) Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of New York, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.13(h) No Guarantee of Tax Consequences. No person connected with the Plan in any capacity, including, but not limited to, the Corporation and its directors, officers, agents and employees, makes any representation, commitment, or guarantee that any tax treatment, including, but not limited to, federal, state and local income, estate and gift tax treatment, will be applicable with respect to the tax treatment of any Award, or that such tax treatment will apply to or be available to a Grantee on account of participation in the Plan.(i) Amendment or Termination. The Board may, at any time and for any reason, with or without prior notice, suspend, discontinue or terminate the Plan; provided, however, that no such action shall adversely affect the rights of Grantees to Awards previously granted hereunder. In addition, the Board may, at any time and for any reason, with or without prior notice, amend the Plan in any manner, but may not without stockholder approval, adopt any amendment which would: (i) increase the number of shares available under the Plan; (ii) expand the types of Awards available under the Plan; (iii) expand the class of persons eligible to participate in the Plan; (iv) extend the term of the Plan; (v) be a material amendment to the Plan, including, but not limited to, a change in the method of determining the exercise price of Options issued under the Plan; (vi) allow for repricing of Options or SARs issued under the Plan; (vii) terminate restrictions applicable to Awards (except in connection with a Grantee’s death, Disability or termination of employment or in connection with a Change in Control); or (viii) require the vote of the stockholders if such approval is necessary or desirable in order to comply with tax, securities, or other applicable laws or regulations, including, but not limited to, the listing requirements of the stock exchanges on which the securities of Corporation are listed.(j) Effective Date and Duration of Plan. The adoption of the Plan was approved by the Board of Directors on March 27, 2014, subject, however, to approval by the stockholders of the Corporation by a majority of the votes cast in person or by proxy at the 2014 annual meeting of the Corporation’s stockholders including any adjournment thereof. The effective date of the Plan shall be the date of such approval by the Corporation’s stockholders. Awards may not be granted under the Plan after June 2, 2024, but Awards theretofore granted may extend beyond that date.14