| President and Chief Executive Officer
| | | | | | | | | | | | | | | IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON THURSDAY, MAY 12, 2022:
The proxy statement for the Annual Meeting and the combined Annual Report to Shareholders and Annual Report on Form 10-K for the year ended December 31, 2021, are available at www.proxyvote.com. |
TABLE OF CONTENTS
[PRELIMINARY COPY - SUBJECT TO COMPLETION]
ACCELERATE DIAGNOSTICS, INC. 3950 South Country Club Road, Suite 470
PROXY STATEMENT Dated April [], 2022
ANNUAL MEETING OF SHAREHOLDERS To be held on Thursday, May 29, 2014
To the Shareholders of Accelerate Diagnostics, Inc.:
Notice
TO BE HELD ON MAY 12, 2022
GENERAL
This proxy statement (“Proxy Statement”) is hereby given that the 2014 Annual Meeting (the “Annual Meeting”) ofbeing furnished to the shareholders (the “Shareholders”) of Accelerate Diagnostics, Inc., a Delaware corporation (the “Company”), will be held at 8:00 a.m., local time, on Thursday, May 29, 2014, at the Herbert K. Abrams Public Health Center, 1st Floor Conference Room, 3950 South Country Club Road, Tucson, Arizona 85714, and any continuations, postponements or adjournments thereof, for the following purposes: | 1. | to elect the following six persons to serve as directors of the Company until the next Annual Meeting of Shareholders and thereafter until their successors shall have been elected and qualified: Lawrence Mehren, Mark C. Miller, John Patience, Jack Schuler, Matthew W. Strobeck, Ph.D. and Frank J.M. ten Brink; |
| 2. | to approve an amendment to the Company’s 2012 Omnibus Equity Incentive Plan increasing the number of shares of the Company’s common stock reserved and available for grant thereunder by 4,000,000 shares; |
| 3. | to ratify the selection of Ernst & Young LLP as the independent public accountants of the Company for the fiscal year ending December 31, 2014; and |
| 4. | to transact such other business as may properly come before the meeting or any continuation, postponement or adjournment thereof. |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. We are not aware of any other business to be considered at the Annual Meeting.
The Company’s Board of Directors has fixed the close of business on April 1, 2014 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and at any continuation, postponement or adjournment thereof. There were 41,904,521 shares of the Company’s common stock issued and outstanding as of the record date, each of which entitles the holder thereof to one vote at the Annual Meeting. Your proxy is being solicited by the Board of Directors.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on THURSDAY, MAY 29, 2014:
The Proxy Statement for the Annual Meeting and the Annual Report to Shareholders for the fiscal year ended December 31, 2013 are available athttps://materials.proxyvote.com/00430H.
By Order of the Board of Directors,
/s/ Lawrence Mehren
Lawrence Mehren
President and Chief Executive Officer
Tucson, Arizona
April 23, 2014
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. YOU ALSO MAY VOTE YOUR SHARES ON THE INTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS ON YOUR PROXY CARD.
EVEN IF YOU HAVE PROVIDED US WITH YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE ANNUAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE ANNUAL MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
TABLE OF CONTENTS
| Page | | | Proxy Statement | 1 | Information about the Annual Meeting | 1 | Directors, Executive Officers and Corporate Governance | 5 | Audit Committee Report | 10 | Executive Compensation | 11 | Security Ownership of Certain Beneficial Owners and Management | 15 | Proposal No. 1 – Election of Directors | 17 | Proposal No. 2 – Amendment of 2012 Omnibus Equity Incentive Plan | 18 | Proposal No. 3 – Ratification of Ernst & Young LLP as Our Independent Public Accountants | 26 | Related Party Transactions | 28 | Annual Report | 28 | Shareholder Proposals | 28 | Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
to be held on May 29, 2014
| 28 | Other Matters | 29 | Attachments:
Appendix A: 2012 Omnibus Equity Incentive Plan, as amended
Second Amendment to 2012 Omnibus Equity Incentive Plan
Proxy Card
| |
ACCELERATE DIAGNOSTICS, INC.
3950 South Country Club, Suite 470
Tucson, Arizona 85714
(520) 365-3100
PROXY STATEMENT
Dated April 23, 2014
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 29, 2014
GENERAL
This Proxy Statement is being furnished to the shareholders of Accelerate Diagnostics, Inc., a Delaware corporation (the “Company”), as of April 1, 2014 (the “Shareholders”), in connection with the solicitation of proxies by the Board of Directors of the Company (the “Board”) from the Shareholders for use at the 2022 Annual Meeting of Shareholders for the fiscal year ended December 31, 2013, to be held at 8:0010:30 a.m., local time,Mountain Standard Time, on Thursday, May 29, 2014, at the Herbert K. Abrams Public Health Center, 1st Floor Conference Room, 3950 South Country Club Road, Tucson, Arizona 85714,12, 2022, and any continuations, postponements or adjournments thereof (the “Annual Meeting”). Because of the unprecedented COVID-19 pandemic, the Annual Meeting will be held virtually. To participate in the virtual meeting, click on wwW.virtualshareholdermeeting.com/AXDX2022. This Proxy Statement and the accompanying Notice and proxy card are first being mailed to Shareholders on or about April 23, 2014.
[ ], 2022.
INFORMATION ABOUT THE ANNUAL MEETING
When and where is the Annual Meeting?
The Annual Meeting will be held at 8:0010:30 a.m., local time,Mountain Standard Time, on Thursday, May 29, 2014,12, 2022. Because of the ongoing COVID-19 pandemic, the Annual Meeting will be held virtually. To participate in the virtual meeting, click on www.virtualshareholdermeeting.com/AXDX2022.
Why did I receive these materials?
Our Board has provided these proxy materials to you, in connection with our Board’s solicitation of proxies for use at the Herbert K. Abrams Public Health Center, 1st Floor Conference Room, 3950 South Country Club Road, Tucson, Arizona 85714.Annual Meeting. As a Shareholder, you are invited to attend the Annual Meeting virtually and vote per the virtual meeting instructions or you may vote by proxy on the proposals described in this Proxy Statement.
What is included in the proxy materials?
The proxy materials include: •this Proxy Statement; •the proxy card or voting instruction form; and •our Annual Report on Form 10-K for the year ended December 31, 2021 (the "Annual Report").
What is being considered at the Annual Meeting?
At the Annual Meeting, our Shareholders will be acting on the following proposals: | 1. | to elect the following six persons to serve as directors of the Company until the next Annual Meeting of Shareholders and thereafter until their successors shall have been elected and qualified: Lawrence Mehren, Mark C. Miller, John Patience, Jack Schuler, Matthew W. Strobeck, Ph.D. and Frank J.M. ten Brink; |
| 2. | to approve an amendment to the Company’s 2012 Omnibus Equity Incentive Plan increasing the number of shares of the Company’s common stock reserved and available for grant thereunder by 4,000,000 shares; |
| 3. | to ratify the selection of Ernst & Young LLP as the independent public accountants of the Company for the fiscal year ending December 31, 2014; and |
| 4. | to transact such other business as may properly come before the meeting or any continuation, postponement or adjournment thereof. |
1.to elect the following 11 persons to serve as directors of the Company until the 2022 Annual Meeting of Shareholders and thereafter until their successors have been elected and qualified: John Patience, Jack Phillips, Mark C. Miller, Jack Schuler, Matthew W. Strobeck, Ph.D., Frank J.M. ten Brink, Charles Watts, M.D., Thomas D. Brown, Louise L. Francesconi, Hany Massarany, and Wayne Burris;
2.to approve an amendment to the Company’s Certificate of Incorporation to increase the total number of authorized shares of the Company's common stock, par value $0.001 per share (“Common Stock”) by 100,000,000 shares, to a total of 200,000,000 shares;
3.to approve the Accelerate Diagnostics, Inc. 2022 Omnibus Equity Incentive Plan (the “2022 Incentive Plan”);
4.to approve, on an advisory basis, the compensation of the Company’s named executive officers (“say-on-pay”);
5.to ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2022; and
6.to transact such other business as may properly come before the meeting or any continuation, postponement or adjournment thereof.
In addition, our management will report on our progress and respond to your questions.
Who is entitled to vote at the Annual Meeting?
You may vote at the Annual Meeting if you owned shares of the Company’s common stock (“Common Stock”)Stock as of the close of business on the record date, for the Annual Meeting, which was April 1, 2014.March 16, 2022 (the "Record Date"). You are entitled to one vote for each share of Common Stock that you held as of the record date. How many shares are eligible to be voted at the Annual Meeting?
There were 41,904,52169,661,265 shares of Common Stock issued and outstanding as of the record date (close of business on April 1, 2014),Record Date, each of which entitles the holder thereof to one vote at the Annual Meeting.
You can vote in the following ways: | · | by attending the Annual Meeting and voting in person; |
| · | over the Internet or by telephone using the instructions on the enclosed proxy card; |
| · | by completing, signing, dating and returning the enclosed proxy card (applicable only to shareholders of record); or |
| · | by following the instructions on the voting instruction form (applicable only to beneficial holders of shares of Common Stock held in “street name”). |
•by attending the virtual Annual Meeting and voting per the virtual meeting instructions; •over the Internet or by telephone using the instructions on the enclosed proxy card; •by completing, signing, dating and returning the enclosed proxy card (applicable only to Shareholders of record); or •by following the instructions on the voting instruction form (applicable only to beneficial holders of shares of Common Stock held in “street name”).
What if I return my proxy card but do not include voting instructions?
Proxies that are signed and returned but do not include voting instructions will be voted in accordance with the Board’s recommendations, which are as follows: | · | •FOR the election of the 11 director nominees (Proposal 1); •FOR the approval of the proposed amendment to the Company’s Certificate of Incorporation to increase the total number of authorized shares of Common Stock (Proposal 2); •FOR the approval of the 2022 Incentive Plan (Proposal 3); •FOR the say-on-pay resolution approving, on an advisory basis, the compensation of our named executive officers (Proposal 4); and •FOR the six director nominees; |
| · | FOR approval of the proposed amendment to the Company’s 2012 Omnibus Equity Incentive Plan; and |
| · | FOR ratification of the selection of Ernst & Young LLP as the Company’s independent public accountants for the fiscal year ending December 31, 2014. |
Will my shares be voted if I do not provide my proxy?
If you hold your shares directly in your own name, they will not be voted if you do not provide a proxy or attend the Annual Meeting and vote in person.
Your shares may be voted under certain circumstances if they are held in “street name.” Brokerage firms generally have the authority to vote customers’ un-voted shares on certain “routine” matters. With the sole exception of the ratification of Ernst & Young LLP as the Company’s independent registered public accountantsaccounting firm for the fiscal year ending December 31, 2014, no matters submitted for shareholder approval herein are “routine” matters. When a brokerage firm votes its customers’ un-voted shares, these shares are counted for purposes of establishing a quorum. At our Annual Meeting these shares will be counted as voted by the brokerage firm with respect to ratifying the selection of Ernst & Young LLP as Company’s independent public accountants for the fiscal year ending December 31, 2014.
2022 (Proposal 5).
How do I vote if I hold shares registered in the name of a broker or bank?“street name”?
If, on the record date (April 1, 2014),Record Date, your shares were not held in your name, but rather were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and a Notice of Proxy Materials wasthe proxy materials were forwarded to you by that organization. The organization holding your account is considered to be the shareholderShareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares held in your account. You will receive a voting instruction form from your broker or other agent asking you how your shares should be voted. Please complete the form and return it as provided in the instructions.
You are also invited to attend the virtual Annual Meeting. However, since you are not the shareholderShareholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent and bring such proxy to the Annual Meeting.agent. If you want to attend and vote at the virtual Annual Meeting, you must provide proof of beneficial ownership as of the record date,Record Date, such as your most recent account statement showing ownership as of April 1, 2014, a copy of the voting instruction card with your control number provided by your broker or other agent, or other similar evidence of ownership. Whether or not you plan to attend the virtual Annual Meeting, we urge you to provide voting instructions to your broker or other agent in advance of the Annual Meeting to ensure your vote is counted. Your broker or other agent will furnish you with additional information regarding the submission of such voting instructions.
Will my shares be voted if I do not provide my proxy?
If you hold your shares directly in your own name, they will not be voted if you do not provide a proxy or attend the Annual Meeting and vote in accordance with the virtual meeting instructions.
If, however, you hold your shares in street name, your shares may be voted under certain circumstances. Brokers and other agents generally have the authority to vote customers’ un-voted shares on certain “routine” matters. The ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022 (Proposal 5) is the only proposal at the Annual Meeting that we believe is routine. Accordingly, brokers and other agents that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion. A “broker non-vote” occurs when the broker or other agent is unable to vote on a proposal because the proposal is non-routine and the beneficial owner does not provide instructions.
Can I change my mind after I return my proxy?
Yes. You may change your vote or revoke your proxy at any time before your proxy is voted at the Annual Meeting. If you are a shareholderShareholder of record, you can do this by giving written notice to the corporate secretary, by submitting another proxy with a later date, or by attending the Annual Meeting and voting in person.accordance with the virtual meeting instructions. If you hold your shares in “streetstreet name, ” you should consult with your bank, broker or other nomineeagent regarding the procedures for changing your voting instructions.
How many votes must be present to hold the Annual Meeting?
Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in personaccordance with the virtual meeting instructions or if you properly return a proxy by mail or the other methods described in these materials. In order for us to conduct business at the Annual Meeting, one-third (33-1/3%)one third (1/3) of our outstandingthe shares of Common Stock entitled to vote as of the record dateRecord Date must be present in person or by proxy at the Annual Meeting. This is referred to as a quorum. In order to ensure that there is a quorum, it may be necessary for certain directors, officers, regular employees and other representatives of the Company to solicit proxies by telephone, facsimile or in person. These persons will receive no extra compensation for their services.
If a quorum is not present, then either the Chairman of the Annual Meeting or the Shareholders may adjourn the meeting until a later time. Abstentions and “broker non-votes”broker non-votes are counted as present or represented for purposes of determining the presence or absence of a quorum. A “broker non-vote” occurs when a broker holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because, in respect of such other proposal, the broker does not have discretionary voting power and has not received voting instructions from the beneficial owner.
What vote is required to approve each item of business to be considered at the Annual Meeting? Election of Directors. Election of a director requires
The following table describes the affirmative vote of the holders of a plurality of the sharesvoting requirement for which votes are cast at a meeting at which a quorum is present. The six persons receiving the greatest number of votes will be elected as directors. Since only affirmative votes count for this purpose, a properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. Shareholders may not cumulate votes in the election of directors.Pursuant to rules approved by the Securities and Exchange Commission (the “SEC”) brokers are not entitled to use their discretion to vote uninstructed proxies in, among other things, uncontested director elections. In other words, if your shares are held by your broker in “street name” and you do not provide your broker with instructions about how your shares should be voted in connection with this proposal, your shares will not be voted and a “broker non-vote” will result. Therefore, if you desire that your shares be voted in connection with the election of the Board, it is imperative that you provide your broker with voting instructions. If your shares are held by your broker in “street name,” you will receive a voting instruction form from your broker or the broker’s agent asking you how your shares should be voted. Please complete the form and return it in the envelope provided by the broker or agent.
Amendment of 2012 Omnibus Equity Incentive Plan. The proposed amendment to the Company’s 2012 Omnibus Equity Incentive Plan increasing the number of shares of our common stock reserved and available for grant thereunder by 4,000,000 shares will be approved if a majority of the votes cast affirmatively or negatively at the Annual Meeting are voted in favor of the proposal, assuming a quorum is present. A properly executed proxy marked “ABSTAIN” with respect to such matter will not be voted or treated as a vote cast, although it will be counted for purposes of determining whether a quorum is present. Accordingly, an abstention will not affect the outcome of this proposal. Brokers are not entitled to use their discretion to vote uninstructed proxies with respect to the proposal, and any such “broker non-votes” will not be deemed a vote cast or affect the outcome of theeach proposal (assuming a quorum is present).
Ratification of Independent Public Accountants. The ratification of the Audit Committee’s selection of Ernst & Young LLP as our independent public accountants for the fiscal year ending December 31, 2014 will be approved if a majority of the votes cast affirmatively or negatively at the Annual Meeting are voted in favor of the proposal, assuming a quorum is present. A properly executed proxy marked “ABSTAIN” with respect to such matter will not be voted or treated as a vote cast, although it will be counted for purposes of determining whether a quorum is present. Accordingly, an abstention will not affect the outcome of this proposal. Brokers are entitled to use their discretion to vote uninstructed proxies with respect to ratification of our independent public accountants.
:
| | | | | | | Proposal 1: Election of Directors | Election of a director requires the affirmative vote of the holders of a plurality of the shares for which votes are cast. The 11 persons receiving the greatest number of votes will be elected as directors. Since only affirmative votes count for this purpose, a properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. Broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the proposal. Shareholders may not cumulate votes in the election of directors. | | Proposal 2: Amendment of Certificate of Incorporation | Pursuant to applicable Delaware law, approval of the amendment of our Certificate of Incorporation requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock. Abstentions and broker non-votes will have the same effect as a vote cast against the proposal. | | Proposal 3: Approval of the 2022 Incentive Plan | The proposal will be approved if a majority of the votes cast are voted in favor of the proposal. Abstentions and broker non-votes will not be treated as votes cast for or against the proposal, and therefore will have no effect on the outcome of the proposal. | | Proposal 4: Say-on-pay resolution approving, on an advisory basis, the compensation of our named executive officers | The proposal will be approved if a majority of the votes cast are voted in favor of the proposal. Abstentions and broker non-votes will not be treated as votes cast for or against the proposal, and therefore will have no effect on the outcome of the proposal. | | Proposal 5: Ratification of Independent Registered Public Accounting Firm | The proposal will be approved if a majority of the votes cast are voted in favor of the proposal. Abstentions and broker non-votes will not be treated as votes cast for or against the proposal, and therefore will have no effect on the outcome of the proposal. |
How will voting on any other business be conducted?
Although we do not know of any business to be conducted at the Annual Meeting other than the proposals described in this Proxy Statement, if any other business comes before the Annual Meeting, your signed proxy card gives authority to the proxy holder(s) to vote on those matters at their discretion.
Can I dissent or exercise rights of appraisal?
Under Delaware law, Shareholdersshareholders are not entitled to dissenters’ rights in connection with any of the proposals to be presented at the Annual Meeting or to demand appraisal of their shares as a result of the approval of any of the proposals.
Who will bear the costs of this solicitation?
We will bear the entire cost of solicitation of proxies, including the preparation, assembly, printing and mailing of this Proxy Statement, the proxy card and any additional information furnished to Shareholders.materials. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of Common Stock beneficially owned by others to forward to the beneficial owners. We may reimburse persons representing beneficial owners of Common Stock for their costs of forwarding solicitation materials to the beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, facsimile or personal solicitation by our directors, officers or other regular employees. These persons will receive no extra compensation for their services.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors, Director Nominees and Executive Officers
The following table sets forth certain information with respect to the current directors, director nominees and executive officers of our Company:
Name | Age | Position | | | | | | | Lawrence MehrenName | 47Age as of Annual Meeting | President, Chief Executive Officer and Position | | Thomas D. Brown | 74 | Director | | Wayne C. Burris | 67 | Director | | Louise L. Francesconi | 69 | Director | | Hany Massarany | 60 | Director | | Mark C. Miller | 5866 | Director | | John Patience | 6574 | Chairman of the Board of Directors | | Jack Phillips | 56 | President, Chief Executive Officer and Director | | Jack Schuler | 7381 | Director | | Matthew W. Strobeck, Ph.D. | 4149 | Director | | Frank J.M. ten Brink | 5765 | Director | Pete BantockCharles Watts, M.D. | 4879 | Chief Commercial OfficerDirector | | Steve Reichling | 3543 | Chief Financial Officer | | Ron Price | 58 | Chief Commercial Officer, Americas |
Lawrence Mehren
Thomas D. Brown has served as the Chief Executive Officer and a Director of the Company since June 26, 2012.March 14, 2017. Mr. MehrenBrown has more than 30 years’ experience in the clinical diagnostics industry. Beginning his career with the Abbott Laboratories Diagnostics Division (ADD) in 1974, Mr. Brown held numerous sales, marketing and general management positions of increasing responsibility. He served in various positions there including Divisional Vice President of Sales within the United States and Divisional Vice President and General Manager of the Western Hemisphere, and by 1993 he was Corporate Vice President of Worldwide Diagnostic Commercial Operations. He was named Senior Vice President before becoming President of the Diagnostic Division, the role he served until his retirement in 2002. Mr. Brown has previously served on the boards of Cepheid, Inc., Ventana Medical Systems, Inc., Quidel Corporation (NASDAQ: QDEL), and Stericycle, Inc. (NASDAQ: SRCL). He received a Bachelor of Arts degree from the State University of New York at Buffalo.
We believe that Mr. Brown is qualified to serve on our board of directors because of his experience in leadership and management roles, and experience as a board member, in the healthcare industry.
Wayne C. Burris has served as a Director of the Company since February 2, 2022. Mr. Burris served as the Senior Vice President and Chief Financial Officer (CFO) at Roche Diagnostics Corporation from 1996 through his retirement in July 2019. He was a member of Ventana Medical Systems from 2007 until 2008 and as Head ofthe Global Business from 2008 until 2011. Previously,Roche Diagnostics Finance Executive Committee where he was Managing Director, Partnerrecognized as one of their top senior leaders. Before joining Roche Diagnostics, Mr. Burris was a senior manager for Price Waterhouse LLP. Mr. Burris currently serves as a director of Orthofix Medical Inc. (NASDAQ: OFIX). Mr. Burris is a Certified Public Accountant and headhas a Bachelor of P&M Corporate Finance’s (an investment banking firm basedScience in Detroit, Michigan) life sciences practice. PriorAccounting and Finance from Butler University.
We believe that Mr. Burris is qualified to serve on our board of directors because of his tenure at P&M, Mr. Mehren workedexperience in leadership and management positions with Gale Group, a division of The Thomson Corporation,roles in the healthcare industry as well as Merrill Lynch. Mr. Mehren holdshis experience holding finance-related roles of increasing responsibility.
Louise L. Francesconi has served as a B.A.Director of the Company since December 2, 2019. Before retiring, Ms. Francesconi served as President of Raytheon Missile Systems, a defense electronics corporation, from 1997 to 2008. During her tenure at Raytheon, Ms. Francesconi was named three times by Fortune Magazine to its 50 Most Powerful Women in Political ScienceBusiness list. Ms. Francesconi currently serves as a director of US Energy Corporation (NASDAQ: USEG) and as Chairman of the Board of Trustees for Tucson Medical Center, a regional hospital. Ms.
Francesconi has previously served as a director of Stryker Corporation, a medical technology company. Ms. Francesconi received a B.S. degree in Economics from Scripps College and an M.B.A. from the University of ArizonaCalifornia, Los Angeles.
We believe that Ms. Francesconi is qualified to serve on our board of directors because of her experience in leadership and management roles, and experience as a board member in a variety of industries, including as a director in the healthcare industry.
Hany Massarany has served as a Director of the Company since May 20, 2020. Mr. Massarany was President and Chief Executive Officer of GenMark Diagnostics, Inc. (NASDAQ: GNMK), a provider of multiplex molecular diagnostic solutions, from April 2011 to March 2020. From February 2009 to April 2011, Mr. Massarany served as President at Ventana and Head of Roche Tissue Diagnostics, a division of F. Hoffman-La Roche Ltd. focused on manufacturing instruments and reagents that automate tissue processing and slide staining diagnostics for cancer. From 1999 to 2009, Mr. Massarany held various global leadership positions with Ventana, including Chief Operating Officer, Executive Vice President, Worldwide Operations, Senior Vice President, Corporate Strategy and Development, and Vice President, North American Commercial Operations. Mr. Massarany also held executive management positions with Bayer Diagnostics and Chiron Diagnostics, working in both the Asia Pacific region and the United States. Mr. Massarany served on the board of directors of GenMark Diagnostics, Inc. from May 2011 to February 2020. Mr. Massarany currently serves as a director of Biodesix, Inc. (NASDAQ: BDSX), a medical diagnostics company. Mr. Massarany earned a B.S. in Microbiology and Immunology from Monash University in Australia and an M.B.A. from Northwestern University’s Kellogg Graduate SchoolMelbourne University.
We believe that Mr. Massarany is qualified to serve on our board of Management.directors because of his experience in leadership and management roles, and experience as a board member, in the healthcare industry.
Mark C. Miller has served as a Director of the Company since November 5, 2013. He currently servesBefore retiring, Mr. Miller served as Chief Executive Chairman and directorOfficer of Stericycle (NASDAQ: SRCL), where he was Chief Executive Officer from 1992 to 2012 and Chairman of the Board of Directors from 2008 to 2012. Prior to joining Stericycle, Mr. Miller served as vice presidentVice President for the Pacific, Asia and Africa in the international division of Abbott Laboratories, a diversified health care company, which he joined in 1976 and where he held a number of management and marketing positions. Mr. Miller formerly served as a director of Stericycle and Ventana Medical Systems, Inc., a developer and supplier of automated diagnostic systems. He received a B.S. degree in computer science from Purdue University, where he graduated Phi Beta Kappa.
We believe that Mr. Miller was selected by Morningstar, Inc.is qualified to serve on our board of directors because of his experience in leadership and management roles, and experience as its “2009 CEO ofa board member, in the Year.”healthcare industry.
John Patience has served as a Director of the Company and board chairman since June 26, 2012. Mr. Patience also serves as a director and chairman of the board of Biodesix, Inc. (NASDAQ: BDSX), another medical diagnostics company. Mr. Patience is also a founding partner of Crabtree Partners, a private equity investment firm. Mr. Patience served as a director of Ventana Medical Systems, Inc. from 1989 and as Vice Chairman from 1999 until Ventana’s acquisition by Roche in 2008. Mr. Patience has beenserved as a director of Stericycle, Inc. (NASDAQ: SRCL) since 1989.its founding in 1989 until June of 2018. Mr. Patience was previously a partner of a venture capital investment firm that provided both Ventana and Stericycle with early stage funding. Mr. Patience also was also previously a partner in the consulting firm of McKinsey & Co., Inc., specializing in health care. Mr. Patience holds a B.A. in Liberal Arts and an L.L.B. from the University of Sydney, Australia, and an M.B.A. from the University of Pennsylvania’s Wharton School of Business.
We believe that Mr. Patience is qualified to serve on our board of directors because of his experience in leadership and management roles in the field of medicine, as well as his experience as a board member and investor in companies in the healthcare industry.
Jack SchulerPhillips has served as a Director of the Company and as the Company’s President and Chief Executive Officer since February 1, 2020. From August 2019 to January 2020, Mr. Phillips served as the Company’s Chief Operating Officer. Prior to joining the Company, Mr. Phillips served as President and Chief Executive Officer of Roche Diagnostics Corporation, a division of Roche Holding AG, a biotech company, from January 2010 through August 2019. As President and Chief Executive Officer of Roche Diagnostics Corporation, Mr. Phillips was accountable for commercial operations, performance and strategy of approximately 4,200 employees in the United States and Canada. He also served as a member of Roche’s global Diagnostics
Leadership Team. Prior to his role as President and Chief Executive Officer of Roche Diagnostics Corporation, Mr. Phillips held senior leadership roles at Ventana Medical Systems, a cancer diagnostic company and a member of the Roche Group, including Senior Vice President of Commercial Operations for North America and Japan from July 1999 to December 2009. Before joining Ventana Medical Systems, Mr. Phillips worked at Bayer Diagnostics and Motorola. Mr. Phillips holds a B.S. in marketing from Northern Kentucky University.
We believe that Mr. Phillips is qualified to serve on our board of directors because of his experience in leadership and management roles at our Company, as well as his experience as a senior executive in the healthcare and medical device industries.
Jack Schuler has served as a Director of the company since June 26, 2012. Mr. Schuler is a founding partner of Crabtree Partners, a private equity investment firm. Mr. Schuler served as a directorDirector of Ventana Medical Systems, Inc. from 1991 and as Chairman of the Board from 1995 until Ventana’s acquisition by Roche in 2008. Mr. Schuler has been a director of Stericycle, Inc. (NASDAQ: SRCL) since March 1990, formerly serving as Chairman of the Board, and continues to serve as Lead Director for Stericyle. Prior to joining Stericycle, Inc., Mr. Schuler held various executive positions at Abbott Laboratories from December 1972 through August 1989, most recently serving asincluding President and Chief Operating Officer. Mr. Schuler previously served on the boards of Abbott Laboratories, Medtronic (Lead Director) and Stericycle (Chairman), and Quidel Corp. He is currently a director of Quidel CorporationBiodesix, Inc. (NASDAQ: QDEL) and Medtronic, Inc. (NYSE: MDT)BDSX). Mr. Schuler holds a B.S. in Mechanical Engineering from Tufts University and an M.B.A. from Stanford University.
We believe that Mr. Schuler is qualified to serve on our board of directors because of his experience in leadership and management roles in the healthcare industry, as well as his experience as a board member in the healthcare and medical device industries.
Matthew W. Strobeck, Ph.D . Ph.D. has served as a Director of the Company since July 7, 2012. Dr. Strobeck is currently serves as a directorthe Managing Partner of Metabolix, Inc. (NASDAQ: MBLX), an innovation-driven bioscience company focused on delivering sustainable solutions to the plastics, chemicals and energy industries. HeBirchview Capital. Dr. Strobeck was a Partner and Member of the Management Committee and Advisory Board of Westfield Capital Management from 2008 until 2011, having served as a member of the investment team, specializing in healthcare and life sciences, from May 2003 to June 2008. Dr. Strobeck wascurrently serves on the boards of Quidel Corporation (NASDAQ: QDEL), a fellow in the Departmentprovider of Biology at MIT from December 2001 to June 2002.rapid diagnostic testing solutions, Biodesix (NASDAQ: BDSX), a medical diagnostic company, and Monteris Medical, a medical device company. Dr. Strobeck received his B.S. from St. Lawrence University, a Ph.D. from the University of Cincinnati, a S.M. from the Harvard University/MIT Health Sciences Technology Program, and a S.M. from the MIT Sloan School of Management.
We believe that Mr. Strobeck is qualified to serve on our board of directors because of his experience in leadership and management roles at medical technology companies, as well as his experience as a board member and investor in the medical technology industry.
Frank J.M. ten Brinkhas served as a Director of the Company since March 6, 2013. Mr. ten Brink hasserved as an executive consultant to Stericycle, Inc. (NASDAQ: SRCL) until February 2021. Until October 2017 he was Senior Vice President of Mergers and Acquisitions at Stericycle where he also served as Executive Vice President, Chief Financial Officer and Chief Administrative Officer of Stericycle, Inc. (NASDAQ: SRCL) sincefrom June 1997.1997 to August 2014. He has over 16 years of finance experience in high growth environments, mergers and acquisitions. Prior to joining Stericycle, he was Senior Vice President and Chief Financial Officer with Telular Corporation. Between 1991 and 1995, he was Vice President and Chief Financial Officer of Hexacomb Corporation. Mr. ten Brink studied International Business at the Netherlands School of Business and received an M.B.A. degree in Finance from the University of Oregon.Pete Bantock
We believe that Mr. ten Brink is qualified to serve on our board of directors because of his experience in leadership and management roles in a variety of industries, as well as his experience holding finance-related roles of increasing responsibility.
Charles Watts, M.D. has served as the Company’s Chief Commercial Officer since July 1, 2013. Prior to joininga Director of the Company Mr. Bantock was Senior Vice Presidentsince November 14, 2017. Until his retirement, Dr. Watts served as Chief Medical Officer at Northwestern Memorial Hospital (NMH) and General ManagerAssociate Dean for Clinical Affairs at the Feinberg School of Ventana Medical Systems’ North American Commercial Operations. Previously, he was the General Manager of Spring Bioscience, a division of Ventana.Medicine, Northwestern University from 2001 to 2011. Prior to his roletenure at Northwestern, Dr. Watts served as Chief of Clinical Affairs and Associate Dean at the University of Michigan Medical Center. He has also served as Executive in Residence for Spring Bioscience, Mr. Bantock held various sales and marketing positions at Ventana Medical Systems, includingthe Health Management Academy, as an active faculty member of a nationally based Physician Leadership Program. Dr. Watts has served as a Director of MarketingProvidence Health and Head of Corporate Accounts. Mr. Bantock began his healthcare career at Abbott Labs,Services (Seattle, Washington) from 2012 to 2016 where he was managerchaired the Quality and Patient Safety Improvement Committee, and recently served as a Trustee of South African commercial operationsSwedish Health Services, Inc. until
June 2021. He currently serves as a Trustee on the Institute for Systems Biology Board (Seattle, Washington). He received his undergraduate and medical degrees from the Diagnostics Division, among other roles.University of Michigan.
We believe that Mr. Bantock receivedWatts is qualified to serve on our board of directors because of his experience in leadership and management roles in the field of medicine, as well as his experience as a B.A. degree and a Higher Diploma of Education from Rhodes Universityboard member in Grahamstown, South Africa.the healthcare industry.
Steve Reichling has served as the Company’s Chief Financial Officer since September 10, 2012. Prior to joining the Company, Mr. Reichling served as general manager of Spring Bioscience Corp., a R&D and research products subsidiary of Roche Tissue Diagnostics. From January 2003 to December 2009, Mr. Reichling held various finance, accounting and operations leadership roles at Roche Tissue Diagnostics and Ventana Medical Systems, Inc., including director of finance and operations, manager of business development finance, and head of Internal Audit and Sarbanes Oxley Compliance. From October 2002 to January 2003, Mr. Reichling was an auditor at Ernst & Young LLP. Mr. Reichling received his B.A.B.S. in accounting and entrepreneurship from the University of ArizonaArizona.
Ron Price has served as the Company's Chief Commercial Officer, Americas, since March 2020, and iswas previously Head of Commercial Operations, Americas since April 2015. Mr. Price has over 20 years of commercial operations experience and a Certified Public Accountant.proven track record of leading sales and marketing teams to achieve double-digit revenue growth and strong bottom-line performance. Prior to joining the Company, Mr. Price served as Vice President, Commercial Operations for Roche Point of Care managing all commercial responsibilities across three separate product lifecycles. In addition, Mr. Price held a number of sales, marketing, and leadership roles with Ventana Medical Systems from 2001 to 2012 following 5 years at Bayer Healthcare Diagnostics. Mr. Price holds a B.S. in Clinical Laboratory Sciences, Cytology from the University of Oklahoma.
There are no agreements or understandings for any of our executive officers or directordirectors to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.
Directors are elected to serve until their successors are duly elected and qualified.
Pursuant to Mr. Phillips’ employment agreement entered into with the Company on January 31, 2020, so long as Mr. Phillips is employed as the Company’s Chief Executive Officer, the Company will use its reasonable efforts, subject to applicable law and the rules of NASDAQ and the Company’s Amended and Restated Bylaws, to cause Mr. Phillips to be nominated for election to the Board at the Company’s annual shareholder meeting.
Board Diversity
The table below provides information relating to certain voluntary self-identified characteristics of our directors. Each of the categories listed in the table below has the meaning as set forth in NASDAQ Rule 5605(f).
| | | | | | | | | | | | | | | | Board Diversity Matrix (As of March 16, 2022) | | Total Number of Directors | 11 | | Female | Male | Non-Binary | Did Not Disclose Gender | | Part I: Gender Identity | | Directors | 1 | 10 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 0 | 1 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 0 | 0 | 0 | 0 | | Hispanic or Latinx | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 1 | 9 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ | 0 | | Did Not Disclose Demographic Background | 0 |
The Board has affirmatively determined that Messrs.directors Brown, Burris, Francesconi, Massarany, Miller, Patience, Schuler, Strobeck, and ten Brink, and Watts (constituting a majority of the full Board) are “independent directors” under NASDAQ Listing Rule 5605(a)(2) and the related rules of the SEC.U.S. Securities and Exchange Commission (the “SEC”). In making this determination, our Board considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. The Company’s independent directors conduct executive sessions at regularly scheduled meetings as required by NASDAQ Listing Rule 5605(b)(2).
There are no family relationships among any of our directors and executive officers.
Board Leadership Structure
The Board does not have an express policy regarding the separation of the roles of Chief Executive Officer (“CEO”) and Board Chairman, as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. Currently, Lawrence MehrenJack Phillips serves as the Company’s Chief Executive OfficerPresident and CEO and John Patience serves as the Chairman of the Board. The Board believes that its current leadership structure best serves the objectives of the Board’s oversight of management; the ability of the Board to carry out its roles and responsibilities on behalf of the shareholders; and the Company’s overall corporate governance. The Board also believes that the current separation of the Chairman and CEO roles allows the CEO to focus his time and energy on operating and managing the Company and leverageleverages the experience and perspectives of the Chairman. Board Oversight of Risk Management
The full Board has responsibility for general oversight of risks facing the Company. The Board is informed by senior management on areas of risk facing the Company and periodically conducts discussions regarding risk assessment and risk management. The Board believes that evaluating how the executive team manages the
various risks confronting the Company is one of its most important areas of oversight. TheWhile the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. For example, the Audit Committee reviews and assesses the Company’s processes to manage financial reporting risk and to manage investment, tax, and other financial risks.risks; the Compensation Committee oversees risks relating to the compensation and incentives provided to our executive officers; and the Nominating and Governance Committee oversees risks associated with our overall compliance and corporate governance practices, as well as the independence and composition of our Board. Finally, management periodically reports to the Board or relevant committee, which provides guidance on risk assessment and mitigation.
Delinquent Section 16(A) Beneficial Ownership Reporting Compliance16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Directors, executive officers and greater than 10% shareholders also are required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished tofiled electronically with the CompanySEC or written representations that no Form 5s were required, the Company believes that all Section 16(a) filing requirements were timely met during the fiscal year ended December 31, 2013.2021, except for two Form 4s filed by Jack Phillips reporting three transactions; one Form 4 filed by Ron Price reporting two transactions; one Form 4 filed by Steven Reichling reporting two transactions; two Form 4s filed by Matthew Strobeck reporting two transactions; two Form 4s filed by Jack Schuler reporting four transactions; one Form 4 filed by Thomas Brown reporting one transaction; one Form 4 filed by Mark Miller reporting one transaction; and one Form 4 filed by John Patience reporting one transaction.
The Company has adopted a code of ethics for its principal executive officer and senior financial officers and a code of ethics and standards of conduct that is applicable to all directors, officers and employees.employees, a copy of which is available online at https://ir.axdx.com/governance-documents. Shareholders may also request a free copy of these documents from: ACCELERATE DIAGNOSTICS, INC., 3950 South Country Club Road, Suite 470, Tucson, Arizona 85714, Attn: Corporate Secretary.
Director Meeting Attendance
During the year ended December 31, 2021, the Board held six meetings of the full Board, The Board also took action by written consent on six occasions. During the year ended December 31, 2021, each member of the Board attended at least 75% of the aggregate of all meetings of the Board and the meetings of the committees on which he or she served (during the periods for which he or she served).
The Company does not have a written policy requiring directors to attend the annual meeting, but attendance is encouraged. Last year three of the directors attended our 2021 Annual Meeting of Shareholders.
Board Committees
Our board of directors has established an audit committee, a compensation committee and Meeting Attendancea nominating and governance committee. Our board of directors may establish other committees to facilitate the management of our business. The composition and functions of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. The charter of each committee is available on our corporate website at https://ir.axdx.com/corporate-governance.
Committee Composition
The following table provides current membership for each committee of our board of directors:
| | | | | | | | | | | | | Name: | Audit Committee | Compensation Committee | Nominating and Governance Committee | | John Patience | | X | | | Wayne C. Burris | X | | | | Thomas D. Brown | | Chair | | | Louise L. Francesconi | | X | | | Hany Massarany | | X | | | Mark C. Miller | X | | Chair | | Jack Schuler | | | X | | Matthew W. Strobeck Ph.D. | X | | | | Frank J.M. ten Brink | Chair | | | | Charles Watts M.D. | | X | X |
Audit Committee
The Board maintains a standing Audit Committee comprised of Mr.Messrs. ten Brink (Chairman), Mr. SchulerBurris, Miller and Dr. Strobeck. Each member of the Audit Committee satisfies the applicable independence standards specified in Rule 5605(a)(2) of the NASDAQ Listing Rules and the related rules of the SEC pertaining to audit committees and has been determined by the Board to be “financially literate” with accounting or related financial management experience. The Board has also determined that Mr.Messrs. ten Brink is anand Burris are “audit committee financial expert”experts” as defined under SEC rules and regulations and qualifiesqualify as a financially sophisticated audit committee membermembers as required under Rule 5605(c)(2)(A) of the NASDAQ Listing Rules. The Audit Committee has a written charter, which was adopted on November 3, 2005 (when the Company’s name was “Accelr8 Technology Corporation” and the Company’s common stock was listed for trading on the AMEX Stock Market), a copy of which was attached as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on November 5, 2013. The Audit Committee met foursix times during the fiscal year ended December 31, 2013.2021.
The Audit Committee is responsible primarily forCommittee's responsibilities include overseeing the qualifications, independence and performance of our independent registered public accountants; the services performed by our independent public accountants;accounting firm; evaluating the Company’s accounting policies and system of internal controls; and reviewing significant financial transactions. In carrying out this purpose, the Audit Committee maintains and facilitates free and open communication between the Board, the independent registered public accountants,accounting firm, and our management. Currently, the
Compensation Committee
The Board does not maintainmaintains a standing Compensation Committee butcomprised of Messrs. Brown (Chairman), Massarany, and Patience, Ms. Francesconi and Dr. Watts. Each member of the Board intends to form a Compensation Committee comprised of independent directors and comply withsatisfies the other applicable rules set forthindependence standards specified in the NASDAQ Listing Rule 5605(d) withinRules and the compliance time frames set forth therein. Until such time as arelated rules of the SEC pertaining to compensation committees. All members of the Compensation Committee is constituted,also qualify as non-employee directors under Exchange Act Rule 16b-3 and as outside directors under Section 162(m) of the independent directors are carrying out the functions typically performed by aInternal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee includingmet five times and took action by written consent on four occasions during the year ended December 31, 2021.
The Compensation Committee’s responsibilities include reviewing the compensation arrangements for the Company’s executive officers, including the CEO; administering the Company’s equity compensation plans; and reviewing the compensation of the Board.During In its discretion, the fiscalCompensation Committee may delegate certain of its authority and responsibilities to one or more subcommittees comprised entirely of members of the Compensation Committee
.
Nominating and Governance Committee
The Board maintains a standing Nominating and Governance Committee comprised of Messrs. Miller (Chairman), Schuler and Dr. Watts. Each member of the Nominating and Governance Committee satisfies the applicable independence standards specified in the NASDAQ Listing Rules. The Nominating and Governance Committee met three times during the year ended December 31, 2013,2021.
The Nominating and Governance Committee’s responsibilities include determining the Board held four meetingsqualifications, qualities, skills, and took action by written consent on three occasions. Each member ofother expertise required to be a director; recommending to the Board attended or participatedcriteria to be considered in 75% or more of the aggregate of (i) the total number of meetings of the Board (held during the period for which such person has been a director)selecting director nominees; identifying and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served).The Company does not have a written policy requiring directorsscreening individuals qualified to attend the Annual Meeting, but attendance is encouraged. In 2013, one of the directors attended our Annual Meeting of Shareholders. We presently anticipate that one director will attend the Annual Meeting this year.
Director Nominations
The independentbecome members of the Board; making recommendations to the Board have nominated Messrs. Mehren, Miller, Patience, Schuler, Strobeckregarding the selection and ten Brink, eachapproval of whomdirector nominees; overseeing the Company’s corporate governance policies, practices and procedures; assisting the Board in assessing director independence; and reviewing the structure and composition of Board committees and recommending to the Board, if desirable, changes in their number, responsibilities and membership
.
Director Nominations
The Nominating and Governance Committee is a current member ofresponsible for identifying and screening potential candidates and recommending qualified candidates to the Board for re-election at the Annual Meeting.nomination. The BoardNominating and Governance Committee seeks to ensure that itthe Board is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight obligations effectively. The Board does not currently have a separate Nominating and Governance Committee becausetypically solicits recommendations for nominees from the Board does not yet believe such apersons the committee is necessary. However, asbelieves are likely to be familiar with (i) the needs of the Company continues to grow, the Boardand (ii) qualified candidates. These persons may consider establishing a separate Nominating Committee. Currently, the independentinclude members of the Board are responsible forand management of the Company. The Nominating and Governance Committee may also engage a professional search firm to assist in identifying and appointing appropriate persons to add to the Board when necessary.qualified candidates. In selecting Board candidates, itthe Nominating and Governance Committee’s goal is the independent directors’ goal to identify persons who it believes have appropriate expertise and experience to contribute to the oversight of a company of the Company’s nature while also reviewing other appropriate factors. factors, including those discussed below under “Qualifications of Director Nominees.”
The Nominating and Governance Committee will consider director candidates recommended by shareholders in the same manner in which it evaluates candidates it identified, if such recommendations are properly submitted to the Company pursuant to the Company's Amended and Restated Bylaws. The Company’s Amended and Restated Bylaws contains provisions relating to certain timing and information requirements for shareholder nominations for election to the Board brought before a meeting of the shareholders. See Section 2.12 of the Company’s Amended and Restated Bylaws and the section entitled “Shareholder Proposals and Director Nominations for the 2023 Annual Meeting” in this Proxy Statement for additional information.
Qualifications of Director Nominees
The Board believesand the Nominating and Governance Committee believe that each of the persons nominated for election at the Annual Meeting have the experience, qualifications, attributes and skills that, when taken as a whole, will enable the Board to satisfy its oversight responsibilities effectively. With regardThe Board and the Nominating and Governance Committee consider the following for each candidate, among other qualifications deemed appropriate, when evaluating the suitability of candidates for nomination as director: independence; integrity; personal and professional ethics; business judgment; ability and willingness to commit sufficient time to the nominees (each of whom is currently a member of our Board), the following factors were among those considered in determining that each nominee would make valuable contributionsBoard; qualifications, attributes, skills and/or experience relevant to the Board: | · | Lawrence Mehren: In addition to his experience as the Company’s President and Chief Executive Officer and a member of our Board of Directors,Mr. Mehren has significant prior experience in the medical diagnostics industry. Mr. Mehren served as Senior Vice President and Chief Financial Officer of Ventana Medical Systems and was Managing Director, Partner and head of P&M Corporate Finance’s (an investment banking firm based in Detroit, Michigan) life sciences practice. |
| · | Mark C. Miller: Mr. Miller has significant experience serving as a director and executive officer for other public companies, including Stericycle, Inc. (NASDAQ: SRCL), where he has served as Executive Chairman since January 2013 and as a director since May 1992. |
| · | John Patience: In addition to his experience as Chairman of our Board of Directors, Mr. Patience also has a significant amount of experience in serving as a director for other public companies in the medical diagnostics industry.Mr. Patience served as a director of Ventana Medical Systems, Inc. from 1989 and as Vice Chairman from 1999 until Ventana’s acquisition by Roche in 2008. Mr. Patience has been a director of Stericycle, Inc. (NASDAQ: SRCL) since 1989. |
| · | Jack Schuler: In addition to his experience as a member of our Board of Directors and a member of our Audit Committee, Mr. Schuler has a significant amount of experience in serving as a director for other public companies in the medical diagnostics industry. Mr. Schulerserved as a director of Ventana Medical Systems, Inc. from 1991 and as Chairman of the Board from 1995 until Ventana’s acquisition by Roche in 2008. Mr. Schuler has been a director of Stericycle, Inc. (NASDAQ: SRCL) since March 1990, formerly serving as Chairman of the Board, and continues to serve as Lead Director for Stericyle. |
| · | Frank J.M. ten Brink: In addition to his experience as a member of our Board of Directors and Chairman of our Audit Committee, Mr. ten Brink has significant experience as a financial executive of a public companies including most recently his role as Chief Financial Officer of Stericycle, Inc. (NASDAQ: SRCL) since 1997. |
| · | Matthew W. Strobeck, Ph.D.: In addition to his experience as a member of our Board of Directors and a member of our Audit Committee, Dr. Strobeck also has experience in serving as a director for other public companies in the medical diagnostics industry.Dr. Strobeck currently serves as a director of Metabolix, Inc. (NASDAQ: MBLX), an innovation-driven bioscience company focused on delivering sustainable solutions to the plastics, chemicals and energy industries. |
BoardCompany’s business; educational and professional background; personal accomplishment; and national, gender, age, and ethnic diversity
.
Shareholder Communications with the Board
Shareholders To date, who wish to communicate with the Board of Directors has not adoptedor with a formal procedureparticular director may do so by which shareholders may recommend nomineessending a letter to the Board. However, any shareholder who desiresCorporate Secretary, 3950 South Country Club Road, Suite 470, Tucson, Arizona 85714. The Corporate Secretary will review all correspondence and regularly forward to submit a nominationthe Board copies of a person to stand for election of directors atall such correspondence that, in the next annual or special meetingopinion of the shareholders at which directors are to be elected must submit a notificationCorporate Secretary, deals with the functions of the shareholder’s intention to make a nomination (“Notification”)Board or committees thereof or that the Corporate Secretary otherwise determines requires attention.
Hedging, Short Sales and Related Policies
Pursuant to the Company’s insider trading policy, all directors, officers and employees of the Company (collectively, “Team Members”), as well as their spouses, minor children, other persons living in their household and entities over which they exercise control, are prohibited from engaging in the following transactions in the Company’s securities unless advance unanimous approval is obtained from members of the compliance committee designated by the date mentioned in the most recent proxy statement under the heading “Shareholder Proposals” and in that notification must provide the following additional informationBoard:
•Hedging. Team Members may not enter into hedging or monetization transactions or similar arrangements with respect to the Company: | (i) | name, address, telephone number and other methods by which the Company can contact the shareholder submitting the Notification and the total number of shares beneficially owned by the shareholder (as the term “beneficial ownership” is defined in SEC Rule 13d-3); |
| (ii) | if the shareholder owns shares of the Company’s voting stock other than on the records of the Company, the shareholder must provide evidence that he or she owns such shares (which evidence may include a current statement from a brokerage house or other appropriate documentation); |
| (iii) | information from the shareholder regarding any intentions that he or she may have to attempt to make a change of control or to influence the direction of the Company, and other information regarding the shareholder any other persons associated with the shareholder that would be required under Items 4 and 5 of SEC Schedule 14A were the shareholder or other persons associated with the shareholder making a solicitation subject to SEC Rule 14a-12(c); |
| (iv) | name, address, telephone number and other contact information of the proposed nominee; and |
| (v) | all information required by Item 7 of SEC Schedule 14A with respect to the proposed nominee, shall be in a form reasonably acceptable to the Company. |
•Short sales. Team Members may not sell the Company’s securities short;
•Options trading. Team Members may not buy or sell puts or calls or other derivative securities on the Company’s securities; and
•Trading on margin. Team Members may not hold the Company’s securities in a margin account or pledge the Company’s securities as collateral for a loan.
The Audit Committee (Committee) ofoversees the board of directors of is comprised entirely of independent directors who meet the independence requirements of the Listing Rules of the NASDAQ Stock Market and the SEC. The Committee operates pursuant to a charter that is available on the Investor Relations section of our website athttp://ir.axdx.com.The Committee oversees financial reporting process and internal control structure of the Companyour company on behalf of our Board. Management has the board of directors. Management is responsibleprimary responsibility for the preparation, presentation, and integrity of the financial statements and the effectivenessreporting process, including the systems of The Company's internal control over financial reporting. The Company's independent auditors are responsible for expressing an opinion as to the conformity of the Company's consolidated financial statements with generally accepted accounting principles and as to the effectiveness of the Company's internal control over financial reporting.
controls. In performingfulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed with management and the independent auditors the audited consolidated financial statements in the Company'sour Annual Report on Form 10-K for the year ended December 31, 2013. 2021 with management, including a discussion of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee has also discussed with Ernst & Young, LLP (“Ernst & Young”), our independent registered public accounting firm that was responsible for expressing an opinion on the independent auditorsconformity of those audited financial statements with U.S. generally accepted accounting principles, its judgments about our accounting principles and the other matters required to be discussed by Auditing Standard No. 16, “Communications with Audit Committees” issued bythe applicable requirements of the Public Company Accounting Oversight Board (PCAOB). ( PCAOB) and the SEC. The Audit Committee has received from Ernst & Young the written disclosures and the letter from the independent auditors pursuant to therequired by applicable requirements of the PCAOB regarding the independent auditors’accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Ernst & Young their independence. The Audit Committee has considered the effect of non-audit fees on the independence of Ernst & Young and has concluded that such non-audit services are compatible with the independence of Ernst & Young.
The Audit Committee discussed with Ernst & Young the auditors their independence. Basedoverall scope and plans for its audits. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of its audits and quarterly reviews, its observations regarding our internal controls, and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee unanimously recommended to the board of directorsBoard, and the Board has approved, that the audited consolidated financial statements for the year ended December 31, 2021, be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. 2021 for filing with the SEC.
This report has been furnished by the members of the Audit Committee. THE
Audit Committee
Frank J.M. ten Brink, Chairman
Jack Schuler
| | | | | | | THE AUDIT COMMITTEE | | Frank J.M. ten Brink, Chairman | | Wayne C. Burris | | Mark C. Miller | | Matthew W. Strobeck, Ph.D.
COMPENSATION OVERVIEW
The purpose of this Compensation Overview section is to provide material information about the Company’s compensation philosophy, objectives and other relevant policies and to explain and put into context the material elements of the disclosure that follows in this Proxy Statement with respect to the compensation of our named executive officers (“NEOs”). For the year ended December 31, 2021, our NEOs were:
Jack Phillips, President and Chief Executive Officer Steve Reichling, Chief Financial Officer Ron Price, Senior Vice President and Head of Commercial Operations, Americas
Determining Executive Compensation
On an ongoing basis, the Compensation Committee reviews the performance and compensation of our President and CEO and the Company’s other executive officers.
Our President and CEO provides input to the Compensation Committee regarding the performance of the other NEOs and offers recommendations regarding their compensation packages in light of such performance. The Compensation Committee is ultimately responsible, however, for determining the compensation of the NEOs, including our President and CEO.
Compensation Philosophy and Objectives
The Compensation Committee and the Board believe that the Company’s executive compensation programs for its executive officers should reflect the Company’s performance and the value created for its shareholders. In addition, we believe our executive compensation programs should support the goals and values of the Company and should reward individual contributions to the Company’s success. Specifically, the Company’s executive compensation program is intended to, among other things: •attract and retain the highest caliber executive officers; •drive achievement of business strategies and goals; •motivate performance in an entrepreneurial, incentive-driven culture; •closely align the interests of executive officers with the interests of the Company’s shareholders; •promote and maintain high ethical standards and business practices; and •reward results and the creation of shareholder value.
Factors Considered in Determining Compensation; Elements of Compensation
The Compensation Committee makes executive compensation decisions on the basis of total compensation, rather than on individual components of compensation. We attempt to create an integrated total compensation program structured to balance both short and long-term financial and strategic goals. Our compensation should be competitive enough to attract and retain the highest caliber executive officers. In this regard, we utilize a combination of between two to three of the following types of compensation to compensate our executive officers: •base salary; •annual cash performance bonuses payable as equity awards; and •long-term equity compensation, consisting of stock options, time-based restricted stock units ("RSUs"), and performance stock units ("PSUs"). RSUs and stock options are typically granted with a multiple year vesting schedule to promote long-term retention. PSUs may be tied to the achievement of a variety of performance metrics, including long-term revenue targets. Each vested RSU and PSU will be settled in one share of Common Stock.
The Compensation Committee's philosophy regarding the mix of the three components of compensation is that equity awards should be emphasized over base salaries. The Compensation Committee believes this approach preserves the Company's cash and strongly aligns executive officer incentives with shareholder interests.
The Compensation Committee periodically reviews each executive officer’s base salary and makes appropriate recommendations to the Board. Base salaries are based on the following factors: •the Company’s performance for the prior fiscal years and subjective evaluation of each executive’s contribution to that performance; •the performance of the particular executive in relation to established goals or strategic plans; •competitive levels of compensation for executive positions based on information drawn from informal internal benchmark analysis of base salaries for executive officers at similarly sized, public medical technology companies and other relevant information; and •our obligations under the applicable executive officer’s employment agreement or offer letter (if any). Performance bonuses and equity compensation are awarded based upon the recommendation of the Compensation Committee. These grants are made with a view to linking executives’ compensation to the long-term financial success of the Company and its shareholders.
Role of Say-On-Pay Votes
As selected by our Shareholders at the 2019 Annual Meeting of Shareholders and approved by our Board, an advisory vote to approve the compensation of our NEOs (say-on-pay proposal) is held every three years. At the 2019 Annual Meeting of Shareholders, more than 97.8% of the votes cast on the say-on-pay proposal were voted in favor of the proposal. At the Annual Meeting, Shareholders will have an opportunity to vote on the say-on-pay proposal (Proposal 4). The Compensation Committee carefully considers the level of voting support from our Shareholders on our say-on-pay vote and will continue to consider the outcome of votes on say-on-pay proposals when making future compensation decisions for our NEOs.
Other Compensation Policies and Considerations; Tax Issues and Risk Management
As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under the Code and historically, the intention of the Committee has been to compensate our NEOs in a manner that maximizes the Company’s ability to deduct compensation for federal income tax purposes (although no assurances have ever been made nor can be made or given with respect to our ability to deduct any compensatory payment to any of our executives).
Section 162(m) of the Code, as in effect for tax years beginning prior to December 31, 2017, provided that we could not deduct compensation of more than $1,000,000 paid in any year to the executives designated as “covered employees” under Section 162(m) of the Code, unless the compensation in excess of $1,000,000 qualified as “performance-based compensation” under Section 162(m) of the Code. Although the Compensation Committee historically considered the implications of Section 162(m) on its ability to deduct compensation, the Compensation Committee has always retained the discretion to award compensation that is not “performance-based compensation” under Section 162(m) of the Code if it determined that providing such compensation was appropriate with respect to the achievement of our business objectives and in the best interests of the Company and its shareholders. The Tax Cuts and Jobs Act (the “Tax Act”), which was signed into law in December 2017, eliminated the exception for “performance-based compensation” with respect to 2018 and future years. As a result, we expect that, except to the extent that compensation is eligible for limited transition relief applicable to binding contracts in effect on November 2, 2017 and not materially modified thereafter, compensation that is paid or provided to our Section 162(m) “covered employees” that exceeds $1,000,000 per year will be nondeductible under Section 162(m).
The Compensation Committee continues to monitor the impact that the repeal of the “performance-based compensation” exception to Section 162(m) will have on the Company’s compensation plans, awards, and arrangements, including whether and to what extent our existing agreements and programs qualify for the transition relief described above.
Section 409A of the Code imposes an additional 20% federal income tax and penalties upon employees who receive “non-qualified deferred compensation” that does not comply with Section 409A. The Compensation
Committee takes into account the impact of Section 409A in designing our executive compensation plans and programs that provide for “non-qualified deferred compensation” and, as a general rule, these plans and programs are designed either to comply with the requirements of Section 409A or to qualify for an applicable exception to Section 409A so as to avoid possible adverse tax consequences that may result from failure to comply with Section 409A. We cannot, however, guarantee that the compensation will comply with the requirements of Section 409A or an applicable exception thereto.
On an annual basis, the Compensation Committee evaluates the Company’s compensation policies and practices for its employees, including the NEOs, to assess whether such policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. Based on its evaluation, the Compensation Committee has determined that the Company’s compensation policies and practices do not create such risks.
Stock Ownership Guidelines
In order to promote a meaningful, permanent level of ownership in the Company and alignment of interests of the Board and NEOs with shareholders, in February 2021 the Board adopted stock ownership guidelines (the "Stock Ownership Guidelines") for Board members and NEOs. The Stock Ownership Guidelines identify the minimum level of stock ownership expected of Board members (3 x annual retainer), the CEO (5 x annual base salary), and other NEOs (3 x annual base salary). Individuals are expected to achieve their respective minimum ownership level within five years of becoming subject to the Stock Ownership Guidelines. The Stock Ownership Guidelines are available online at https://ir.axdx.com/governance-documents.
Nonqualified Executive Deferred Compensation Plan
Our NEOs and other executive officers are eligible to participate in the Accelerate Diagnostics, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), pursuant to which certain of our highly compensated employees are permitted to defer up to 70% of their annual base salary into such plan. The Deferred Compensation Plan was adopted effective January 1, 2020. We do not make any contributions to the Deferred Compensation Plan on behalf of any participant, including any NEO, so each participant is fully vested in his or her account balances at all times. Investment gains or losses credited to a participant's account in the Deferred Compensation Plan are based on investment elections made by the participant from prescribed mutual fund investment options. Each participant in the Deferred Compensation Plan makes his or her own individual investment elections and may change any such investment election during the annual enrollment window.
As of the date of this Proxy Statement, only Mr. Phillips has made deferred elections pursuant to the Deferred Compensation Plan whereby Mr. Phillips elected to defer 70% of his annual base salary for 2020, 2021 and 40% for 2022.
Hedging, Short Sales and Related Policies
See “Directors, Executive Officers and Corporate Governance-Hedging, Short Sales and Related Policies” for information regarding the Company’s policies relating to hedging, short sales and related matters.
2020 Salary Waiver and Nonqualified Stock Options Grant Plan
In December 2019, the Compensation Committee approved the 2020 Salary Waiver and Nonqualified Stock Option Grant Plan (the “2020 Sub-Plan”), which was established pursuant to the Accelerate Diagnostics, Inc. 2012 Omnibus Equity Incentive Plan (the “2012 Incentive Plan”). Pursuant to the 2020 Sub-Plan, eligible employees, including our executive officers, were permitted to irrevocably waive a portion of their base compensation (e.g. salary) scheduled to be paid to them in 2020 in exchange for a grant of nonqualified stock options, which were awarded January 1, 2020 under the 2012 Incentive Plan. The maximum election possible was 50% of the eligible employee’s base compensation. In accordance with the 2020 Sub-Plan, Mr. Phillips irrevocably waived $100,000 of his 2020 base compensation in exchange for 25,268 of such options, and Mr. Reichling irrevocably waived $50,000 of his 2020 base compensation in exchange for 12,634 of such options.
The number of nonqualified stock options awarded to each participant was determined by multiplying the amount of salary forfeited by four (4) and dividing such amount by the 30-day trailing average closing price of the Common Stock as of December 19, 2019, with such amount rounded to the nearest whole share. Subject to
continued full-time employment, the options vested and became exercisable in equal monthly installments, on the last day of each month, over 12 months, with the first installment vesting on January 31, 2020 and the last installment vesting on December 31, 2020. Upon termination of employment for any reason other than death or disability, the vested portion of the option, if any, may generally be exercised for 90 days following termination of employment. Upon termination of employment by reason of death or disability, the vested portion of the option, if any, may generally be exercised for 12 months following termination of employment.
The Compensation Committee decided not to adopt a salary waiver and equity plan for 2021 for various reasons including that the Company implemented temporary 20% salary reductions for Company management in 2020, including NEOs, because of the COVID-19 crisis and its impact on the operations on the Company.
2020 COVID-19 Salary Reduction
On June 29, 2020, the Compensation Committee approved temporary 20% salary reductions for Company management and other employees with a base salary over $100,000, including NEOs because of the ongoing COVID-19 crisis and its impact on the operations on the Company. Salary reductions took effect for the period from June 29, 2020 through December 16, 2020. To compensate impacted employees, the Compensation Committee approved awards of RSUs under the 2012 Incentive Plan. The number of RSUs for each award was calculated based on the individual’s aggregate salary reduction amount, divided by the average closing price of the Company’s common stock over the 30 trading days prior to the internal announcement of the salary reductions on June 19, 2020. The RSUs vested in full on December 16, 2020.
2020 Performance Incentive Program
In February 2020, the Compensation Committee approved a 2020 performance incentive program (“2020 Performance Program”). The 2020 Performance Program consisted of two commercial performance goals and one financial performance goal. Because the ongoing COVID-19 pandemic significantly limited the Company's ability throughout 2020 to sell and implement its products at hospitals that were focussed on responding to the COVID-19 pandemic, the Compensation Committee in September 2020 modified all three performance goals. In the first quarter of 2021, the Compensation Committee determined that the Company had achieved a level of performance under the 2020 Performance Program of 115%. The Compensation Committee elected to pay the 2020 Performance Program in restricted stock units in lieu of cash.
2020 Long-Term Incentive Program
In February 2020, the Compensation Committee approved a long-term incentive program ("2020 LTI Program"). The 2020 LTI Program consisted of one commercial annual goal to be achieved by by the end of 2022. The Company made grants of PSUs in March 2020 under the 2020 LTI Program to certain employees, including the NEOs.
2020 Employee Equity Retention Program
In December 2020, the Compensation Committee approved an equity retention program ("2020 Retention Program") designed to retain employees given that many employees had little or no Company equity that was "in the money." The grants under the 2020 Retention Program were in the form of RSUs with monthly vesting over 12 months beginning January 2023. With the exception of Mr. Phillips, the named executive officers received grants under the 2020 Retention Program.The Compensation Committee further decided not to approve a separate 2021 long-term incentive program since it would be largely duplicative of the 2020 Retention Program.
2021 Performance Incentive Program
In March 2021, the Compensation Committee approved a long-term incentive program ("2021 Performance Program"). The 2021 Performance Program consisted of two commercial and three research and development goals to be achieved during 2021. Because the COVID-19 pandemic continued to significantly limit the Company's ability throughout 2021 to sell and implement its products at hospitals that were focused on responding to the COVID-19 pandemic, the Compensation Committee modified all three performance goals in September 2021. In the first quarter of 2022, the Compensation Committee determined that the Company had achieved a level of performance under the 2021 Performance Program of 75%. The Compensation Committee elected to pay the 2021 Performance Program in RSUs in lieu of cash.
CEO Retention Grants
Separately from the above programs, in order to properly incentivize and ensure the retention of Mr. Phillips, the Compensation Committee made the following grants to Mr. Phillips:
•June 2020 - 93,530 PSUs tied to a commercial goal to be achieved by the end of 2022, and 124,320 RSUs with a three-year annual vesting period.
•May 2021 - 103,299 PSUs based upon a commercial goal and various product development goals, and 206,597 RSUs to vest monthly starting in January 2023.
EXECUTIVE COMPENSATION Summary Compensation Table
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named personsour NEOs for services rendered in all capacities during the noted periods. The transition period from August 1, 2012 tofiscal years ended December 31, 2012 is2020 and December 31, 2021 are indicated below by “2012T”“2020” and the fiscal year that ended on July 31, 2012 is indicated below by “2012”, and the fiscal year ended December 31, 2013 is indicated below by “2013”.| | | | | | | | | Option | | | All Other | | | | | | | | | | | Salary | | | Awards | | | Compensation | | | Total | | | Name and Principal Position | | Year | | | ($) | | | ($) | | | ($) | | | ($) | | | Lawrence Mehren, President and Chief Executive | | 2013 | | | | 300,000 | | | | -- | | | | 5,298 | (3) | | | 305,298 | | | Officer | | 2012T | | | | 124,392 | | | | -- | | | | -- | | | | 124,392 | | | | | 2012 | | | | 28,767 | | | | 1,123,279 | (1) | | | -- | | | | 1,152,046 | | | | | | | | | | | | | | | | | | | | | | | | | Steve Reichling, Chief Financial Officer | | 2013 | | | | 170,000 | | | | -- | | | | 3,002 | (3) | | | 173,002 | | | | | 2012T | | | | 52,164 | | | | 365,236 | (1) | | | -- | | | | 417,400 | | | | | | | | | | | | | | | | | | | | | | | | | Pete Bantock, Chief Commercial Officer | | 2013 | | | | 115,096 | | | | 1,254,481 | (2) | | | -- | | | | 1,369,577 | |
| (1) | The amounts reflect the aggregate grant date fair value of awards during each year calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 7 to the financial statements set forth in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 7, 2014 (the “Form 10-K”). | | (2) | The amounts reflect the aggregate grant date fair value of awards during each year calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 11 to the financial statements set forth in the Form 10-K. | | (3) | The amount reflects a one-time pay-out of accrued vacation upon the dissolution of the Company’s vacation policy. |
Mehren Offer Letter
“2021,” respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal
Position | Year | Salary
($) | | Bonus
($) | | Stock
Awards
($)(8) | | Option
Awards
($)(8) | | All Other
Compensation
($) | | Total
($) | | Jack Phillips, President and CEO (1) | 2021 | 595,000 | | (2) | — | | | 2,186,207 | | (6) | — | | | 108,015 | | (9) | 2,889,222 | | | 2020 | 554,923 | | (3)(4)(5) | — | | | 3,146,563 | | (7) | 105,963 | | | 65,039 | | (10) | 3,872,488 | | | | | | | | | | | | | | | | Steve Reichling, CFO | 2021 | 340,000 | | | — | | | 1,265,602 | | | — | | | — | | | 1,605,602 | | | 2020 | 324,077 | | (11)(12) | — | | | 44,679 | | (13) | 326,000 | | | — | | | 694,756 | | | | | | | | | | | | | | | | Ron Price, Senior Vice President and Head of Commercial Operations, America | 2021 | 240,000 | | | — | | | 1,112,594 | | | — | | | — | | | 1,352,594 | | | 2020 | 225,231 | | (14) | — | | | 36,986 | | (15) | 192,718 | | | — | | | 454,935 | |
(1)The Board appointed Mr. Mehren was appointedPhillips as the Company’s President and CEO, effective February 1, 2020. Mr. Phillips had been serving as the Company’s Chief Operating Officer since August 2019 when he joined the Company. (2)Mr. Phillips made deferred elections pursuant to the Deferred Compensation Plan whereby Mr. Phillips elected to defer 70% of his 2021 annual base salary in the amount of $416,500, which was included in the Salary column. Unrealized investment gains credited to Mr. Phillips’ account in the Deferred Compensation Plan was $38,080 and is not included in the Salary column. Investment income credited to Mr. Phillips’ account in the Deferred Compensation Plan was $28,986 and is not included in the Salary column. See “Compensation Overview - Nonqualified Deferred Compensation Plan” for additional information. (3)In accordance with the 2020 Sub-Plan, Mr. Phillips irrevocably waived $100,000 of his 2020 salary in exchange for options to purchase 25,268 shares of Common Stock. The fair value of the options upon being granted was $205,963 of which the amount in excess of the $100,000 was $105,963 and is a component of the Option Awards column. See “Compensation Overview - 2020 Salary Waiver and Nonqualified Stock Options Grant Plan” and “2021 Outstanding Equity Awards at Fiscal Year-End” for additional information regarding such options. (4)Mr. Phillips’ 2020 salary reflects a temporary reduction in the amount of $49,500 approved by the Compensation Committee because of the ongoing COVID-19 crisis. To compensate impacted employees, the Compensation Committee approved a grant of 5,363 shares RSUs to Mr. Phillips in June 2020. The fair value of the RSUs was $76,262 and is a component of the Stock Awards column. See “Compensation Overview - 2020 COVID-19 Salary Reduction” and “2021 Outstanding Equity Awards At Fiscal Year-End” for additional information regarding such RSUs. (5)Mr. Phillips made deferred elections pursuant to the Deferred Compensation Plan whereby Mr. Phillips elected to defer 70% of his 2020 annual base salary in the amount of $305,119, which was included in the Salary column. Unrealized investment gains credited to Mr. Phillips’ account in the Deferred Compensation Plan was $40,185 and is not included in the Salary column. Investment income credited to Mr. Phillips’ account in the Deferred Compensation Plan was $11,405 and is not included in the Salary column. See “Compensation Overview - Nonqualified Deferred Compensation Plan” for additional information. (6)During 2021, 103,299 PSUs were granted to Mr. Phillips, which are subject to performance conditions. On the grant date, the performance conditions were not deemed probable and, therefore, the grant date value of the PSUs is not included in the “Stock Awards” column. The grant date value of the PSUs assuming that the highest level of performance conditions will be achieved was $732,390 (target level of performance as there are no threshold or maximum payout amounts). (7)During 2020, 117,938 PSUs were granted to Mr. Phillips, which are subject to performance conditions. On the grant dates, the performance conditions were not deemed probable and, therefore, the grant date values of the PSUs are not included in the “Stock Awards” column. The aggregate grant date value of the
PSUs assuming that the highest level of performance conditions will be achieved was $1.3 million (target level of performance as there are no threshold or maximum payout amounts). (8)The amount reflects the aggregate grant date fair value of RSU and option award during each year calculated in accordance with ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 13 to the financial statements set forth in the Annual Report. See “Compensation Overview” and “2021 Outstanding Equity Awards at Fiscal Year-End” for additional information regarding the rawards granted in 2021. (9)The amounts reflect the aggregate value of housing and relocation expenses during the year. (10)The amounts reflect the aggregate value of housing during the year. (11)In accordance with the 2020 Sub-Plan, Mr. Reichling irrevocably waived $50,000 of his 2020 salary in exchange for options to purchase 12,634 shares of Common Stock. The fair value of the options upon being granted was $102,981 of which the amount in excess of the $50,000 was $52,981 and is a component of the Option Awards column. See “Compensation Overview - 2020 Salary Waiver and Nonqualified Stock Options Grant Plan” and “2021 Outstanding Equity Awards at Fiscal Year-End” for additional information regarding such options. (12)Mr. Reichling’s 2020 salary reflects a temporary reduction in the amount of $29,000 approved by the Compensation Committee because of the ongoing COVID-19 crisis. To compensate impacted employees, the Compensation Committee approved a grant of 3,142 RSUs to Mr. Reichling in June 2020. The fair value of the RSUs was $44,679 and is a component of the Stock Awards column. See “Compensation Overview - 2020 COVID-19 Salary Reduction” and “2021 Outstanding Equity Awards at Fiscal Year-End” for additional information regarding such RSUs. (13)During 2020 16,765 PSUs were granted to Mr. Reichling, which are subject to performance conditions. On the grant date, the performance conditions were not deemed probable and, therefore, the grant date value of the PSUs are not included in the “Stock Awards” column. The grant date value of the PSUs assuming that the highest level of performance conditions will be achieved was $99,416 (target level of performance as there are no threshold or maximum payout amounts). (14)Mr. Price’s 2020 salary reflects a temporary reduction in the amount of $24,000 approved by the Compensation Committee because of the ongoing COVID-19 crisis. To compensate impacted employees, the Compensation Committee approved a grant of 2,601 RSUs to Mr. Price in June 2020. The fair value of the RSUs was $36,986 and is a component of the Stock Awards column. See “Compensation Overview - 2020 COVID-19 Salary Reduction" and “2021 Outstanding Equity Awards at Fiscal Year-End” for additional information regarding such RSUs. (15)During 2020, 11,834 PSUs were granted to Mr. Price, which are subject to performance conditions. On the grant date, the performance conditions were not deemed probable and, therefore, the grant date value of the PSUs are not included in the “Stock Awards” column. The grant date value of the PSUs assuming that the highest level of performance conditions will be achieved was $70,176 (target level of performance as there are no threshold or maximum payout amounts).
2021 Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning outstanding equity awards held by the NEOs at December 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | Number of Securities Underlying Unexercised Options | | | | | | | | | | | | Name | Grant Date | Number of securities underlying unexercised options (#) exercisable
(#) | Number of securities underlying unexercised options (#) unexerciable | | Option
Exercise
Price
($) | 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
($) | Equity
Incentive
Plan
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) | | Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($) | | Jack Phillips | 8/6/2019 | 583,295 | | 666,622 | | (1) | 17.00 | | 8/6/2029 | | — | | | — | | — | | | — | | | Jack Phillips | 1/1/2020 | 25,268 | | — | | | 16.90 | | 1/1/2030 | | — | | | — | | — | | | — | | | Jack Phillips | 2/1/2020 | — | | — | | | — | | — | | | 40,000 | | (2) | 303,200 | | — | | | — | | | Jack Phillips | 3/24/2020 | — | | — | | | — | | — | | | — | | | — | | 24,408 | | (3) | 185,013 | | | Jack Phillips | 6/22/2020 | — | | — | | | — | | — | | | 124,320 | | (4) | 942,346 | | — | | | — | | | Jack Phillips | 6/22/2020 | — | | — | | | — | | — | | | — | | | — | | 93,530 | | (3) | 708,957 | | | Jack Phillips | 5/20/2021 | — | | — | | | — | | — | | | 206,597 | | (5) | 1,566,005 | | — | | | — | | | Jack Phillips | 5/20/2021 | — | | — | | | — | | — | | | — | | | — | | 103,299 | | (6) | 783,006 | | | Steve Reichling | 9/10/2012 | 50,000 | | — | | | 2.98 | | 9/10/2022 | | — | | | — | | — | | | — | | | Steve Reichling | 2/26/2014 | 16,161 | | — | | | 14.92 | | 2/26/2024 | | — | | | — | | — | | | — | | | Steve Reichling | 4/2/2015 | 3,588 | | — | | | 22.92 | | 4/2/2025 | | — | | | — | | — | | | — | | | Steve Reichling | 3/18/2016 | 3,296 | | — | | | 12.49 | | 3/18/2026 | | — | | | — | | — | | | — | | | Steve Reichling | 3/18/2016 | 30,000 | | — | | | 12.49 | | 3/18/2026 | | — | | | — | | — | | | — | | | Steve Reichling | 2/23/2017 | 7,836 | | — | | | 24.45 | | 2/23/2027 | | — | | | — | | — | | | — | | | Steve Reichling | 2/23/2017 | 12,000 | | 3,000 | | (7) | 24.45 | | 2/23/2027 | | — | | | — | | — | | | — | | | Steve Reichling | 8/17/2017 | 4,000 | | 1,000 | | (8) | 22.40 | | 8/17/2027 | | — | | | — | | — | | | — | | | Steve Reichling | 3/7/2018 | 8,032 | | — | | | 25.95 | | 3/7/2028 | | — | | | — | | — | | | — | | | Steve Reichling | 3/7/2018 | 12,000 | | 8,000 | | (9) | 25.95 | | 3/7/2028 | | — | | | — | | — | | | — | | | Steve Reichling | 1/1/2019 | 16,604 | | — | | | 11.50 | | 1/1/2029 | | — | | | — | | — | | | — | | | Steve Reichling | 1/1/2019 | 29,916 | | 29,914 | | (10) | 11.50 | | 1/1/2029 | | — | | | — | | — | | | — | | | Steve Reichling | 1/1/2020 | 12,634 | | — | | | 16.90 | | 1/1/2030 | | — | | | — | | — | | | — | | | Steve Reichling | 3/24/2020 | 20,118 | | — | | | 5.93 | | 3/24/2030 | | — | | | — | | — | | | — | | | Steve Reichling | 3/24/2020 | 13,413 | | 53,648 | | (11) | 5.93 | | 3/24/2030 | | — | | | — | | — | | | — | | | Steve Reichling | 3/24/2020 | — | | — | | | — | | — | | | — | | | — | | 16,765 | | (3) | 127,079 | | | Steve Reichling | 3/13/2021 | — | | — | | | — | | — | | | 113,265 | | (5) | 858,549 | | — | | | — | | | Ron Price | 5/27/2015 | 100,000 | | — | | | 22.66 | | 5/27/2025 | | — | | | — | | — | | | — | | | Ron Price | 2/17/2016 | 2,749 | | — | | | 11.52 | | 2/17/2026 | | — | | | — | | — | | | — | | | Ron Price | 3/17/2016 | 30,000 | | — | | | 12.42 | | 3/17/2026 | | — | | | — | | — | | | — | | | Ron Price | 2/23/2017 | 20,000 | | 5,000 | | (7) | 24.45 | | 2/23/2027 | | — | | | — | | — | | | — | | | Ron Price | 2/23/2017 | 7,836 | | — | | | 24.45 | | 2/23/2027 | | — | | | — | | — | | | — | | | Ron Price | 3/7/2018 | 8,032 | | — | | | 25.95 | | 3/7/2028 | | — | | | — | | — | | | — | | | Ron Price | 1/1/2019 | 25,191 | | 25,191 | | (10) | 11.50 | | 1/1/2029 | | — | | | — | | — | | | — | | | Ron Price | 3/24/2020 | 14,201 | | — | | | 5.93 | | 3/24/2030 | | — | | | — | | — | | | — | | | Ron Price | 3/24/2020 | 9,468 | | 37,869 | | (11) | 5.93 | | 3/24/2030 | | — | | | — | | — | | | — | | | Ron Price | 3/24/2020 | — | | — | | | — | | — | | | — | | | — | | 11,834 | | (3) | 89,702 | | | Ron Price | 3/13/2021 | — | | — | | | — | | — | | | 104,338 | | (5) | 790,882 | | — | | | — | |
(1)Option award vests 40% on August 6, 2021, and the balance vests monthly in 36 equal installments beginning on September 6, 2021 and ending on August 6, 2024. (2)RSUs vest in equal annual amounts on each anniversary of the grant date over five years, beginning on February 1, 2021 and ending on February 1, 2025. (3)The number of PSUs is based upon achieving the target level of performance as there are no threshold or maximum payout amounts. PSUs will vest if the performance goals determined by the Company's Compensation Committee are achieved or exceeded on or before December 31, 2022. Any unachieved goals will result in the PSUs being forfeited. Each vested PSU will be settled in one share of the Company’s common stock. As of December 31, 2021, none of the PSUs were considered probable.
(4)RSUs vest in equal annual amounts on each anniversary of the grant date over three years, beginning on June 21, 2021 and ending on June 21, 2023. (5)RSUs vest in equal monthly amounts beginning January 13, 2023 and ending on December 13, 2023. (6)The number of PSUs is based upon achieving the target level of performance as there are no threshold or maximum payout amounts. PSUs will vest if the performance goals determined by the Company's Compensation Committee are achieved or exceeded on or before December 31, 2023.Any unachieved goals will result in the PSUs being forfeited. Each vested PSU will be settled in one share of the Company’s common stock. As of December 31, 2021, none of the PSUs were considered probable. (7)Option awards vest in equal annual amounts on each anniversary of the grant date over five years, beginning on February 23, 2018 and ending on February 23, 2022. (8)Option award vests in equal annual amounts on each anniversary of the grant date over five years, beginning on August 17, 2018 and ending on August 17, 2022. (9)Option award vests in equal annual amounts on each anniversary of the grant date over five years, beginning on March 7, 2019 and ending on March 7, 2023. (10)Option awards vests 50% on January 1, 2021; 25% on January 1, 2022; and 25% on January 1, 2023. (11)Option awards vest in equal annual amounts on each anniversary of the grant date over five years, beginning on March 24, 2021 and ending on March 24, 2025.
Potential Payments Upon Termination or Change-in-Control
The Company has entered into salary continuation, severance or similar agreements or arrangements with Mr. Phillips. Under Mr. Phillips' current employment agreement (the “Phillips Employment Agreement”), all unvested equity awards accelerate upon the closing of a transaction resulting in a Change of Control (as defined in the Phillips Employment Agreement), notwithstanding anything in the 2012 Incentive Plan to the contrary. Pursuant to the Phillips Employment Agreement, if the Company terminates Mr. Phillips without Cause (as defined in the Phillips Employment Agreement) or Mr. Phillips terminates his employment for Good Reason (as defined in the Phillips Employment Agreement) prior to a Change of Control (as defined in the Phillips Employment Agreement), Mr. Phillips will receive a severance payment equal to the sum of: (i) 12 months of his then base salary and (ii) his average earned under the Company’s annual cash incentive program over the term of his employment, plus a pro-rated amount under the Company’s annual cash incentive program for the year in which termination occurs. In addition, if the Company terminates Mr. Phillips without Cause or Mr. Phillips terminates his employment for Good Reason during the 12-month period following a Change of Control, Mr. Phillips will receive a severance payment equal to the sum of: (i) 18 months of his then base salary and (ii) 18 times the monthly amount that is charged to COBRA qualified beneficiaries for the same medical coverage options elected by Mr. Phillips immediately prior to his last day of employment, plus a pro-rated amount under the Company’s annual cash incentive program for the year in which termination occurs.
Certain option awards previously granted to Mr. Reichling provided for accelerated vesting upon the occurrence of certain change of control and other events. However, all such option awards have already vested as of December 31, 2019.
Executive Arrangements
Phillips
On January 31, 2020, Mr. Phillips entered into the Phillips Employment Agreement with the Company in connection with his appointment as Chief Executive Officer and President of the Company, effective February 1, 2020. The Phillips Employment Agreement superseded and replaced Mr. Phillips’ prior employment agreement with the Company entered into on August 6, 2019 (the “Prior Phillips Employment Agreement”) relating to his employment as Chief FinancialOperating Officer on June 26, 2012. In his capacityof the Company. Unless terminated earlier in accordance with the terms of the Phillips Employment Agreement, Mr. Phillips’ employment as Chief Executive Officer and President of the Company was to continue until February 1, 2022 and automatically renews for additional one-year periods unless either the Company or Mr. MehrenPhillips provides notice prior to the end of the then-current term. Pursuant to the Phillips Employment Agreement, Mr. Phillips is paid aentitled to an annual base salary of $300,000 per$595,000. Mr. Phillips was also granted 50,000 RSUs under the 2012 Incentive Plan, which vest in equal annual amounts on each anniversary of the grant date over five years. Beginning January 1, 2020, Mr. Phillips is eligible to earn an annual cash bonus equal to 100% of Mr. Phillips' base salary as of the first day of the calendar year, with the opportunity to earn up to (but not exceed) 150% of Mr. Phillips' base salary as of the first day of the calendar year. On April 20,Beginning January 1, 2021, Mr.
Phillips is also eligible to receive stock options, performance shares and other awards under the 2012 Incentive Plan; provided that, for the 2021 calendar year, Mr. Mehren, inPhillips was to receive an equity award grant equal to 400% of his then base salary consisting of an award mix of 50% non-qualified stock options and 50% performance shares. However, the Compensation Committee and Mr. Phillips agreed instead for 2021 that Mr. Phillips would receive an award mix of one-third performance shares and two-thirds RSU’s For information regarding potential payments to Mr. Phillips upon termination or change-in-control pursuant to the Phillips Employment Agreement, see "- Potential Payments Upon Termination or Change-in-Control.”
Pursuant to the Prior Phillips Employment Agreement, among other things, Mr. Phillips was paid an annual base salary of $495,000 for his role as Chief Operating Officer of the Company. Additionally, Mr. Phillips received a consultantsigning bonus of $100,000 and was entitled to the Company,reimbursement of up to $200,000 of expenses incurred in connection with his relocation and reimbursement for reasonable and customary temporary housing costs. Mr. Phillips was also granted an option to purchase 2,200,0001,249,917 shares of the Company’s common stockCommon Stock at an exercise price equal to $1.04$17.00 per share, which was equal to the closing price of the Company’s common stockCommon Stock on the date of grant. The option was issued pursuant to the Company’s 2004 Omnibus Stock Option2012 Incentive Plan as amended, and will vest according towith the following vesting schedule: 580,000 shares vested immediately upon the date of grant, 825,000 shares will vest as follows: 40% (330,000 shares) will vestvests on the second anniversary of the date of grant, and the remaining 60% (495,000 shares) will vestvests in 36 equal monthly installments (13,750 shares per month) over the subsequent 36 months, 795,000 shares will vest as follows (provided that both criteria must be satisfied): | · | 40% (318,000 shares) will vest on the second anniversary of the date of grant, and the remaining 60% (477,000 shares) will vest in 36 equal monthly installments (13,250 shares per month) over the subsequent 36 months. |
| · | 50% (397,500 shares) will vest when at least 50% of the warrants initially issued to Abeja Ventures, LLC (“Abeja”) have been exercised by the holder(s) thereof, and the remaining 50% (397,500 shares) will vest when at least 90% of such warrants have been exercised by the holder(s) thereof. |
Notwithstanding the foregoing, if Mr. Mehren’s employment is terminated for any reason other than for cause (as defined in the option award agreement), he will be entitled to exercise the then-vested portion of the option for a period of 90 days following his termination of employment (after which time any unexercised options will expire). If Mr. Mehren’s employment is terminated for cause, the Company, in its sole discretion, may provide for the immediate cancellation of the option (or any portion thereof). Any unvested portion of the option will accelerate and become immediately vested and exercisable in the event of a change of control with respect to the Company.
months.
Mr. Reichling was appointed as the Company’s Chief Financial Officer (replacing Mr. Mehren in that role)(“CFO”) on July 22, 2012. In his capacity as Chief Financial Officer,August 10, 2012 and accepted an offer letter with the Company on August 10, 2012 (the “Reichling Offer Letter”). Pursuant to the Reichling Offer Letter, Mr. Reichling is paid a base salary of $170,000 per year. Mr. Reichling was also granted an option to purchase 200,000 shares of the Company’s common stockCommon Stock at an exercise price equal to $2.98 per share, which was equal to the closing price of the Company’s common stockCommon Stock on the date of grant. The option award was issued pursuant to the Company’s 2004 Omnibus Stock Option Plan, as amended, and will vest as follows: 40% will vest on the second anniversary of the date of grant, and the remaining 60% will vest in 36 equal monthly installments over the subsequent 36 months.is fully vested. Mr. Reichling was also provided with a $70,000 budget to be used towards relocation and temporary living arrangements, with the understanding that hearrangements. In his capacity as CFO, Mr. Reichling’s annual base salary was requiredincreased to relocate to the Tucson, Arizona area by the completion date$340,000 beginning in 2019 following an internal assessment of the Company’s relocation of its corporate headquarters.Bantock Offer Letter
CFO base salaries at similarly sized medical technology companies. Mr. BantockReichling is also eligible for annual cash performance bonuses (which may be paid as equity awards), as well as long-term incentive equity awards.
Price
Mr. Price was appointed as the Company’s ChiefSenior Vice President and Head of Commercial OfficerOperations, Americas on July 1, 2013. In his capacity as Chief Commercial Officer,April 6, 2015. Mr. BantockPrice is paid a base salary of $237,500$240,000 per year. Mr. Bantock was also granted an option to purchase 200,000 shares of the Company’s common stock at an exercise price equal to $9.83 per share, which was equalPrice is entitled to the closing price of the Company’s common stock on the date of grant. The option was issued pursuant to the Company’s 2012 Omnibus Equity Incentive Plan and will vest as follows: 40% will vest on the second anniversary of the date of grant,annual incentive programs and the remaining 60% will vest in 36 equal monthly installments over the subsequent 36 months.Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning outstanding option awards held by Messrs. Mehren, Bantock and Reichling at December 31, 2013:
| | | | Option Awards | | | | | | Number of securities underlying unexercised options (#) | | | | Option | | | | Option | | | Name | | | Exercisable | | | | Unexercisable | | | | Exercise Price | | | | Expiration Date | | | Lawrence Mehren | | | 580,000 | | | | 1,620,000 | (1) | | | $1.04 | | | | April 20, 2022 | | | Pete Bantock | | | -- | | | | 200,000 | (2) | | | $9.83 | | | | September 4, 2023 | | | Steve Reichling | | | -- | | | | 200,000 | (3) | | | $2.98 | | | | September 10, 2022 | |
| (1) | 580,000 shares vested immediately upon the date of grant (April 20, 2012); 825,000 shares will vest as follows: 40% (330,000 shares) will vest on the second anniversary of the date of grant, and the remaining 60% (495,000 shares) will vest in 36 equal monthly installments (13,750 shares per month) over the subsequent 36 months; and 795,000 shares will vest as follows (provided that both criteria must be satisfied): (i) 40% (318,000 shares) will vest on the second anniversary of the date of grant, and the remaining 60% (477,000 shares) will vest in 36 equal monthly installments (13,250 shares per month) over the subsequent 36 months, and (ii) 50% (397,500 shares) will vest when at least 50% of the warrants initially issued to Abeja have been exercised by the holder(s) thereof, and the remaining 50% (397,500 shares) will vest when at least 90% of such warrants have been exercised by the holder(s) thereof. | | (2) | 40% vests on September 4, 2015; the balance vests monthly in 36 equal installments beginning on October 4, 2015 and ending on September 4, 2018. | | (3) | 40% vests on September 10, 2014, the balance vests monthly in 36 equal installments beginning on October 10, 2014 and ending on September 10, 2017. |
annual long-term incentive programs. Option Exercises
During the fiscal year ended December 31, 2013, none of our named executive officers exercised any stock options.
Director Compensation of Directors
Directors who are also employees of the Company (including Mr. Mehren)Phillips) do not receive any separate compensation in connection with their Board service, and we do not pay cash fees to any of our directors. Our non-employee directors generally receive ana non-qualified initial stock option award upon joining the Board, which is calculated using a pre-determined formula and vests 20% per year over a five-year period, beginning on the first anniversary of the date of the director’s election to the Board. Non-employee directors also receive annual equity awards with a nominal value of $60,000. Beginning in 2021, non-employee directors had the option of receiving their annual compensation comprised of all nonqualified stock optionoptions, all RSUs, or half RSUs and half nonqualified stock options. Additionally, pursuant to the Director Equity Deferral Program adopted by the Board in April 2021, if a director elects to receive RSUs, the director may elect to defer the payment of 100% of the RSU award until the first to occur of: (a) the date on which the director ceases to be a member of the Board; (b) the date specified by the director in writing; or (c) the date of the closing of a transaction that results in a Change of Control (as defined in the 2012 Incentive Plan) as long as such Change of Control constitutes a “change in control event” as defined in Section 409A of the Code.. Options were valued at a four times multiple, and RSUs were valued at a one time multiple. All equity awards vest after 12 months, unless a non-employee director in good standing leaves prior to 12 months, in which are calculated using a pre-determined formula and vest in 12 equal monthly installments, beginning one month aftercase the vesting is pro-rated based on the number of months served following the date of grant. We compensate our non-employee directors solely with equity in keeping with our overall goal of preserving cash. In addition, we believe larger equity awards, rather than cash fees, align our director incentives with the interests of our shareholders. We reimburse non-employee directors for reasonable expenses related to their Board service.
The following table sets forth the compensation of our directors for serving as our directors for the fiscal year ended December 31, 2013:| Name | | Option Awards ($) (1) | | | Total ($) | | | Jack Schuler | | | 212,542 | (2) | | | 212,542 | | | John Patience | | | 212,542 | (2) | | | 212,542 | | | Matthew W. Strobeck, Ph.D. | | | 212,542 | (2) | | | 212,542 | | | Frank J.M. ten Brink | | | 765,077 | (3) | | | 765,077 | | | Mark C. Miller | | | 812,810 | (4) | | | 812,810 | |
| (1) | Amounts reflect the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. | | (2) | Includes annual award of option to purchase 44,670 shares of common stock at an exercise price of $6.48 per share, which vests in 12 equal monthly installments with the first installment vesting on May 3, 2013. | | (3) | Includes (i) initial award of option to purchase 134,011 shares of common stock at an exercise price of $6.48 per share, which vests 20% per year over a five-year period with the first installment vesting on March 5, 2014 and (ii) annual award of option to purchase 44,670 shares of common stock at an exercise price of $6.48 per share, which vests in 12 equal monthly installments with the first installment vesting on May 3, 2013. | | (4) | Includes (i) initial award of option to purchase 69,671 shares of common stock at an exercise price of $13.30 per share, which vests 20% per year over a five-year period with the first installment vesting on November 5, 2014 and (ii) annual award of option to purchase 23,224 shares of common stock at an exercise price of $13.30 per share, which vests in 12 equal monthly installments with the first installment vesting on December 5, 2013. |
| | | | | | | | | | | | | | | | | | | Name | Option
Award (1)
($) | | Stock
Award (1)
($) | | Total
($) | | Thomas D. Brown | 140,799 | | (2) | — | | | 140,799 | | | Roland Diggelmann | — | | (3) | — | | | — | | | Louise L. Francesconi | 140,799 | | (2) | — | | | 140,799 | | | Hany Massarany | 527,008 | | (4)(5) | — | | | 527,008 | | | Mark C. Miller | 70,399 | | (6) | 31,168 | | (7) | 101,567 | | | John Patience | 140,799 | | (2) | — | | | 140,799 | | | Jack Schuler | 140,799 | | (2) | — | | | 140,799 | | | Matthew W. Strobeck, Ph.D. | 140,799 | | (2) | — | | | 140,799 | | | Frank J.M. ten Brink | 140,799 | | (2) | — | | | 140,799 | | | Charles Watts, M.D. | 140,799 | | (2) | — | | | 140,799 | |
(1)The amount reflects the aggregate grant date fair value of option awards and RSUs calculated in accordance with ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 13 to the financial statements set forth in the Annual Report. (2)Includes annual option award to purchase 35,168 shares of Common Stock granted on May 20, 2021 at an exercise price of $7.09 per share, which vests on May 20, 2022. (3)Mr. Diggelmann retired as a member of the Board and did not seek re-election in 2021. Mr. Diggelmann did not receive any equity awards in 2021. (4)Includes annual option to purchase 31,261 shares of Common Stock granted on May 20, 2021 at an exercise price of $7.09 per share, which vests on May 20, 2022. (5)Includes option to purchase 93,783 shares of Common Stock granted May 20, 2021 at an exercise price of $7.09 per share which vests in equal annual amounts on each anniversary of the grant date over five years, beginning on May 20, 2022 and ending on May 20, 2026. (6)Includes annual option award to purchase 17,584 shares of Common Stock granted on May 20, 2021 at an exercise price of $7.09 per share, which vests on May 20, 2022. (7)Includes 4,396 RSUs, which vest on May 20, 2022. Pursuant to the Company’s Director Equity Deferral Program described above, Mr. Miller elected to defer receipt of the RSUs to such time that is within 30 days following his departure from the Board.
As of December 31, 2021, our non-employee directors held unvested RSUs and options to purchase the following number of shares of Common Stock:
| | | | | | | | | | | | | Name | Option
Awards | Stock
Awards | | | Thomas D. Brown | 117,596 | | | | | Louise L. Francesconi | 92,894 | | | | | Hany Massarany | 125,044 | | | | | Mark C. Miller | 179,474 | | 4,396 | | * | | John Patience | 112,701 | | | | | Jack Schuler | 104,520 | | | | | Matthew W. Strobeck, Ph.D. | 157,371 | | | | | Frank J.M. ten Brink | 291,382 | | | | | Charles Watts, M.D. | 104,365 | | | |
* Pursuant to the Company’s Non-Employee Director Equity Deferral Program described above, Mr. Miller elected to defer receipt of the RSUs to such time that is within 30 days following his departure from the Board.
Equity Compensation Plan Information
The table set forth below presents the securities authorized for issuance with respect to compensation plans under which equity securities are authorized for issuance as of December 31, 2013:| Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | | Equity compensation plans approved | | | 5,160,086 | | | $ | 3.45 | | | | 504,414 | | | by security holders (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity compensation plans not | | | -- | | | | -- | | | | -- | | | approved by security holders | | | | | | | | | | | | | | Total | | | 5,160,086 | | | $ | 3.45 | | | | 504,414 | |
| (1) | Comprised of the Company’s 2012 Omnibus Equity Incentive Plan, as amended. |
2021: Security Ownership
| | | | | | | | | | | | | | | | Equity Compensation Plan | | Plan category | Number of securities to be issued upon exercise of outstanding options and release of restricted stock units | | Weighted-average exercise price of outstanding options, warrants and rights(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the 1st column) | | Equity compensation plans approved by security holders | 9,282,722 | | (2) | $ | 13.89 | | 3,617,783 | | | Equity compensation plans not approved by security holders | — | | | — | | ��� | | | Total | 9,282,722 | | | $ | 13.89 | | 3,617,783 | |
(1)Shares of Certain Beneficial Ownerscommon stock issuable upon vesting of RSUs and ManagementPSUs have been excluded from the calculation of the weighted average exercise price because they have no exercise price associated with them. (2)Represents 7,192,540 shares of common stock subject to outstanding stock options and 2,090,182 shares of common stock that may be issued upon vesting of outstanding RSUs and PSUs (assuming the maximum performance level for PSUs).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stockCommon Stock as of March 21, 201416, 2022 of (i) each named executive officerNEO and each director of the CompanyCompany; (ii) all named executive officers and directors as a groupgroup; and (iii) each person known to the Company to be the beneficial owner of more than 5% of our common stock.Common Stock. We deem shares of our common stockCommon Stock that may be acquired by an individual or group within 60 days of March 21, 2014,16, 2022, pursuant to the exercise of options or warrants or conversion of convertible securities, to be outstanding for the purpose of computing the percentage ownership of such individual or group, but these shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 41,904,52169,661,265 shares of common stockCommon Stock outstanding on March 21, 2014.16, 2022.
The information as to beneficial ownership was either (i) furnished to us by or on behalf of the persons named or (ii) determined based on a review of the beneficial owners’ Schedules 13D/G and Section 16 filings with respect to our common stock.Common Stock. Unless otherwise indicated, the business address of each person listed is c/o Accelerate Diagnostics, Inc., 3950 South Country Club Road, Suite 470, Tucson, Arizona 85714. Name of Beneficial Owner | Amount & Nature of Beneficial Ownership | Percentage of Class | | Named Executive Officers and Directors: | | | | Lawrence Mehren (1) | 3,357,389 | 7.7% | | Mark C. Miller (2) | 11,612 | * | | John Patience (3) | 6,183,143 | 14.7% | | Jack Schuler (4) | 9,234,189 | 22.0% | | Matthew W. Strobeck, Ph.D. (5) | 2,078,326 | 5.0% | | Frank J.M. ten Brink (6) | 71,473 | * | | Steve Reichling (7) | 100 | * | | Pete Bantock (8) | -- | -- | | | | | | All named executive officers and directors as a group (8 persons) | 20,936,232 | 47.7% | | | | | | Other 5% shareholders: | | | | Larry N. Feinberg (9) | 4,773,449 | 11.4% | | Oracle Associates, LLC (9) | 4,227,235 | 10.1% | | Oracle Partners, L.P. (9) | 3,759,681 | 9.0% |
_________________________
| | | | | | | | | | Name of Beneficial Owner | Amount of Beneficial Ownership | Percentage
of Class | | Named Executive Officers and Directors: | | | | Thomas D. Brown (1) | 128,969 | | * | | Wayne C. Burris (2) | — | | * | | Louise L. Francesconi (3) | 33,996 | | * | | Hany Massarany (4) | 30,000 | | | | Mark Miller (5) | 200,952 | | * | | John Patience (6) | 6,887,697 | | 9.9 | % | | Jack Phillips (7) | 836,108 | | * | | Jack Schuler (8) | 18,861,374 | | 27.0 | % | | Matthew W. Strobeck, Ph.D. (9) | 2,374,591 | | 3.4 | % | | Frank J.M. ten Brink (10) | 266,014 | | * | | Charles Watts, M.D. (11) | 63,244 | | * | | Steve Reichling (12) | 309,639 | | * | | Ron Price (13) | 259,469 | | * | | All executive officers and directors as a group (13 persons) | 30,252,053 | | 42.2 | % |
*Represents less than 1% of our issued and outstanding Common Stock. | (1) | Mr. Mehren is a director of the Company and is the Company’s President and Chief Executive Officer. Amount includes 1,255,000 shares of common stock issuable to him upon the exercise of stock options that are vested or vest within 60 days of the date hereof. Amount also includes 1,576,792 shares and warrants to purchase an additional 525,597 shares held by MAB, LLC. Mr. Mehren disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. | | (2) | Mr. Miller was appointed as a director of the Company on November 5, 2013. Amount includes 11,612 shares of common stock issuable to him upon the exercise of stock options that are vested or vest within 60 days of the date hereof. | | (3) | Mr. Patience is the Chairman of the Board. Amount includes 4,067,311 shares held by the John Patience Trust dated 7/23/1993 and 2,071,162 shares held by Patience Enterprises LP. Mr. Patience disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. Amount also includes options to purchase 44,670 shares of common stock that are vested or will vest within 60 days. | | (4) | Mr. Schuler is a director of the Company. Amount includes 647,939 shares held by Schuler Grandchildren LLC (Mr. Schuler has sole voting and dispositive power with respect to such shares in his capacity as manager of the entity); 647,939 shares held by Schuler GC 2010 Continuation Trust (Mr. Schuler has shared voting and dispositive power with respect to such shares in his capacity as the grantor of the trust); and 7,893,641 shares held by the Jack W. Schuler Living Trust (Mr. Schuler has sole voting and dispositive power with respect to such shares in his capacity as trustee of the trust). Mr. Schuler disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. Amount also includes options to purchase 44,670 shares of common stock that are vested or will vest within 60 days. |
| (5) | Dr. Strobeck is a director of the Company. Amount includes options to purchase 44,670 shares of common stock that are vested or will vest within 60 days. | | (6) | Mr. ten Brink is a director of the Company. Reflects options to purchase 71,473 shares of common stock that are vested or will vest within 60 days. | | (7) | Mr. Reichling is the Company’s Chief Financial Officer. Mr. Reichling holds options to purchase 200,000 shares of common stock, but none are vested or scheduled to vest within 60 days. | | (8) | Mr. Bantock is the Company’s Chief Commercial Officer. Mr. Bantock holds options to purchase 200,000 shares of common stock, but none are vested or scheduled to vest within 60 days. | | (9) | Based on a Schedule 13G/A (Amendment No. 1) filed on February 7, 2014. Aggregate amount for Mr. Feinberg includes 20,000 shares held by him directly, 455,213 shares held by Oracle Ten Fund Master, L.P. (“Ten Fund”), 60,001 shares held by Oracle Investment Management, Inc. Employees’ Retirement Plan (the “Retirement Plan”), 11,000 shares held by The Feinberg Family Foundation (the “Foundation”), 3,759,681 shares held by Oracle Partners, L.P. (“Partners”), and 467,554 shares held by Oracle Institutional Partners, L.P. (“Institutional Partners”). Mr. Feinberg serves as the managing member of Oracle Associates, LLC, the general partner of Partners and Institutional Partners, and accordingly, may be deemed to be the indirect beneficial owner of the shares beneficially owned by Partners and Institutional Partners. Mr. Feinberg is the sole shareholder, director and president of Oracle Investment Management, Inc., which serves as investment manager to Ten Fund and the Retirement Plan, and accordingly, may be deemed to be the beneficial owner of the shares beneficially owned by Ten Fund and the Retirement Plan. Mr. Feinberg is the trustee of the Foundation, and accordingly may be deemed to be the beneficial owner of the shares beneficially owned by the Foundation. Mr. Feinberg disclaims beneficial ownership of all such shares except to the extent of his pecuniary interest therein. The address of the principal business office of such reporting persons is 200 Greenwich Avenue, 3rd Floor, Greenwich, Connecticut 06830. |
(1)Mr. Brown is a director of the Company. Amount includes 46,541 shares of Common Stock held directly and 82,428 shares of Common Stock that are issuable to him upon exercise of options that are vested or vest within 60 days of March 16, 2022. (2)Mr. Burris is a director of the Company. (3)Ms. Francesconi is a director of the Company. Amount includes 33,996 shares of Common Stock that are issuable to her upon exercise of options that are vested or vest within 60 days of March 16, 2022. (4)Mr. Massarany is a director of the Company. Amount includes 30,000 shares of Common Stock held by the Massarany Family Trust dated November 15, 2012. (5)Mr. Miller is a director of the Company. Amount includes 39,062 shares of Common Stock held directly and 161,890 shares of Common Stock that are issuable to him upon exercise of options or release of restricted stock units that are vested or vest within 60 days of March 16, 2022. (6)Mr. Patience is the Chairman of the Board. Amount includes 4,365,585 shares held by the John Patience Trust dated 7/23/1993, 2,140,462 shares held by Patience Enterprises LP, 39,411 shares held by the John Patience and 264,706 shares held by Ventana Charitable Foundation. Mr. Patience has sole voting and dispositive power with respect to the shares held by the John Patience Trust dated 7/23/1993, Patience Enterprises LP and the Ventana Charitable Foundation. Mr. Patience disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. Amount also includes 77,533 shares of Common Stock issuable to him upon exercise of options that are vested or vest within 60 days of March 16, 2022.
(7)Mr. Phillips is a director of the Company and is the Company’s President and CEO. Amount includes 123,385 shares of Common Stock held directly and 712,723 shares of Common Stock that are issuable to him upon exercise of options or release of restricted stock units that are vested or vest within 60 days of March 16, 2022. Amount does not include 55,586 shares of Common Stock held by the John J. Phillips Investment Irrevocable Trust, dated July 31, 2019, for which a third-party serves as the trustee. Mr. Phillips does not have voting or dispositive power with respect to the shares held by the trust. (8)Mr. Schuler is a director of the Company. Amount includes 18,737,047 shares held by the Jack W. Schuler Living Trust (Mr. Schuler has sole voting and dispositive power with respect to such shares in his capacity as trustee of the trust); and 54,975 shares held by Renate Schuler (the spouse of Jack Schuler). Mr. Schuler disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. Amount also includes 69,352 shares of Common Stock issuable to him upon exercise of options that are vested or vest within 60 days of March 16, 2022. Amount does not include an aggregate of 3,964,843 shares of common stock issuable upon the conversion of 3,964,843 shares of Series A Preferred Stock held by three entities related to Mr. Schuler but are not affiliates of his. (9)Dr. Strobeck is a director of the Company. Amount includes 2,025,650 shares of Common Stock held directly, 206,828 shares held by Birchview Fund, LLC and 20,000 shares held as an UGMA Custodian for minor children (Dr. Strobeck has sole voting and dispositive power with respect to such shares in his capacity as the Managing Partner of such entity). Amount also includes 122,203 shares of Common Stock issuable to him upon exercise of options that are vested or vest within 60 days of March 16, 2022. (10)Mr. ten Brink is a director of the Company. Amount includes 9,800 shares of Common Stock held directly and 256,214 shares of Common Stock issuable to him upon exercise of options that are vested or vest within 60 days of March 16, 2022. (11)Dr. Watts is a director of the Company. Amount includes options to purchase 63,244 shares of Common Stock issuable to him upon exercise of options that are vested or vest within 60 days of March 16, 2022. (12)Mr. Reichling is the Company’s Chief Financial Officer. Amount includes 34,672 shares of Common Stock held directly and 274,697 shares of Common Stock issuable to him upon exercise of options or the release of restricted stock units that are vested or vest within 60 days of March 16, 2022. (13)Mr. Price is the Company’s Senior Vice President and Head of Commercial Operations, Americas. Amount includes 14,927 shares of Common Stock held directly and 244,542 shares of Common Stock issuable to him upon exercise of options or the release of restricted stock units that are vested or vest within 60 days of March 16, 2022.
PROPOSAL NO. 1:1
Nominees for Election at the 20142022 Annual Meeting of Shareholders
The Board has nominated Messrs. Mehren,directors Brown, Burris,Francesconi, Massarany, Miller, Patience, Phillips, Schuler, Strobeck, and ten Brink and Watts for election as directors to serve until the next Annual Meeting of Shareholders and until their successors are duly elected and qualified. If elected, each of the directors will hold office as a director until our 20152023 Annual Meeting of Shareholders.
If you sign your proxy or voting instruction card but do not give instructions with respect to the voting of directors, your shares will be voted for the nominees recommended by our Board. If you wish to give specific instructions with respect to the voting of directors, you may do so by indicating your instructions on your proxy or voting instruction card. The Board expects that the nominees will be available to serve as directors. If any nominee becomes unavailable, however, the proxy holders intend to vote for any nominee designated by the Board, unless the Board chooses to reduce the number of directors serving on the Board. If additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as to assure the election of Messrs. Mehren,directors Brown, Burris, Francesconi, Massarany, Miller, Patience, Phillips, Schuler, Strobeck, ten Brink and ten Brink.Watts.
Vote Required and Board Recommendation
Election of a director requires the affirmative vote of the holders of a plurality of the shares for which votes are cast at a meeting at which a quorum is present. The six11 persons receiving the greatest number of votes will be elected as directors. Since only affirmative votes count for this purpose, a properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. Broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the proposal. Shareholders may not cumulate votes in the election of directors.
The Board recommends that shareholders vote “FOR”FOR the election of each of Messrs. Mehren,directors Brown, Burris, Francesconi, Massarany, Miller, Patience, Phillips, Schuler, Strobeck, and ten Brink and Watts as directors of the Company.
PROPOSAL NO. 2:2
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The Company’s current Certificate of Incorporation authorizes the issuance of 105,000,000 shares of the Company’s capital stock, of which 100,000,000 shares are designated as Common Stock and 5,000,000 shares are designated as preferred stock. On March 16, 2022, the Board adopted and approved an amendment to the Company’s Certificate of Incorporation (the “Charter Amendment”) to increase the total number of authorized shares of the Company’s capital stock to 205,000,000 shares, of which 200,000,000 shares are to be designated as Common Stock and 5,000,000 shares are to be designated as preferred stock, subject to Shareholder approval. The Board has declared the proposed Charter Amendment to be advisable and in the best interests of the Company and the Shareholders and has directed that the adoption and approval of the Charter Amendment be submitted to the Shareholders for their consideration at the Annual Meeting. The text of the proposed Charter Amendment is attached hereto as Appendix A.
Purpose and Background of the Proposed Share Amendment
As of March 16, 2022, there were approximately 69,661,265 shares of Common Stock issued and outstanding, which does not include approximately: 6,850,974 shares of Common Stock issuable upon the exercise of outstanding options to purchase Common Stock; 2,718,182 shares of RSU awards which have not yet vested; 2,872,042 shares of Common Stock reserved for future issuance under the 2012 Incentive Plan; 305,557 shares of Common Stock reserved for future issuance under our 2016 Employee Stock Purchase Plan; 3,897,307 shares of Common Stock reserved for issuance upon conversion of the Company’s outstanding 2.50% Convertible Senior Notes due 2023 (the “Convertible Notes”) (based on $120.5 million aggregate principal amount of Convertible Notes outstanding as of March 16, 2022 and an initial conversion rate of 32.3428 shares of common stock per $1,000 principal amount of Convertible Notes); and 3,954,546 shares of Common Stock reserved for issuance upon conversion of the Series A Preferred Stock. Based upon our issued and reserved shares of Common Stock, there are approximately 9,740,127 shares of Common Stock available for issuance in the future for other corporate purposes. If approved by the Shareholders, a total of 5,500,000 shares of Common Stock will be reserved for grant under the 2022 Incentive Plan and no awards will be granted under the 2012 Incentive Plan or any other prior plan on or after the effective date of the 2022 Incentive Plan. See “Proposal No. 3 Approval of the Accelerate Diagnostics, Inc. 2022 Omnibus Equity Incentive Plan” for additional information.
The purpose of the proposed Charter Amendment is to allow the Company to have a sufficient number of shares of authorized and unissued Common Stock for issuance in connection with such corporate purposes as may, from time to time, be considered advisable by the Board. Having such shares available for issuance in the future will give the Company greater flexibility and will allow the shares to be issued from time to time as determined by the Board and, unless otherwise required by NASDAQ rules or other applicable rules and regulations, without the expense and delay of a special shareholders’ meeting to approve the additional authorized capital stock. The corporate purposes for which the Company may issue Common Stock could include, without limitation, issuances in connection with stock splits or stock dividends, issuances in connection with future acquisitions, issuances pursuant to equity awards granted under current or future equity compensation plans, issuances in connection with equity financings and issuances in connection with exchange transactions. There are currently no commitments or understandings with respect to the issuance of any of the additional shares of Common Stock that would be authorized by the proposed Charter Amendment.
Effect of Proposed Charter Amendment
The issuance of additional shares of Common Stock in the future may have the effect of diluting earnings or loss per share, as well as the ownership and voting rights of the holders of our then-outstanding Common Stock. In addition, while the increase in the authorized number of shares of Common Stock is not designed to deter or prevent a change of control, under some circumstances we could use the additional authorized shares to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of the Company by, for example, issuing those shares in private placements to purchasers who might side with our Board in opposing a hostile takeover bid. The Board is not aware of any attempt to take control of the Company and has not presented this proposal with the intention that the increase in our authorized shares of Common Stock be used as a type of anti-takeover device.
Rights of Additional Authorized Shares
Any authorized shares of Common Stock, if and when issued, would be part of our existing class of Common Stock and would have the same rights and privileges as the shares of Common Stock then-outstanding. The holders of Common Stock have no preemptive rights to subscribe for or purchase any additional shares of Common Stock that may be issued in the future.
Implementing the Proposed Charter Amendment
If approved by the Shareholders at the Annual Meeting, the proposed Charter Amendment will become effective upon the filing of a Certificate of Amendment with the Secretary of State of the State of Delaware, which filing is expected to occur promptly after the Annual Meeting.
Vote Required and Board Recommendation
Pursuant to applicable Delaware law, approval of the Charter Amendment requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock. Abstentions and broker non-votes will have the same effect as a vote cast against the proposal.
The Board recommends that the Shareholders vote FOR Proposal 2.
PROPOSAL NO. 3
APPROVAL OF THE ACCELERATE DIAGNOSTICS, INC. 2022 OMNIBUS EQUITY INCENTIVE PLAN
The Board adoptedCompany currently sponsors, and grants equity-based compensation awards pursuant to, the Accelerate Diagnostics, Inc. 2012 Omnibus Equity Incentive Compensation Plan on October 31, 2012 (the “2012 Incentive Plan”). The 2012 Incentive Plan was subsequentlywill automatically expire pursuant to its terms in October 2022. Accordingly, on March 16, 2022, the Board approved, by the Company’s shareholders at the Company’s 2012 Annual Meeting of Shareholders on December 12, 2012. The 2012 Plan provides for the grant of nonqualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, stock grants, stock units, performance units, performance shares and performance cash awards. The 2012 Plan also allows the Committee (as described below) to grant awards that are intended to qualify for the “performance-based compensation” exceptionsubject to the $1,000,000 limitation onapproval of our stockholders, the deduction of compensation imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).Since its adoption, the 2012 Plan has been amended on one occasion. The First Amendment was approved by the Board on March 21, 2013. The First Amendment, among other things, reflected the Company’s name change to Accelerate Diagnostics, Inc. 2022 Omnibus Incentive Compensation Plan (the “2022 Incentive Plan”). The 2012 Incentive Plan will be automatically replaced and superseded by the transfer of2022 Incentive Plan on the listing ofdate on which the 2022 Incentive Plan is approved by our common stock (“Common Stock”) from NYSE MKT LLC to the NASDAQ Capital Market. Subject to shareholder approval, on February 26, 2014(thestockholders (the “Effective Date”), provided that any outstanding awards granted under the Board adopted2012 Incentive Plan will remain in effect pursuant to their terms. If stockholder approval is not received, the Second Amendment2012 Incentive Plan will remain in place until it automatically expires by its terms in October of 2022.
If the 2022 Incentive Plan is approved, as of its Effective Date and subject to the 2012share counting rules and other adjustments described in the 2022 Incentive Plan, (the “Second Amendment”), which is described below. If approved by the Company’s shareholders, the Second Amendmenta total of 5,500,000 shares will increase the number of shares of Common Stock reserved andbe available for grant under the 2022 Incentive Plan. No awards will be granted under the 2012 Incentive Plan by 4,000,000 shares.or any other prior plan on or after the Effective Date of the 2022 Incentive Plan. We anticipate that the adoption of the 2022 Incentive Plan and the additional 5,500,000 shares we are requesting to be reserved for grant under the 2022 Incentive Plan will allow the Compensation Committee to grant awards for the next two (2) years, although this could change based on other factors, including but not limited to merger and acquisition activity.
As of the Effective Date,date the 2022 Incentive Plan was approved by our Board, all of the shares of Common Stock previously reserved and available for grant under the 2012 Incentive Plan had been depleted,depleted. The table below presents our potential fully diluted overhang levels as of March 16, 2022 before and after effectiveness of the Company had granted stock option2022 Incentive Plan:
| | | | | | | (A) Equity awards outstanding as of March 16, 2022 | 9,569,156 | | (B) Shares available for grant under the 2012 Incentive Plan | 2,872,042 | | (C) Additional requested shares for 2022 Incentive Plan | 5,500,000 | | (D) Common shares outstanding | 69,661,265 | | Fully Diluted Overhang prior to effectiveness of 2022 Incentive Plan (A+B)/(A+B+D) | 15 | % | | Fully Diluted Overhang after effectiveness of 2022 Incentive Plan (A+B+C)/(A+B+C+D) | 20 | % |
Our burn rate for 253,723 additional shares of Common Stockthe last three years (the “Burn Rate”), which will only become exercisable if and when shareholders approve the Second Amendment. In order to continue to have an appropriate supply of shares available for grant for future equity awards, the Company is asking the shareholders to approve the Second Amendment to increasewe define as the total number of shares availablesubject to awards granted in a calendar year expressed as a percentage of our weighted average shares outstanding, was 5.02% for 2021, 4.41% for 2020, and 6.87% for 2019, and the average Burn Rate over the last three years was 5.41%. If the 2022 Incentive Plan is not approved, we will no longer be able to grant equity-based compensation awards, which would have a detrimental effect on our ability to attract, retain and motivate our employees, officers, directors and consultants. The Board believes the potential dilution from equity issuances to be made under the 20122022 Incentive Plan and our historical Burn Rate is reasonable and that approval of the 2022 Incentive Plan is in the best interests of our stockholders as it allows us to 5,677,500 shares.continue awarding equity incentives, which are an important component of our overall compensation program.
The closing price of our common stock, as reported on The Nasdaq Capital Market on March 16, 2022, was $1.90 per share. If the 2022 Incentive Plan is approved by our stockholders, we anticipate filing a Form S-8 registration statement with the SEC shortly after the Annual Meeting to register the shares authorized for issuance under the 2022 Incentive Plan. Set forth below is a summary of the principal provisions of the 2012 Plan, as amended by the First and Second Amendments.2022 Incentive Plan. The summary is qualified by reference to the full text of the Second Amendment and the 20122022 Incentive Plan, as amended by the First Amendment, all of which areis attached to this proxy statement as Appendix A.B.
Purpose. The Board believes that the 20122022 Incentive Plan promotes the success and enhances the value of the Company by aligning the interests of participants in the 2022 Incentive Plan with those of the Company’s shareholders and by providing those individuals with an incentive for outstanding performance to generate significant returns for the Company’s shareholders. The Board also believes that the flexible terms and conditions of the 20122022 Incentive Plan, which permit the grant of various forms of equity awards with a variety of terms and conditions, allow the Company to attract, retain and motivate individuals upon whose judgment, interest and effort the successful conduct of the Company’s operation is largely dependent.
Administration. The 20122022 Incentive Plan is administered by the BoardCompensation Committee (“Committee”) or, with respect to individuals subject tonon-employee directors, the requirements of Section 16 of the Exchange Act of 1934 or “covered employees” as defined in Section 162(m) of the Code, aBoard. The Committee (the “Committee”) consistingshall at all times consist of at least two (2) individuals, each of whom qualifies as: (i) a “non-employee director” as defined in Rule 16b-3(b)16b‑3(b)(3) of the General Rules and Regulations of the Exchange Act of 1934;Act; and (iii) an “outside director” as defined in Section 162(m)(ii) “independent” for purposes of the Code,NASDAQ Listing Rules, in each case, as each such rule or regulation is in effect from time to time. The Committee, by majority action, is authorized to interpret the 20122022 Incentive Plan, to prescribe, amend, and rescind rules and regulations relating to the 20122022 Incentive Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company, and to make all other determinations necessary for the administration of the 20122022 Incentive Plan, to the extent they are not contrary to express provisions of the 20122022 Incentive Plan. All references in the 2012 Plan to the “Committee” shall be, as applicable, to the Board or the Committee appointed by the Board.
The Committee has the authority, without limitation, to: (i) designate participants to receive awards; (ii) determine the type or types of awards and the times when awards are to be granted; (iii) determine the number of awards to be granted and the number of shares of Common Stock to which an award will relate; (iv) determine the terms and conditions of any award, including, but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the award, any schedule for lapse of restrictions or limitations, and accelerations or waivers thereof, based in each case on such considerations as the Committee determines; provided, however, that except in the context of a change of control (as described below under “Change of Control”), the Committee shall not have the authority to accelerate the vesting or waive the forfeiture restrictions of any Performance-Based Compensation Awards; (v) determine whether, to what extent, and in what circumstances an award may be settled in, or the exercise price of an award may be paid in, cash, Common Stock, other awards, or other property, or whether an award may be canceled,cancelled, forfeited, exchanged or surrendered; (vi) prescribe the form of each award agreement, which need not be identical for each participant; (vii) decide all other matters that must be determined in connection with an award; (viii) establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the 20122022 Incentive Plan; (ix) amend or modify any outstanding award to the extent the terms of such award are within the power and authority of the Committee as provided under the 20122022 Incentive Plan; (x) interpret the terms of, and determine any matter arising pursuant to, the 20122022 Incentive Plan or any award agreement and correct any defects and reconcile any inconsistencies in the 2022 Incentive Plan or any award agreement; and (xi) make all other decisions or determinations that may be required pursuant to the 20122022 Incentive Plan or an award agreement as the Committee deems necessary or advisable to administer the 20122022 Incentive Plan.
Pursuant to the Committee’s specific written delegation, the Company’s CEO has the authority to grant awards to individualsemployees to expedite the hiring process and retain talented employees. The CEO does not have the authority to grant awards to any individual who is or will becomemay upon hiring “covered employees” as defined in Section 162(m) of the Code or who isbecome employees subject to Section 16 of the Exchange Act of 1934.Act.
Stock Subject to the PlanIf the Second Amendment is approved by the shareholders, the2022
Plan. The total number of shares of Common Stock reserved and available for grant pursuant to the 20122022 Incentive Plan shall be 5,677,500 shares.5,500,000, plus the number of shares of Common Stock that remain available or that otherwise become available for grant under the 2012 Plan and all Prior Plans (as defined in the 2022 Incentive Plan) following its Effective Date. The maximum number of shares of Common Stock that may be issued as incentive stock options under the 20122022 Incentive Plan is the same numeric limitation set forth in the preceding sentence. Shares delivered pursuant to the 20122022 Incentive Plan may consist of authorized but unissued Common Stock, treasury stock, or Common Stock purchased on the open market. The amount of Common Stock reserved for grants pursuant to the 20122022 Incentive Plan is subject to adjustment in the event of certain changes in capital structure as described below under “Adjustment Provisions.”
If any award granted under a Prior Plan terminates, expires, lapses for any reason, any Common Stock subject to or surrendered for such award will again be available for grant under the 20122022 Incentive Plan. The exercise of a stock-settled SARstock appreciation right (“SAR”) or broker-assisted “cashless” exercise of an option (or a portion thereof) will reduce the number of shares of Common Stock available for grant by the entire number of
shares of Common Stock subject to that SAR or option (or applicable portion thereof), even though a smaller number of shares of Common Stock will be issued upon such an exercise. Common Stock tendered to pay the exercise price of an option or tendered or withheld to satisfy a tax withholding obligation arising in connection with an award will not become available for grant or sale under the 20122022 Incentive Plan. Awards that are settled in cash will not be charged against the number of shares available for grant.Eligibility
The aggregate grant date fair value of awards (including share-based and cash-based awards) that may be granted under the 2022 Incentive Plan to a non-employee director, plus the aggregate amount of all cash payments made to such non-employee director, for service as director during any fiscal year may not exceed $750,000.
Eligibility. All employees, officers, directors of, and certain consultants and advisers to, the Company or its subsidiaries are eligible to participate in the 2012 Plan. As of the Effective Date, there were approximately 61 employees, including officers, and directors eligible to participate in the 20122022 Incentive Plan. Awards may also be granted to prospective employees or members of the Board subject to certain requirements.
Awards Available Under the Plan2022 Incentive Plan. Each of the following types of awards may be granted pursuant to the 20122022 Incentive Plan: | · | Stock Options. An option entitles the participant to purchase shares of Common Stock in the future at a specified price. The Committee may grant both incentive stock options and nonqualified stock options under the 2012 Plan. Incentive stock options will be granted only to participants who are employees. The exercise price of all options granted under the Plan will be at least 100% of the fair market value of our Common Stock on the date of grant. Stock options may be exercised as determined by the Committee, but no option may be exercised more than 10 years from the date of grant. The Committee will determine the methods by which the exercise price of an option may be paid, the form of payment, including, without limitation, cash, shares of Common Stock held for longer than six (6) months (through actual tender or by attestation), any net-issuance arrangement or other property acceptable to the Committee (including broker-assisted “cashless exercise” arrangements), and the methods by which shares of Common Stock will be delivered or deemed delivered to participants. Special rules will apply to incentive stock options as provided in the 2012 Plan. A participant will have no rights as a shareholder with respect to options until the shares of Common Stock are actually issued in connection with the award. |
| · | Stock Appreciation Rights. A SAR award gives the participant the right to share in the appreciation in value of one share of Common Stock. Appreciation is calculated as the excess, if any, of (i) the fair market value of a share of Common Stock on the date of exercise over (ii) the base value fixed by the Committee on the date of grant, which may not be less than the fair market value of a share of Common Stock on the date of grant. SARs are exercisable at such times and subject to such restrictions and conditions as the Committee approves, provided that no SAR may be exercised more than ten (10) years following the date of grant. The award agreement will specify whether the payment for the SARs shall be in cash, Common Stock of equivalent value, or in a combination thereof. |
| · | Restricted Stock. A restricted stock award gives the participant the right to receive a specified number of shares of Common Stock at a purchase price determined by the Committee (including and typically zero). Restrictions limit the participant’s ability to transfer the Common Stock and subject the Common Stock to a substantial risk of forfeiture until specific conditions or goals are met. The restrictions will lapse in accordance with a schedule or other conditions as determined by the Committee. As a general rule, if the participant terminates employment (or service) during the period of restriction, any unvested restricted Common Stock will be forfeited. |
| · | Restricted Stock Units. A restricted stock unit award gives the participant the right to receive Common Stock, a cash payment, or a combination thereof, equal to the fair market value of our Common Stock (determined as of a specified date) in the future, subject to certain restrictions and to the risk of forfeiture. Participants holding restricted stock units have no voting rights with respect to the shares of Common Stock subject to their restricted stock unit award prior to the issuance of such shares pursuant to the award. As a general rule, if the participant terminates employment (or service) during the period of restriction, any unvested restricted stock units will be forfeited. |
| · | Stock Grant Awards. A stock grant award gives the participant the right to receive (or purchase at a price determined by the Committee), a designed number of shares of Common Stock free of any vesting restrictions. A stock grant award may be granted or sold as consideration for past services, other consideration or in lieu of cash compensation due to any participant. The purchase price, if any, for a stock grant award shall be payable in cash or other form of consideration acceptable to the Committee. |
| · | Stock Unit Awards
•Stock Options. An option entitles the participant to purchase shares of Common Stock in the future at a specified price. The Committee may grant both incentive stock options and nonqualified stock options under the 2022 Incentive Plan. Incentive stock options will be granted only to participants who are employees. The exercise price of all options granted under the 2022 Incentive Plan will be at least 100% of the fair market value of our Common Stock on the date of grant. Stock options may be exercised as determined by the Committee, but no option may be exercised more than ten (10) years from the date of grant. The Committee will determine the methods by which the exercise price of an option may be paid, the form of payment, including, without limitation, cash, shares of Common Stock held for longer than six (6) months (through actual tender or by attestation), any net-issuance arrangement or other property acceptable to the Committee (including broker-assisted “cashless exercise” arrangements), and the methods by which shares of Common Stock will be delivered or deemed delivered to participants. Special rules will apply to incentive stock options as provided in the 2022 Incentive Plan. A participant will have no rights as a shareholder with respect to options until the shares of Common Stock are actually issued in connection with the award.
•Stock Appreciation Rights. A SAR award gives the participant the right to share in the appreciation in value of one share of Common Stock. Appreciation is calculated as the excess, if any, of (i) the fair market value of a share of Common Stock on the date of exercise over (ii) the base value fixed by the Committee on the date of grant, which may not be less than the fair market value of a share of Common Stock on the date of grant. SARs are exercisable at such times and subject to such restrictions and conditions as the Committee approves, provided that no SAR may be exercised more than ten (10) years following the date of grant. The award agreement will specify whether the payment for the SARs shall be in cash, Common Stock of equivalent value, or in a combination thereof.
•Restricted Stock. A restricted stock award gives the participant the right to receive a specified number of shares of Common Stock at a purchase price determined by the Committee (including and typically zero). Restrictions limit the participant’s ability to transfer the Common Stock and subject the Common Stock to a substantial risk of forfeiture until specific conditions or goals are met. The restrictions will lapse in accordance with a schedule or other conditions as determined by the Committee. As a general rule, if the participant terminates employment (or service) during the period of restriction, any unvested restricted Common Stock will be forfeited.
•Restricted Stock Units. A restricted stock unit award gives the participant the right to receive Common Stock, a cash payment, or a combination thereof, equal to the fair market value of our Common Stock (determined as of a specified date) in the future, subject to certain restrictions and to the risk of forfeiture. Participants holding restricted stock units have no voting rights with respect to the shares of Common Stock subject to their restricted stock unit award prior to the issuance of such shares pursuant to the award. As a general rule, if the participant terminates employment (or service) during the period of restriction, any unvested restricted stock units will be forfeited.
•Stock Grant Awards. A stock grant award gives the participant the right to receive (or purchase at a price determined by the Committee), a designed number of shares of Common Stock free of any vesting restrictions. A stock grant award may be granted or sold as consideration for past services, other consideration or in lieu of cash compensation due to any participant. The purchase price, if any, for a stock grant award shall be payable in cash or other form of consideration acceptable to the Committee.
•Stock Unit Awards. A stock unit award gives the participant the right to receive a designated number of shares of Common Stock, or a cash payment equal to the fair market value (determined as of a specified date) of a designated number of shares of Common Stock, in the future free of any vesting restrictions. A stock unit award may be granted or sold as consideration for past services, other consideration or in lieu of cash compensation due to any participant. |
| · | Performance Shares. A performance share award gives the participant the right to receive a specified number of shares of Common Stock if the participant achieves the performance goals specified by the Committee during a performance period specified by the Committee. |
| · | Performance Units. A performance unit award gives the participant the right to receive a specified number of shares of Common Stock, a cash payment or a combination of Common Stock and cash, if the participant achieves the performance goals specified by the Committee during a performance period specified by the Committee. |
| · | Performance Cash Awards. A performance cash award gives the participant the right to receive a cash payment if the participant achieves the performance goals specified by the Committee during a performance period specified by the Committee. |
| · | Performance-Based Compensation Awards. When the Committee grants restricted stock, restricted stock units, stock grants, stock units, performance shares, performance units, and performance cash awards, it may designate the awards as “Performance-Based Compensation Awards.” Performance-Based Compensation Awards are designed to qualify for the “performance-based compensation” exception to the limitation on the deduction of compensation imposed by Section 162(m) of the Code. Section 162(m) of the Code only applies to “covered employees,” as that term is defined in Section 162(m) of the Code and the regulations issued thereunder. Therefore, only covered employees are eligible to receive awards that are designated as Performance-Based Compensation Awards. The Committee has complete discretion regarding whether to grant awards to covered employees that qualify for the “performance-based compensation” exception to Section 162(m) of the Code. Options and SARs granted pursuant to the Plan should, by their terms, qualify for the “performance-based compensation” exception. |
A covered employee is only entitled to receive payment for a Performance-Based Compensation Award for any given performance period to the extent that pre-established performance goals set by the Committee for the period are satisfied. These pre-established performance goals must be based on one or more of the following performance criteria: EBITDA; EBIT; costs; operating income; net income; cash flow; operating cash flow; net cash flow; retained earnings; budget achievement; return on equity; return on assets; return on capital employed; return on invested capital; expense spending; O&M expense; gross margin; net margin; market capitalization; customer satisfaction; revenues; financial return ratios; market share; shareholder return and/or value (including but not limited to total shareholder return); operating profits (including earnings before or after income taxes, depreciation and amortization); net profits; earnings per share; earnings per share growth; profit returns and margins; Common Stock price; working capital; production cost; project milestones; economic value added; equipment performance; operating efficiency; debt; dividends; corporate governance; and health and safety (including environmental health and safety). The performance criteria may, but need not, be calculated in accordance with generally accepted accounting principles (“GAAP”) or any successor method to GAAP, including International Financial Reporting Standards. The performance criteria may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group, indices, or any other basket of companies.
With respect to any Performance-Based Compensation Award, the Committee has the discretion to select the length of the performance period (which may be one or more periods of time of varying and overlapping durations, over which the attainment of one or more performance goals will be measured), the type of Performance-Based Compensation Award to be issued, the kind and/or level of performance goal or goals and whether the performance goal or goals apply to the Company, a subsidiary or any division or business unit of any of them, or to the individual participant or any group of participants. The Committee also has the discretion to evaluate the achievement of the performance goals in a manner that includes or excludes certain events that may occur during the performance period, as described in the Plan. The Committee has the discretion to decrease the amount of compensation payable pursuant to any Performance-Based Compensation Award but may not increase the compensation payable pursuant to any Performance-Based Compensation Award. The Committee must certify in writing prior to the payment of any Performance-Based Compensation Award that the performance goals and any other material terms and conditions precedent to such payment have been satisfied.
The maximum amount of any Performance-Based Compensation Award (other than a performance cash award) that may be granted to a covered employee during any performance period is 400,000shares of Common Stock, or a cash payment equal to the equivalentfair market value (determined as of a specified date) of a designated number of shares of Common Stock, in the future free of any vesting restrictions. A stock unit award may be granted or sold as consideration for past services, other consideration or in lieu of cash value. The maximumcompensation due to any participant.
•Performance Shares. A performance share award gives the participant the right to receive a specified number of shares of Common Stock if the participant achieves the performance goals specified by the Committee during a performance period specified by the Committee.
•Performance Units. A performance unit award gives the participant the right to receive a specified number of shares of Common Stock, a cash payment or a combination of Common Stock and cash, if the participant achieves the performance goals specified by the Committee during a performance period specified by the Committee.
•Performance Cash Awards. A performance cash award payable forgives the participant the right to receive a cash payment if the participant achieves the performance goals specified by the Committee during a performance period is $1,500,000.Ifspecified by the performance period is less than or exceeds 12 months, the dollar and share limits expressed in the preceding sentences shall be reduced or increased proportionately, as the case may be.Restrictions
Committee.
Restrictions. Except as described above, the Committee may impose such restrictions on any awards under the 20122022 Incentive Plan as it may deem advisable, including restrictions under applicable federal securities law, under the requirements of any stock exchange upon which our Common Stock is then listed and under any blue sky or state securities law applicable to the awards.
Change of ControlControl. If a Change of Control occurs, the Board shall have the authority and discretion, but shall not have the obligation, to provide, in an award agreement or thereafter, that all or part of outstanding awards shall become fully exercisable and all or part of the restrictions on outstanding awards shall lapse. In addition, upon, or in anticipation of, a Change of Control, the Committee may: (i) cause all outstanding awards to be canceledcancelled and terminated as of a specified date and give each participant the right to exercise such awards during a period of time as the Committee, in its sole discretion, shall determine, or (ii) cause all outstanding awards to be canceledcancelled and terminated as of a specified date in exchange for a payment or right to payment pursuant to the terms and conditions set forth in the Change of Control transaction documents. With respect to an award which the Company concludes is subject to (and not excepted from) the requirements of Section 409A, any actions taken by the Board in connection with a Change of Control shall be done in compliance with Section 409A of the Code.
Clawback of AwardsAwards. Every award issued under the 20122022 Incentive Plan is subject to potential forfeiture or “clawback” to the fullest extent called for by applicable federal or state law or Company policy. By accepting an award, a participant agrees to return to the Company the full amount required by applicable law or Company policy.Nontransferability
Nontransferability. The Committee may, in its sole discretion, determine the right of a participant to transfer any award granted under the 2022 Incentive Plan. Unless otherwise determined by the Committee, no award granted under the 2022 Incentive Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or pursuant to a domestic relations order in favor of a spouse (that would otherwise qualify as a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, but for the fact that the order pertains to an award), or, if applicable, until the termination of any restricted or performance period as determined by the Committee. Notwithstanding the foregoing, the Committee shall have the authority to allow a participant to transfer awards, including SARs and options, to family members.
A participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant’s death. If no
beneficiary has been designated or survives the participant, payment will be made to the person entitled thereto under the participant’s will or the laws of descent and distribution. Subject to the foregoing, a participant may change or revoke a beneficiary designation at any time provided the change or revocation is filed with the Committee.
Adjustment ProvisionsProvisions. If there is a change in the outstanding shares of Common Stock because of a stock dividend or split, recapitalization, merger, consolidation, combination, exchange of shares, or other similar corporate change, the Committee shall, in its sole discretion and to the extent it deems equitable and appropriate to prevent dilution or enlargement of rights, make a proportionate adjustment in: (i) the number and class of shares of Common Stock made available for grant; (ii) the number of shares of Common Stock set forth in the various numeric limits expressed in the 20122022 Incentive Plan; (iii) the number and class of and/or price of shares of Common Stock, units, or other rights subject to the then-outstanding awards; (iv) the performance targets or goals appropriate to any outstanding awards (subject to such limitations as appropriate for Performance-Based Compensation Awards);awards; or (v) any other terms of an award that are affected by the event. Notwithstanding anything in the 20122022 Incentive Plan to the contrary, in the event of any such transaction or occurrence, the Committee, in its sole discretion, may provide in substitution for any or all outstanding awards such alternative consideration (including cash) as it, in good faith, may determine to be equitable under the circumstances and may require in connection therewith the surrender of all awards so replaced. Any adjustments made pursuant to the 20122022 Incentive Plan’s adjustment provisions shall be made in a manner consistent with the requirements of Section 409A of the Code and, in the case of incentive stock options, any such adjustments shall be made in a manner consistent with the requirements of Section 424(a) of the Code.
Replacement AwardsAwards. In the event of any corporate transaction in which the Company or a subsidiary acquires a corporate entity which, at the time of such transaction, maintains an equity compensation plan pursuant to which equity awards are then outstanding (the “Acquired Plan”), the Committee may make awards to assume, substitute or convert such outstanding awards in such manner as may be determined to be appropriate and equitable by the Committee. Any shares of stock authorized and available for issuance under the Acquired Plan shall, subject to adjustment as described above under “Adjustment Provisions,” be available for use in making awards under this 20122022 Incentive Plan with respect to persons eligible under such Acquired Plan, by virtue of the Company’s assumption of such Acquired Plan, consistent with the NASDAQ Listing Rules (or rules of any other exchange upon which our Common Stock is then traded), including, but not limited to, NASDAQ Listing Rule 5635(c), including IM-5635-1, as such Rulesrules may be amended or replaced from time to time.
Amendment, Modification and Termination of PlanPlan. With the approval of the Board, the Committee may, at any time and from time to time, terminate, amend or modify the 20122022 Incentive Plan. Any such action of the Committee is subject to the approval of the shareholders to the extent required by law, regulation or the rules of any exchange on which our Common Stock is then listed, quoted or traded. Except as otherwise provided in the 2022 Incentive Plan, neither the Board nor the Committee may, without the approval of shareholders: (i) increase the number of shares available for grant under the 20122022 Incentive Plan; (ii) permit the Committee to grant options or SARs with an exercise price or base value that is below fair market value on the date of grant; (iii) permit the Committee to extend the exercise period for an option or SAR beyond ten (10) years from the date of grant; (iv) amend the 20122022 Incentive Plan to permit the Committee to reprice previously granted options; or (v) amend the 20122022 Incentive Plan to permit the Committee to reprice previously granted SARs.SARs; (vi) extend the duration of the 2022 Incentive Plan; or (vii) expand the type of awards available for grant under the 2022 Incentive Plan or expand the class of participants eligible to participate in the 2022 Incentive Plan.
Except as provided in the next sentence, or in connection with a change of control, no amendment, modification, or termination of the 2022 Incentive Plan or any award agreement shall in any material manner adversely affect any award previously granted under the 20122022 Incentive Plan without the consent of the participant. The participant’s consent is unnecessary if the change: (i) is required by law or regulation; (ii) does not adversely affect in any material way the rights of the participant; or (iii) is required to cause the benefits under the 20122022 Incentive Plan to qualify as performance-based compensation exception to the deduction limitation imposed by Section 162(m) of the Code or to comply with the provisions of Section 409A of the Code. Except in the context of a change of control, the Committee shall not have the authority to amend an award agreement to accelerate the vesting or waive the forfeiture restrictions of any Performance-Based Compensation Awards. In addition, the Committee shall not take any other action that would cause a Performance-Based Compensation Award to fail to satisfy the requirements of the performance-based compensation exception to the deduction limitation imposed by Section 162(m) of the Code unless the Committee concludes that the deduction limitation will not become applicable or that the amendment is appropriate despite the deduction limitation imposed by Section 162(m) of the Code.
Tax WithholdingWithholding. The Company will have the power to withhold, or require a participant to remit to the Company, up to the maximum statutory amount necessary (or such lower amount that will not cause an amount sufficientadverse tax consequence or cost to the Company) to satisfy federal, state, and local withholding tax requirements on any award under the 20122022 Incentive Plan. To the extent that alternative methods of withholding are available under applicable laws, the Company will have the power to choose among such methods.
Federal Income Tax InformationInformation. The following is a brief summary of certain federal income tax consequences of certain transactions under the 2022 Incentive Plan based on federal income tax laws in effect on as of the Effective Date.date of this Proxy Statement. This summary is not intended to be exhaustive and does not describe state, local, or foreign income tax consequences which may also be applicable.
As a general rule, with the exception of a stock grant, a participant will not recognize taxable income with respect to any award at the time of grant. A participant will recognize income on a stock grant award at the time of grant.grant and, subject to any deduction limitations set forth in the Code, the Company will be entitled to a concurrent income tax deduction equal to the ordinary income recognize by the participant.
Upon exercise of a nonqualified stock option, the lapse of restrictions on restricted stock, or upon the payment of SARs, restricted stock units, performance shares, performance units, performance cash awards, or stock unit awards, the participant will recognize ordinary taxable income in an amount equal to the difference between the amount paid for the award, if any, and the fair market value of our Common Stock or amount received on the date of exercise, lapse of restriction or payment. TheSubject to any deduction limitations set forth in the Code, the Company will be entitled to a concurrent income tax deduction equal to the ordinary income recognized by the participant.
A participant who is granted an incentive stock option will not recognize taxable income at the time of exercise. However, the excess of the Common Stock’s fair market value over the option price could be subject to the alternative minimum tax in the year of exercise (assuming the Common Stock received is not subject to a substantial risk of forfeiture or is transferable). If Common Stock acquired upon exercise of an incentive stock option is held for a minimum of two (2) years from the date of grant and one year from the date of exercise, the gain or loss (in an amount equal to the difference between the sales price and the exercise price) upon disposition of the Common Stock will be treated as a long-term capital gain or loss, and the Company will not be entitled to any income tax deduction. If the holding period requirements are not met, the incentive stock option will not meet the requirements for this tax favored treatment and the tax consequences described for nonqualified stock options will apply.
Section 409A of the Code, among other things, expanded the definition of deferred compensation arrangements to include, for example, below market option and SAR grants, restricted stock units, performance shares, performance units, performance cash awards, and stock units. If awards that are subject to Section 409A fail to comply with Section 409A, a participant must include in ordinary income all deferred compensation conferred by the award, pay interest from the date of the deferral and pay an additional 20% tax. The award agreement for any award that is subject to Section 409A may include provisions necessary for compliance as determined by the Committee. The Company intends (but cannot and does not guarantee) that awards granted under the 2022 Incentive Plan will comply with the requirements of Section 409A or an exception thereto and intends to administer and interpret the 2022 Incentive Plan in such a manner.
The Patient Protection and Affordable Care Act, which became effective in 2010, introduced a new net investment income tax. Effective January 1, 2013, dividends paid to and capital gains recognized by individuals with incomes over certain threshold amounts may be subject to an additional 3.8% tax on net investment income.
Special Rules Applicable to OfficersOfficers. In limited circumstances where the sale of Common Stock that is received as the result of a grant of an award could subject an officer to suit under Section 16(b) of the Exchange Act, the tax consequences to the officer may differ from the tax consequences described above. In these circumstances, unless a special election has been made, the principal difference usually will be to postpone valuation and taxation of the Common Stock received so long as the sale of the Common Stock received could subject the officer or director to suit under Section 16(b) of the Exchange Act, but not longer than six (6) months.Tax Consequences to the Company or Its SubsidiariesSubsidiaries. To the extent that a grantee recognizes ordinary income in the circumstances described above, the Company or the subsidiary for which the employee performs services will be entitled to a corresponding deduction, provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code and isCode.
New Plan Benefits.The Company has not subject to the $1,000,000 million deduction limit for certain executive compensation under Section 162(m)approved any awards that are conditioned upon stockholder approval of the Code.2022 Incentive Plan. Awards under the 2022 Incentive Plan Benefits As ofwill be determined by the Effective Date, 1,763,809shares of Common Stock subjectCommittee in its discretion. It is, therefore, not possible to predict the awards that will be made to particular officers in the future under the 2022 Incentive Plan. If the 2022 Incentive Plan had been in effect in fiscal year 2021, we expect that our award grants for fiscal year 2021 would not have been granteddifferent from those actually made in that year under the 2012 Incentive Plan. The belowfollowing table provides information with respect to all equitysets forth the awards that were granted during 2021 under the 2012 Incentive Plan from adoption through the Effective Dateto the Company’s namedto (i) each of our NEOs; (ii) all current executive officers theas a group; (iii) all current directors who are not executive officer group, the director group,officers as a group; and the non-executive officer employee group:
Name and Position or Group | Stock Options (1) | Named Executive Officers: | | Lawrence Mehren | 52,082 | Pete Bantock | 211,506 | Steve Reichling | 16,161 | Executive Group (including NEOs): | 279,749 | Non-Executive Director Group: | 405,586 | Non-Executive Officer Employee Group: | 1,050,474 | TOTAL: | 1,735,809 |
| (1) | Amounts exclude awards of options to purchase 28,000 shares of Common Stock granted to consultants and include contingent awards of options to purchase 253,723 shares of Common Stock granted to officers and other employees of the Company that will become exercisable if and when our shareholders approve the Second Amendment. |
(iv) all employees, including all current officers who are not executive officers, as a group.
| | | | | | | | | | | | | | | | Name and Position | Aggregate Grant Date Fair Value of Stock Awards
($) | RSUs Awarded
(#) | Number of PSUs Awarded
(#) | Options Awarded
(#) | | Jack Phillips President and CEO | 2,918,596 | | 286,490 | | 103,299 | | — | | | Steve Reichling CFO | 1,265,602 | | 140,657 | | — | | — | | | Ron Price Senior Vice President and Head of Commercial Operations, America | 1,112,594 | | 123,673 | | — | | — | | | Executive Group | 4,390,076 | | 341,742 | | 8,507 | | 100,000 | | | Non-Executive Director Group | 1,614,166 | | 4,396 | | — | | 388,804 | | | Non-Executive Officer Employee Group | 21,076,757 | | 1,574,518 | | 121,666 | | 1,000 | |
Vote Required and Board Recommendation
The proposed amendment to the Company’s 2012 Omnibus Equity Incentive Plan increasing the number of shares of our common stock reserved and available for grant thereunder by 4,000,000 sharesproposal will be approved if a majority of the votes cast affirmatively or negatively at the Annual Meeting are voted in favor of the proposal, assuming a quorum is present. A properly executed proxy marked “ABSTAIN” with respect to such matterproposal. Abstentions and broker non-votes will not be voted or treated as a votevotes cast although it will be counted for purposes of determining whether a quorum is present. Accordingly, an abstention will not affect the outcome of this proposal. Brokers are not entitled to use their discretion to vote uninstructed proxies with respect toor against the proposal, and any such “broker non-votes”therefore will not be deemed a vote cast or affecthave no effect on the outcome of the proposal (assuming a quorum is present).proposal.
The Board recommends that the shareholdersShareholders vote FOR Proposal 3.
PROPOSAL NO. 4
ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”)
Proposed Advisory Resolution of Shareholders
At the Annual Meeting, Shareholders will be given the opportunity to vote on the following advisory resolution:
RESOLVED, that the shareholders of Accelerate Diagnostics, Inc. hereby approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement, including the accompanying compensation tables and the related narrative discussion.
Background on Proposal
As required by Section 14A of the Exchange Act and in accordance with SEC rules, Shareholders are being given the opportunity to vote at the Annual Meeting on this advisory resolution for the approval of the proposed amendmentcompensation of our NEOs (commonly referred to as “say-on-pay”). For more information about the compensation that we paid to our NEOs during 2021, as well as a description of our overall executive compensation philosophy and program, please refer to the Company’s 2012 Omnibus Equity Incentive Plan increasing“Compensation Overview” and “Executive Compensation” sections of this Proxy Statement.
As selected by our Shareholders at the number2019 Annual Meeting of sharesShareholders and approved by our Board, the say-on-pay vote is held every three years.
Effects of common stock reservedAdvisory Vote
Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to our NEOs and availablewill not be binding on the Board or the Compensation Committee. However, the Board and the Compensation Committee will consider the outcome of the vote when making future executive compensation decisions.
Vote Required and Board Recommendation
This proposal will be approved if a majority of the votes cast are voted in favor of the proposal. Abstentions and broker non-votes will not be treated as votes cast for grant thereunder by 4,000,000 shares.or against the proposal, and therefore will have no effect on the outcome of the proposal.
The Board recommends that the Shareholders vote FOR Proposal 4.
PROPOSAL NO. 3:5
Ratification of Ernst
RATIFICATION OF ERNST & YoungYOUNG LLP as Our Independent Public AccountantsAS OUR INDEPENDENT PUBLIC ACCOUNTANTS Audit Committee Appointment – Ernst & Young LLP
Our Audit Committee, pursuant to authority granted to it by the Board, has selected Ernst & Young LLP as the Company’s independent registered public accountantsaccounting firm to examine our annual consolidated financial statements for the fiscal year ending December 31, 2014.2022. The Board is submitting this proposal to the vote of the shareholdersShareholders in order to ratify the Audit Committee’s selection. If shareholdersShareholders do not ratify the selection of Ernst & Young LLP, the Audit Committee will reconsider its selection of our independent registered public accountantsaccounting firm for fiscal 2014,2022, although the Audit Committee will be under no obligation to change its selection. Ernst & Young LLP has been our independent registered public accounting firm since July 1, 2013. Change in Independent Public Accountants
On July 1, 2013, the Audit Committee dismissed Comiskey & Company, P.C. (“Comiskey”) as its independent registered public accounting firm and approved the engagement of Ernst & Young LLP to replace Comiskey as its independent registered public accounting firm for the fiscal year ending December 31, 2013.
The reports issued by Comiskey with respect to the Company’s financial statements for (i) the fiscal years ended July 31, 2011 and July 31, 2012, respectively, and (ii) the transition period that began on August 1, 2012 and ended on December 31, 2012, did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s fiscal years ended July 31, 2011 and July 31, 2012, respectively, and the transition period that ended on December 31, 2012 (and the subsequent interim period preceding Comiskey’s dismissal), there were no disagreements between the Company and Comiskey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of Comiskey, would have caused Comiskey to make reference to the matter.
During the Company’s fiscal years ended July 31, 2011 and July 31, 2012, respectively, and the transition period that ended on December 31, 2012 (and the subsequent interim period preceding the Company’s engagement of Ernst & Young LLP), neither the Company nor anyone on its behalf consulted Ernst & Young LLP regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.
As required by Item 304(a)(3) of Regulation S-K, the Company furnished a copy of the above disclosures to Comiskey and requested that Comiskey furnish the Company with a letter addressed to the SEC stating whether Comiskey agrees with the above statements. A copy of Comiskey’s letter to the SEC, dated July 1, 2013, was filed as Exhibit 16.1 to the Current Report on Form 8-K filed by the Company with the SEC on July 2, 2013.
Fees Billed by Ernst & Young, LLP and Comiskey & Company, P.C.
Fees and related expenses for the fiscal year ended December 31, 2013 audit by Ernst & Young, LLP of our annual financial statements, its review of the financial statements included in our quarterly reports and other services that were provided in connection with statutory and regulatory filings totaled approximately $146,000. Fees and related expenses$0.9 million for audits relating to the five-month period ended December 31, 2012 and the fiscal years ended July 31, 2012 and July 31, 2011, respectively, by Comiskey & Company, P.C. of our annual financial statements, its review of the financial statements included in our quarterly reports and other services that are provided in connection with statutory and regulatory filings totaled approximately $34,257, $38,000, $36,200, respectively. Fees for the fiscal years ended July 31, 2012 included billings for the issuance of consents related to our filing of registration statements during the fiscal year ended July 31, 2012.
Audit-Related Fees
During the fiscal year ended December 31, 20132021 and $0.7 million for the year ended December 31, 2020.
Audit-Related Fees
During the years ended December 31, 2021 and 2020, Ernst & Young, LLP did not bill us for any audit-related fees.
Tax Fees
During the transition periodyears ended December 31, 20122021 and the fiscal years ended July 31, 2012 and July 31, 2011, respectively, Comiskey2020, Ernst & Company, P.C.Young, LLP did not bill us for any audit-related fees.Taxtax-related professional services.
During the fiscal yearyears ended December 31, 20132021 and 2020, Ernst & Young, LLP billed us $9,400 for tax-related professional services.During the transition period ended December 31, 2012$1,755 and the fiscal years ended July 31, 2012 and July 31, 2011,$1,500, respectively, Comiskey & Company, P.C. did not bill us for any tax-related professional services.
All Other Fees
During the fiscal year ended December 31, 2013 Ernst & Young, LLP billed us $9,100 for other professional services.
During the transition period ended December 31, 2012 and the fiscal years ended July 31, 2012 and July 31, 2011, respectively, Comiskey & Company, P.C. did not bill us for any other professional services.
services, which includes a subscription to accounting-related reference information.
Policy on Audit Committee Pre-Approval of Fees
The Audit Committee must pre-approve all services to be performed for us by our independent auditors.registered public accounting firm. Pre-approval is granted usually at regularly scheduled meetings of the Audit Committee. If unanticipated items arise between regularly scheduled meetings of the Audit Committee, the Audit Committee has delegated authority to the chairman of the Audit Committee to pre-approve services, in which case the chairman communicates such pre-approval to the full Audit Committee at its next meeting. The Audit Committee also may approve the additional unanticipated services by either convening a special meeting or acting by unanimous written consent. During the fiscal yearyears ended December 31, 20132021 and 2020, all services billed by Ernst & Young, LLP were pre-approved by the Audit Committee in accordance with this policy. During the transition period ended December 31, 2012 and the fiscal years ended July 31, 2012 and 2011, all services billed by Comiskey & Company, P.C. were pre-approved by the Audit Committee in accordance with this policy.
Attendance at Annual Meeting
Representatives of Ernst & Young LLP and Comiskey & Company, P.C. are not expected to be present atattend the Annual Meeting.Meeting virtually. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Vote Required and Board Recommendation The ratification of the Audit Committee’s selection of Ernst & Young LLP as our independent public accountants for the fiscal year ending December 31, 2014
This proposal will be approved if a majority of the votes cast affirmatively or negatively at the Annual Meeting are voted in favor of the proposal. Abstentions and broker non-votes will not be treated as votes cast for or against the proposal, assuming a quorum is present. A properly executed proxy marked “ABSTAIN”and therefore will have no effect on the outcome of the proposal.
The Board recommends that the Shareholders vote FOR Proposal 5.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has established policies and other procedures regarding approval of transactions between the Company and any employee, officer, director, and certain of their family members and other related persons. These policies and procedures are generally not in writing but are evidenced by long standing principles adhered to by our Board. The disinterested members of the Board review, approve and ratify transactions that involve “related persons” and potential conflicts of interest. Related persons must disclose to the disinterested members of the Board any potential related person transactions and must disclose all material facts with respect to such matter will not be voted or treated as a vote cast, although ittransaction. All such transactions will be counted for purposesreviewed by the disinterested members of the Board and, in their discretion, approved or ratified. In determining whether to approve or ratify a quorum is present. Accordingly, an abstention will not affectrelated person transaction the outcome of this proposal. Brokers are entitled to use their discretion to vote uninstructed proxies with respect to ratification of our independent public accountants.The Board recommends a vote “FOR” ratificationdisinterested members of the Audit Committee’s appointmentBoard will consider the relevant facts and circumstances of Ernst & Young LLPthe transaction, which may include factors such as our independent public accountants for fiscal 2014.
RELATED PARTY TRANSACTIONS
On July 12, 2013,the relationship of the related person with the Company, filed a prospectus relatingthe materiality or significance of the transaction to the Company and the related person, the business purpose and reasonableness of the transaction, whether the transaction is comparable to a rights offering pursuanttransaction that could be available to the Company on an arms-length basis, and the impact of the transaction on the Company’s business and operations.
Since the beginning of fiscal year 2020, the Company did not have any transactions to which it distributed,has been a participant that involved amounts that exceeded or will exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at no chargeyear-end for the last two completed fiscal years, and in which any of the Company’s directors, executive officers or any other “related person” as defined in Item 404(a) of Regulation S-K had or will have a direct or indirect material interest, other than:
•David Patience, who is the son of John Patience, our Chairman of the Board, is an employee of the Company. From January 2020 through June 2020 Mr. D. Patience's annual salary was $145,000. Mr. D. Patience participated in the 2020 Sub-Plan electing to holdersforfeit $60,000 in 2020 salary in exchange for 15,161 nonqualified stock options. From July 2020 through January 2021 Mr. D. Patience's annual salary was $170,000. On June 29, 2020, the Compensation Committee approved temporary salary reductions for Company management because of our common stock, asthe ongoing COVID-19 crisis. To compensate impacted employees, the Compensation Committee approved awards of 5:00 p.m., New York City time, on July 8, 2013, non-transferable subscription rights to purchaseRSUs under the 2012 Incentive Plan. Mr. D. Patience incurred a salary reduction of $12,500 in exchange for 1,355 RSUs. For the year ended December 31, 2020, Mr. D. Patience was granted an aggregate of up to 2,487,562 shares23,575 stock options, and for the year ended December 31, 2021, Mr. D. Patience was granted an aggregate of common stock45,414 RSUs.
•On March 22, 2018, the Company entered into a purchase agreement with J.P. Morgan Securities LLC, as representative of the several initial purchasers named therein (collectively, the “Rights Offering”“Initial Purchasers”). For each share, to issue and sell $150 million aggregate principal amount of common stock held by a stockholder of the Company at the close of business on the record date, such stockholder received 0.064038 subscription rights. Each whole subscription right allowed the holder thereof to subscribe to purchase one share of common stock at a subscription price of $8.04 per share. The terms of the Rights Offering also enabled stockholders to exercise an over-subscription privilege, subject to the conditions and limitations described in the prospectus.Pursuant to a Standby Purchase Agreement, Abeja Ventures, LLC (the “Standby Purchaser”) agreed to purchase any subscription rights remaining unexercised after the expiration of the Rights Offering at the $8.04 per share subscription price2.50% Convertible Senior Notes due 2023 in a private transaction separate fromplacement to qualified institutional buyers pursuant to Rule 144A under the Rights Offering. AsSecurities Act of 1933, as amended (the “securities Act”). In addition, the Company granted the Initial Purchasers a 13-day option to purchase up to an additional $22.5 million aggregate principal amount of the dateConvertible Notes on the same terms and conditions, which was partially exercised by the Initial Purchasers on April 4, 2018 and resulted in an aggregate of $171.5 million of Convertible Notes issued.
The Schuler Family Foundation (the “Foundation”) purchased an aggregate of $30.0 million of the Standby Purchase Agreement,Convertible Notes in the Standby PurchaserMarch 22, 2018 offering on the same terms as those under which other investors purchased the Convertible Notes, although no discount or commission in respect of such notes purchased by the Foundation was owned by, among other individuals and entities, Lawrence Mehren, John Patience, Jack Schuler and Matthew W. Strobeck, each of whom was a director of the Company. Messrs. Mehren and Patience also served as managers of the Standby Purchaser. No fees or other consideration were paid by the Company to the Standby PurchaserInitial Purchasers. During 2019 the Foundation purchased an additional $12.0 million of Convertible Notes on the open market. The Convertible Notes purchased by the Foundation constitute part of the same series as the other Convertible Notes sold in exchange for its commitmentthe offering, including with respect to voting rights under the Standby Purchase Agreement.Followingindenture governing the completionConvertible Notes. Jack Schuler, a member of our Board, is the President of the Rights Offering,Foundation
.
The Convertible Notes bear interest at a rate of 2.50% per year, payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2018. The Convertible Notes will mature on March 15, 2023, unless earlier repurchased by the Company issued a totalor converted pursuant to their terms. The initial conversion rate of 413,090the Convertible Notes is 32.3428 shares of Common Stock per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $30.92 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Common Stock, or a combination thereof, at its election.
For the years ended December 31, 2020 and 2021, interest on the Convertible Notes in the aggregate amount of $1.1 million and $1.1 million, respectively, was paid to the Foundation. In September 2021, the Foundation transferred by gift the $42.0 million aggregate principal amount of Notes held by the Foundation to the Schuler Initiative Supporting Charitable Trust, a tax-exempt organization that is not an affiliate of Mr. Schuler
•On August 20, 2019, the Company entered into a securities purchase agreement (the August 2019 Purchase Agreement”) with the John J. Phillips Investment Irrevocable Trust, dated July 31, 2019 (the “Phillips Trust”) for the issuance and sale by the Company of an aggregate of 55,586 shares of the Company’s Common Stock in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder. The shares were sold at a purchase price (determined in accordance with NASDAQ rules relating to the “market value” of the shares) of $17.99 per share, which was equal to the consolidated closing bid price reported by NASDAQ immediately preceding the time the Company entered into the August 2019 Purchase Agreement, for an aggregate purchase price of approximately $1 million. The spouse of Jack Phillips, our President and Chief Executive Officer and a member of our Board, is the beneficiary of the Phillips Trust, and a third-party serves as the trustee for the Phillips Trust.
•On December 24, 2020, the Company entered into a securities purchase agreement (the “December 2020 Securities Purchase Agreement”) with Jack W. Schuler, John Patience, Matthew Strobeck, Mark C. Miller, Thomas D. Brown and Jack Phillips, or entities affiliated with such persons (collectively, the “Original Purchasers”), for the issuance and sale by the Company of an aggregate of 4,166,663 shares of the Company’s common stock (the “Shares”), to the Original Purchasers in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder. Each of Jack W. Schuler, John Patience, Matthew Strobeck, Mark C. Miller, Thomas D. Brown and Jack Phillips is a member of the Board. Mr. Phillips also serves as the Company’s President and Chief Executive Officer. Additionally, on December 24, 2020, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Original Purchasers in connection with the December 2020 Securities Purchase Agreement pursuant to which the Company agreed to register the resale of the Shares pursuant to the terms set forth therein.
The Jack W. Schuler Living Trust a trust controlled by Mr.(the “Schuler Trust”), which was the entity affiliated with Jack W. Schuler (as assigneethat originally entered into the December 2020 Securities Purchase Agreement for the purchase of the Standby Purchaser’s rights under the Standby Purchase Agreement),3,964,843 Shares for a total cashan aggregate purchase price of $3,321,243.60.approximately $30.5 million, subsequently entered into an assignment and assumption agreement whereby it assigned all of its rights and obligations as an Original Purchaser to three other entities under the December 2020 Securities Purchase Agreement (collectively, the “Schuler Purchasers”). These three entities are related to Jack W. Schuler but are not affiliates of his.
Pursuant to the December 2020 Securities Purchase Agreement, the Original Purchasers agreed to purchase the Shares at a purchase price (determined in accordance with NASDAQ rules relating to the “market value” of the Company’s common stock) of $7.68 per share, which was equal to the consolidated closing bid price reported by NASDAQ immediately preceding the time the Company entered into the December 2020 Securities Purchase Agreement, for an aggregate purchase price of approximately $32 million.
The December 2020 Securities Purchase Agreement contemplated that the closing of the purchase and sale of the Shares would occur in three approximately equal tranches on the dates specified in the agreement or such other dates as the parties may agree, with the first and second tranches having closed on February 19, 2021 and April 9, 2021, respectively, whereby the Company received total proceeds of approximately $21.3 million.
On September 17, 2021, the Company entered into a rescission agreement (the “Rescission Agreement”) with the Schuler Purchasers and the Schuler Trust pursuant to which, effective as of January 29, 2021, the Company and the Schuler Purchasers agreed to rescind and unwind the December 2020 Securities Purchase Agreement and the Registration Rights Agreement for all legal, tax and financial purposes ab initio as if the related transactions, including the issuance and sale of an aggregate of 2,643,228 Shares in
the first two tranche closings and the third tranche (as discussed below) under the December 2020 Purchase Agreement, had never occurred with respect to the Schuler Purchasers and the Company. The Rescission Agreement was entered into due to the unanticipated legal, tax and/or financial consequences that may have otherwise resulted from the December 2020 Purchase Agreement and the Registration Rights Agreement.
On September 30, 2021, the Company closed the final third tranche in connection with the December 2020 Securities Purchase Agreement and received total proceeds of approximately $0.5 million. In accordance with the Rescission Agreement, the Schuler Purchasers did not participate in the third tranche. During the year ended December 31, 2021, the Company issued 201,820 Shares and received total proceeds of approximately $1.5 million under the December 2020 Securities Purchase Agreement. On February 3, 2022, the Company filed a registration statement on Form S-3 to register the resale of such Shares, which became effective on February 11, 2022.
•On September 22, 2021, the Company entered into a new securities purchase agreement (the “September 2021 Securities Purchase Agreement”) with the Schuler Purchasers for the issuance and sale by the Company of an aggregate of 3,954,546 shares of the Company’s newly designated Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Shares”), to the Schuler Purchasers in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder. The Series A Preferred Shares were sold at a purchase price of $7.70 per share for an aggregate purchase price of approximately $30.5 million. For additional information regarding the Series A Preferred Stock, see the Company’s Current Report on Form 8-K filed with the SEC on September 23, 2021.
•On November 29, 2021, the Schuler Trust purchased 1,000,000 shares of Common Stock at a price of $5.00 per share in an “at-the-market” (“ATM”) offering conducted by the Company under its ATM equity offering program established in May 2021.
The above related-party transactions were approved or ratified by the disinterested members of the Board.
A copy of our combined Annual Report is being furnished to Shareholders and Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as amended, will be mailed to the shareholders of record as of April 1, 2014 together with the mailing of this Proxy Statement.concurrently herewith. An additional copy of our Annual Report may be obtained fromhttps://materials.proxyvote.com/00430H,www.proxyvote.com, or will be furnished, without charge, to beneficial shareholders or shareholders of record as of the record date upon request in writing to the Company, Accelerate Diagnostics, Inc., 3950 South Country Club Road, Suite 470, Tucson, Arizona 85714 or by telephone to (520) 365-3100.
HOUSEHOLDING
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single set of these proxy materials addressed to those shareholders. This process, which is commonly referred to as “householding,” reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources.
Accordingly, Shareholders who share an address may receive only one copy of this Proxy Statement and the Annual Report unless contrary instructions are received. We will deliver promptly a separate copy of such proxy materials to any Shareholder who resides at a shared address and to which a single copy of the documents was delivered, if the Shareholder makes a request by contacting our Corporate Secretary at 3950 South Country Club Road, Suite 470, Tucson, Arizona 85714, or by telephone at (520) 365-3100. If you wish to receive separate copies of proxy statements and annual reports in the future, or if you are receiving multiple copies and would like to receive a single copy for your household, you should contact your broker, bank or other agent if your shares are held in street name. Alternatively, if you are a record holder of our Common Stock, you may contact Broadridge Financial Solutions Inc. either by calling toll-free at 1-800-542-1061, or by writing Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2023 ANNUAL MEETING
If any shareholderShareholder of the Company intends to present a proposal for consideration at the 2015 Annual Meeting of Shareholders and desires to have sucha proposal included in the Proxy StatementCompany’s 2023 proxy statement and form of proxy distributed by the Board pursuant to and in compliance with respect to such meeting,Rule 14a-8 under the Exchange Act, such proposal must be received at the Company’s offices, 3950 South Country Club Road, Suite 470, Tucson, Arizona 85714, Attention: Corporate Secretary, not later than December[], 2022. However, in the event that the Company holds its 2023 Annual Meeting of Shareholders more than 30 days before or 30 days after the one-year anniversary date of the 2022 Annual Meeting of Shareholders, the Company will disclose the new deadline by which shareholder proposals must be received under Item 5 of the Company’s earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably calculated to inform Shareholders.
Proposals to be presented at the 2023 Annual Meeting of Shareholders that are not intended for inclusion in the proxy statement, including director nominations, must be submitted by notice in writing and received by the Company at the above address no earlier than January 13, 2014. Proposals2023 nor later than by February 12, 2023. However, if the 2023 Annual Meeting of Shareholders is held more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the 2022 Annual Meeting of Shareholders, such notice must be so received afterno earlier than the close of business on the 120th day prior to the date of the 2023 Annual Meeting of Shareholders and not later than the close of business on the later of: (1) the 90th day prior to such annual meeting and (2) the 10th day following the date includingthe first public disclosure of the date of such annual meeting.
In addition, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 14, 2023.
Please refer to the advance notice provisions of our Amended and Restated Bylaws for additional information and requirements regarding shareholders proposals and director nominations. We will not consider any proposal or nomination that is not timely or otherwise does not meet our Amended and Restated Bylaws’ and the SEC’s requirements for submitting a proposal or nomination, as applicable. We reserve the right to reject, rule out of order or take other appropriate action with respect to theany proposal or nomination of directors, willthat does not be considered timely.For each matter that you wish to bring before the meeting, provide the following information:
| · | a brief description of the business and the reason for bringing it to the meeting; |
| · | your name and record address; |
| · | the number of shares of Company stock which you own; and |
| · | any material interest (such as financial or personal interest) that you have in the matter. |
comply with these and any other applicable requirements.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON THURSDAY, MAY 29, 2014This Proxy Statement12, 2022:
The proxy statement for the Annual Meeting and ourthe combined Annual Report to Shareholders and Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as amended,2021 are available via the Internet athttps://materials.proxyvote.com/00430Hwww.proxyvote.com.
We know of no other matters to be submitted for consideration by the shareholdersShareholders at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed proxy card to vote the shares they represent as the Board may recommend. It is important that your shares be represented at the meeting, regardless of the number of shares which you hold. You are therefore urged to execute and return, at your earliest convenience, the accompanying proxy card in the postage-prepaid envelope enclosed. You may also submit your proxy over the Internet or by telephone. For specific instructions, please refer to the information provided with your proxy card.
| | | | | | | By order of the Board of Directors, | | | | /s/ Jack Phillips | | Jack Phillips | | President and Chief Executive Officer |
APPENDIX A
CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF ACCELERATE DIAGNOSTICS, INC.
Accelerate Diagnostics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies as follows:
FIRST: That the following resolutions were duly adopted by the Corporation’s Board of Directors,/s/ Lawrence Mehren
Lawrence Mehren
President in accordance with the Corporation’s Bylaws and Chief Executive Officer
the General Corporation Law of the State of Delaware, setting forth a proposed amendment to the Certificate of Incorporation of the Corporation as follows:
RESOLVED, that the Certificate of Incorporation be amended by deleting the current text of the first paragraph of Article IV (Capital Stock) in its entirety and replacing it with the following text (the “Amendment”):
“The Corporation shall be authorized to issue two classes of shares of capital stock, to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of Common Stock and Preferred Stock that the Corporation shall have the authority to issue is two hundred and five million (205,000,000), of which two hundred million (200,000,000) shares shall be Common Stock, par value $0.001 per share, and five million (5,000,000) shares shall be Preferred Stock, par value $0.001 per share.”
FURTHER RESOLVED, any officer of the Corporation is authorized and directed to execute and file the Amendment with the Secretary of State of the State of Delaware and to take such further actions and execute such additional documents and make such additional filings as such officer shall determine to be necessary or appropriate to effectuate the foregoing resolutions.
FURTHER RESOLVED, that all actions heretofore taken by the officers, directors, or agents of the Corporation relating to the foregoing resolutions, be, and hereby are, approved, adopted, ratified, and confirmed in all respects.
SECOND: The foregoing Amendment to the Certificate of Incorporation was duly adopted by the Corporation’s Board of Directors in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
THIRD: The foregoing Amendment to the Certificate of Incorporation was duly approved by the Corporation’s stockholders in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Certificate of Incorporation to be signed by the undersigned duly authorized officer who declares under penalty of perjury that the matters set forth in the foregoing Certificate of Amendment are true and correct to his knowledge.
Dated: [•], 2022 29 | | | | | | | ACCELERATE DIAGNOSTICS, INC. | | | | | | Steve Reichling | | Chief Financial Officer |
ACCELERATE DIAGNOSTICS, INC.
2012 2022 OMNIBUS EQUITY INCENTIVE PLAN (as amended by the First Amendment to the Accelr8 Technology Corporation
2012 Omnibus Equity Incentive Plan)EFFECTIVE DATE: October 31, 2012
Approved by SHAREholders: DecemberDATE: March 16, 2022 APPROVED BY SHAREHOLDERS: May 12, 2012
2022 EXPIRATION DATE: October 31, 2022March 16, 2032
ARTICLE 1
ESTABLISHMENT; PURPOSE; GLOSSARY
1.1ESTABLISHMENT. Accelerate Diagnostics, Inc. (f/k/a Accelr8 Technology Corporation), a Delaware corporation (the “Company”), hereby establishes the Accelerate Diagnostics, Inc. 20122022 Omnibus Equity Incentive Plan (the “Plan”). The Plan will supersede and replace the 2004Company’s 2012 Omnibus Stock OptionEquity Incentive Plan (the “20042012 Plan”) and all other Prior Plans. No awards will be made pursuant to the 20042012 Plan or any other Prior Plan on or after the date it is approved by the Board (the “Effective Date”) (as defined below); provided, however, that, the 20042012 Plan and all Prior Plans shall remain in effect until all awards granted under the 2012 Plan and such Prior Plans have been exercised, forfeited, canceled,cancelled, or have otherwise expired or terminated in accordance with the terms of such awards.grants.
1.2PURPOSE. The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interest of the Participants to those of the Company’s shareholders by providing the Participants with an incentive for outstanding performance. To further these objectives, the Plan providesallows for the award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock Grants, Stock Units, Performance Shares, Performance Units, and Performance Cash.
1.3GLOSSARY. Defined terms used in this Plan are set forth in the attached Glossary, which is incorporated into and made part of this Plan.
ARTICLE 2
EFFECTIVE DATE; EXPIRATION DATE 2.1
2.1.EFFECTIVE DATE. The Plan will become effective on the date it is effective as ofapproved by the Effective Date, but is subject to the approval of the Company’s shareholders at the Company’s 20122022 Annual Meeting. Any Awards granted pursuant to the Plan, prior to shareholder approval, shall be expressly conditioned upon shareholder approval of the Plan.2.2Meeting (the “
Effective Date”).
2.2.EXPIRATION DATE. The Plan will expire on, and no Award may be granted under the Plan after, the 10th anniversary of the Effective Date. Any Awards that are outstanding on the 10th anniversary of the Effective Date shall remain in force according to the terms of the Plan and the Award Agreement.
ARTICLE 3 ADMINISTRATION 3.1COMMITTEE. The Plan shall be administered by the BoardCommittee or, with respect to individuals subject tonon-employee directors, the requirements of Section 16 of the Exchange Act or Covered Employees, the Committee.Board. The Committee shall consist of 2 or more individuals, each of whom qualifies as: (i)(a) a “non-employee director” as defined in Rule 16b-3(b)16b‑3(b)(3) of the General Rules and Regulations of the Exchange Act; and (ii) an “outside director” as defined in Section 162(m)(b) “independent” for purposes of the Code,NASDAQ Listing Rules (or rules of any other exchange upon which the Stock is then traded), in each case, as each such rule or regulation is in effect from time to time. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board. All references in the Plan to the “Committee” shall be, as applicable, to the Board or the Committee appointed by the Board, as applicable.Committee.
3.2ACTION BY THE COMMITTEE. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all of the members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.
3.3AUTHORITY OF COMMITTEE. The Committee has the power and authority to take the following actions: (i)(a) designate Participants to receive Awards; (ii)(b) determine the type or types of Awards and the times when Awards are to be granted to each Participant; (iii)(c) determine the number of Awards to be granted and the number of shares of Stock to which an Award will relate; (iv)(d) determine the terms and conditions of any Award, including, but
not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of restrictions or limitations, and accelerations or waivers thereof, based in each case on such considerations as the Committee determines; provided, however, that except in the context of a Change of Control, the Committee shall not have the authority to accelerate the vesting or waive the forfeiture restrictions of any Performance-Based Compensation Awards; (v)(e) determine whether, to what extent, and in what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property, or whether an Award may be canceled,cancelled, forfeited, exchanged or surrendered; (vi)(f) prescribe the form of each Award Agreement, which need not be identical for each Participant; (vii)(g) decide all other matters that must be determined in connection with an Award; (viii)(h) establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan; (ix)(i) amend or modify any outstanding Award to the extent the terms of such Award are within the power and authority of the Committee as provided under the Plan; (x)(j) interpret the terms of, and determine any matter arising pursuant to, the Plan or any Award Agreement and correct any defects and reconcile any inconsistencies in the Plan or any Award Agreement; and (xi)(k) make all other decisions or determinations that may be required pursuant to the Plan or an Award Agreement as the Committee deems necessary or advisable to administer the Plan.
3.4DECISIONS BINDING. The Committee’s interpretation of the Plan or any Award Agreement and all decisions and determinations by the Committee with respect to the Plan and any Award are final, binding, and conclusive on all parties. All authority of the Board and the Committee with respect to Awards issued pursuant to this Plan, including the authority to amend outstanding Awards, shall continue after the term of this Plan so long as any Award remains outstanding. Any action authorized to be taken by the Committee pursuant to the Plan may be taken or not taken by the Committee in the exercise of its discretion as long as such action or decision not to act is not inconsistent with a provision of this Plan.
3.5DELEGATION to CEO. The Committee may, in its discretion, delegate to the CEO, in writing, the power and authority to grant Awards to individualsemployees (other than to employees who are or willmay become upon hiring Covered Employees or employees subject to Section 16 of the Exchange Act) to expedite the hiring process or to retain talented employees. The Committee’s delegation to the CEO may be revoked or modified at any time. Any such delegation must be consistent with applicable law and shall be subject to such restrictions or limitations as may be imposed by the Committee. ARTICLE 4
SHARES SUBJECT TO THE PLAN
4.1NUMBER OF SHARES. Subject to the possible increases provided bySection 4.2(a) and adjustment as provided inSection 4.4, the total number of shares of Stock reserved and available for grant pursuant to the Plan is 5,500,000, plus the number of shares of Stock that were authorized but unissuedremain available or, as described in Section 4.2 otherwise become available, for grant under the terms of the 2012 Plan and all Prior Plans as offollowing the Effective Date, or 1,677,500 shares.Date. As provided in Section 1.1, no Awards will be made pursuant to the 20042012 Plan or any other Prior Plan on or after the Effective Date.
4.2shareSHARE COUNTING. For purposes of determining the number of shares of Stock available for grant under the Plan from time-to-time:
(a)In the event any Award granted under this Plan, or any award outstanding under any Prior Plan on or after the Effective Date, is forfeited, terminated, canceled,cancelled, or expired, the number of shares of Stock subject to such Award or Prior Plan award, to the extent of any such forfeiture, termination, cancellation or expiration, shall thereafter be available for grant under the Plan (i.e., any prior charge against the numeric limit in Section 4.1 shall be reversed).
(b)If shares of Stock are not delivered in connection with any Award because the Award is settled in cash such shares shall not be deemed to have been delivered for purposes of determining the maximum number ofrather than in Stock, no shares of Stock shall be counted against the limit set forth in Section 4.1. If an Award may be settled in cash or Stock, the rules set forth in Section 4.2(a) shall apply until the Award is settled, at which time the underlying shares of Stock will be added back to the shares available for delivery undergrant pursuant to Section 4.1 but only if the Plan and will again be available for grant.Award is settled in cash.
(c)The exercise of a stock-settled SAR or broker-assisted “cashless” exercise of an Option (or a portion thereof) will reduce the number of shares of Stock available for issuancegrant by the entire number of shares of Stock subject to that SAR or Option (or applicable portion thereof), even though a smaller number of shares of Stock will be issued upon such an exercise.
(d)Shares of Stock tendered to pay the exercise price of an Option or tendered, withheld or
otherwise relinquished by the Participant to satisfy a tax withholding obligation arising in connection with any Award will not become available for grant under the Plan. Moreover, shares of Stock purchased on the open market with cash proceeds generated by the exercise of an Option or SAR will not increase or replenish the number of shares available for grant.
(e)If the provisions of thisSection 4.2 are inconsistent with the requirements of any regulations promulgated by the Internal Revenue Service pursuant to Section 422 of the Code, the provisions of such regulations shall control over the provisions of thisSection 4.2, but only as thisSection 4.2 applies to Incentive Stock Options.
(f)The Committee may adopt such other reasonable rules and procedures as it deems to be appropriate for purposes of determining the number of shares of Stock that are available for grant pursuant toSection 4.1.
4.3STOCK DISTRIBUTED. Any shares of Stock delivered pursuant to an Award may consist, in whole or in part, of authorized but unissued Stock or treasury Stock or Stock purchased on the open market.
4.4ADJUSTMENTS. In the event of any recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with respect to the shares of Stock, or any similar corporate transaction or event in respect of the Stock, the Committee shall, in its sole discretion and to the extent it deems equitable and appropriate to prevent dilution or enlargement of rights, make a proportionate adjustment in: (i)(a) the number and class of shares of Stock made available for grant pursuant toSection 4.1; (ii)(b) the number of shares of Stock set forth inSection 7.2,Section 12.9,7.2(h) and any other similar numeric limit expressed in the Plan; (iii)(c) the number and class of and/or price of shares of Stock, units, or other rights subject to the then-outstanding Awards; (iv)(d) the performance targets or goals appropriate to any outstanding Awards (subject to such limitations as appropriate for Performance-Based Compensation Awards);Awards; or (v)(e) any other terms of an Award that are affected by the event. Notwithstanding anything in the Plan to the contrary, in the event of any such transaction or occurrence, the Committee, in its sole discretion, may provide in substitution for any or all outstanding Awards such alternative consideration (including cash) as it, in good faith, may determine to be equitable under the circumstances and may require in connection therewith the surrender of all Awards so replaced. Any adjustments made pursuant to thisSection 4.4 shall be made in a manner consistent with the requirements of Section 409A of the Code and, in the case of Incentive Stock Options, any such adjustments shall be made in a manner consistent with the requirements of Section 424(a) of the Code.
4.5REPLACEMENT AWARDS. In the event of any corporate transaction in which the Company or a Subsidiary acquires a corporate entity which, at the time of such transaction, maintains an equity compensation plan pursuant to which awards of stock options, stock appreciation rights, restricted stock, performance shares, performance units, stock grants, stock units, restricted stock units or any other form of equity based compensation are then outstanding (the “Acquired Plan”), the Committee may make Awards to assume, substitute or convert such outstanding awards in such manner as may be determined to be appropriate and equitable by the Committee; provided, however, that the number of shares of Stock subject to any Award shall always be a whole number by rounding any fractional share to the nearest whole share. To the extent permitted by Section 409A of the Code, Options or SARs issued pursuant to thisSection 4.5 shall not be subject to the requirement that the exercise price of such Award not be less than the Fair Market Valuefair market value of Stock on the date the Award is granted. Shares used in connection with an Award granted in substitution for an award outstanding under an Acquired Plan under thisSection 4.5 shall not be counted against the number of shares of Stock reserved under this Plan underSection 4.1. Any shares of Stock authorized and available for issuance under the Acquired Plan shall,may, subject to adjustment as described inSection 4.4, be available for use in making Awards under this Plan with respect to persons eligible under such Acquired Plan, by virtue of the Company’s assumption of such Acquired Plan, consistent with NASDAQ Listing Rules (or rules of any other exchange upon which the Stock is then traded), including, but not limited to, NASDAQ Rule 5635(c), including IM-5635-1, as such Rules may be amended or replaced from time to time.
4.6FRACTIONAL SHARES.No fractional shares shall be issued pursuant to the Plan. Unless the Committee specifies otherwise in the Award Agreement or pursuant to any policy adopted by the Committee, cash will be given in lieu of fractional shares. In the event of adjustment as provided inSection 4.4 or the issuance of replacement awards as provided inSection 4.5, the total number of shares subject to any affected Award shall always be a whole number by rounding any fractional shares to the nearest whole share.
4.7LIMIT ON NON-EMPLOYEE DIRECTOR AWARDS. Notwithstanding any other provision in the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any non-employee director during any fiscal year, plus the aggregate amount of all cash payments made to such non-employee director for services rendered as a director for the same fiscal year, shall not exceed $500,000 (the “Annual Director Compensation Limit”). For the avoidance of doubt, any compensation that is deferred shall be counted toward the Annual Director Compensation Limit during the year in which it is first earned.
ARTICLE 5
ELIGIBILITY; PARTICIPATION
5.1ELIGIBILITY. Persons eligible to participate in this Plan include members of the Board and employees and officers of the Company and its Subsidiaries. The Committee may determine on a case-by-case basis to make Awards to consultants and advisersConsultants to the Company or any Subsidiary. Awards may also be granted to prospective employees or members of the Board but no portion of any such Award will vest, become exercisable, be issued, or become effective prior to the date on which such individual begins to provide services to the Company or any Subsidiary.
5.2ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible Participants those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any right to be selected to receive an Award, or having been so selected, to be selected to receive a future Award, except as otherwise provided by separate agreement, the relevant provisions of which have been approved by the Committee.
ARTICLE 6
GENERAL RULES APPLICABLE TO ALL AWARDS
6.1AWARD AGREEMENTS. All Awards shall be evidenced by an Award Agreement. The Award Agreement shall include such terms and provisions as the Committee determines to be appropriate. The terms of the Award Agreement may vary depending on the type of Award, the employee or classification of the employee to whom the Award is made and such other factors as the Committee determines to be appropriate.
6.2STAND-ALONE AND TANDEM AWARDS. Awards granted pursuant to the Plan may be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan or any Prior Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.
6.3TERM OF AWARD. The term of each Award shall be for the period determined by the Committee,Committee; provided, that, in no event shall the term of any Option or Stock Appreciation Right exceed a period of 10 years from the Date of Grant.
6.4TERMINATION OF EMPLOYMENT OR SERVICE. Subject to the provisions of this Plan, the Committee shall determine and set forth in the applicable Award Agreement the extent to which a Participant shall have the right to retain and/or exercise an Award following Termination of Employment (or Termination of Service in the case of a member of the Board)Service). Such provisions need not be uniform among all types of Awards and may reflect distinctions based on the reasons for such terminations, including but not limited to, death, Disability, a Change of Control, a termination for cause or reasons relating to the breach or threatened breach of restrictive covenants.
6.5FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan, the Award Agreement and any applicable law, payments or transfers to be made by the Company or any Subsidiary on the grant, exercise or settlement of an Award may be made in such forms as determined by the Committee, including, without limitation, cash, Stock, other Awards, or other property, or any combination thereof, and may be made in a single payment or transfer, in installments, or any combination thereof, in each case determined in accordance with applicable law and rules adopted by the Committee.ARTICLE 76.6LIMITS ON TRANSFER.
GENERAL(a). Subject to the terms and provisions of the Plan, Options may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. The Committee may grant either Nonqualified Stock Options or Incentive Stock Options and shall have complete discretion in determining the number of shares subject to Options granted to each Participant. Option Awards are subject to the following terms and conditions:(a)Exercise Price. The exercise price per share of Stock pursuant to any Option shall be equal to the Fair Market Value of one share of Stock as of the Date of Grant unless the Committee sets a higher exercise price in the Award Agreement.
(b)Exercise of Option. Options shall be exercisable at such times and in such manner, and shall be subject to such restrictions and conditions, as the Committee shall, in each instance approve, which need not be the same for each grant or for each Participant. The Committee may prescribe performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised.
(c)Term of Option. Each Option shall expire at such time as the Committee shall determine as of the Date of Grant; provided, however, that no Option shall be exercisable later than the 10th anniversary of the Date of Grant.
(d)Payment. The exercise price for any Option shall be paid in cash or shares of Stock held for longer than 6 months (through actual tender or by attestation). In the Award Agreement, the Committee also may prescribe other methods by which the exercise price of an Option may be paid and the form of payment including, without limitation, any net-issuance arrangement or other property acceptable to the Committee (including broker-assisted “cashless exercise” arrangements), and the methods by which shares of Stock shall be delivered or deemed to be delivered to Participants. The Committee, in consideration of applicable accounting standards and applicable law, may waive the 6 month share holding period described in the first sentence of this paragraph (d) in the event payment of an Option is made through the tendering of shares.
(e)Repricing of Options. Notwithstanding any other provision in the Plan to the contrary, without approval of the Company’s shareholders, an Option may not be amended, modified or repriced to reduce the exercise price after the Date of Grant. Except as otherwise provided inSection 4.4 with respect to an adjustment in capitalization, an Option also may not be surrendered in consideration of or exchanged for cash, other Awards or a new Option having an exercise price below the exercise price of the Option being surrendered or exchanged.
(f)Nontransferability of Options. No Option may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all Options granted to a Participant shall be exercisable during his or her lifetime only by such Participant or his or her legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, permit the transfer of an Option to a Family Member, trust or partnership, or to a charitable organization, provided that no value or consideration is received by the Participant with respect to such transfer.
7.2INCENTIVE STOCK OPTIONSGeneral. The following additional rules shall apply to Incentive Stock Options granted pursuant to this Article 7:
(a)Employees Only. Incentive Stock Options shall be granted only to Participants who are employees of the Company or any Subsidiary.
(b)Exercise Price. Except as provided inSection 7.2(f), the exercise price per share of Stock pursuant to any Incentive Stock Option shall be equal to the Fair Market Value of one share of Stock as of the Date of Grant unless the Committee sets a higher exercise price in the Award Agreement.
(c)Term of Incentive Stock Option. In no event may any Incentive Stock Option be exercisable for more than 10 years from the Date of Grant.
(d)Lapse of Option. An Incentive Stock Option shall lapse in the following circumstances:
(1) The Incentive Stock Option shall lapse 10 years from the Date of Grant, unless an earlier time is specified in the Award Agreement;
(2) The Incentive Stock Option shall lapse upon a Termination of Employment for any reason other than the Participant’s death or Disability, unless otherwise provided in the Award Agreement; and
(3) If the Participant incurs a Termination of Employment on account of death or Disability before the Option lapses pursuant to paragraph (1) or (2), the Incentive Stock Option shall lapse on the earlier of: (i) the scheduled expiration date of the Option; or (ii) 12 months after the date of the Participant’s Termination of Employment on account of death or Disability. Upon the Participant’s death or Disability, any Incentive Stock Options exercisable at the Participant’s death or Disability may be exercised by the Participant’s legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant’s last will and testament in the case of death, or, if the Participant fails to make testamentary disposition of such Incentive Stock Option or dies intestate, by the person or persons entitled to receive the Incentive Stock Option pursuant to the applicable laws of descent and distribution.
(e)Individual Dollar Limitation. The aggregate Fair Market Value (determined as of the time an Award is made) of all shares of Stock with respect to which Incentive Stock Options are first exercisable by a Participant in any one calendar year may not exceed $100,000 or such other limitation as may then be imposed by Section 422(d) of the Code or any successor provision. To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Nonqualified Stock Options.
(f)Ten Percent Owners. An Incentive Stock Option may be granted to any employee who, at the Date of Grant, owns stock possessing more than 10% of the total combined voting power of all classes of Stock of the Company only if such Option is granted at a price that is not less than 110% of Fair Market Value on the Date of Grant and the Option is exercisable for no more than 5 years from the Date of Grant.
(g)Right to Exercise. Except as provided inSection 7.2(d)(3), during a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant.
(h)Limitations on Number of Shares Subject to Awards. The maximum number of shares that may be issued under the Plan as Incentive Stock Options is the numeric limit set forth in Section 4.1.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1GENERAL. Subject to the terms and provisions of the Plan, SARs may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. The Committee shall have complete discretion in determine the number of SARs granted to each Participant. SARs are subject to the following terms and conditions:
(a)Base Value. The base value per share of Stock pursuant to any SAR shall be equal to the Fair Market Value of one share of Stock as of the Date of Grant unless the Committee sets a higher base value in the Award Agreement.
(b)Exercise of SAR. SARs shall be exercisable at such times and in such manner, and shall be subject to such restrictions and conditions, as the Committee shall, in each instance approve, which need not be the same for each grant or for each Participant. The Committee may prescribe performance or other conditions, if any, that must be satisfied before all or part of a SAR may be exercised.
(c)Term of SAR. Each SAR shall expire at such time as the Committee shall determine as of the Date of Grant; provided, however, that no SAR shall be exercisable later than the 10th anniversary of the Date of Grant.
(d)Payment of SAR Amount. Upon exercise of the SAR, the Participant shall be entitled to receive a payment equal to the amount determined by multiplying (a) the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise over the base value fixed by the Committee on the Date of Grant, by (b) the number of shares with respect to which the SAR is exercised. Payment shall be made in the manner and at the time specified by the Committee in the Award Agreement. At the discretion of the Committee, the Award Agreement may provide for payment for the SARs in cash, shares of Stock of equivalent value, or in a combination thereof.
(e)Repricing of SARs. Notwithstanding any other provision in the Plan to the contrary, without approval of the Company’s shareholders, a SAR may not be amended, modified or repriced to reduce the exercise price after the Date of Grant. Except as otherwise provided inSection 4.4 with respect to an adjustment in capitalization, a SAR also may not be surrendered in consideration of or exchanged for cash, other Awards or a new SAR having an exercise price below the exercise price of the SAR being surrendered or exchanged.
(f)Nontransferability of SARs. No SAR may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all SARs granted to a Participant shall be exercisable during his or her lifetime only by such Participant or his or her legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, permit the transfer of an SAR to a Family Member, trust or partnership, or to a charitable organization, provided that no value or consideration is received by the Participant with respect to such transfer.
ARTICLE 9
RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS
9.1GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the Plan, Restricted Stock may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. Restricted Stock Awards are subject to the following terms and conditions:
(a)Restrictions. Restricted Stock shall be subject to such conditions and/or restrictions as the Committee may impose (including, without limitation, limitations on transferability, the right to receive dividends, or the right to vote the Restricted Stock), which need not be the same for each grant or for each Participant. These restrictions may lapse separately or in combination at such times, in such circumstances, in such installments, or otherwise, as determined by the Committee. Except as otherwise provided in the Award Agreement, Participants holding shares of Restricted Stock may not exercise voting rights with respect to the shares of Restricted Stock during the period of restriction.
(b)Forfeiture. Except as otherwise provided in the Award Agreement, upon a Termination of Employment (or Termination of Service in the case of a member of the Board) during the applicable period of restriction, Restricted Stock that is at that time subject to restrictions shall be forfeited. The Committee may provide in the Award Agreement that the restrictions or forfeiture conditions relating to a Restricted Stock Award will be waived in whole or in part in the event of a Termination of Employment (or Termination of Service in the case of a member of the Board) resulting from specified causes. The Committee also may waive in whole or in part any other restrictions or forfeiture conditions relating to a Restricted Stock Award.
(c)Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing shares of Restricted Stock are registered in the name of the Participant, the certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may retain physical possession of the certificate until such time as all applicable restrictions lapse.
9.2GRANT OF RESTRICTED STOCK UNITS.Subject to the terms and provisions of the Plan, Restricted Stock Units may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. Restricted Stock Unit Awards are subject to the following terms and conditions:
(a)Restrictions. Restricted Stock Unit Awards grant a Participant the right to receive a specified number of shares of Stock, or a cash payment equal to the Fair Market Value (determined as of a specified date) of a specified number of shares of Stock, subject to such conditions and/or restrictions as the Committee may impose, which need not be the same for each grant or for each Participant. These restrictions may lapse separately or in combination at such times, in such circumstances, in such installments, or otherwise, as determined by the Committee.
(b)Forfeiture. Except as otherwise provided in the Award Agreement, upon a Termination of Employment (or Termination of Service in the case of a member of the Board) during the applicable period of restriction, Restricted Stock Units that are at that time subject to restrictions shall be forfeited. The Committee may provide in any Award Agreement that restrictions or forfeiture conditions relating to a Restricted Stock Unit Award will be waived in whole or in part in the event of a Termination of Employment (or Termination of Service in the case of a member of the Board) resulting from specified causes. The Committee also may waive in whole or in part any other restrictions or forfeiture conditions relating to a Restricted Stock Unit Award.
(c)Payment. Payment for vested Restricted Stock Units shall be made in the manner and at the time designated by the Committee in the Award Agreement. In the Award Agreement, the Committee may provide that payment will be made in cash or Stock, or in a combination thereof.
ARTICLE 10
STOCK GRANT AND STOCK UNIT AWARDS
10.1STOCK GRANT AWARDS.Subject to the terms and provisions of the Plan, Stock Grant Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Stock Grant Award grants the Participant the right to receive (or purchase at such price as determined by the Committee) a designated number of shares of Stock free of any vesting restrictions. The purchase price, if any, for a Stock Grant Award shall be payable in cash or other form of consideration acceptable to the Committee. A Stock Grant Award may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to such Participant.
10.2STOCK UNIT AWARDS.Subject to the terms and provisions of the Plan, Stock Unit Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Stock Unit Award grants the Participant the right to receive a designated number of shares of Stock, or a cash payment equal to the Fair Market Value (determined as of a specified date) of a designated number of shares of Stock, in the future free of any vesting restrictions. A Stock Unit Award may be granted as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to such Participant.
ARTICLE 11
PERFORMANCE SHARES; PERFORMANCE UNITS;
AND PERFORMANCE CASH AWARDS
11.1PERFORMANCE SHARE AWARDS.Subject to the terms and provisions of the Plan, Performance Share Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Performance Share Award grants the Participant the right to receive a specified number of shares of Stock depending on the satisfaction of any one or more Performance Goals. Performance may be measured on a specified date or dates or over any period or periods determined by the Committee. Unless otherwise provided in the Award Agreement, payment for vested Performance Shares shall be made in Stock.
11.2PERFORMANCE UNIT AWARDS.Subject to the terms and provisions of the Plan, Performance Unit Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Performance Unit Award grants the Participant the right to receive a specified number of shares of Stock or a cash payment equal to the Fair Market Value (determined as of a specified date) of a specified number of shares of Stock depending on the satisfaction of any one or more Performance Goals. Performance may be measured on a specified date or dates or over any period or periods determined by the Committee. At the discretion of the Committee, the Award Agreement may provide for payment for vested Performance Unit Awards in cash, shares of Stock of equivalent cash value, or in a combination thereof.
11.3PERFORMANCE CASH AWARDS.Subject to the terms and provisions of the Plan, Performance Cash Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Performance Cash Award grants the Participant the right to receive an amount of cash depending on the satisfaction of any one or more Performance Goals. Performance may be measured on a specified date or dates or over any period or periods determined by the Committee.
11.4PERFORMANCE GOALS. The Performance Goal or Goals applicable to any Performance Share, Performance Unit or Performance Cash Award shall be based on the Performance Criteria selected by the Committee and designated in the Award Agreement. The Performance Criteria applicable to any Performance Share, Performance Unit or Performance Cash Award granted to a Covered Employee that is designated as, or deemed to be, a Performance-Based Compensation Award pursuant toArticle 12 shall be limited to the Performance Criteria specifically listed in the Glossary. The Performance Criteria applicable to any other Performance Share, Performance Unit or Performance Cash Award shall include the Performance Criteria specifically listed in the Glossary and such other criteria or factors as may be determined by the Committee and specified in the Award Agreement. Except as otherwise provided inArticle 12 with respect to Performance-Based Compensation Awards to Covered Employees, the Committee shall retain the power to adjust the Performance Goals, the level of attainment of the Performance Goals or otherwise increase or decrease the amount payable with respect to any Award made pursuant to thisArticle 11.
ARTICLE 12
PERFORMANCE-BASED COMPENSATION AWARDS
12.1PURPOSE. Section 162(m) of the Code limits the amount of the Company’s deductions for compensation payable to Covered Employees to $1,000,000 per year. “Performance-based compensation” that meets the requirements set forth in Section 162(m) of the Code is not subject to this limitation. The purpose of thisArticle 12 is to enable the Committee to qualify some or all of the Awards granted pursuant toArticles 9, 10 and 11 as “performance-based compensation” pursuant to Section 162(m) of the Code. If the Committee decides that a particular Award to a Covered Employee should qualify as “performance-based compensation,” the Committee will provide in the Award Agreement or otherwise that the Award is intended to be a Performance-Based Compensation Award.
12.2APPLICABILITY. ThisArticle 12 shall apply only to Performance-Based Compensation Awards. If thisArticle 12 applies, its provisions control over any contrary provision contained in any other section of this Plan or any Award Agreement. The provisions of thisArticle 12 and any Award Agreement for a Performance-Based Compensation Award shall be interpreted in a manner consistent with the requirements of Section 162(m) of the Code. If any provision of this Plan or any Award Agreement for a Performance-Based Compensation Award does not comply with or is inconsistent with the requirements of Section 162(m) of the Code, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.
12.3DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE-BASED COMPENSATION AWARDS. With regard to a particular Performance Period, the Committee may select the length of such Performance Period, the type of Performance-Based Compensation Awards to be issued, the kind and/or level of the Performance Goal or Goals, and whether the Performance Goal or Goals is or are to apply to the Company, a Subsidiary or any division or business unit thereof or the Participant or any group of Participants. Depending on the Performance Criteria used to establish the Performance Goals, the Performance Goals may be stated in terms of absolute levels or relative to another company or to an index or indices.
12.4ESTABLISHMENT OF PERFORMANCE GOALS. A Performance-Based Compensation Award shall provide for payment only upon the attainment of one or more pre-established, objective Performance Goals. The Performance Goals, and the process by which they are established, shall satisfy all of the requirements of Section 162(m) of the Code. By way of illustration, but not limitation, the following requirements must be satisfied:
(a) The Performance Goals shall be based solely on the Performance Criteria specifically identified in the Glossary;
(b) The Performance Goals shall be considered to be pre-established only if the Performance Goals are established by the Committee in writing not later than 90 days after the commencement of the Performance Period for such Award provided that (i) the outcome must be substantially uncertain at the time the Committee establishes the Performance Goals; and (ii) in no event may the Committee establish the Performance Goals for any Performance-Based Compensation Award after 25% of the Performance Period for such Award has elapsed;
(c) A Performance Goal will be considered to be objective only if a third party having knowledge of the relevant facts could determine whether the Performance Goal has been met;
(d) The Performance Goal must state, in terms of an objective formula or standard, the method for computing the amount of compensation payable to the Covered Employee if the Goal is attained. For this purpose, the formula will be considered to be objective only if a third party having knowledge of the relevant performance results could calculate the amount to be paid to the Covered Employee; and
(e) The objective formula or standard must preclude discretion to increase the amount of compensation payable that would otherwise be due upon attainment of the Performance Goal.
12.5PERFORMANCE EVALUATION; ADJUSTMENT OF GOALS. At the time that a Performance-Based Compensation Award is first issued, the Committee, in the Award Agreement or in another written document, shall specify whether performance will be evaluated including or excluding the effect of any of the following events that occur during the Performance Period, as the Committee deems appropriate: (i) decisions entered or settlements reached in litigation or regulatory proceedings; (ii) the write down or sale of assets; (iii) the impact of discontinued operations or any reorganization, liquidation or restructuring; (iv) the impact of changes in tax laws, accounting principles, regulatory actions or other laws affecting reported results; (v) extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual or quarterly reports filed with the Securities and Exchange Commission in respect of the applicable year; (vi) the impact of any mergers, acquisitions, spin-offs or other divestitures; and (vii) foreign exchange gains and losses.
The inclusion or exclusion of these items shall be expressed in a form that satisfies the requirements of Section 162(m) of the Code. The Committee also may, within the time prescribed by Section 162(m), adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants: (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development; or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.
12.6ADJUSTMENT OF PERFORMANCE-BASED COMPENSATION AWARDS.The Committee may adjust the determinations of the degree of attainment (taking into account any adjustments required pursuant toSection 12.5) of the pre-established Performance Goals. Notwithstanding any provision herein to the contrary, the Committee may not make any adjustment or take any other action with respect to any Performance-Based Compensation Award that will increase the amount payable under any such Award. The Committee shall retain the power to adjust Performance-Based Compensation Awards downward or to otherwise reduce the amount payable with respect to any Performance-Based Compensation Award.
12.7CONTINUED EMPLOYMENT REQUIRED. Unless otherwise provided in the relevant Award Agreement, a Participant must be an employee of the Company or a Subsidiary on the day a Performance-Based Compensation Award for such Performance Period is paid to the Participant.
12.8CERTIFICATION BY COMMITTEE.The payment for a Performance-Based Compensation Award shall not occur until the Committee certifies, in writing, that the pre-established Performance Goals and any other material terms and conditions precedent to such payment have been satisfied. Committee certification is not required for compensation that is attributable solely to the increase in the value of the Company’s Stock.
12.9MAXIMUM AWARD PAYABLE. The maximum Performance-Based Compensation Award (other than a Performance Cash Award) payable to any one Participant pursuant to the Plan for any Performance Period is 400,000 shares of Stock or the equivalent cash value. The maximum Performance Cash Award payable to any one Participant for any Performance Period is $1,500,000. If the Performance Period is less than or exceeds 12 months, the dollar and share limits expressed in the preceding sentences shall be reduced or increased proportionately, as the case may be. For example, if the Performance Period is 3 years, the limit shall be increased by multiplying it by 3.
12.10MISCELLANEOUS. The designation of a Covered Employee as a Participant for any Performance Period shall not in any manner entitle the Participant to receive a Performance-Based Compensation Award for such Performance Period. Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such Covered Employee as a Participant for any subsequent Performance Period.
ARTICLE 13
OTHER PROVISIONS APPLICABLE TO ALL AWARDS
13.1LIMITS ON TRANSFER.
(a)General. Except as provided inSection 7.1(f),Section 8.1(f),Section 13.1(b)6.6(b) orSection 13.26.7, no right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to, or in
favor of, any party other than the Company or any Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or any Subsidiary and except as otherwise provided by the Committee, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution or, pursuant to a domestic relations order (that would otherwise qualify as a qualified domestic relations order as defined in the Code or Title I of ERISA but for the fact that the order pertains to an Award) in favor of a spouse or, if applicable, until the expiration of any period during which any restrictions are applicable or any Performance Period as determined by the Committee.
(b)Transfers to Family Members. The Committee shall have the authority to adopt a policy that is applicable to existing Awards, new Awards, or both, which permits a Participant to transfer Awards during his or her lifetime to any Family Member. In the event an Award is transferred as permitted by such policy, such transferred Award may not be subsequently transferred by the transferee (other than another transfer meeting the conditions set forth in the policy) except by will or the laws of descent and distribution. A transferred Award shall continue to be governed by and subject to the terms and limitations of the Plan and relevant Award Agreement, and the transferee shall be entitled to the same rights as the Participant, as if the transfer had not taken place.13.2
6.7BENEFICIARIES. NotwithstandingSection 13.16.6, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death, and, in accordance withSection 7.2(d)(3), upon the Participant’s Disability. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the Participant’s spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is provided to the Company.13.3
6.8STOCK CERTIFICATES. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the BoardCommittee has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange or quotation system on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the BoardCommittee may require that a Participant make such reasonable covenants, agreements, and representations, as the BoardCommittee deems advisable in order to comply with any such laws, regulations, or requirements.13.4
6.9CLAWBACK. Notwithstanding any provision of the Plan to the contrary, in an Award Agreement, the Committee shall include provisions calling for the recapture or clawback of all or any portion of an Award to the extent necessary to comply with applicable law in effect on the date of the Award Agreement, including, but not limited to, the final rules issued by the Securities and Exchange Commission and the NASDAQ Listing Rules (or any other exchange upon which the Stock is then listed) pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Committee also may include other clawback provisions in the Award Agreement as it determines to be appropriate. By accepting an Award, each Participant agrees to be bound by, and comply with, the terms of any such recapture or clawback provisions and with any Company request or demand for recapture or clawback.
6.10DIVIDEND EQUIVALENTS. With respect to any Award that vests based on the achievement of Performance Goals, in no event will any dividend equivalent award vest or be paid prior to the attainment of the Performance Goals applicable to the corresponding Award and such dividend equivalent awards shall only be paid to the Participant if and to the extent that the Performance Goals related to the corresponding Award are satisfied. No dividend equivalents awards may be awarded in connection with an award of Stock Options or SARs.
ARTICLE 147 STOCK OPTIONS
7.1GENERAL. Subject to the terms and provisions of the Plan, Options may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. The Committee may grant either Nonqualified Stock Options or Incentive Stock Options and shall have complete discretion in determining the number of shares subject to Options granted to each Participant. Option Awards are subject to the following terms and conditions:
(a)Exercise Price. The exercise price per share of Stock pursuant to any Option shall be equal to the Fair Market Value of one share of Stock as of the Date of Grant unless the Committee sets a higher exercise price in the Award Agreement.
(b)Exercise of Option. Options shall be exercisable at such times and in such manner, and shall be subject to such restrictions and conditions, as the Committee shall, in each instance approve, which need not be the same for each grant or for each Participant. The Committee may prescribe performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised.
(c)Term of Option. Each Option shall expire at such time as the Committee shall determine as of the Date of Grant; provided, however, that no Option shall be exercisable later than the 10th anniversary of the Date of Grant.
(d)Payment. The exercise price for any Option shall be paid in cash or shares of Stock held for longer than 6 months (through actual tender or by attestation). In the Award Agreement, the Committee also may prescribe other methods by which the exercise price of an Option may be paid and the form of payment including, without limitation, any net-issuance arrangement or other property acceptable to the Committee (including broker-assisted “cashless exercise” arrangements), and the methods by which shares of Stock shall be delivered or deemed to be delivered to Participants. The Committee, in consideration of applicable accounting standards and applicable law, may waive the 6-month share holding period described in the first sentence of this paragraph (d) in the event payment of an Option is made through the tendering of shares.
(e)Repricing of Options. Notwithstanding any other provision in the Plan to the contrary, without approval of the Company’s shareholders, an Option may not be amended, modified or repriced to reduce the exercise price after the Date of Grant. Except as otherwise provided in Section 4.4 with respect to an adjustment in capitalization, an Option also may not be surrendered in consideration of or exchanged for cash, other Awards or a new Option having an exercise price below the exercise price of the Option being surrendered or exchanged.
(f)Nontransferability of Options. No Option may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all Options granted to a Participant shall be exercisable during his or her lifetime only by such Participant or his or her legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, permit the transfer of an Option to a Family Member, trust or partnership, or to a charitable organization, provided that no value or consideration is received by the Participant with respect to such transfer.
7.2INCENTIVE STOCK OPTIONS. The following additional rules shall apply to Incentive Stock Options granted pursuant to this Article 7:
(a)Employees Only. Incentive Stock Options shall be granted only to Participants who are employees of the Company or any Subsidiary.
(b)Exercise Price. Except as provided in Section 7.2(f), the exercise price per share of Stock pursuant to any Incentive Stock Option shall be equal to the Fair Market Value of one share of Stock as of the Date of Grant unless the Committee sets a higher exercise price in the Award Agreement.
(c)Term of Incentive Stock Option. In no event may any Incentive Stock Option be exercisable for more than 10 years from the Date of Grant.
(d)Lapse of Option. An Incentive Stock Option shall lapse in the following circumstances:
(1)The Incentive Stock Option shall lapse 10 years from the Date of Grant, unless an earlier time is specified in the Award Agreement;
(2)The Incentive Stock Option shall lapse upon a Termination of Employment for any reason other than the Participant’s death or Disability, unless otherwise provided in the Award Agreement; and
(3)If the Participant incurs a Termination of Employment on account of death or Disability before the Option lapses pursuant to paragraph (1) or (2), the Incentive Stock Option shall lapse on the earlier of: (i) the scheduled expiration date of the Option; or (ii) 12 months after the date of the Participant’s Termination of Employment on account of death or Disability. Upon the Participant’s death or Disability, any Incentive Stock Options exercisable at the Participant’s death or Disability may be exercised by the Participant’s legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant’s last will and testament in the case of death, or, if the Participant fails to make testamentary disposition of such Incentive Stock Option or dies intestate, by the person or persons entitled to receive the Incentive Stock Option pursuant to the applicable laws of descent and distribution.
(e)Individual Dollar Limitation. The aggregate fair market value (determined as of the time an Award is made and in accordance with Section 422 of the Code) of all shares of Stock with respect to which Incentive Stock Options are first exercisable by a Participant in any one calendar year may not exceed $100,000 or such other limitation as may then be imposed by Section 422(d) of the Code or any successor provision. To the extent that Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Nonqualified Stock Options.
(f)Ten Percent Owners. An Incentive Stock Option may be granted to any employee who, at the Date of Grant, owns stock possessing more than 10% of the total combined voting power of all classes of Stock of the Company only if such Option is granted at a price that is not less than 110% of Fair Market Value on the Date of Grant and the Option is exercisable for no more than 5 years from the Date of Grant.
(g)Right to Exercise. Except as provided in Section 7.2(d)(3), during a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant.
(h)Limitations on Number of Shares Subject to Awards. Subject to adjustment as provided in Section 4.4, the maximum number of shares that may be issued under the Plan as Incentive Stock Options is the numeric limit set forth in Section 4.1.
ARTICLE 8 STOCK APPRECIATION RIGHTS
8.1GENERAL. Subject to the terms and provisions of the Plan, SARs may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. The Committee shall have complete discretion in determine the number of SARs granted to each Participant. SARs are subject to the following terms and conditions:
(a)Base Value. The base value per share of Stock pursuant to any SAR shall be equal to the Fair Market Value of one share of Stock as of the Date of Grant unless the Committee sets a higher base value in the Award Agreement.
(b)Exercise of SAR. SARs shall be exercisable at such times and in such manner, and shall be subject to such restrictions and conditions, as the Committee shall, in each instance approve, which need not be the same for each grant or for each Participant. The Committee may prescribe performance or other conditions, if any, that must be satisfied before all or part of a SAR may be exercised.
(c)Term of SAR. Each SAR shall expire at such time as the Committee shall determine as of the Date of Grant; provided, however, that no SAR shall be exercisable later than the 10th anniversary of the Date of Grant.
(d)Payment of SAR Amount. Upon exercise of the SAR, the Participant shall be entitled to receive a payment equal to the amount determined by multiplying (i) the excess, if any, of the fair market value of a share of Stock on the date of exercise over the base value fixed by the Committee on the Date of Grant, by (ii) the number of shares with respect to which the SAR is exercised. Payment shall be made in the manner and at the time specified by the Committee in the Award Agreement. At the discretion of the Committee, the Award Agreement may provide for payment for the SARs in cash, shares of Stock of equivalent value, or in a combination thereof.
(e)Repricing of SARs. Notwithstanding any other provision in the Plan to the contrary, without approval of the Company’s shareholders, a SAR may not be amended, modified or repriced to reduce the exercise price after the Date of Grant. Except as otherwise provided in Section 4.4 with respect to an adjustment in capitalization, a SAR also may not be surrendered in consideration of or exchanged for cash, other Awards or a new SAR having an exercise price below the exercise price of the SAR being surrendered or exchanged.
(f)Nontransferability of SARs. No SAR may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all SARs granted to a Participant shall be exercisable during his or her lifetime only by such Participant or his or her legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, permit the transfer of an SAR to a Family Member, trust or partnership, or to a charitable organization, provided that no value or consideration is received by the Participant with respect to such transfer.
ARTICLE 9 RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS
9.1GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the Plan, Restricted Stock may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. Restricted Stock Awards are subject to the following terms and conditions:
(a)Restrictions. Restricted Stock shall be subject to such conditions and/or restrictions as the Committee may impose (including, without limitation, limitations on transferability, the right to receive dividends, or the right to vote the Restricted Stock), which need not be the same for each grant or for each Participant. These restrictions may lapse separately or in combination at such times, in such circumstances, in such installments, or otherwise, as determined by the Committee. Except as otherwise provided in the Award Agreement, Participants holding shares of Restricted Stock may not exercise voting rights with respect to the shares of Restricted Stock during the period of restriction.
(b)Forfeiture. Except as otherwise provided in the Award Agreement, upon a Termination of Employment (or Termination of Service) during the applicable period of restriction, Restricted Stock that is at that time subject to restrictions shall be forfeited. The Committee may provide in the Award Agreement that the restrictions or forfeiture conditions relating to a Restricted Stock Award will be waived in whole or in part in the event of a Termination of Employment (or Termination of Service) resulting from specified causes. The Committee also may waive in whole or in part any other restrictions or forfeiture conditions relating to a Restricted Stock Award.
(c)Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing shares of Restricted Stock are registered in the name of the Participant, the certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may retain physical possession of the certificate until such time as all applicable restrictions lapse.
9.2GRANT OF RESTRICTED STOCK UNITS. Subject to the terms and provisions of the Plan, Restricted Stock Units may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. Restricted Stock Unit Awards are subject to the following terms and conditions:
(a)Restrictions. Restricted Stock Unit Awards grant a Participant the right to receive a specified number of shares of Stock, or a cash payment equal to the fair market value (determined as of a specified date) of a specified number of shares of Stock, subject to such conditions and/or restrictions as the Committee may impose, which need not be the same for each grant or for each Participant. These restrictions may lapse separately or in combination at such times, in such circumstances, in such installments, or otherwise, as determined by the Committee.
(b)Forfeiture. Except as otherwise provided in the Award Agreement, upon a Termination of Employment (or Termination of Service) during the applicable period of restriction, Restricted Stock Units that are at that time subject to restrictions shall be forfeited. The Committee may provide in any Award Agreement that restrictions or forfeiture conditions relating to a Restricted Stock Unit Award will be waived in whole or in part in the event of a Termination of Employment (or Termination of Service) resulting from specified causes. The Committee also may waive in whole or in part any other restrictions or forfeiture conditions relating to a Restricted Stock Unit Award.
(c)Payment. Payment for vested Restricted Stock Units shall be made in the manner and at the time designated by the Committee in the Award Agreement. In the Award Agreement, the Committee may provide that payment will be made in cash or Stock, or in a combination thereof.
ARTICLE 10 STOCK GRANT AND STOCK UNIT AWARDS
10.1STOCK GRANT AWARDS. Subject to the terms and provisions of the Plan, Stock Grant Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Stock Grant Award grants the Participant the right to receive (or purchase at such price as determined by the Committee) a designated number of shares of Stock free of any vesting restrictions. The purchase price, if any, for a Stock Grant Award shall be payable in cash or other form of consideration acceptable to the Committee. A Stock Grant Award may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to such Participant.
10.2STOCK UNIT AWARDS. Subject to the terms and provisions of the Plan, Stock Unit Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Stock Unit Award grants the Participant the right to receive a designated number of shares of Stock, or a cash payment equal to the fair market value (determined as of a specified date) of a designated number of shares of Stock, in the future free of any vesting restrictions. A Stock Unit Award may be granted as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to such Participant.
ARTICLE 11 PERFORMANCE SHARES; PERFORMANCE UNITS; AND PERFORMANCE CASH AWARDS
11.1PERFORMANCE SHARE AWARDS. Subject to the terms and provisions of the Plan, Performance Share Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Performance Share Award grants the Participant the right to receive a specified number of shares of Stock depending on the satisfaction of any one or more Performance Goals. Performance may be measured on a specified date or dates or over any period or periods determined by the Committee. Unless otherwise provided in the Award Agreement, payment for vested Performance Shares shall be made in Stock.
11.2PERFORMANCE UNIT AWARDS. Subject to the terms and provisions of the Plan, Performance Unit Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from
time to time, as shall be determined by the Committee. A Performance Unit Award grants the Participant the right to receive a specified number of shares of Stock or a cash payment equal to the fair market value (determined as of a specified date) of a specified number of shares of Stock depending on the satisfaction of any one or more Performance Goals. Performance may be measured on a specified date or dates or over any period or periods determined by the Committee. At the discretion of the Committee, the Award Agreement may provide for payment for vested Performance Unit Awards in cash, shares of Stock of equivalent cash value, or in a combination thereof.
11.3PERFORMANCE CASH AWARDS. Subject to the terms and provisions of the Plan, Performance Cash Awards may be granted to one or more Participants upon such terms and conditions, and at any time and from time to time, as shall be determined by the Committee. A Performance Cash Award grants the Participant the right to receive an amount of cash depending on the satisfaction of any one or more Performance Goals. Performance may be measured on a specified date or dates or over any period or periods determined by the Committee.
11.4PERFORMANCE GOALS. The Performance Goal or Goals applicable to any Performance Share, Performance Unit or Performance Cash Award shall be specified by the Committee in the Award Agreement. The Committee shall retain the power to adjust the Performance Goals, the level of attainment of the Performance Goals or otherwise increase or decrease the amount payable with respect to any Award made pursuant to this Article 11.
ARTICLE 12
12.1BOARD DISCRETION. If a Change of Control occurs, the Board shall have the authority and discretion, but shall not have the obligation, to provide, in the Award Agreement or thereafter, that all or part of outstanding Options, SARs, and other Awards shall become fully exercisable and all or part of the restrictions on outstanding Awards shall lapse. To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth inSection 7.2(e), the excess Options shall be deemed to be Nonqualified Stock Options. In addition, upon, or in anticipation of, a Change of Control, the Committee may: (i)(a) cause all or a part of outstanding Awards to be canceledcancelled and terminated as of a specified date and give each Participant the right to exercise such Awards during a period of time as the Committee, in its sole discretion, shall determine,determine; or (ii)(b) cause all or a part of outstanding Awards to be canceledcancelled and terminated as of a specified date in exchange for a payment or right to payment pursuant to the terms and conditions set forth in the Change of Control transaction documents. With respect to an Award which the Company concludes is subject to (and not excepted from) the requirements of Section 409A, any actions taken by the Board pursuant to this Article 1412 shall be done in compliance with Section 409A of the Code.14.2
12.2PARTICIPANT CONSENT NOT REQUIRED. Nothing in thisArticle 1412 or any other provision of this Plan is intended to provide any Participant with any right to consent to or object to any transaction that might result in a Change of Control and each provision of this Plan shall be interpreted in a manner consistent with this intent. Similarly, nothing in thisArticle 1412 or any other provision of this Plan is intended to provide any Participant with any right to consent to or object to any action taken by the Board pursuant to thisArticle 1412.ARTICLE 15
13 AMENDMENT, MODIFICATION, AND TERMINATION 15.1
13.1AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN. With the approval of the Board, at any time and from time to time, the Committee may terminate, amend or modify the Plan; provided, however, that any such action of the Committee shall be subject to the approval of the shareholders to the extent necessary to comply with any applicable law, regulation, or rule of the stock exchange on which the shares of Stock are listed, quoted or traded. Except as provided inSection 4.4, neither the Board nor the Committee may, without the approval of shareholders: (i)(a) increase the number of shares available for grant under the Plan; (ii)(b) permit the Committee to grant Options or SARs with an exercise price or base value that is below Fair Market Value on the Date of Grant; (iii)(c) permit the Committee to extend the exercise period for an Option or SAR beyond 10 years from the Date of Grant; (iv)(d) amendSection 7.1(e) to permit the Committee to reprice previously granted Options; or (v)(e) amendSection 8.1(e) to permit the Committee to reprice previously granted SARs.15.2SARs; (f) extend the duration of the Plan; or (g) expand the type of awards available for grant under the Plan or expand the class of participants eligible to participate in the Plan.
13.2AWARDS PREVIOUSLY GRANTED. Except as provided in the next sentence and subject toSection 14.212.2, no termination, amendment, or modification of the Plan or any Award Agreement shall adversely affect in any material way the rights of the holder underof any Award previously granted pursuant to the Plan without the prior written consent of the holder of the Award. The consent of the holder of ana previously granted Award is not needed if the change: (i)(a) is required by law or regulation; (ii)(b) does not adversely affect in any material way the rights of the holder; or (iii)(c) is required to cause the benefits under the Plan to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code or to comply with the provisions of Section 409A of the Code. Additional rules relating to amendments to the Plan or any Award Agreement to assure compliance with Section 409A of the Code are set forth inSection 16.1514.15.15.3PERFORMANCE-BASED COMPENSATION AWARDS. Except as provided inArticle 14, the Committee shall not have the authority to amend an Award Agreement to accelerate the vesting or waive the forfeiture restrictions of any Performance-Based Compensation Awards. In addition, the Committee shall not take any other action that would cause a Performance-Based Compensation Award to fail to satisfy the requirements of the performance-based compensation exception to the deduction limitations imposed by Section 162(m) of the Code unless the Committee concludes that the deduction limitations will not become applicable or that the amendment is appropriate despite the deduction limitations imposed by Section 162(m) of the Code.
ARTICLE 16
14
14.1NO RIGHTS TO AWARDS. No Participant, employee, or other person shall have any claim to be granted any Award, and neither the Company nor the Committee is obligated to treat Participants, employees, and other persons uniformly.16.2
14.2NO SHAREHOLDERS RIGHTS. No Award gives the Participant any of the rights of a shareholder of the Company unless and until unrestricted shares of Stock are issued to the Participant or the restrictions on any shares previously issued lapse, except as specifically otherwise provided in the Plan or the Award Agreement.16.3
14.3WITHHOLDING. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, up to the maximum statutory amount necessary (or such lower amount that will not cause an amount sufficientadverse accounting consequence or cost to the Company), in the applicable jurisdiction, to satisfy any federal, state, and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. With the Committee’s consent as expressed in an Award Agreement or in any policy adopted by the Committee, the Company may permit the Participant to satisfy a tax withholding requirement by: (i)(a) directing the Company to withhold shares of Stock to which the Participant is entitled pursuant to the Award in an amount necessary to satisfy the Company’s applicable federal, state, local or foreign income and employment tax withholding obligations with respect to such Participant; (ii)(b) tendering previously-owned shares of Stock held by the Participant for 6 months or longer to satisfy the Company’s applicable federal, state, local, or foreign income and employment tax withholding obligations with respect to the Participant (which holding period may be waived in accordance withSection 7.1(d)); (iii)(c) a broker-assisted “cashless” transaction; or (iv)(d) personal check or other cash equivalent acceptable to the Company.16.4
14.4NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment or services at any time, nor confer upon any Participant any right to continue in the employ or service of the Company or any Subsidiary.16.5
14.5UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary. Neither the Participant nor any other persons shall have any interest in any fund or in any specific asset or assets of the Company or any other entity by reason of any Award, except to the extent provided hereunder.16.6
14.6RELATIONSHIP TO OTHER BENEFITS. No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary, except as otherwise provided in such plan.16.7
14.7EXPENSES. The expenses of administering the Plan shall be borne by the Company.16.8
14.8TITLES AND HEADINGS. The titles and headings of the sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.16.9
14.9SECURITIES LAW COMPLIANCE. With respect to any person who is, on the relevant date, obligated to file reports pursuant to Section 16 of the Exchange Act, transactions pursuant to this Plan are intended
to comply with all applicable conditions of Rule 16b-316b‑3 or its successors pursuant to the Exchange Act. Notwithstanding any other provision of the Plan, the Committee may impose such conditions on the exercise of any Award as may be required to satisfy the requirements of Rule 16b-316b‑3 or its successors pursuant to the Securities Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be void to the extent permitted by law and voidable as deemed advisable by the Committee. 16.10
14.10GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to make payment of awards in Stock or otherwise shall be subject to all applicable laws, rules and regulations, and to such approvals by government agencies as may be required. The Company shall be under no obligation to register pursuant to the Securities Act of 1933, as amended, any of the shares of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act of 1933, as amended, the Company may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption. The Committee shall impose such restrictions on any Award as it may deem advisable, including without limitation, restrictions under applicable federal securities law, under the requirements of the NASDAQ Listing Rules (or any other exchange upon which the Stock is then listed), quoted or traded and under any blue sky or state securities laws applicable to such Award.16.11
14.11GOVERNING LAW. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the jurisdiction of incorporation of the Company.16.12
14.12SUCCESSORS. All obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.16.13
14.13SURVIVAL OF PROVISIONS. The rights, remedies, agreements, obligations and covenants contained in or made pursuant to this Plan, any Award Agreements and any notices or agreements made in connection with this Plan shall survive the execution and delivery of such notices and agreements and the delivery and receipt of such shares of Stock.16.14
14.14INDEMNIFICATION. Each person who is or shall have been a member of the Committee or of the Board, or who has served as the CEO, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.16.15
14.15COMPLIANCE WITH SECTION 409A.
(a)General Compliance. Some of the types of Awards that may be granted pursuant to the Plan (including, but not necessarily limited to, Restricted Stock Unit Awards, Performance Share Awards, Performance Unit Awards, Performance Cash Awards and Stock Unit Awards) may be considered to be “non-qualified deferred compensation” subject to the requirements of Section 409A of the Code. If an Award is subject to the requirements of Section 409A of the Code, the Company intends (but cannot and does not guarantee) that the Award Agreement and this Plan comply fully with and meet all of the requirements of Section 409A of the Code or an exception thereto and the Award Agreement shall include such provisions, in addition to the provisions of this Plan, as may be necessary to assure compliance with Section 409A of the Code or an exception thereto.
(b)Delay for Specified Employees. If, at the time of a Participant’s Separation from Service, the Company has any Stock which is publicly traded on an established securities market or otherwise, and if the Participant is considered to be a Specified Employee, to the extent any payment for any Award is
subject to the requirements of Section 409A of the Code and is payable upon the Participant’s Separation from Service, such payment shall not commence prior to the first business day following the date which is 6 months after the Participant’s Separation from Service (or the date of the Participant’s death if earlier than the end of the 6 month period). Any amounts that would have been distributed during such 6 month6-month period will be distributed on the day following the expiration of the 6 month period.
(c)Prohibition on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment for any Award that is subject to the requirements of Section 409A of the Code be accelerated or subject to further deferral except as otherwise permitted or required by Section 409A of the Code. If the Company fails to make any payment pursuant to the payment provisions applicable to an Award that is subject to Section 409A of the Code, either intentionally or unintentionally, within the time period specified in such provisions, but the payment is made within the same calendar year, such payment will be treated as made within the specified time period. In addition, in the event of a dispute with respect to any payment, such payment may be delayed in accordance with Section 409A of the Code.
ACCELERATE DIAGNOSTICS, INC.
By:
(a)“20042012 Plan” means the Company’s 20042012 Omnibus Stock OptionEquity Incentive Plan.
(b)“Acquired Plan” has the meaning ascribed to it inSection 4.5.
(c)“Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Unit, Performance Share, Performance Cash, Stock Grant, or Stock Unit Award granted to a Participant under the Plan.
(d)“Award Agreement” means any written agreement, contract, or other instrument or document, including an electronic agreement or document, evidencing an Award.
(e)“Board” means the Board of Directors of the Company.
(f)“Change of Control” means and shall be deemed to have occurred as of the date of the occurrence of any of the following events:
(1)Any person, or more than one person acting as a group (as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)), acquires (or has acquired during the 12-month period ending on the most recent acquisition by such person or persons) ownership of stock of Company possessing 40% or more of the total voting power of the stock of Company, unless such person is, or shall be, a trustee or other fiduciary holding securities under an employee benefit plan of Company or a corporation owned, directly or indirectly, by the stockholdersshareholders of Company in substantially the same proportion as their ownership of stock of Company;
(2)The sale, transfer or other disposition of all or substantially all of the assets of the Company to a person other than the Company or a Subsidiary; or
(3)During any period of 12 consecutive months, excluding any period prior to the Effective Date, the majority of the members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of such appointment or election.
Notwithstanding the foregoing, except as otherwise provided in an Award Agreement, a Change of Control shall not occur for purposes of this Plan in the case of Awards that are subject to the requirements of Section 409A of the Code unless such Change of Control constitutes a “change in control event” as defined in Section 409A of the Code.
(g)“Chief Executive Officer” or “CEO” means the President and Chief Executive Officer of the Company.
(h)“Code” means the Internal Revenue Code of 1986, as amended. All references to the Code shall be interpreted to include a reference to any applicable rules, regulations, rulings or other official guidance promulgated pursuant to such section of the Code.
(i)“Committee” means the Compensation Committee of the Board or a subcommittee thereof, or such other committee of the Board designated by the Board to administer the Plan pursuant toSection 3.1.
(j)“Company” means Accelerate Diagnostics, Inc. (f/k/a Accelr8 Technology Corporation), a Delaware corporation and any successor corporation.
(k)“Covered EmployeeConsultant” means an employeeany consultant or advisor or independent contractor who is a natural person and who provides services to the Company or could be, a “covered employee” withinany Subsidiary, so long as such person: (i) renders bona fide services that are not in connection with the meaning of Section 162(m)offer and sale of the Code.Company’s securities in a capital raising transaction; (ii) does not directly or indirectly promote or maintain a market for the Company’s securities; and (iii) otherwise qualifies as a consultant under the applicable rules of the SEC for registration of shares of stock on a Form S-8 registration statement.
(l)“Date of Grant” means, as determined by the Committee (or CEO with respect to an Award granted pursuant toSection 3.5), the latest to occur of: (i) the date as of which the Committee (or CEO) approves an Award,Award; (ii) the date on which an Award to a prospective employee, officer, or member of the Board first becomes effective,effective; or (iii) such other date as may be specified in the Award Agreement.
(m)“Disability” means “disability” as that term is defined in Section 22(e)(3) of the Code unless a different definition is provided in the Award Agreement.
(n)“Effective Date” has the meaning ascribed to it inSection 1.12.1.
(o)“Exchange Act” means the Securities Exchange Act of 1934, as amended. All references to the Exchange Act shall be interpreted to include a reference to any applicable rules, regulations, rulings or other official guidance promulgated pursuant to such section of the Exchange Act.
(p)“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
(q)“Fair Market Value” means, as of any given date, the closing price for the Stock as reported on the NASDAQ (or any other exchange upon which the Stock is then listed) on that date or the closing price for the Stock on the immediately preceding date or, if no such prices are reported on either such date, the closing price on the last day on which such prices were reported.
(r)“Family Member” means a Participant’s spouse and any parent, stepparent, grandparent, child, stepchild, or grandchild, including adoptive relationships, or a trust or any other entity in which these persons (or the Participant) have more than 50% of the beneficial interest.interest or voting interest, or any other person or entity who is identified as a “family member” under the applicable rules of the SEC for registration of shares of stock on a Form S-8 registration statement.
(s)“Incentive Stock Option” means an Option granted pursuant to and in compliance withSection 7.2.
(t)“Nonqualified Stock Option” means an Option granted pursuant toSection 7.1 that is not intended to be an Incentive Stock Option.
(u)“Option” means a right granted to a Participant pursuant toArticle 7. An Option may be either an Incentive Stock Option or a Nonqualified Stock Option.
(v)“Participant” means a person who has been granted an Award.
(w)“Performance-Based Compensation Award” means an Award intended to satisfy the requirements of the performance-based compensation exception to the limitations imposed by Section 162(m) of the Code on the tax deductibility of compensation payable to Covered Employees.(x) “
Performance Cash” means a right granted to a Participant pursuant toSection 11.3.(y)
(x)“Performance Criteria” means the criteria, or any combination of the criteria, that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period. The Performance Criteria that will be used to establish Performance Goals for Performance-Based Compensation Awards are limited to the following: EBITDA; EBIT; costs; operating income; net income; cash flow; operating cash flow; net cash flow; retained earnings; budget achievement; return on equity; return on assets; return on capital employed; return on invested capital; expense spending; O&M expense; gross margin; net margin; market capitalization; customer satisfaction; revenues; financial return ratios; market share; shareholder return and/or value (including but not limited to total shareholder return); operating profits (including earnings before or after income taxes, depreciation and amortization); net profits; earnings per share; earnings per share growth; profit returns and margins; stock price; working capital; production cost; project milestones; economic value added; equipment performance; operating efficiency; debt; dividends; corporate governance; and health and safety (including environmental health and safety). The Performance Criteria that will be used to establish performance goals with respect to any Award other than a Performance-Based Compensation Award that is subject toArticle 12 will include the above-listed Performance Criteria and such other criteria as may be set forth in the applicable Award Agreement. Any of the Performance Criteria may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group, indices, or any other basket of companies. Financial Performance Criteria may, but need not, be calculated in accordance with generally accepted accounting principles (“GAAP”) or any successor method to GAAP, including International Financial Reporting Standards. The Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for a particular Performance Period for a particular Participant.(z) “Performance Goals
” means, for a Performance Period, the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, thePeriod. The Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, plant, or an individual. The Performance Goals may be stated in terms of absolute levels or relative to another company or companies or to an index or indices.(aa)
(y)“Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, an Award.(bb)
(z)“Performance Share” means a right granted to a Participant pursuant toSection 11.1.(cc)
(aa)“Performance Unit” means a right granted to a Participant pursuant toSection 11.2.(dd)
(bb)“Plan” means this Accelerate Diagnostics, Inc. 20122022 Omnibus Equity Incentive Plan, as it may be amended from time to time.(ee)
(cc)“Prior Plans” means the 2012 Plan, Company’s 2004 Omnibus Stock Option Plan, the Company’s 1996 Nonqualified Stock Option Plan, and any other similar plan adopted by the Company at any time in the past,
which has not yet lapsed or expired. (ff)
(dd)“Restricted Stock” means Stock granted to a Participant pursuant toSection 9.1.(gg)
(ee)“Restricted Stock Unit” means a right granted to a Participant pursuant toSection 9.2.(hh)
(ff)“Securities Act” means the Securities Act of 1933, as amended. All references to the Securities Act shall be interpreted to include a reference to any applicable rules, regulations, rulings or other official guidance promulgated pursuant to such section of the Securities Act.
(gg)“Separation from Service” is a term that applies only in the context of an Award that the Company concludes is subject to Section 409A of the Code. In that limited context, the term “Separation from Service” means either: (i) the termination of a Participant’s employment with the Company and all Subsidiaries due to death, retirement or other reasons; or (ii) a permanent reduction in the level of bona fide services the Participant provides to the Company and all Subsidiaries to an amount that is less than 50%20% of the average level of bona fide services the Participant provided to the Company and all Subsidiaries in the immediately preceding 36 months, with the level of bona fide service calculated in accordance with Treasury Regulation Section 1.409A-1(h)1.409A‑1(h)(1)(ii).
Solely for purposes of determining whether a Participant has a “Separation from Service,” a Participant’s employment relationship is treated as continuing while the Participant is on military leave, medical or sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six6 months, or if longer, so long as the Participant’s right to reemployment with the Company or a Subsidiary is provided either by statute or contract). If the Participant’s period of leave exceeds six6 months and the Participant’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six-month6-month period. Whether a Termination of Employment has occurred will be determined based on all of the facts and circumstances and in accordance with Section 409A of the Code.
In the case of a non-employee member of the Board, Separation from Service means that such member has ceased to be a member of the Board. Whether an independent contractor consultant has incurred a Separation from Service will be determined in accordance with Treasury Regulation Section 1.409A-1(h)1.409A‑1(h). (ii)
(hh)“Specified Employee” means an employee who, as of the date of his or her Separation from Service, is (i) an officercertain officers and highly compensated employees of the Company or any Subsidiary having an annual compensation greater than $165,000, (ii) a 5% owner of the Company or any Subsidiary, or (iii) a 1% owner of the Company or any Subsidiary having an annual compensation from the Company and all of Subsidiary of more than $165,000. The dollar limitations set forth above shall be adjusted to reflect cost of living increasesas defined in accordance withTreasury Regulation Section 416(i)(1)(A) of the Code. An employee will be treated as a Specified Employee for a particular calendar year if the employee meets any of the above requirements (applied in accordance with Section 416 of the Code and disregarding Section 416(i)(5)) at any time during the 12-month period ending on December 31 of the prior calendar year.(jj) 1.409A-1(i).
(ii)“Stock” means the common stock of the Company or any security that may be substituted for Stock or into which Stock may be changed pursuant toArticle 4.(kk)
(jj)“Stock Appreciation Right” or “SAR” means a right granted to a Participant pursuant toArticle 8.(ll)
(kk)“Stock Grant Award” means the grant of Stock to a Participant pursuant toSection 10.1.(mm)
(ll)“Stock Unit” means a right granted to a Participant pursuant toSection 10.2.(nn)
(mm)“Subsidiary” means any subsidiary or parent of the Company that is: (i) a member of a “controlled group of corporations” (within the meaning of Section 414(b) of the Code as modified by Section 415(h) of the Code) that includes the Company as a member of the group; or (ii) a member of a group of trades or businesses under common control (within the meaning of Section 414(c) of the Code as modified by Section 415(h) of the Code) that includes the Company as a member of the group. In applying Section 1563(a)(1), (2) and (3) of the Code for purposes of determining the members of a controlled group of corporations under Section 414(b) of the Code, the language “at least 50%” shall be used instead of “at least 80%” each place it appears in Section 1563(a)(1), (2) and (3) and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining the members of a group of trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, the language “at least 50%” shall be used instead of “at least 80%” each place it appears in Treasury Regulation Section 1.414(c)-2.(oo)
(nn)“Termination of Employment” or “Termination of Service” means the cessation of performance of services for the Company. For this purpose, the transfer of a Participant among the Company and any Subsidiary, or transfer from a position as a member of the Board to Employee, shall not be considered a Termination of Service
or a Termination of Employment with the Company. In the context of an Award that is subject to the requirements of Section 409A of the Code, the terms “Termination of Service” and “Termination of Employment” mean a Separation from Service. SECOND AMENDMENT
PRELIMINARY COPY - SUBJECT TO THEACCELERATE DIAGNOSTICS, INC.2012 OMNIBUS EQUITY INCENTIVE PLAN
Effective as of October 31, 2012, Accelerate Diagnostics, Inc. (the “Company”) established the Accelerate Diagnostics, Inc. 2012 Omnibus Equity Incentive Plan (the “Plan”). The Plan was subsequently amended by the First Amendment effective March 21, 2013. By adoption of this instrument, the Company now desires to amend the Plan to increase the number of shares of stock reserved and available for grant pursuant to the Plan by 4,000,000.
1. This Amendment shall be effective as of February 26, 2014, but is subject to the approval of the Company’s shareholders at the Company’s 2014 Annual Meeting and shall be void in the absence of such approval.
2. Section 4.1 of the Plan (Number of Shares) is hereby amended and restated in its entirety to read as follows:
4.1NUMBER OF SHARES. Subject to the possible increases provided bySection 4.2(a) and adjustment as provided inSection 4.4, the total number of shares of Stock reserved and available for grant pursuant to the Plan shall be 5,677,500 shares. As provided inSection 1.1, no Awards will be made pursuant to the 2004 Plan or any other Prior Plan on or after the Effective Date.
3. This Amendment shall only amend the provisions of the Plan referred to above, and those provisions not amended hereby shall be considered in full force and effect. Notwithstanding the foregoing, this Amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions and intent of this Amendment.
IN WITNESS WHEREOF, the Company has caused this Second Amendment to be executed as of this 26th day of February, 2014.
| ACCELERATE DIAGNOSTICS, INC. | | | | | | By: | /s/ Steve Reichling | | | | Steve Reichling, Chief Financial Officer | | | | | |
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