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Chromadex (CDXC)

Filed: 21 Apr 20, 8:00am
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.   )
 
Filed by the Registrant  [X]
 
Filed by a party other than the Registrant  [  ]
 
Check the appropriate box:
[ ]Preliminary Proxy Statement
[  ]Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[  ]Definitive Additional Materials
[  ]Soliciting Material under §240.14a-12
 
CHROMADEX CORPORATION
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[   ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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[   ]Fee paid previously with preliminary materials.
[   ]Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 (1)Amount Previously Paid:
   
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ChromaDex Corporation
10900 Wilshire Blvd, Suite 600
Los Angeles, CA 90024
 
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 19, 2020
 
April 21, 2020
 
To the stockholders of ChromaDex Corporation:
 
Notice is hereby given that the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of ChromaDex Corporation, a Delaware corporation (“we,” “us,” “our,” “ChromaDex,” or the “Company”), will be held on June 19, 2020, at 11:30 a.m. Pacific Time. You are being asked to vote on the following matters:
 
(1)
To elect the eight nominees for director named herein;
 
(2)
To approve an amendment to the Company’s 2017 Equity Incentive Plan, as amended, to, among other things, increase the aggregate number of shares of common stock authorized for issuance under such plan by 5.5 million shares;
 
(3)
To ratify the appointment of Marcum LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020; and
 
(4)To transact other business that may properly come before the meeting and any postponement(s) or adjournment(s) thereof.
 
The accompanying proxy statement contains additional information and should be carefully reviewed by stockholders.
 
Because of the COVID-19 pandemic, the Annual Meeting will be a completely virtual meeting of stockholders, conducted solely online via live webcast. You will be able to attend and participate in the Annual Meeting online and vote your shares electronically by visiting: www.meetingcenter.io/226139824 at the meeting date and time described in the accompanying proxy statement. The password for the meeting is CDXC2020. There is no physical location for the Annual Meeting. We are utilizing the latest technology to provide safe access for our stockholders. Hosting a virtual meeting will enable greater stockholder attendance and participation from any location. Questions related to the Annual Meeting or voting matters can be submitted by email to InvestorRelations@Chromadex.com. We encourage you to attend online and participate. We recommend that you log in a few minutes before the Annual Meeting start time of 11:30 a.m. Pacific Time on June 19, 2020, to ensure you are logged in when the Annual Meeting begins.
 
Pursuant to the bylaws of the Company, the Board of Directors has fixed the close of business on April 20, 2020 as the record date (the “Record Date”) for determination of stockholders entitled to notice and to vote at the Annual Meeting and any adjournment thereof. Holders of the Company’s Common Stock are entitled to vote at the Annual Meeting. 
 
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide our beneficial owners and stockholders of record access to our proxy materials over the Internet. Beneficial owners are stockholders whose shares are held in the name of a broker, bank or other agent (i.e., in “street name”). Accordingly, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be mailed on or about April 27, 2020 to our beneficial owners and stockholders of record who owned our Common Stock at the close of business on April 20, 2020. Beneficial owners and stockholders of record will have the ability to access the proxy materials on a website referred to in the Notice or request a printed set of the proxy materials be sent to them by following the instructions in the Notice. Beneficial owners and stockholders of record who have previously requested to receive paper copies of our proxy materials will receive paper copies of the proxy materials instead of a Notice.
 
 
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Frank L. Jaksch Jr.
Executive Chairman of the Board
 

 
 
 
 
Whether or not you expect to attend the Annual Meeting, please complete, date, sign and return the proxy mailed to you, or vote over the telephone or the internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) has been provided for your convenience. Even if you have voted by proxy, you may still vote 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 a proxy issued in your name from that record holder.
 
 
 
 
 
 
 
 
 
  
TABLE OF CONTENTS
 
Introduction1
  
Questions and Answers About these Proxy Materials and Voting2
  
Proposal 1: Election of Directors7
  
Information Regarding the Board of Directors and Corporate Governance11
  
Proposal 2: Approval of an Amendment to the 2017 Equity Incentive Plan16
  
Proposal 3: Ratification of the Appointment of Independent Registered Public Accounting Firm29
  
Executive Officers30
  
Executive Officers and Management Compensation31
  
Certain Relationships and Related Transactions46
  
Security Ownership of Certain Beneficial Owners and Management48
  
Householding of Proxy Materials50
  
Other Business51
  
Proxy Card52
  
Appendix A – ChromaDex Corporation Amended 2017 Equity Incentive PlanA-1
 
 
 
 
 
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ChromaDex Corporation
10900 Wilshire Blvd, Suite 600
Los Angeles, CA 90024
 
PROXY STATEMENT
FOR
2020 ANNUAL MEETING OF STOCKHOLDERS
JUNE 19, 2020
 
 
INTRODUCTION
 
 
The enclosed proxy is solicited by the Board of Directors (“Board of Directors” or “Board”) of ChromaDex Corporation (the “Company”), in connection with the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of the Company, to be held on June 19, 2020, at 11:30 a.m. Pacific Time via live webcast at www.meetingcenter.io/226139824 due to the public health impact of the COVID-19 pandemic and to support the health and well-being of our stockholders, employees, management and directors.
 
At the Annual Meeting, you will be asked to consider and vote upon the following matters:
 
(1)
To elect the eight nominees for director named herein;
 
(2)
To approve an amendment to the Company’s 2017 Equity Incentive Plan, as amended, to, among other things, increase the aggregate number of shares of common stock authorized for issuance under such plan by 5.5 million shares;
 
(3)
To ratify the appointment of Marcum LLP as the Company's independent registered public accounting firm for the year ending December 31, 2020; and
 
(4)
 
To transact other business that may properly come before the meeting and any postponement(s) or adjournment(s) thereof.
 
The Board of Directors has fixed the close of business on April 20, 2020 as the record date (the “Record Date”) for determining stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment thereof.
 
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide our beneficial owners and stockholders of record access to our proxy materials over the Internet. Beneficial owners are stockholders whose shares are held in the name of a broker, bank or other agent (i.e., in “street name”). Accordingly, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be mailed on or about April 27, 2020 to our beneficial owners and stockholders of record who owned our Common Stock at the close of business on April 20, 2020. Beneficial owners and stockholders of record will have the ability to access the proxy materials on a website referred to in the Notice or request a printed set of the proxy materials be sent to them by following the instructions in the Notice. Beneficial owners and stockholders of record who have previously requested to receive paper copies of our proxy materials will receive paper copies of the proxy materials instead of a Notice.
 
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE 19, 2020: THE NOTICE, PROXY STATEMENT, PROXY CARD AND THE ANNUAL REPORT ARE AVAILABLE AT WWW.CHROMADEX.COM, INVESTOR RELATIONS SECTION.
 
 
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QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
 
Why did I receive in the mail a Notice of Internet Availability of Proxy Materials this year instead of a full set of Proxy Materials?
 
We are pleased to take advantage of the SEC rule that allows companies to furnish their proxy materials over the Internet. Accordingly, we have sent to our beneficial owners and stockholders of record a Notice of Internet Availability of Proxy Materials. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. Our stockholders may request to receive proxy materials in printed form by mail or electronically on an ongoing basis. A stockholder’s election to receive proxy materials by mail or electronically by email will remain in effect until the stockholder terminates its election.
 
We intend to mail the Notice on or about April 27, 2020 to all stockholders of record entitled to vote at the Annual Meeting.
 
Will I receive any other proxy materials by mail?
 
We may send you a proxy card, along with a second Notice, on or after May 7, 2020. 
 
How can I attend the Annual Meeting?
 
In light of the COVID-19 pandemic, to support the health and well-being of our stockholders, employees and directors, and taking into account recent federal, state and local guidance, the Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on the Record Date, or if you hold a valid proxy for the Annual Meeting. No physical meeting will be held. You will be able to attend the Annual Meeting online by visiting www.meetingcenter.io/226139824. You also will be able to vote your shares online by attending the Annual Meeting by webcast. Questions related to the Annual Meeting or voting matters can be submitted by email to InvestorRelations@Chromadex.com.
 
To participate in the Annual Meeting, you will need to review the information included on your Notice, on your proxy card or on the instructions that accompanied your proxy materials. The password for the meeting is CDXC2020. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below.
 
The online meeting will begin promptly at 11:30 a.m., Pacific Time. We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement.
 
How do I register to attend the Annual Meeting virtually on the Internet?
 
If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare Trust Company, N.A.), you do not need to register to attend the Annual Meeting virtually on the Internet. Please follow the instructions on the notice or proxy card that you received. Registered stockholders can attend the meeting by accessing the meeting site at www.meetingcenter.io/226139824 and entering the 15-digit control number that can be found on your Notice or proxy card mailed with the proxy materials and the meeting password, CDXC2020.
 
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually on the Internet. To register to attend the Annual Meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your ChromaDex Corporation holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on June 16, 2020. You will receive a confirmation of your registration by email after we receive your registration materials.
 
Requests for registration should be directed to us at the following:
 
By email
 
Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com
 
By mail
 
Computershare
ChromaDex Corporation Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
 
 
  
 
 
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Who can vote at the Annual Meeting?
 
Only stockholders of record at the close of business on April 20, 2020 will be entitled to vote at the Annual Meeting. On this record date, there were 59,787,897 shares of common stock outstanding and entitled to vote.
 
Stockholder of Record: Shares Registered in Your Name
 
If on April 20, 2020 your shares were registered directly in your name with the Company’s transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record. As a stockholder of record, you may vote at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted. Registered stockholders can attend the meeting by accessing the meeting site at www.meetingcenter.io/226139824 and entering the 15-digit control number that can be found on your Notice or proxy card mailed with the proxy materials and the meeting password, CDXC2020.
 
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
 
If on April 20, 2020 your shares were held, not in your name, but rather 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 the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder 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 in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares at the meeting unless you request and obtain a valid proxy from your broker or other agent.
 
What am I voting on?
 
There are three matters scheduled for a vote:
 
To elect the eight nominees for director named herein;
To approve an amendment to the 2017 Equity Incentive Plan, as amended, to, among other things, increase the number of authorized shares for issuance under such plan by 5.5 million shares; and
To ratify the appointment of Marcum LLP as the Company's independent registered public accounting firm for the year ending December 31, 2020.
 
What if another matter is properly brought before the meeting?
 
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
 
How Do I Vote?
 
You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting.
 
The procedures for voting are fairly simple:
 
Stockholder of Record: Shares Registered in Your Name
 
If you are a stockholder of record, you may vote at the Annual Meeting or vote by proxy using the enclosed proxy card. Alternatively, you may vote by proxy either by telephone or on the Internet. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote even if you have already voted by proxy.
 
To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
 
To vote over the telephone, dial toll-free 1-800-652-VOTE (8683) using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice. Your telephone vote must be received by 5:00 p.m., Eastern Time on June 18, 2020 to be counted.
 
To vote through the internet, go to www.envisionreports.com/CDXC to complete an electronic proxy card. You will be asked to provide the company number and control number from the Notice. Your internet vote must be received by 5:00 p.m., Eastern Time on June 18, 2020 to be counted.
 
To vote during the Annual Meeting, follow the instructions posted at www.meetingcenter.io/226139824.
 
 
 
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Beneficial Owner: Shares Registered in the Name of Broker or Bank
 
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting instructions from that organization rather than from the Company. Simply follow the voting instructions in the Notice to ensure that your vote is counted. To vote at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
 
What if I have technical difficulties or trouble accessing the virtual Annual Meeting?
 
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual Annual Meeting. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please click on the “Support” link in the upper right of the broadcast screen to access: https://support.vevent.com. Technical support will be available starting at 9:00 a.m. Pacific Time on June 19, 2020.
 
How many votes do I have?
 
On each matter to be voted upon, you have one vote for each share of common stock you own as of April 20, 2020.
 
What happens if I do not vote?
 
Stockholder of Record: Shares Registered in Your Name
 
If you are a stockholder of record and do not vote by completing your proxy card, by telephone, through the internet or at the Annual Meeting, your shares will not be voted.
 
Beneficial Owner: Shares Registered in the Name of Broker or Bank
 
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (“NYSE”) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposal 1 or Proposal 2 without your instructions, but may vote your shares on Proposal 3 even in the absence of your instruction.
 
What if I return a proxy card or otherwise vote but do not make specific choices?
 
If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of all eight nominees for director, “For” the proposal to approve an amendment to the 2017 Equity Incentive Plan, as amended, to, among other things, increase the number of authorized shares for issuance under such plan by 5.5 million shares, and “For” the proposal to ratify the appointment of Marcum LLP as the Company's independent registered public accounting firm for the year ending December 31, 2020. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
 
Who is paying for this proxy solicitation?
 
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
 
What does it mean if I receive more than one Notice?
 
If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.
 
 
 
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Can I change my vote after submitting my proxy?
 
Stockholder of Record: Shares Registered in Your Name
 
Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
 
You may submit another properly completed proxy card with a later date.
 
You may grant a subsequent proxy by telephone or through the internet.
 
You may send a timely written notice that you are revoking your proxy to the Company’s Secretary at 10900 Wilshire Blvd. Suite 600, Los Angeles, CA 90024.
 
You may vote during the Annual Meeting which will be hosted via the Internet.
 
Your most current proxy card or telephone or internet proxy is the one that is counted.
 
Beneficial Owner: Shares Registered in the Name of Broker or Bank
 
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
 
When are stockholder proposals and director nominations due for next year’s Annual Meeting?
 
To be considered for inclusion in the Company’s proxy materials for next year’s annual meeting, your proposal must be submitted in writing by December 28, 2020, to ChromaDex Corporation, Attn: Secretary, at 10900 Wilshire Blvd. Suite 600, Los Angeles, CA 90024. If you wish to submit a proposal (including a director nomination) at the annual meeting that is not to be included in the Company’s proxy materials for next year’s annual meeting, such proposal must be received no earlier than the close of business on March 21, 2021 nor later than the close of business on April 20, 2021. You are also advised to review the Company’s Bylaws, which contain additional requirements relating to advance notice of stockholder proposals and director nominations.
 
How are votes counted?
 
Votes will be counted by the inspector of election appointed for the meeting, who will separately count, for the proposal to elect directors, votes “For,” “Withhold” and broker non-votes; and, with respect to Proposal 2 and Proposal 3, votes “For” and “Against,” and abstentions. Abstentions will be counted towards the vote total for Proposal 2 and Proposal 3 and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
 
What are “broker non-votes”?
 
As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed by the NYSE to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as “broker non-votes.”
 
How Many Votes Are Needed for Each Proposal to Pass?
Proposal Vote Required for Approval Effect of Abstention Effect of Broker Non-Vote
       
Election of eight members to our Board of Directors
 
 
Plurality of the votes cast (the eight directors receiving the most “For” votes)
 
 None. None.
Approval of an amendment to the 2017 Equity Incentive Plan, as amended, to, among other things, increase the number of authorized shares for issuance under such plan by 5.5 million shares “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter Against. None.
Ratification of the Appointment of Marcum LLP as our Independent Registered Public Accounting Firm for our Fiscal Year Ending December 31, 2020
 
 “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter Against. None.
Vote cast online during the virtual Annual Meeting will constitute votes cast in person at the Annual Meeting for purposes of the votes.
 
 
 
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What Constitutes a Quorum?
 
To carry on business at the Annual Meeting, we must have a quorum. A quorum is present when a majority of the shares entitled to vote, as of the Record Date, are represented in person or by proxy. Virtual attendance at the Annual Meeting constitutes presence in person for purposes of a quorum at the meeting. Thus, holders representing at least 29,893,949 votes must be represented in person or by proxy to have a quorum. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. Shares owned by us are not considered outstanding or considered to be present at the Annual Meeting. If there is not a quorum at the Annual Meeting, our stockholders may adjourn the meeting.
 
How can I find out the Results of the Voting at the Annual Meeting?
 
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K, which we will file within four business days of the meeting.
 
 
 
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PROPOSAL 1:
ELECTION OF DIRECTORS
 
Each director to be elected at the Annual Meeting will serve until the next annual meeting of stockholders and until his or her successor is elected, or, if sooner, until such director’s death, resignation or removal. Unless otherwise instructed, the persons named in the accompanying proxy intend to vote the shares represented by the proxy for the election of the eight nominees listed below. Although it is not contemplated that any nominee will decline or be unable to serve as a director, in such event, proxies will be voted by the proxy holder for such other persons as may be designated by the Board of Directors, unless the Board of Directors reduces the number of Directors to be elected. Election of a director to the Board of Directors requires a plurality of the votes cast at the Annual Meeting.
 
The current Board of Directors consists of Frank Jaksch, Jr., Stephen Block, Jeff Baxter, Robert Fried, Kurt Gustafson, Steven Rubin, Wendy Yu and Tony Lau. The Board of Directors has determined that a majority of its members, including Stephen Block, Jeff Baxter, Kurt Gustafson, Steven Rubin, Wendy Yu and Tony Lau are independent directors within the meaning of the applicable NASDAQ rules.
  
The following table sets forth the director nominees. It also provides certain information about the nominees as of the Record Date.
 
Nominees for Election to Board of Directors
 
    Director
Name Age Since
Frank Jaksch, Jr. 51 2000
Stephen A. Block 75 2007
Jeff Baxter 58 2015
Robert Fried 60 2015
Kurt Gustafson 52 2016
Steven Rubin 59 2017
Wendy Yu 44 2017
Tony Lau 31 2017
 
Frank L. Jaksch Jr., 51, is a Co-Founder of the Company and has served as a member of the Board since February 2000. Mr. Jaksch served as Chairman of the Board from May 2010 to October 2011 and was its Co-Chairman from February 2000 to May 2010. In June 2018, Mr. Jaksch transitioned from Chief Executive Officer to Executive Chairman of the Board. Mr. Jaksch oversees research, strategy and operations for the Company with a focus on scientific and novel products for pharmaceutical and nutraceutical markets. From 1993 to 1999, Mr. Jaksch served as International Subsidiaries Manager of Phenomenex, a life science supply company where he managed the international subsidiary and international business development divisions. Mr. Jaksch earned a B.S. in Chemistry and Biology from Valparaiso University. The Nominating and Corporate Governance Committee believes that Mr. Jaksch’s years of experience working in chemistry-related industries, his extensive sales and marketing background, and his knowledge of international business bring an understanding of the industries in which the Company operates as well as scientific expertise to the Board.
 
Stephen A. Block, 75, has been a director of the Company since October 2007 and Chair of the Compensation Committee and a member of the Audit Committee since October 2007. From May 2010 to October 2011, Mr. Block served as Lead Independent Director to the Board. Until November 2018, when Senomyx, Inc. was sold to Firmenich, Inc., an unaffiliated third party, Mr. Block was a director and chair of the nominating and corporate governance committee and a member of the audit committee of Senomyx, Inc., where he had served on the board of directors since 2005. He also is, and since September 2015 has been, a director of myLAB Box, Inc., a privately held company. Until December 2011, he also served as the chairman of the board of directors of Blue Pacific Flavors and Fragrances, Inc., and, until March 2012, as a director of Allylix, Inc. He served on the boards of directors of these privately held companies since 2008, and 2007, respectively. Mr. Block retired as senior vice president, general counsel and secretary of International Flavors and Fragrances Inc., a leading creator, manufacturer and seller of flavors and fragrances (“IFF”) in December 2003, having been IFF’s chief legal officer since 1992. During his eleven years at IFF he also led the company’s Regulatory Affairs Department. Prior to 1992, Mr. Block served as senior vice president, general counsel, secretary and director of GAF Corporation, a company specializing in specialty chemicals and building materials, and its publicly traded subsidiary International Specialty Products Inc., held various management positions with Celanese Corporation, a company specializing in synthetic fibers, chemicals and plastics, and practiced law with the New York firm of Stroock & Stroock & Lavan. Mr. Block received his B.A. cum laude in Russian Studies from Yale University and his law degree from Harvard Law School. The Nominating and Corporate Governance Committee believes that Mr. Block’s experience as the chief legal officer of one of the world’s leading flavor and fragrance companies contributes to the Board’s understanding of the flavor industry, including the Board’s perspective on the strategic interests of potential collaborators, the regulation of the industry, and the viability of various commercial strategies. In addition, Mr. Block’s experience in the area of corporate governance and public company financial reporting is especially valuable to the Board in his capacity as a member of both the Audit Committee and the Compensation Committee.
 
 
 
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Jeff Baxter, 58, has served as a director of the Company since April 2015 and has served as a member of the Audit Committee and the Nominating and Corporate Governance Committee since April 2015. Mr. Baxter has served as President and CEO and a Director of VBI Vaccines, Inc. (NASDAQ:VBIV) since 2009. Previously, he was managing partner for the venture capital firm, The Column Group, where he played a pivotal role in the creation of several biotech companies including Immune Design Corp., a vaccine company based on the Lentiviral vector platform and TLR adjuvant technologies. Until July 2006, Mr. Baxter was SVP, R&D Finance and Operations, of GlaxoSmithKline (GSK). In his 19 years of pharma experience at GSK, he has held line management roles in R&D, commercial, manufacturing, finance and the office of the CEO. His most recent position in the global R&D organization included responsibility for finance, pipeline resource planning and allocation, business development deal structuring and SROne (GSK's in-house venture capital fund). He also chaired GSK's R&D Operating Board. Prior to GSK, he worked at Unilever and British American Tobacco. Mr. Baxter was educated at Thames Valley University and is a Fellow of the Chartered Institute of Management Accountants. The Nominating and Corporate Governance Committee believes that Mr. Baxter’s past experience in the pharmaceutical industry bring financial expertise, industry knowledge, and research and development experience to the Board.
 
Robert Fried, 60, became Chief Executive Officer in June 2018. He has served as a director of the Company since July 2015, President and Chief Operating Officer from January to June 2018 and President and Chief Strategy Officer from March 2017 to January 2018. Mr. Fried also served as a member of the Nominating and Corporate Governance Committee from July 2015 to March 2017. Mr. Fried has served as Chairman of the Board of Directors of Tiger Media, Inc., which is now Fluent, Inc. (NASDAQ: FLNT), an information solutions provider focused on data-driven digital marketing services, from 2011 until June 2015. From 2007 to 2017, Mr. Fried was the founder and Chief Executive Officer of Spiritclips LLC, now called Hallmark Movies Now, a subscription streaming video service, which was acquired by Hallmark Cards Inc. in 2012. Mr. Fried is an Academy Award winning motion picture producer whose credits include Rudy, Collateral, Boondock Saints, So I Married an Axe Murderer, Godzilla, and numerous others. From December 1994 until June 1996, he was President and Chief Executive Officer of Savoy Pictures, a unit of Savoy Pictures Entertainment, Inc. Mr. Fried has also held several executive positions including Executive Vice President in charge of Production for Columbia Pictures, Director of Film Finance and Special Projects for Columbia Pictures, and Director of Business Development at Twentieth Century Fox. Mr. Fried is a member of the Board of Directors of the Council for Responsible Nutrition and holds an M.S. from Cornell University and an M.B.A. from the Columbia University Graduate School of Business. The Nominating and Corporate Governance Committee believes that Mr. Fried’s past experience as Chairman of the Board of Directors of another public company brings financial expertise and industry knowledge to the Board.
 
Kurt A. Gustafson, 52, has been a director of the Company and Chair of the Audit Committee since October 2016 and a member of the Compensation Committee since March 2017. In April 2018, the Board of Directors appointed Mr. Gustafson as lead independent director of the Board of Directors. Mr. Gustafson has more than 25 years of diverse experience in corporate finance. He currently serves as chief financial officer, principal accounting officer and executive vice president of Spectrum Pharmaceuticals, Inc. (Nasdaq: SPPI). From 2009 to 2013, he served as the chief financial officer of Halozyme Therapeutics, Inc. (Nasdaq: HALO). From 1991 to 2009, Mr. Gustafson worked at Amgen Inc. (Nasdaq: AMGN), holding various financial roles as vice president finance, chief financial officer of Amgen International and treasurer. Prior to joining Amgen Inc., he worked in public accounting as staff auditor at Laventhol & Horwath in Chicago. Mr. Gustafson is currently a member of the Board of Directors of Xencor, Inc. (Nasdaq: XNCR), a clinical-stage biopharmaceutical company. Mr. Gustafson serves as Chair of Xencor, Inc.’s Audit Committee. Mr. Gustafson holds a Bachelors of Arts degree in Accounting from North Park University in Chicago and a Masters in Business Administration from University of California, Los Angeles. The Nominating and Corporate Governance Committee believes that Mr. Gustafson’s past experience as chief financial officer of a public company and his extensive experience pharmaceutical industry qualify him to chair the Audit Committee and that Mr. Gustafson brings financial, merger and acquisition experience, and a background working with public marketplaces to the Board.
 
 
 
-8-
 
 
 
Steven D. Rubin, 59, has been a director of the Company and a member of the Nominating and Corporate Governance Committee since March 2017 and Chair of Nominating and Corporate Governance Committee since March 2018. Mr. Rubin currently serves as OPKO Health, Inc.’s (NASDAQ: OPK) Executive Vice President – Administration since May 2007 and as a director since February 2007. Mr. Rubin is a member of The Frost Group, LLC, a private investment firm. He has extensive experience as a practicing lawyer, and as general counsel and board member to multiple public companies. Mr. Rubin currently serves on the board of directors for the following companies: Non-Invasive Monitoring Systems, Inc. (OTCBB:NIMU), a medical device company; Cocrystal Pharma, Inc. (OTCBB:COCP), a biotechnology company developing new treatments for viral diseases; Eloxx Pharmaceuticals (OTCMKTS: ELOX), a company committed to treating patients suffering from rare and ultra-rare diseases caused by premature termination codon (PTC) nonsense mutations, prior to its merger with Sevion Therapeutics in December 2017; Neovasc, Inc. (NASDAQ:NVCN), a company developing and marketing medical specialty vascular devices; and Red Violet, Inc., a software and services company that specializes in big data analysis providing cloud-based mission-critical information solutions to enterprises in a variety of industries. Red Violet, Inc. serves customers in the United States. Mr. Rubin previously served as the Senior Vice President, General Counsel and Secretary of IVAX from August 2001 until September 2006. Mr. Rubin previously served as a director of the following companies: Castle Brands, Inc. (NYSE:ROX), a developer and marketer of premium brand spirits; Kidville, Inc. (OTCBB:KVIL), an operator of large, upscale facilities, catering to newborns through five-year-old children and their families and offers a wide range of developmental classes for newborns to five-year-olds; VBI Vaccines Inc. (NASDAQ CM: VBIV), a commercial-stage biopharmaceutical company developing a next generation of vaccines; Dreams, Inc. (NYSE MKT: DRJ), a vertically integrated sports licensing and products company; Safestitch Medical, Inc. prior to its merger with TransEnterix, Inc.; and, PROLOR Biotech, Inc., prior to its acquisition by the Company in August 2013; and Cognit, Inc. (NASDAQ:COGT), a data and analytics company providing cloud-based mission-critical information and performance marketing solutions. The Nominating and Corporate Governance Committee believes that Mr. Rubin’s past experience as general counsel and board member of multiple public companies bring financial expertise, industry knowledge, and a background working with public marketplaces to the Board.
 
Wendy Yu, 44, has been a director of the Company since August 2017 and a member of the Nominating and Corporate Governance Committee since March 2018. Since 2012, Ms. Yu has served as the Chief Digital Officer of Horizons Digital Group Limited (affiliate of Horizons Ventures Limited, a Hong Kong based investment firm), overseeing the Asia expansion of Horizons’ portfolio companies and directing public relations, communications, marketing and events. Ms. Yu graduated from University of Toronto, majoring in Commerce and Psychology. Ms. Yu serves as the director nominated by Pioneer Step Holdings Limited pursuant to rights granted to Pioneer Step Holdings Limited pursuant to that certain Securities Purchase Agreement, dated April 26, 2017, by and among the Company and the certain purchasers named therein (the “April 2017 Purchase Agreement”). The Nominating and Corporate Governance Committee believes that Ms. Yu’s experience in management, marketing and communications bring valuable expertise to the Board.
 
Tony Lau, 31, has been a director of the Company since August 2017 and a member of the Compensation Committee since March 2018. Since September 2014, Mr. Lau has been with Horizons Ventures Limited, building the consumer and retail segment and China market of the Hong Kong based investment firm. Prior to joining Horizons Ventures Limited, Mr. Lau was with Goldman Sachs Asia from June 2011 to August 2014. Mr. Lau has a Bachelor of Arts degree in Finance from the Guanghua School of Management in Peking, China. Mr. Lau serves as the director nominated by Champion River Ventures Limited pursuant to rights granted to Champion River Ventures Limited pursuant to the April 2017 Purchase Agreement. The Nominating and Corporate Governance Committee believes that Mr. Lau’s experience in the finance and consumer products industry bring valuable experience to the Board.
 
2019 Director Compensation
 
Amended and Restated Director Compensation Policy
 
Under our Non-Employee Director Compensation Policy, each of our current non-employee directors is eligible to receive an annual retainer of $40,000 for serving on the Board and, if applicable, an additional annual retainer of $30,000 for serving as the Lead Independent Director. The chairpersons of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee receive an additional $20,000, $15,000, and $10,000, respectively, per year for service as chairperson for such committee. Members of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee each receive an additional $10,000, $7,500 and $5,000, respectively, per year for service on such committee.
 
Any non-employee director who is first elected to the Board will be granted an option to purchase 40,000 shares of our common stock on the date of his or her initial election to the Board. In addition, on the date of each annual meeting, each person who continues to serve as a non-employee member of the Board following such annual meeting will be granted a stock option to purchase 20,000 shares of our common stock. All option grants will have an exercise price per share equal to the fair market value of our common stock on the date of grant. Each initial grant for a non-employee director will vest over a three year period, and each annual grant for a non-employee director will vest over a one year period, in each case subject to the director’s continuing service on our Board.
 
 
 
-9-
 
 
 
The following table provides information concerning compensation of our non-employee directors who were directors during the fiscal year ended December 31, 2019. The compensation reported is for services as directors for the fiscal year ended December 31, 2019.
 
Director Compensation Table
 
Name
 
Fees
Earned or
Paid in
Cash ($)
 
 
Stock Awards($)
 
 
Option Awards($)(1)
 
 
Non-Equity Incentive Plan Compensation ($)
 
 
Non-Qualified Deferred
Compensation
Earnings ($)
 
 
All Other Compensation($)
 
 
Total
($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stephen Block (2)
  65,000 
  - 
  44,727 
  - 
  - 
  - 
  109,727 
Jeff Baxter (3)
  55,000 
  - 
  44,727 
  - 
  - 
  - 
  99,727 
Kurt Gustafson (4)
  97,500 
  - 
  44,727 
  - 
  - 
  - 
  142,227 
Steven Rubin (5)
  50,000 
  - 
  44,727 
  - 
  - 
  - 
  94,727 
Wendy Yu (6)
  45,000 
  - 
  44,727 
  - 
  - 
  - 
  89,727 
Tony Lau (7)
  47,500 
  - 
  44,727 
  - 
  - 
  - 
  92,227 
 
(1) The amounts in the column titled “Option Awards” above reflect the aggregate grant date fair value of stock option awards for the fiscal year ended December 31, 2019. See Note 14 of the ChromaDex Corporation Consolidated Financial Report included in the Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020, for a description of certain assumptions in the calculation of the fair value of the Company’s stock options. The options have an exercise price of $3.80 and vest 100% on June 21, 2020.
 
(2) On June 21, 2019, Mr. Block was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(3) On June 21, 2019, Mr. Baxter was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(4) On June 21, 2019, Mr. Gustafson was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(5) On June 21, 2019, Mr. Rubin was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(6) On June 21, 2019, Ms. Yu was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(7) On June 21, 2019, Mr. Lau was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
Family Relationships
 
There are no family relationships between any of our directors and executive officers.
 
Involvement in Certain Legal Proceedings
 
During the past ten years, none of our officers, directors, promoters or control persons have been involved in any legal proceedings as described in Item 401(f) of Regulation S-K.
 
VOTE REQUIRED
 
Under applicable Delaware law, the election of each nominee requires the affirmative vote by a plurality of the voting power of the shares present and entitled to vote on the election of directors at the Annual Meeting at which a quorum is present.
 
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED ABOVE AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
 
 
-10-
 
 
 
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
 
Code of Business Conduct and Ethics
 
The Board has established a corporate Code of Business Conduct and Ethics that applies to all officers, directors and employees and which is intended to qualify as a “code of ethics” as defined by Item 406 of Regulation S-K of the Exchange Act. The Code of Business Conduct and Ethics is available on the Investor Relations section of the Company’s website at www.chromadex.com. If the Company makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.
 
Public Availability of Corporate Governance Documents
 
Our key corporate governance documents, including our Code of Conduct and the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are:
 
available on the Investor Relations section of our corporate website at www.chromadex.com; and
 
available in print to any stockholder who requests them from our corporate secretary.
 
Director Attendance
 
The Board held four meetings during 2019. Each director attended at least 75% of Board meetings and meetings of the committees on which he or she served.
 
Board Qualification and Selection Process
 
The Nominating and Corporate Governance Committee does not have a specific written policy or process regarding the nominations of directors, nor does it maintain minimum standards for director nominees or consider diversity in identifying nominees for director. However, the Nominating and Corporate Governance Committee does consider the knowledge, experience, integrity and judgment of potential candidates for nominations to the Board. The Nominating and Corporate Governance Committee will consider persons recommended by stockholders for nomination for election as directors. The Nominating and Corporate Governance Committee will consider and evaluate a director candidate recommended by a stockholder in the same manner as a committee-recommended nominee. Stockholders wishing to recommend director candidates must follow the prior notice requirements as described herein.
 
Board Leadership Structure and Risk Oversight
 
The leadership of the Board of Directors is currently structured so that it is led by an Executive Chairman, Frank Jaksch, who has authority, among other things, to call and preside over meetings of the Board of Directors, to set meeting agendas and to determine materials to be distributed to the Board of Directors. As Executive Chairman, Mr. Jaksch will serve as Chairman of the Board and will continue to serve as an employee and executive officer of the Company. Kurt Gustafson serves as lead independent director.
 
The Board of Directors has determined that the leadership structure, in which there is an Executive Chairman and an independent director acting as lead independent director, ensures that the appropriate level of oversight, independence, and responsibility is applied to all Board decisions, including risk oversight, and is in the best interests of the Company and those of the Company’s stockholders. The lead independent director serves as the liaison between the Executive Chairman and the independent directors and his responsibilities, among other things, include facilitating communication with the Board and presiding over regularly conducted executive sessions of the independent directors and establishing the agenda for meetings of the independent directors. The Board of Directors believes that its strong corporate governance policies and practices, including the substantial percentage of independent directors on the Board of Directors, and the robust duties that will be delegated to the lead independent director, empower the Board of Directors to effectively oversee the Company’s Chief Executive Officer and Executive Chairman and provide an effective and appropriately balanced Board of Directors governance structure.
 
The entire Board of Directors, as well as through its various committees, is responsible for oversight of our Company’s risk management process.  Management furnishes information regarding risk to the Board of Directors as requested.  The Audit Committee discusses risk management with the Company’s management and independent public accountants as set forth in the Audit Committee’s charter.  The Compensation Committee reviews the compensation programs of the Company to make sure economic incentives are tied to the long-term interests of the stockholders.  The Company believes that innovation and the building of long-term stockholder value are impossible without taking risks. We recognize that imprudent acceptance of risk and the failure to identify risks could be a detriment to stockholder value.  The executive officers of the Company are responsible for assessing these risks on a day-to-day basis and for how to best identify, manage and mitigate significant risks that the Company may face.
 
 
 
-11-
 
 
 
Board Committees
 
The Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Other committees may be established by the Board from time to time. The following table provides membership and meeting information for the fiscal year ended December 31, 2019 for each of our Board committees: 
 
Name Audit Compensation Nominating and Corporate Governance
Jeff Baxter X   X
Stephen Block X X(1)  
Kurt Gustafson X(1) X  
Tony Lau   X  
Steven Rubin     X(1)
Wendy Yu     X
Total meetings in fiscal year ended December 31, 2019 5 5 3
 
(1)
Committee Chairperson.
 
The following is a description of each of the committees and their composition:
 
Audit Committee
 
The Audit Committee of the Board of Directors was established by the Board of Directors in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to oversee the Company’s corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, the Audit Committee performs several functions, including, among other things:
 
evaluates the performance of and assesses the qualifications of the independent auditors;
determines and approves the engagement of the independent auditors;
determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors;
reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services;
monitors the rotation of partners of the independent auditors on the Company’s audit engagement team as required by law;
reviews and approves or rejects transactions between the company and any related persons;
confers with management and the independent auditors regarding the effectiveness of internal control over financial reporting;
establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and
meets to review the Company’s annual audited financial statements and quarterly financial statements with management and the independent auditor, including a review of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
The Audit Committee currently consists of three directors: Kurt Gustafson (chairman), Stephen Block and Jeff Baxter. The Audit Committee met five times during the last fiscal year. The Board of Directors has adopted a written Audit Committee charter that is available to stockholders on the Investor Relations section of the Company’s website at www.chromadex.com. The information on our website is not incorporated by reference into this Proxy Statement or our Annual Report for fiscal year 2019.
 
The Board of Directors reviews the NASDAQ listing standards definition of independence for Audit Committee members on an annual basis and has determined that all members of the Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A) of the NASDAQ listing standards and Rule 10A-3 of the Exchange Act).
 
 
 
-12-
 
 
 
The Board of Directors has also determined that Mr. Gustafson also qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. The Board made a qualitative assessment of Mr. Gustafson’s level of knowledge and experience based on a number of factors, including his formal education and experience as a chief financial officer for public reporting companies.
 
Report of the Audit Committee of the Board of Directors
 
This report of the audit committee is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.
 
 
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2019 with management of the Company. The Audit Committee has discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
 
             
Submitted by:
 
The Audit Committee of
                
 The Board of Directors
 
                    Kurt Gustafson (Chairman)
                   Stephen Block
                   Jeff Baxter
 
Compensation Committee
 
Our Compensation Committee currently consists of three directors: Stephen Block (chairman), Kurt Gustafson and Tony Lau. All members of the Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2) of the NASDAQ listing standards. The Compensation Committee met five times during fiscal year 2019. The Board has adopted a written Compensation Committee charter that is available to stockholders on the Investor Relations section of the Company’s website at www.chromadex.com. The information on our website is not incorporated by reference into this Proxy Statement or our Annual Report for fiscal year 2019.
 
The Compensation Committee acts on behalf of the Board to review, modify (as needed) and approve the Company’s compensation strategy, policies, plans and programs. For this purpose, the Compensation Committee performs several functions, including, among other things:
 
establishment of corporate and individual performance objectives relevant to the compensation of the Company’s executive officers and evaluation of performance in light of these stated objectives;
review and approval (or recommend to the Board of Directors for approval) of the compensation and other terms of employment or service, including severance and change-in-control arrangements, of the Company’s Chief Executive Officer, other executive officers and non-employee directors; and
administration of the Company’s equity compensation plans, pension and profit-sharing plans, deferred compensation plans and other similar plan and programs.
 
If applicable, the Compensation Committee will review with management the Company’s Compensation Discussion and Analysis and will consider whether to recommend that it be included in proxy statements and other filings.
 
 
 
-13-
 
 
 
The Compensation Committee has the authority to retain, in its sole discretion, compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. In March 2018, the Compensation Committee retained a consulting firm, Exequity LLP (“Exequity”) directly, although in carrying out assignments, the consulting firm may interact with Company management when necessary and appropriate. Exequity is a nationally recognized provider of executive compensation advisory services and was deemed independent pursuant to SEC rules.
 
The Compensation Committee generally does not have a specific target amount of compensation for individual executive officers relative to a peer group of companies, but it considers peer data for purposes of assessing the competitiveness of the executive compensation program. An individual executive officer may earn more or less than the market median depending on factors described below, including the individual’s experience and background, role, and past and future performance.
 
The Company has paid and will pay cash bonuses to its executive officers in 2020 for 2019 performance based upon achievements of certain goals. For additional information regarding the performance bonus amounts, see “Executive Officers and Management Compensation.”
 
Compensation Committee Interlocks and Insider Participation
 
None of the members of the Compensation Committee is an officer or employee of the Company. None of the executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the Board or Compensation Committee.
 
Compensation Committee Report
 
This report of the Compensation Committee is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.
 
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
 
Submitted by:
 
The Compensation Committee of
The Board of Directors
 
  Stephen Block, Chairman
  Kurt Gustafson
  Tony Lau
 
 
Nominating and Corporate Governance Committee
 
The Nominating and Corporate Governance Committee currently consists of three directors: Steven Rubin (chairman), Jeff Baxter and Wendy Yu. All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards). The Nominating and Corporate Governance Committee met three times during the last fiscal year. The Board has adopted a written Nominating and Corporate Governance Committee charter that is available to stockholders on the Investor Relations section of the Company’s website at www.chromadex.com. The information on the website is not incorporated by reference into this Proxy Statement or the Annual Report for fiscal year 2019.
 
The Nominating and Corporate Governance Committee is responsible for identifying, reviewing and evaluating candidates to serve as directors of the Company consistent with criteria approved by the Board of Directors, reviewing and evaluating incumbent directors, selecting or recommending to the Board of Directors for selection candidates for election to the Board of Directors, making recommendations to the Board of Directors regarding the membership of the committees of the Board of Directors, assessing the performance of the Board of Directors, and developing a set of corporate governance principles for the Company.
 
 
 
-14-
 
 
 
The Nominating and Corporate Governance Committee believes that candidates for director nominees should have certain minimum qualifications, including the ability to read and understand basic financial statements and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of the Company’s stockholders. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board of Directors, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee typically considers diversity, age, skills and such other factors as it deems appropriate, given the current needs of the Board of Directors and the Company, to maintain a balance of knowledge, experience and capability.
 
In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board of Directors. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee by majority vote which we expect will typically be recommended to the full Board.
 
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board of Directors may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: ChromaDex Corporation, Attn: Secretary, at 10900 Wilshire Blvd. Suite 600, Los Angeles, CA 90024, no later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting. Submissions must include the name and address of the Company stockholder on whose behalf the submission is made; the number of Company shares that are owned beneficially by such stockholder as of the date of the submission; the full name of the proposed candidate; a description of the proposed candidate’s business experience for at least the previous five years; complete biographical information for the proposed candidate; and a description of the proposed.
 
Stockholder Communication
 
Any stockholder may communicate in writing by mail at any time with the entire Board of Directors or any individual director (addressed to “Board of Directors” or to a named director), c/o ChromaDex Corporation, ATTN: Secretary, 10900 Wilshire Blvd. Suite 600, Los Angeles, CA 90024. All communications will be compiled by the Secretary of the Company and promptly submitted to the Board of Directors or the individual directors on a periodic basis.
 
Policy Regarding Attendance at Annual Meetings of Stockholders
 
The Company does not have a policy with regard to Board members’ attendance at annual meetings. Eight directors attended the Company’s most recent annual meeting of stockholders held on June 21, 2019.
 
Director Independence
 
As required under the NASDAQ Stock Market listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the Board of Directors. The Board of Directors consults with the Company’s counsel to ensure that its determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of NASDAQ, as in effect from time to time.
 
Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and the Company, its senior management and its independent auditors, the Board of Directors has affirmatively determined that the following directors are independent directors within the meaning of the applicable NASDAQ listing standards: Stephen Block, Jeff Baxter, Kurt Gustafson, Steven Rubin, Wendy Yu and Tony Lau. Frank L. Jaksch Jr. and Robert Fried do not meet the independence standards because of their employment with the Company.
 
 
 
-15-
 
 
 
PROPOSAL 2:
APPROVAL OF AN AMENDMENT TO THE 2017 EQUITY INCENTIVE PLAN
 
 
Overview
 
On April 16, 2020, our Board of Directors amended the ChromaDex Corporation 2017 Equity Incentive Plan, as amended (the “2017 Plan”), subject to stockholder approval, to among other things, increase the number of shares of common stock authorized for issuance under the 2017 Plan by 5.5 million shares. We refer to the 2017 Plan, as amended on April 16, 2020, as the “Amended 2017 Plan” throughout this proxy statement. References in this proposal to our Board of Directors include the Compensation Committee of the Board, where applicable.
 
A description of the material terms of the Amended 2017 Plan are summarized below. The key differences between the terms of the 2017 Plan and the Amended 2017 Plan are as follows:
 
● 
The Amended 2017 Plan provides that an additional 5.5 million shares may be issued pursuant to stock awards granted under the Amended 2017 Plan.
 
● 
The Amended 2017 Plan provides that an additional 5.5 million shares may be issued pursuant to the exercise of incentive stock options under the Amended 2017 Plan.
 
● 
The Amended 2017 Plan adds a fungible share counting provisions that assign a higher share deduction from the pool for full value awards, effective for awards granted on or after the date of the Annual Meeting.
 
● 
The Amended 2017 Plan removes certain liberal share recycling provisions that provided for the Company to recycle shares that were used for tax withholding or the payment of the exercise price of awards, effective on or after the date of the Annual Meeting.
 
In this Proposal 2, our Board of Directors is requesting stockholder approval of the Amended 2017 Plan, including the increase to the number of shares of common stock authorized for issuance under the Amended 2017 Plan by 5.5 million shares. The Board of Directors believes that the Amended 2017 Plan is an integral part of our long-term compensation philosophy and the Amended 2017 Plan is necessary to continue providing the appropriate levels and types of equity compensation for our employees.
 
Equity Awards Are an Integral Component of Our Compensation Program
 
Equity awards have been historically and, we believe, will continue to be an integral component of our overall compensation program for our employees and directors. Approval of the Amended 2017 Plan will allow us to continue to grant stock options and other equity awards at levels we determine to be appropriate in order to attract new employees and directors, retain our existing employees and to provide incentives for such persons to exert maximum efforts for the Company’s success and ultimately increase stockholder value. The Amended 2017 Plan allows the Company to utilize a broad array of equity incentives with flexibility in designing such incentives, including traditional option grants, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, and other stock awards.
 
At March 31, 2020, stock awards covering an aggregate of 12,194,125 shares were outstanding under our 2007 Equity Incentive Plan (the “2007 Plan”), our 2000 Non-Qualified Incentive Stock Option Plan (the “2000 Plan”) and the 2017 Plan. In addition, 1,205,698 shares remained available for future grant under the 2017 Plan as of such date.
 
The following table provides certain additional information regarding our equity incentive program.
 
 
 
As of March 31, 2020
 
Total number of shares of common stock subject to outstanding stock options
  12,194,125 
Weighted-average exercise price of outstanding stock options
 $3.86 
Weighted-average remaining term of outstanding stock options
  7.0 years 
Total number of shares of common stock subject to outstanding full value awards
  183,335 
Total number of shares of common stock available for grant under the 2017 Plan
  1,205,698 
Total number of shares of common stock available for grant under other equity incentive plans
  0 
Total number of shares of common stock outstanding
  59,787,897 
Per-share closing price of common stock as reported on NASDAQ Global Select Market
 $3.26 
 
 
 
-16-
 
 
 
The Size of Our Share Reserve Increase Request Is Reasonable
 
If our request to increase the share reserve of the Amended 2017 Plan by 5.5 million shares is approved, we will have approximately 6.7 million shares available for grant after our Annual Meeting, which we anticipate being a sufficient amount of equity for attracting, retaining, and motivating employees for at least the next two years. We anticipate seeking approval from our stockholders in 2022 of an additional increase to the share reserve under the Amended 2017 Plan.
 
The size of our request is also reasonable in light of the equity granted to our employees and directors over the last three years.
 
We Manage Our Equity Incentive Award Use Carefully, and Dilution Is Reasonable
 
We continue to believe that equity awards such as stock options and other types of stock awards are a vital part of our overall compensation program. Our compensation philosophy reflects broad-based eligibility for equity incentive awards, and we grant awards to substantially all of our employees. However, we recognize that equity awards dilute existing stockholders, and, therefore, we must responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of equity incentive awards necessary to attract, reward, and retain employees.
 
The following table shows our historical dilution and burn rate percentages for fiscal years 2019, 2018 and 2017.
As of December 31
 

2019
 
 
2018
 
 2017 
Full Dilution(1) 
  18.6%
  20.6%
  12.9%
Gross Burn Rate(2) 
  4.9%
  6.2%
  6.2%
 
(1) 
Full dilution is calculated as (shares available for grant + shares subject to outstanding equity incentive awards)/(common stock outstanding + shares available for grant + shares subject to outstanding equity incentive awards).
(2) 
Gross Burn Rate is calculated as (shares subject to options granted + shares subject to other equity incentive awards granted)/weighted average common shares outstanding.
 
Burn Rate
 
The following table provides detailed information regarding the activity related to our equity incentive plans for fiscal years 2019, 2018 and 2017.
 
Fiscal Year
 
2019
 
 
2018
 
 
2017 
Total number of shares of common stock subject to stock options granted
  2,603,070 
  3,070,747 
  2,285,404 
Total number of shares of common stock subject to full value awards granted
  166,666 
  333,334 
  500,000 
Weighted-average number of shares of common stock outstanding
  57,056,379 
  55,005,949 
  44,598,879 
Burn Rate
  4.9%
  6.2%
  6.2%
 
The approval of the Amended 2017 Plan will allow us to continue to grant stock options and would allow us to grant other awards described below, at levels determined appropriate by our Board of Directors or its delegate. The Amended 2017 Plan will continue to provide us with flexibility in designing equity incentives in an environment where a number of companies have moved from traditional option grants to other stock-based awards, including stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards and other stock awards. To date, we have never made any awards other than stock option grants; however, at the discretion of the Board of Directors or its delegate, we may do so in the future. The Amended 2017 Plan allows us to utilize multiple types of equity incentives in order to secure and retain the services of our employees, consultants and directors, and to provide long-term incentives that align the interests of our employees, consultants and directors with the interests of our stockholders.
 
 
 
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General 2017 Plan Information
 
Our 2017 Plan was adopted by the Board of Directors on April 6, 2017 and approved by our stockholders on June 20, 2017. The 2017 Plan was the successor to and continuation of the 2007 Plan. All outstanding stock awards granted under the 2007 Plan and the 2000 Plan (collectively, the “Prior Plans”) continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the applicable Prior Plan; provided, however, that any shares subject to outstanding stock awards granted under a Prior Plan that expire or terminate for any reason prior to exercise become available for issuance pursuant to stock awards granted under the Amended 2017 Plan. Following June 20, 2017, the effective date of the 2017 Plan, no additional stock awards have been granted under the Prior Plans. As of June 20, 2017, the share reserve of the 2017 Plan consisted of 3,000,000 new shares and up to 5,793,960 shares subject to stock awards under the Prior Plans that may become available for issuance pursuant to stock awards under the 2017 Plan. In January 2018, our Board of Directors adopted an amendment to the 2017 Plan to increase the number of shares reserved for issuance under the 2017 Plan by 500,000 shares (the “Inducement Shares”). The Inducement Shares were not subject to stockholder approval and may be used for stock awards (“Inducement Awards”) only for persons not previously an employee of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company. On April 24, 2018, our Board of Directors approved an additional 6,000,000 shares to be issued under the 2017 Plan and our stockholders approved on June 22, 2018. On April 16, 2020, our Board of Directors approved an additional 5,500,000 shares to be issued under the 2017 Plan.
 
Important Aspects of Our Amended 2017 Plan Designed to Protect Our Stockholders’ Interests
 
The Amended 2017 Plan includes certain provisions that are designed to protect our stockholders’ interests and to reflect corporate governance best practices including:
 
Stockholder approval is required for additional shares. The Amended 2017 Plan does not contain an annual “evergreen” provision. Thus, stockholder approval is required each time we need to increase the share reserve allowing our stockholders the ability to have a say on our equity compensation programs.
 
Repricing is not allowed. The Amended 2017 Plan prohibits the repricing of outstanding equity awards and the cancelation of any outstanding equity awards that have an exercise price or strike price greater than the current fair market value of our common stock in exchange for cash or other stock awards under the Amended 2017 Plan.
 
Submission of amendments to Amended 2017 Plan to stockholders. The Amended 2017 Plan requires stockholder approval for material amendments to the Amended 2017 Plan, including as noted above, any increase in the number of shares reserved for issuance under the Amended 2017 Plan.
 
Flexibility in designing equity compensation scheme. The Amended 2017 Plan allows us to provide a broad array of equity incentives, including traditional option grants, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, and other stock awards. By providing this flexibility we can quickly and effectively react to trends in compensation practices and continue to offer competitive compensation arrangements to attract and retain the talent necessary for the success of our business.
 
Restrictions on dividends. The Amended 2017 Plan provides that (i) no dividends or dividend equivalents may be paid with respect to any shares of our common stock subject to an award before the date such shares have vested, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of the applicable award agreement (including any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to us on the date such shares are forfeited to or repurchased by us due to a failure to vest.
 
Director Compensation Limit. The Amended 2017 Plan contains a limit on the total annual compensation that may be paid or granted to any non-employee director for service as a director.
 
No liberal change in control definition. The change in control definition in the Amended 2017 Plan is not a “liberal” definition. A change in control transaction must actually occur in order for the change in control provisions in the Amended 2017 Plan to be triggered.
 
 
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No liberal share counting provisions. Effective on or after the date of the Annual Meeting, the following shares will not become available again for issuance under the 2020 Plan: (i) any shares that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of an award; (ii) any shares that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with an award; and (iii) any shares repurchased by us on the open market with the proceeds of the exercise or purchase price of an award.
 
Fungible share counting. Effective for awards granted on or after the date of the Annual Meeting, the Amended 2017 Plan contains a “fungible share counting” structure, whereby the number of shares of our common stock available for issuance under the Amended 2017 Plan will be reduced by (i) one share for each share issued pursuant to a stock option or stock appreciation right with an exercise price that is at least 100% of the fair market value of our common stock on the date of grant (an “Appreciation Award”) granted under the Amended 2017 Plan and (ii) 1.5 shares for each share issued pursuant to a stock award that is not an Appreciation Award (a “Full Value Award”) granted under the Amended 2017 Plan. As part of such fungible share counting structure, the number of shares of our common stock available for issuance under the Amended 2017 Plan will be increased by (i) one share for each share that becomes available again for issuance under the terms of the Amended 2017 Plan subject to an Appreciation Award and (ii) 1.5 shares for each share that becomes available again for issuance under the terms of the Amended 2017 Plan subject to a Full Value Award.
 
No discounted stock options or stock appreciation rights. All stock options and stock appreciation rights granted under the Amended 2017 Plan must have an exercise or strike price equal to or greater than the fair market value of our common stock on the date the stock option or stock appreciation right is granted.
 
Administration by independent committee. The Amended 2017 Plan will be administered by the members of our Compensation Committee, all of whom are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and “independent” within the meaning of the NASDAQ listing standards.
 
Description of the Amended 2017 Plan
 
The material features of the Amended 2017 Plan are outlined below. This summary is qualified in its entirety by reference to the complete text of the Amended 2017 Plan. Stockholders are urged to read the actual text of the Amended 2017 Plan in its entirety, which is appended to this proxy statement as Appendix A and may be accessed from the SEC’s website at www.sec.gov.
 
Background
 
The terms of the Amended 2017 Plan provide for the grant of both nonstatutory stock options (“NSOs”) and incentive stock options (“ISOs”), restricted stock, restricted stock units, stock appreciation rights, performance stock awards, and other stock awards. Inducement Awards may be in the form of any of the above-mentioned types of stock awards, other than incentive stock options.
 
Shares Available for Awards
 
If this Proposal 2 is approved, the total number of shares of our common stock reserved for issuance under the Amended 2017 Plan will consist of:
 
● 
the number of shares that are subject to stock awards outstanding under the 2000 Plan and the 2007 Plan, as of June 20, 2017, that subsequently terminate prior to exercise or are reacquired, withheld or not issued to satisfy a tax withholding obligation in connection with an award other than a stock option or stock appreciation right; plus
 
● 
3,000,000 new shares that were added to the 2017 Plan on June 20, 2017; plus
 
● 
500,000 Inducement Shares that were added to the 2017 Plan on January 21, 2018; plus
 
● 
6,000,000 shares that were added to the 2017 Plan in April 2018- and approved by our shareholders; plus
 
● 
5,500,000 shares being added under this Proposal 2.
 
 
 
-19-
 
 
 
We call this aggregate number the “Share Reserve”. The Share Reserve under the Amended 2017 Plan may be exceeded so long as the number of shares of common stock actually issued upon the vesting or exercise of equity awards made under the Amended 2017 Plan does not exceed the Share Reserve.
 
As of March 31, 2020, there were 1,205,698 shares of common stock (plus any shares that might in the future be returned to the plan as a result of cancellation or expiration of options) available for future grant under the 2017 Plan. In addition, as of such date, options covering an aggregate of 12,194,125 shares, collectively, and 183,335 shares or restricted stock were outstanding under the Prior Plans and the 2017 Plan. The weighted average exercise price of all options outstanding as of March 31, 2020 was approximately $3.86 and the weighted average remaining term of such options was approximately 7.0 years. A total of 59,787,897 shares of our common stock were outstanding as of March 31, 2020.
 
If a stock award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such stock award having been issued, or (ii) is settled in cash, such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of common stock that may be issued under the Amended 2017 Plan. If we issue common stock pursuant to a stock award and the common stock is later forfeited, then the forfeited shares will become available for issuance under the Amended 2017 Plan. Effective on or after the date of the Annual Meeting, any shares we reacquire pursuant to our withholding obligations and any shares we reacquire as consideration for the exercise of an option or stock appreciation right will not become available for issuance under the Amended 2017 Plan.
 
The Amended 2017 Plan contains a “fungible share counting” structure, whereby the number of shares of our common stock available for issuance under the Amended 2017 Plan will be reduced, effective for awards granted on or after the date of the Annual Meeting, by (i) one share for each share issued pursuant to an Appreciation Award granted under the Amended 2017 Plan and (ii) 1.5 shares for each share issued pursuant to a stock award that is a Full Value Award granted under the Amended 2017 Plan. As part of such fungible share counting structure, the number of shares of our common stock available for issuance under the Amended 2017 Plan will be increased by (i) one share for each share that becomes available again for issuance under the terms of the Amended 2017 Plan subject to an Appreciation Award and (ii) 1.5 shares for each share that becomes available again for issuance under the terms of the Amended 2017 Plan subject to a Full Value Award.
 
Eligibility
 
All of our approximately 105 employees, approximately 10 consultants and our 6 non-employee directors are eligible to participate in the Amended 2017 Plan and may receive all types of awards; provided that (i) incentive stock options may be granted under the Amended 2017 Plan only to our employees in the United States, and (ii) Inducement Awards may be granted under the Amended 2017 Plan only to persons not previously employed by us, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.
 
Limit on Non-Employee Director Compensation
 
Under the Amended 2017 Plan, the following limit on compensation will apply to non-employee directors. The aggregate value of all compensation granted or paid, as applicable, to any individual for service as a non-employee director with respect to any period commencing on the date of the Company’s Annual Meeting of Stockholders for a particular year and ending on the day immediately prior to the date of the Company’s Annual Meeting of Stockholders for the next subsequent year, including awards granted and cash fees paid by the Company to such non-employee director, will not exceed (i) $600,000 in total value or (ii) in the event such non-employee director is first appointed or elected to the Board during such period, $900,000 in total value, in each case calculating the value of any awards based on the grant date fair value of such awards for financial reporting purposes.
 
Administration
 
The Amended 2017 Plan is administered by our Board of Directors, which may in turn delegate authority to administer the plan to a committee. Our Board of Directors has delegated administration of the Amended 2017 Plan to our Compensation Committee and an additional Non-Officer Stock Option Committee created by the Board that has separate but concurrent jurisdiction with the Compensation Committee to make certain discretionary equity awards under the Amended 2017 Plan to all eligible employees other than executive management. Subject to the terms of the Amended 2017 Plan, our Compensation Committee may determine the recipients, numbers and types of stock awards to be granted, and terms and conditions of the stock awards, including the period of their exercisability and vesting. Subject to the terms of the Amended 2017 Plan and limitations on the size of individual and aggregate grants that are set quarterly by our Board of Directors, our Non-Officer Stock Option Committee may determine the recipients and numbers of stock options to be granted, provided that the terms and conditions of the option awards conform to pre-approved standards regarding the period of their exercisability and vesting. The fair market value applicable to a stock award and the exercise price of options granted under the Amended 2017 Plan is determined in accordance with the terms of the Amended 2017 Plan.
 
 
 
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At the discretion of our Board of Directors, the Compensation Committee may consist solely of two or more “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act. Our Compensation Committee has the authority to delegate certain administrative powers to a subcommittee of one or more members. As used herein, except as explicitly stated otherwise, with respect to the Amended 2017 Plan, the “Board” refers to any committee the Board of Directors appoints (including the Compensation Committee and the Non-Officer Stock Option Committee) or, if applicable, any subcommittee, as well as to the Board of Directors itself.
 
Inducement Awards may be granted only by an “inducement committee” that consists of the majority of the Company’s independent directors, or that consists of the Company’s independent compensation committee under applicable NASDAQ listing rules.
 
Repricing
 
Under the Amended 2017 Plan, the Board does not have the authority to reprice any outstanding equity awards by reducing the exercise price of the stock award or cancelling any outstanding stock awards in exchange for cash or other stock awards under the plan without the approval of our stockholders (which approval must be obtained within 12 months prior to the repricing event).
 
Dividends and Dividend Equivalents
 
The Amended 2017 Plan provides that dividends or dividend equivalents may be paid or credited with respect to any shares of our common stock subject to an award (other than a stock option or stock appreciation right), as determined by the Board and contained in the applicable award agreement; provided, however, that (i) no dividends or dividend equivalents may be paid with respect to any such shares before the date such shares have vested, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of the applicable award agreement (including any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to us on the date such shares are forfeited to or repurchased by us due to a failure to vest.
 
Options
 
Options may be granted under the Amended 2017 Plan pursuant to stock option agreements. The Amended 2017 Plan permits the grant of options that qualify as incentive stock options, or ISOs, and nonstatutory stock options, or NSOs. Individual stock option agreements may be more restrictive as to any or all of the permissible terms described in this section.
 
The exercise price of NSOs may not be less than 100% of the fair market value of the common stock subject to the option on the date of grant. The exercise price of ISOs may not be less than 100% of the fair market value of the common stock subject to the option on the date of grant and, in some cases (see “Limitations” below), may not be less than 110% of such fair market value.
 
The term of stock options granted under the Amended 2017 Plan may not exceed ten years. Unless the terms of an optionholder’s stock option agreement provide for earlier or later termination, if an optionholder’s service relationship with us, or any affiliate of ours, ceases due to (i) disability, the optionholder may exercise any vested options for up to 12 months after the date the service relationship ends or (ii) death, the optionholder’s beneficiary, may exercise any vested options for up to 18 months after the date the service relationship ends. Except as explicitly provided otherwise in an optionholder’s award agreement, if an optionholder’s service relationship with us is terminated for “cause” as defined in the Amended 2017 Plan, all options terminate upon the service termination date, and the optionholder is prohibited from exercising any option from the time of such termination. If an optionholder’s service relationship with us ceases for any reason other than for cause or upon disability or death, the optionholder may exercise any vested options for up to three months after the date the service relationship ends, unless the terms of the stock option agreement provide for a longer or shorter period to exercise the option. For example, non-employee directors have three years from the end of their service on the Board to exercise options that have vested as of their service termination date. In no event may an option be exercised after its expiration date. Under the Amended 2017 Plan, the option term may be extended in the event that exercise of the option following termination of service is prohibited by applicable securities laws or if the sale of stock received upon exercise of an option would violate our insider trading policy. In no event, however, may any option be exercised beyond the expiration of its term.
 
Acceptable forms of consideration for the purchase of our common stock issued under the Amended 2017 Plan will be determined by our Board and may include cash, check, bank draft or money order made payable to us, common stock previously owned by the optionholder, payment through a broker assisted exercise or, for NSOs only, a net exercise feature, or other legal consideration approved by our Board.
 
 
 
-21-
 
 
 
Options granted under the Amended 2017 Plan may become exercisable in cumulative increments, or “vest”, as determined by our Board at the rate specified in the option agreement. Shares covered by different options granted under the Amended 2017 Plan may be subject to different vesting schedules as our Board may determine. Vesting can be time-based or performance-based or can be a hybrid of performance- and time-based vesting. Our Board also has flexibility to provide for accelerated vesting of equity awards in certain events. Our Board and Compensation Committee intend to continue to grant stock options to our officers with accelerated vesting, subject to additional conditions, in the event of a change of control of the Company as defined in the Amended 2017 Plan.
 
Generally, an optionholder may not transfer a stock option other than by will or the laws of descent and distribution or a domestic relations order. However, an optionholder may designate a beneficiary who may exercise the option following the optionholder’s death.
 
Limitations
 
The aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisable for the first time by a participant during any calendar year under all of our stock plans may not exceed $100,000. The options or portions of options that exceed this limit are treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any affiliate unless the following conditions are satisfied:
 
● 
the option exercise price must be at least 110% of the fair market value of the stock subject to the option on the date of grant; and
 
● 
the term of any ISO must not exceed five years from the date of grant.
 
The aggregate maximum number of shares of common stock that may be issued pursuant to the exercise of ISOs will be approximately 23.1 million under the Amended 2017 Plan. In addition, no employee may be granted options, stock appreciation rights, or other stock awards under the Amended 2017 Plan covering more than two million shares of our common stock in any calendar year.
 
Restricted Stock Awards
 
Restricted stock awards may be granted pursuant to restricted stock award agreements. A restricted stock award may be granted in consideration for cash, check, bank draft or money order payable to us, the recipient’s past or future services performed for us or an affiliate of ours, or any other form of legal consideration acceptable to the Board. Shares of our common stock acquired under a restricted stock award may be subject to forfeiture to us in accordance with a vesting schedule to be determined by our Board. Rights to acquire shares of our common stock under a restricted stock award may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement.
 
Restricted Stock Unit Awards
 
Restricted stock unit awards may be granted pursuant to restricted stock unit award agreements. Payment of any purchase price may be made in any legal form acceptable to the Board. We will settle a payment due to a recipient of a restricted stock unit award by delivery of shares of our common stock, by cash, by a combination of cash and stock as deemed appropriate by our Board, or in any other form of consideration determined by our Board and set forth in the restricted stock unit award agreement. Dividend equivalents may be credited in respect of shares of our common stock covered by a restricted stock unit award. Restricted stock unit awards may be subject to vesting in accordance with a vesting schedule to be determined by our Board. Except as otherwise provided in the applicable restricted stock unit award agreement, restricted stock units that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.
 
Stock Appreciation Rights
 
Stock appreciation rights may be granted pursuant to a stock appreciation right agreement. Each stock appreciation right is denominated in common stock share equivalents. The strike price of each stock appreciation right will be determined by our Board, but shall in no event be less than 100% of the fair market value of the stock subject to the stock appreciation right at the time of grant. Our Board may also impose restrictions or conditions upon the vesting of stock appreciation rights that it deems appropriate. Stock appreciation rights may be paid in our common stock, in cash, in any combination of the two, or any other form of legal consideration approved by our Board and contained in the stock appreciation right agreement. Stock appreciation rights shall be subject to the same conditions upon termination and restrictions on transfer as stock options under the Amended 2017 Plan.
 
 
 
 
-22-
 
 
 
Performance Stock Awards
 
The Amended 2017 Plan provides for the grant of performance stock awards. Performance awards may be granted, may vest or may be exercised based upon the attainment during a certain period of time of certain performance goals. The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained shall be determined by the Board.
 
Performance goals under the Amended 2017 Plan shall be determined by a committee of the Board composed solely of outside directors members, based on any one or more of the following performance criteria: (i) cash flow; (ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, earnings before interest, taxes and depreciation and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity; (vii) total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; (viii) return on capital; (ix) return on assets or net assets; (x) revenue, growth in revenue or return on sales; (xi) income or net income; (xii) operating income, (xiii) net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue or return on operating profit; (xvii) regulatory filings; (xviii) regulatory approvals, litigation or regulatory resolution goals; (xix) other operational, regulatory or departmental objectives; (xx) budget comparisons; (xxi) growth in stockholder value relative to established indexes, or another peer group or peer group index; (xxiii) development and implementation of strategic plans and/or organizational restructuring goals; (xxiv) development and implementation of risk and crisis management programs; (xxv) improvement in workforce diversity; (xxvi) compliance requirements and compliance relief; (xxvii) safety goals; (xxviii) productivity goals; (xxix) workforce management and succession planning goals; (xxx) economic value added (including typical adjustments consistently applied from generally accepted accounting principles required to determine economic value added performance measures); (xxxi) measures of customer satisfaction, employee satisfaction or staff development; (xxxii) development or marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Company’s revenue or profitability or enhance its customer base; (xxxiii) merger and acquisitions; (xxxiv) implementation or completion of projects or processes (including, without limitation, clinical trial initiation, clinical trial enrollment and dates, clinical trial results, regulatory filing submissions, regulatory filing acceptances, regulatory or advisory committee interactions, regulatory approvals, new and supplemental indications for existing products, and product supply); (xxxv) initiation of phases of clinical trials and/or studies by specific dates; (xxxvi) acquisition of new customers, including institutional accounts; (xxxvii) customer retention and/or repeat order rate; (xxxviii) number of institutional customer accounts (xxxix) budget management; (xl) improvements in sample and test processing times; (xli) regulatory milestones; (xlii) progress of internal research or clinical programs; (xliii) progress of partnered programs; (xliv) partner satisfaction; (xlv) milestones related to samples received and/or tests run; (xlvi) expansion of sales in additional geographies or markets; (xlvii) research progress, including the development of programs; (xlviii) submission to, or approval by, a regulatory body (including, but not limited to the U.S. Food and Drug Administration) of an applicable filing or a product; (xlix) timely completion of clinical trials; (l) milestones related to samples received and/or tests or panels run; (li) expansion of sales in additional geographies or markets; (lii) research progress, including the development of programs; (liii) patient samples processed and billed; (liv) sample processing operating metrics (including, without limitation, failure rate maximums and reduction of repeat rates); (lv) strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property; (lvi) and other similar criteria consistent with the foregoing; and (lvii) other measures of performance selected by the Board. These performance criteria can be calculated under generally accepted accounting principles (“GAAP”) or can be calculated using non-GAAP results as predetermined when establishing the performance goals.
 
Other Stock Awards
 
Other forms of stock awards valued in whole or in part with reference to our common stock may be granted either alone or in addition to other stock awards under the Amended 2017 Plan. Our Board will have sole and complete authority to determine the persons to whom and the time or times at which such other stock awards will be granted, the number of shares of our common stock to be granted and all other conditions of such other stock awards. Other forms of stock awards may be subject to vesting in accordance with a vesting schedule to be determined by our Board.
 
Changes to Capital Structure
 
In the event that there is a specified type of change in our capital structure not involving the receipt of consideration by us, such as a stock split or stock dividend, the class and number of shares reserved under the Amended 2017 Plan (including share limits) and the class and number of shares and exercise price or strike price, if applicable, of all outstanding stock awards will be appropriately adjusted.
 
 
 
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Corporate Transactions
 
In the event of certain significant corporate transactions, our Board has the discretion to take one or more of the following actions with respect to outstanding stock awards under the Amended 2017 Plan:
 
● 
arrange for assumption, continuation, or substitution of a stock award by a surviving or acquiring entity (or its parent company);
 
● 
arrange for the assignment of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award to the surviving or acquiring corporation (or its parent company);
 
● 
accelerate the vesting and exercisability of a stock award followed by the termination of the stock award;
 
● 
arrange for the lapse of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award;
 
● 
cancel or arrange for the cancellation of a stock award, to the extent not vested or not exercised prior to the effective date of the corporate transaction, in exchange for cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and
 
● 
arrange for the surrender of a stock award in exchange for a payment equal to the excess of (a) the value of the property the holder of the stock award would have received upon the exercise of the stock award, over (b) any exercise price payable by such holder in connection with such exercise.
 
The Board need not take the same action for each stock award.
 
For purposes of the Amended 2017 Plan, a corporate transaction will be deemed to occur in the event of the consummation of (i) a sale of all or substantially all of our consolidated assets, (ii) a sale of at least 50% of our outstanding securities, (iii) a merger or consolidation in which we are not the surviving corporation, or (iv) a merger or consolidation in which we are the surviving corporation but shares of our outstanding common stock are converted into other property by virtue of the transaction.
 
A stock award may be subject to additional acceleration of vesting and exercisability upon or after a qualifying termination of continuous service that occurs in connection with a change in control, as provided in the stock award agreement or in any other written agreement between us and the participant, but in the absence of such provision, no acceleration shall occur.
 
Plan Amendments
 
Our Board will continue to have the authority to amend or terminate the Amended 2017 Plan. However, no amendment, including the one put forth in this Proposal 2 or termination of the plan will adversely affect any rights under awards already granted to a participant unless agreed to by the affected participant. We will obtain stockholder approval of any amendment to the Amended 2017 Plan as required by applicable law.
 
U.S. Federal Income Tax Consequences
 
The information set forth below is a summary only and does not purport to be complete. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any recipient may depend on his or her particular situation, each recipient should consult the recipient’s tax adviser regarding the federal, state, local, and other tax consequences of the grant or exercise of an award or the disposition of stock acquired as a result of an award. The Amended 2017 Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligations.
 
Nonstatutory Stock Options
 
Generally, there is no taxation upon the grant of an NSO where the option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. On exercise, an optionholder will recognize ordinary income equal to the excess, if any, of the fair market value on the date of exercise of the stock over the exercise price. If the optionholder is employed by us, that income will be subject to withholding tax. The optionholder’s tax basis in those shares will be equal to their fair market value on the date of exercise of the option, and the optionholder’s capital gain holding period for those shares will begin on that date.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the optionholder.
 
 
 
-24-
 
 
 
Incentive Stock Options
 
The Amended 2017 Plan provides for the grant of stock options that qualify as “incentive stock options”, as defined in Section 422 of the Code. Under the Code, an optionholder generally is not subject to ordinary income tax upon the grant or exercise of an ISO, subject to alternative minimum tax obligations upon exercise of an ISO. If the optionholder holds a share received on exercise of an ISO for more than two years from the date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the holder’s tax basis in that share will be long-term capital gain or loss.
 
If, however, an optionholder disposes of a share acquired on exercise of an ISO before the end of the required holding period, which is referred to as a disqualifying disposition, the optionholder generally will recognize ordinary income in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date the ISO was exercised over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the stock option, the amount of ordinary income recognized by the optionholder will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.
 
For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired on exercise of an ISO exceeds the exercise price of that stock option generally will be an adjustment included in the optionholder’s alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired on exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the stock option is exercised.
 
We are not allowed an income tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired on exercise of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we are allowed a deduction in an amount equal to the ordinary income includible in income by the optionholder, subject to Section 162(m) of the Code and provided that amount constitutes an ordinary and necessary business expense for us and is reasonable in amount, and either the employee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount.
 
Restricted Stock Awards
 
Generally, the recipient of a restricted stock award will recognize ordinary compensation income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary compensation income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days of his or her receipt of the stock award, to recognize ordinary compensation income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient in exchange for the stock.
 
The recipient’s tax basis for the determination of gain or loss upon the subsequent disposition of shares acquired from stock awards will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock award.
 
Stock Appreciation Rights
 
We may grant under the Amended 2017 Plan stock appreciation rights separate from any other award or in tandem with other awards under the Amended 2017 Plan.
 
 
 
-25-
 
 
 
Where the rights are granted with a strike price equal to the fair market value of the underlying stock on the grant date and where the recipient may only receive the appreciation inherent in the stock appreciation rights in shares of our common stock, the recipient will recognize ordinary compensation income equal to the fair market value of the stock received upon such exercise. If the recipient may receive the appreciation inherent in the stock appreciation rights in cash or other property and the stock appreciation right has been structured to conform to the requirements of Section 409A of the Code, then the cash will be taxable as ordinary compensation income to the recipient at the time that the cash is received.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation right.
 
Restricted Stock Units
 
Generally, the recipient of a stock unit structured to conform to the requirements of Section 409A of the Code or an exception to Section 409A of the Code will recognize ordinary compensation income at the time the stock is delivered equal to the excess, if any, of the fair market value of the shares of our common stock received over any amount paid by the recipient in exchange for the shares of our common stock. To conform to the requirements of Section 409A of the Code, the shares of our common stock subject to a stock unit award may generally only be delivered upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change in control. If delivery occurs on another date, unless the stock units otherwise comply with or qualify for an exception to the requirements of Section 409A of the Code, in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes owed.
 
The recipient’s tax basis for the determination of gain or loss upon the subsequent disposition of shares acquired from stock units will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock award.
 
Section 162 Limitations
 
Compensation of persons who are “covered employees” of the Company is subject to the tax deduction limits of Section 162(m) of the Code. The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered employees in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
 
Interest of Certain Persons in the Amended 2017 Plan
 
Stockholders should understand that our directors, executive officers and other employees may be considered as having an interest in the approval of the Amended 2017 Plan because they may, in the future, receive awards under it. The Board believes that it is important to our growth and long-term success to be able to continue to offer these incentives.
 
 
 
-26-
 
 
 
New Plan Benefits
 
Amended 2017 Plan
 
Name and position (1)Number of units
Robert Fried, Chief Executive Officer
   
Kevin Farr, Chief Financial Officer
   
Frank Jaksch, Jr., Executive Chairman
   
Mark Friedman, General Counsel and Corporate Secretary
   
Megan Jordan, Chief Communications Officer and Senior Vice President of Global Marketing
   
All Current Executive Officers as a group
   
All Current Non-Employee Directors as a group (2)
  120,000(3)
All Current Employees as a group (excluding all current executive officers)
   
 
(1) 
Except as listed in the table, no other awards that may be made under the Amended 2017 Plan are currently determinable, as there are no guaranteed or contractually required awards. Future grants are subject to approval of our Board or the applicable committee.
(2) 
Includes the 6 nominees for re-election at the Annual Meeting.
(3) 
As described in the paragraph preceding the table, this amount reflects the NSO grants to be made pursuant to our non-employee director compensation plan at the Annual Meeting as described under “Director Compensation.”
 
 
 
-27-
 
 

Amended 2017 Equity Incentive Plan Benefits
 
The following table shows, for each of the named executive officers and the various groups indicated, the number of stock awards underlying shares of the Company’s common stock that have been granted (even if not currently outstanding) under the Amended 2017 Plan since its approval by the stockholders in 2017 and through March 31, 2020.
 
Amended 2017 Equity Incentive Plan
 
 
 
 
 Number of shares
Name and positionsubject to grant (#)
Robert Fried, Chief Executive Officer and Director
  2,205,154 
Kevin Farr, Chief Financial Officer
  1,198,308 
Frank Jaksch, Jr., Executive Chairman
  179,088 
Mark Friedman, General Counsel and Corporate Secretary
  698,308 
Megan Jordan, Chief Communications Officer and Senior Vice President of Global Marketing
  500,000 
All Current Executive Officers as a Group
  4,780,858 
All Current Non-Executive Directors as a Group
  440,000 
All Current Employees as a Group (including all current non-executive officers)
  4,264,932 
Nominee for Director
    
Frank Jaksch, Jr., Executive Chairman
  179,088 
Robert Fried, Chief Executive Officer and Director
  2,205,154 
Stephen Block, Non-Executive Director
  60,000 
Jeff Baxter, Non-Executive Director
  60,000 
Kurt Gustafson, Non-Executive Director
  60,000 
Steven Rubin, Non-Executive Director
  100,000 
Wendy Yu, Non-Executive Director
  80,000 
Tony Lau, Non-Executive Director
  80,000 
 
In this Proposal 2, stockholders are requested to approve the Amended 2017 Plan. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on this matter at the Annual Meeting will be required to approve the adoption of the Amended 2017 Plan. Abstentions will be counted toward the tabulation of votes cast on Proposal 2 and will have the same effect as negative votes. Broker non-votes are counted toward a quorum, but are not counted for any purpose in determining whether this matter has been approved.
 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE CHROMADEX CORPORATION 2017 EQUITY INCENTIVE PLAN.
 
 
 
 
 
-28-
 
 
PROPOSAL 3:
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
The Audit Committee has appointed Marcum LLP (“Marcum”), to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2020 and our Board of Directors has further directed that management submit the selection of its independent registered public accountant firm for ratification by the stockholders at the Annual Meeting. Marcum has audited the Company’s financial statements since 2013. Representatives of Marcum are not expected to be present at the Annual Meeting.
 
Stockholder ratification of the selection of Marcum as the Company’s independent registered public accountants is not required by Delaware law, the Company’s certificate of incorporation, or the Company’s bylaws. However, the Audit Committee is submitting the selection of Marcum to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of different independent registered public accountants at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.
 
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the selection of Marcum. Abstentions will be counted toward the tabulation of votes cast on Proposal 3 and will have the same effect as negative votes. Broker non-votes will be counted towards a quorum, but will not be counted for any purpose in determining whether Proposal 3 has been approved.
 
Audit Fees
 
The following table sets forth aggregate fees billed to us by Marcum LLP, our independent registered public accounting firm during the fiscal years ended December 31, 2019 and December 31, 2018.
 
 
 
Fiscal Year Ended
 
Marcum, LLP
 
December 31, 2019
 
 
December 31, 2018
 
Audit Fees (1)
 $434,000 
 $350,000 
Audit-Related Fees
 $ 
 $ 
Tax Fees
 $ 
 $ 
All Other Fees
 $ 
 $ 
 
(1)Audit fees consist of fees billed for professional services rendered by Marcum in connection with the audit of the Company’s annual financial statements and internal control over financial reporting and quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, review of our registration statements and related services that are normally provided in connection with statutory and regulatory filings or engagements.
 
All fees described above were pre-approved by the Audit Committee. In connection with the audit of the financial statements for the fiscal year ended December 31, 2019, the Company entered into an engagement agreement with Marcum that sets forth the terms by which Marcum will perform audit services for the Company.
 
Policy for Pre-Approval of Independent Auditor Services
 
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by Marcum. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the specific service or category of service and is generally subject to a specific budget. The independent auditor and management are required to periodically communicate to the Audit Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.
 
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF MARCUM LLP AS INDEPENDENT PUBLIC ACCOUNTANT, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
 
 
-29-
 
 
EXECUTIVE OFFICERS
 
 
Executive Officers
 
The names of our executive officers and their ages, positions, and biographies are set forth below. Frank Jaksch’s and Robert Fried's backgrounds are discussed under the section Nominees for Election to Board of Directors. The persons listed below served as our executive officers during 2019:
 
Name
 
Age Position
Frank Jaksch, Jr.
 
51 Executive Chairman of the Board
Robert Fried
 
60 Chief Executive Officer and Director
Kevin Farr
 
62 Chief Financial Officer
Mark Friedman
 
62 General Counsel and Corporate Secretary
Lisa Bratkovich (1)
 
53 Former Chief Marketing Officer
Matthew Roberts (2)
 
51 Former Chief Scientific Officer and Senior Vice President of Innovation
 
(1) Ms. Bratkovich served as Chief Marketing Officer until January 10, 2020.
(2) Mr. Roberts served as Chief Scientific Officer and Senior Vice President of Innovation until February 7, 2020.
 
The persons listed below are our executive officers as of the date hereof:
 
Name
 
Age Position
Frank Jaksch, Jr.
 
51 Executive Chairman of the Board
Robert Fried
 
60 Chief Executive Officer and Director
Kevin Farr
 
62 Chief Financial Officer
Mark Friedman
 
62 General Counsel and Corporate Secretary
Megan Jordan (1)
 
50 Chief Communications Officer and Senior Vice President of Global Marketing
 
(1) Ms. Jordan joined the Company in August 2019, but was appointed an executive officer in March 2020.
 
Kevin Farr, 62, has served as Chief Financial Officer since October 2017. Mr. Farr previously served as the Chief Financial Officer of Mattel, Inc. (NASDAQ:MAT) from February 2000 through September 2017, and prior to that served in multiple leadership roles at Mattel since 1991. Before joining Mattel, Mr. Farr spent 10 years at PricewaterhouseCoopers. Mr. Farr serves on the Corporate Advisory Board of the Marshall School of Business at the University of Southern California, the Westside Los Angeles Ronald McDonald House Charities and as a board member of Polaris Industries Inc. Mr. Farr received his Master of Business Administration from Northwestern University J. L. Kellogg Graduate School of Business, and his B.S. in Accounting from Michigan State University.
 
Mark Friedman, 62, has served as the Company’s General Counsel and Corporate Secretary since January 2018. From 2013 to January 2018, Mr. Friedman held various positions at Herbalife Ltd. (NYSE:HLF) including Executive Vice President, General Counsel and Counsel to the Executive Chairman. Mr. Friedman served as General Counsel and Senior Vice President of Business Development at Pinkberry from 2008 to 2013, Senior Vice President and General Counsel at American Golf Corporation from 2003 to 2008 and Senior Counsel and Associate Corporate Secretary for BP (NYSE:BP) and Atlantic Richfield Company from 1994 to 2003. Mr. Friedman received his Juris Doctor degree from the University of Southern California and his Bachelor of Arts degree from the University of California, Davis.
 
Megan Jordan, 50, has served as the Company’s Chief Communications Officer and Senior Vice President of Corporate Affairs since August 2019. In January 2020, Ms. Jordan assumed the additional role of Senior Vice President of Global Marketing. In her role, Ms. Jordan oversees the Company’s internal and external communications, marketing, social media, content strategy, thought leadership and advertising. From May 2015 to December 2018, Ms. Jordan was the Senior Vice President of Global Corporate Communications for Herbalife Nutrition (NYSE:HLF), a direct selling nutrition company operating in 94 countries. She led the company’s communications, social media, advertising and web strategy worldwide. Prior to joining Herbalife Nutrition, Ms. Jordan was Vice President of Corporate Communications for Southern California Edison (“SCE”) with responsibility for the company’s communications, advertising, websites, social media and creative teams. Prior to joining SCE, she provided strategic marketing and communications counsel to Fortune 500 clients as a Senior Vice President with leading international firms MSL Group, Cohn & Wolfe (now BCW) and Zeno Group for clients including Hilton, General Motors, Nestle, Philips, Bayer and Kia. Ms. Jordan is a member of the Board of Advisors for the School of Public Relations at the University of Southern California’s Annenberg School of Communication and Journalism, where she has served as an adjunct professor. She is a member of the Arthur W. Page Society, and also serves on the board of directors of Special Olympics. Ms. Jordan holds a B.A. degree in Public Relations from University of Southern California and a M.A. degree in Mass Communications from California State University, Northridge.
 
 
-30-
 
 
 
EXECUTIVE OFFICERS AND MANAGEMENT COMPENSATION
 
Compensation Discussion and Analysis
 
The following discussion and analysis of compensation arrangements of our named executive officers for 2019 should be read together with the compensation tables and related disclosures set forth below.
 
We believe our success is driven by the leadership of our named executive officers. Our named executive officers are primarily responsible for many of our important business development relationships. The growth and maintenance of these relationships is critical to ensuring our future success, as is experience in managing these relationships. Therefore, it is important to our success that we retain the services of these individuals. Our Board believes that our current executive compensation program properly aligns the interests of our executive officers with those of our stockholders.
 
General Philosophy
 
Our overall compensation philosophy is to provide an executive compensation package that enables us to attract, retain and motivate executive officers to achieve our near-term and long-term business objectives. We also believe that a meaningful portion of the executive officer's total cash compensation should be at risk and dependent upon the achievement of our objectives. Among other things, our compensation philosophy aims to reward strong performance with competitive pay and thus better enable us to retain executive officers who contribute to the long-term success of the Company.
 
Executive officers typically are engaged through employment agreements that establish initial base salaries and may include objectives and benchmarks for the calculation of future bonuses and equity incentive awards.
 
We attempt to pay our executive officers competitively in order to retain the most capable people in the industry. In making executive and employee compensation decisions, the Compensation Committee considers achievement of certain goals and criteria, some of which relate to the Company’s performance and others to the performance of the individual employee.
 
The Compensation Committee periodically evaluates our compensation policies to determine whether we remain competitive among industry peers and continue to attract, retain and motivate key personnel. To meet these objectives, the Compensation Committee may from time to time increase salaries, award additional equity grants or provide other short and long-term incentive compensation. Our Board of Directors values the perspective of our stockholders, and the Compensation Committee will continue to consider the outcome of future say-on-pay votes, as well as any other shareholder feedback, when making compensation decisions for the named executive officers.
 
The Compensation Committee generally seeks input from our executive officers when discussing the performance and compensation levels for executives and other Company leadership. The Compensation Committee also works with our Chief Executive Officer and Chief Financial Officer to evaluate the financial, accounting, tax and retention implications of our various compensation programs. No executive participates in deliberations relating to his or her own compensation.
 
Results of Most Recent Stockholder Advisory Vote on Executive Compensation
 
Over 92% of the votes cast in the stockholder advisory vote on the compensation of our named executive officers in 2018 approved our executive compensation. At the Company’s 2015 Annual Meeting of Stockholders, the stockholders recommended a three-year frequency with which the Company should conduct future stockholder advisory votes on named executive officer compensation, as described in our 2015 proxy statement. The Compensation Committee considered the result of the stockholder advisory vote as an endorsement of its compensation policies, practices and philosophy for our named executive officers. Accordingly, the Compensation Committee determined not to make any significant changes as a result of the vote. In addition, in part based on the support shown by the vote, the Compensation Committee has maintained a consistent approach in making compensation decisions.
 
The Compensation Committee considers the results of the say-on-pay vote on our executive compensation program as part of its annual executive compensation review. Our Board of Directors values the opinions of our stockholders, and the Compensation Committee will continue to consider the outcome of future say-on-pay votes, as well as any feedback received, when making compensation decisions for the named executive officers.
 
 
 
 
-31-
 
 
 
Compensation Program and Forms of Compensation
 
We provide our executive officers with a compensation package consisting of base salary, annual bonus, equity incentives and participation in benefit plans generally available to other employees. In establishing total compensation, the Compensation Committee considers individual and company performance, as well as market information regarding compensation paid by other companies in our peer group.
 
Base salaries are calculated to be competitive within our industry and to reflect the capabilities and experience of our executives. The annual bonus is intended to motivate and reward our executives for the achievement of certain strategic and measurable objectives. The equity awards incentivize executives to deliver long-term shareholder value, while serving as a retention vehicle for our executive talent.
 
The Compensation Committee conducts a thorough risk assessment of the Company’s compensation practices to analyze whether they encourage employees to take excessive or inappropriate risks. After completing the review, the Compensation Committee has concluded that the Company’s compensation programs are, on balance, consistent with market practices and do not present material risks to the Company.
 
Base Salary
 
Base salary is designed to provide a predictable level of compensation and provide a competitive level of pay that reflects the executive's experience, role and responsibilities. Base salaries for our executive officers are initially set based on negotiation with individual executive officers at the time of recruitment and with reference to salaries for comparable positions in the industry for individuals of similar background to the executive officers being recruited. We also consider the individual’s experience, reputation in his or her industry and expected contributions to the Company. In each case, we take into account the results achieved by the executive, his or her future potential, scope of responsibilities and experience, and competitive salary practices.
 
Short-Term Incentives
 
We design our bonus programs to be competitive in relation to the market. Our goal is to instill a “pay for performance” culture throughout the Company. These bonus programs are designed to avoid entitlements, to align actual payouts with the actual results achieved and to be easy to understand and administer. Upon completion of the fiscal year, the Compensation Committee assesses the Company’s performance and determines the amount to be awarded to each of the executive officers based on the achievement of the financial and strategic goals that were set earlier in the year. Our compensation plan is reviewed on at least an annual basis to determine that it is operating as intended.
 
2019 Bonuses
 
In 2020, we have paid and will pay bonuses of $190,404, $98,058, $120,938, $98,508 and $0, respectively, to our executive officers Robert Fried, Kevin Farr, Frank Jaksch Jr., Mark Friedman and Lisa Bratkovich for services performed during 2019. For 2019, the bonus goals for named executive officers mainly consisted of three categories, (i) net sales, (ii) operating income / (loss) with certain adjustments and (iii) qualitative corporate goals. Qualitative corporate goals consisted of (i) continuing to build TRU NIAGEN as a Global Brand, (ii) execution of certain business deals with strategic partners, (iii) strengthening the company’s balance sheet, (iv) getting stronger health claims related to TRU NIAGEN products and (v) achieving successful outcome on pending litigation matters. The Compensation Committee determined that 60% of these qualitative corporate goals were achieved. The weight factor of the goals, the threshold, target and maximum threshold and the actual bonus payouts were as follows:
 
 
 
 
-32-
 
 
 
Executive Bonus Targets
 
Weight
Factor
 
 
2019
Threshold
 
 
2019
Target
 
 
2019
Max-out
 
 
2019
Actual
 
 
Payout
%
 
 
Base
Salary
 
 
Target
Bonus %
 
 
Bonus
Payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Robert Fried, Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Company - Net Sales
  50%
 $35,382 
 $47,176 
 $58,971 
 $46,291 
  48%
 $500,000 
  60%
 $145,404 
Total Company - Operating Income / (Loss)
  25%
  (24,608)
  (21,351)
  (18,093)
  (25,193)
  0%
  500,000 
  60%
  - 
Qualitative Corporate Goals
  25%
  N/A 
  N/A 
  N/A 
  60%
  15%
  500,000 
  60%
  45,000 
Total
  100%
    
    
    
    
  63%
    
    
 $190,404 
 
    
    
    
    
    
    
    
    
    
Kevin Farr, Chief Financial Officer
    
    
    
    
    
    
    
    
    
Total Company - Net Sales
  50%
  35,382 
  47,176 
  58,971 
  46,291 
  48%
  309,000 
  50%
  74,883 
Total Company - Operating Income / (Loss)
  25%
  (24,608)
  (21,351)
  (18,093)
  (25,193)
  0%
  309,000 
  50%
  - 
Qualitative Corporate Goals
  25%
  N/A 
  N/A 
  N/A 
  60%
  15%
  309,000 
  50%
  23,175 
Total
  100%
    
    
    
    
  63%
    
    
 $98,058 
 
    
    
    
    
    
    
    
    
    
Frank Jaksch, Executive Chairman
    
    
    
    
    
    
    
    
    
Total Company - Net Sales
  50%
  35,382 
  47,176 
  58,971 
  46,291 
  48%
  381,100 
  50%
  92,356 
Total Company - Operating Income / (Loss)
  25%
  (24,608)
  (21,351)
  (18,093)
  (25,193)
  0%
  381,100 
  50%
  - 
Qualitative Corporate Goals
  25%
  N/A 
  N/A 
  N/A 
  60%
  15%
  381,100 
  50%
  28,583 
Total
  100%
    
    
    
    
  63%
    
    
 $120,938 
 
    
    
    
    
    
    
    
    
    
Mark Friedman, General Counsel
    
    
    
    
    
    
    
    
    
Total Company - Net Sales
  50%
  35,382 
  47,176 
  58,971 
  46,291 
  48%
  309,000 
  50%
  74,883 
Total Company - Operating Income / (Loss)
  25%
  (24,608)
  (21,351)
  (18,093)
  (25,193)
  0%
  309,000 
  50%
  - 
Qualitative Corporate Goals
  25%
  N/A 
  N/A 
  N/A 
  60%
  15%
  309,000 
  50%
  23,175 
Total
  100%
    
    
    
    
  63%
    
    
 $98,058 
 
    
    
    
    
    
    
    
    
    
LisaBratkovich, Chief Marketing Officer (1)
    
    
    
    
    
    
    
    
    
Ecommerce - Net Sales
  50%
  20,693 
  27,591 
  34,488 
  26,659 
  0%
  350,000 
  40%
  - 
Ecommerce - Advertising Expense
  10%
  (3,859)
  (5,145)
  (6,431)
  (6,660)
  0%
  350,000 
  40%
  - 
Ecommerce - Operating Income / (Loss)
  15%
  2,726 
  4,539 
  6,351 
  1,691 
  0%
  350,000 
  40%
  - 
Qualitative Corporate Goals
  25%
  N/A 
  N/A 
  N/A 
  60%
  0%
  350,000 
  40%
  - 
Total
  100%
    
    
    
    
  0%
    
    
 $- 
 
    
    
    
    
    
    
    
    
    
(1) Lisa Bratkovich no longer serves as the Chief Marketing Officer effective January 10, 2020. As a result, 2019 bonus is not paid.
 
 
 
-33-
 
 
 
Long-Term Incentives
 
We design our equity programs to be competitive in relation to the market and industry peer group. We monitor the market and applicable accounting, corporate, securities and tax laws and regulations and adjust our equity programs as appropriate. Currently, our long-term incentive plan is entirely equity-based to facilitate ownership and to align executive interests with those of our stockholders. Stock options and other forms of equity compensation are designed to reward strong, individual performance over a clearly defined timeline. Stock options provide incentives to grow shareholder value since our executive officers can realize value only if our stock price appreciates over the exercise price, which is the closing market price on the date of grant.
 
Timing of Equity Awards
 
Only the Compensation Committee of the Board of Directors may approve stock option grants to our executive officers. Stock options to employees, including our executive officers, are generally granted once a year at predetermined meetings of the Compensation Committee. On limited occasions, grants may occur upon unanimous written consent of the Compensation Committee, which occurs primarily for the purpose of approving a compensation package for a newly hired or promoted executive under an employment agreement with the executive. The exercise price of a newly granted option is the closing market price of our Common Stock on the date of grant.
 
Benefits Programs
 
We design our benefits programs to be both affordable and competitive in relation to the market and our peer group while conforming to local laws and practices. We monitor the market, local laws and practices and adjust our benefits programs as appropriate. We design our benefits programs to provide an element of core benefits, and to the extent possible, offer alternatives for additional benefits, be tax-effective for employees in each country and balance costs and cost sharing between us and our employees. For our retirement program, we sponsor a 401(k) plan for our employees. The 401(k) plan is a retirement savings defined contribution plan established in accordance with the Internal Revenue Code that provides each of our eligible employees with the opportunity to defer a portion of his or her eligible compensation on statutorily prescribed annual limits, and to have this amount contributed to an account under the 401(k) plan in his or her name. Other than the benefits and compensation disclosed herein, the Company does not otherwise provide perquisites to its executive officers.
 
 
 
 
-34-
 
 
 
Severance and Change in Control Arrangements
 
Several of our executives have employment and other agreements that provide for severance payment arrangements and/or acceleration of stock option and stock award vesting in the event of an acquisition or other change in control of our company. These agreements are aimed to reduce distractions by letting our executives focus on the business, and are described in greater detail below under the heading “Employment Agreements”.
 
Clawback Policy
 
The Company has established a Clawback Policy, which, among other things, permits the Compensation Committee to require forfeiture or reimbursement of certain cash and equity award that was paid, granted, or vested based upon the achievement of financial results that, when recalculated to include the impact of a material financial restatement, were not achieved, whether or not fraud or misconduct was involved. The Clawback policy is applicable to all current or former officer of the Company who is or was designated as an “officer” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.
 
Hedging Policy
 
The Company has established an Insider Trading Policy, which, among other things, prohibits trading in securities with material nonpublic information including through hedging activities. Further, none of the Company’s employees, directors, consultants and contractors may trade in options, warrants, puts and calls or similar instruments on our securities or sell our securities “short”. Engaging in any transactions relating to our common stock must be pre-cleared by our Chief Financial Officer.
 
Stock Ownership Policy
 
The Company has established a Stock Ownership Policy, which, among other things, aligns the interests of the Chief Executive Officer, other named executive officers and the members of the Board, with the interests of the Company’s stockholders and to further promote the Company’s commitment to sound corporate governance. The stock ownership guidelines are determined as a multiple of each person’s base salary/retainer as follows:
 
TitleOwnership Guideline
Chief Executive OfficerSix times annual base salary
All other Named Executive OfficersThree times annual base salary
Members of the BoardTwo times annual base retainer
 
Subject to potential extension, the Chief Executive Officer, other named executive officers and the members of the Board are required to achieve the applicable level of ownership by the fifth year from the date of his or her appointment.
 
Tax and Accounting Considerations
 
Limitation on Deductibility of Executive Compensation
 
Under Section 162(m) of the Internal Revenue Code (“Section 162(m)”), compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible.
 
Prior to the enactment of the Tax Cuts and Jobs Act, Section 162(m) provided a performance-based compensation exception, pursuant to which the deduction limit under Section 162(m) did not apply to any compensation that qualified as “performance-based compensation” under Section 162(m). Pursuant to the Tax Cuts and Jobs Act, the performance-based compensation exception under Section 162(m) was repealed with respect to taxable years beginning after December 31, 2017, except that certain transition relief is provided for compensation paid pursuant to a written binding contract which was in effect on November 2, 2017 and which is not modified in any material respect on or after such date.
 
Compensation paid to each of the Company’s “covered employees” in excess of $1 million per taxable year generally will not be deductible unless it qualifies for the performance-based compensation exception under Section 162(m) pursuant to the transition relief described above. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m), as well as other factors beyond the control of the Compensation Committee, no assurance can be given that any compensation paid by the Company will be eligible for such transition relief and be deductible by the Company in the future. Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s NEOs in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its stockholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.
 
 
 
-35-
 
 
 
Accounting Treatment
 
Under Financial Accounting Standard Board ASC Topic 718, or ASC 718, the Company is required to estimate and record an expense for each award of equity compensation over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to ASC 718. The accounting impact of our compensation programs are one of many factors that the Compensation Committee considers in determining the structure and size of our executive compensation programs.
 
Summary Compensation Table
 
The following table sets forth information concerning the annual and long-term compensation earned by our Chief Executive Officer (the principal executive officer), Chief Financial Officer (the principal financial officer), Executive Chairman, General Counsel and Corporate Secretary and Former Chief Marketing Officer, each of whom served during the year ended December 31, 2019 as our named executive officers. Lisa Bratkovich served as Chief Marketing Officer until January 10, 2020.
 
NameYear
 
Salary
 
 
Bonus
 
 
Stock Awards
(1)
 
 
Option Awards(2)
 
 
All Other Compensation
(3)
 
 
Total($)
 
Robert Fried2019
 $486,537 
 $190,404 
 $653,331(4)
 $381,622(5)
  - 
 $1,711,894 

2018
 $379,121 
 $468,330 
 $1,255,003(6)
 $3,057,990(7)
  - 
 $5,160,444 

2017
 $230,769 
 $163,945 
 $2,539,999(8)
 $876,014(9)
  - 
 $3,810,727 
Kevin Farr2019
 $306,577 
 $98,058 
  - 
 $210,450(10)
 $6,418 
 $621,503 

2018
 $300,000 
 $93,600 
  - 
  - 
  - 
 $393,600 

2017
 $60,000(11)
 $24,378 
  - 
 $3,040,183(12)
  - 
 $3,124,561 
Frank Jaksch, Jr.2019
 $378,111 
 $120,938 
  - 
 $129,329(13)
 $8,400 
 $636,778 

2018
 $370,000 
 $100,000 
  - 
 $188,960(14)
 $8,650 
 $667,610 

2017
 $370,000 
 $75,480 
  - 
  - 
 $8,100 
 $453,580 
Mark Friedman2019
 $306,577 
 $98,058 
  - 
 $210,450(15)
 $7,012 
 $622,097 

2018
 $281,967(16)
 $87,974 
  - 
 $1,768,274(17)
 $6,231 
 $2,144,446 

2017
  - 
  - 
  - 
  - 
  - 
  - 
Lisa Bratkovich2019
 $350,000 
  - 
  - 
 $104,760(18)
 $8,400 
 $463,160 

2018
 $204,645(19)
 $41,023 
  - 
 $432,989(20)
  - 
 $678,657 

2017
  - 
  - 
  - 
  - 
  - 
  - 
 
(1)
The amounts in the column titled “Stock Awards” above reflect the aggregate award date fair value of restricted stock awards.
 
(2) 
The amounts in the column titled “Option Awards” above reflect the aggregate grant date fair value of stock option awards for the fiscal years ended December 31, 2019, December 31, 2018 and December 30, 2017. See Note 14 of the ChromaDex Corporation Consolidated Financial Report included in the Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020, for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.
 
(3)
The amount in this column titled “All Other Compensation” above reflect matching 401(k) contributions.
 
(4)
166,666 shares of Common Stock were awarded on March 13, 2019 pursuant to Mr. Fried’s employment agreement in connection with the acquisition of Healthspan Research LLC in 2017, which provided the stock grant upon the achievement of certain performance goals.
 
(5)
On February 21, 2019, Robert Fried was granted options to purchase 162,569 shares of ChromaDex common stock at an exercise price of $3.84. These options expire on February 21, 2029 and 1/3rd of the options vested on February 21, 2020 and the remaining shares vest in a series of 24 equal monthly installments thereafter.
 
(6)
166,667 shares of Common Stock were awarded on each of June 22, 2018 and November 7, 2018 pursuant to Mr. Fried’s employment agreement in connection with the acquisition of Healthspan Research LLC in 2017, which provided the stock grant upon the achievement of certain performance goals.
 
 
 
-36-
 
 
 
(7)
On January 21, 2018, Robert Fried was granted options to purchase 300,000 shares of ChromaDex common stock at an exercise price of $5.85. These options expire on January 21, 2028 and 10/36th of the options vested on January 21, 2018 and thereafter 1/36th vest on 12th of each month for the next 26 months. Also, on June 22, 2018, Mr. Fried was granted options to purchase 744,097 shares at an exercise price of $3.83. These options expire on June 22, 2028 and 1/3rd of the options vested on June 22, 2019 and the remaining options vest in a series of 24 equal monthly installments thereafter.
 
(8) 
On March 12, 2017, Robert Fried was awarded 166,667 shares of restricted Common Stock, which vested on December 20, 2017 pursuant an amendment to his employment agreement in connection with the acquisition of Healthspan Research LLC in 2017. In addition, Mr. Fried received 333,333 shares of restricted stock on December 20, 2017, which were fully vested.
 
(9)
On March 12, 2017, Robert Fried was granted options to purchase 500,000 shares of ChromaDex common stock at an exercise price of $2.715 pursuant to Mr. Fried’s employment agreement in connection with the acquisition of Healthspan Research LLC in 2017. These options expire on March 12, 2027 and 1/36th of the options vest monthly from the grant date.
 
(10)
On February 21, 2019, Kevin Farr was granted options to purchase 89,254 shares of ChromaDex common stock at an exercise price of $3.84. These options expire on February 21, 2029 and 1/3rd of the options vested on February 21, 2020 and the remaining shares vest in a series of 24 equal monthly installments thereafter.
 
(11)
Kevin Farr began serving as Chief Financial Officer on October 5, 2017.
 
(12)
On October 5, 2017, Kevin Farr was granted options to purchase 1,000,000 shares of ChromaDex common stock at an exercise price of $4.24. These options expire on October 4, 2027 and 1/36th of the options vest monthly from the grant date.
 
(13)
On February 21, 2019, Frank Jaksch, Jr. was granted options to purchase 55,040 shares of ChromaDex common stock at an exercise price of $3.84. These options expire on February 21, 2029 and 1/3rd of the options vested on February 21, 2020 and the remaining shares vest in a series of 24 equal monthly installments thereafter.
 
(14)
On January 21, 2018, Frank Jaksch, Jr. was granted options to purchase 50,000 shares of ChromaDex common stock at an exercise price of $5.85. These options expire on January 21, 2028 and 1/4th of the options vested on January 21, 2029 and the remaining shares vest in a series of 36 equal monthly installments thereafter.
 
(15)
On February 21, 2019, Mark Friedman was granted options to purchase 89,254 shares of ChromaDex common stock at an exercise price of $3.84. These options expire on February 21, 2029 and 1/3rd of the options vested on February 21, 2020 and the remaining shares vest in a series of 24 equal monthly installments thereafter.
 
(16) 
Mark Friedman began serving as General Counsel and Corporate Secretary on January 22, 2018.
 
(17)
On January 22, 2018, Mark Friedman was granted options to purchase 500,000 shares of ChromaDex common stock at an exercise price of $5.65. These options expire on January 22, 2028 and 1/3rd of the options vested on January 22, 2019 and the remaining shares vest in a series of 24 equal monthly installments thereafter.
 
(18) 
On February 21, 2019, Lisa Bratkovich was granted options to purchase 44,627 shares of ChromaDex common stock at an exercise price of $3.84. Pursuant to the Separation Agreement effective January 10, 2020, 27,272 of the options vested on January 10, 2020 and these options expire on January 10, 2023.
 
(19) 
Lisa Bratkovich began serving as Chief Marketing Officer on June 4, 2018.
 
(20) 
On June 4, 2018, Lisa Bratkovich was granted options to purchase 200,000 shares of ChromaDex common stock at an exercise price of $3.45. Pursuant to the Separation Agreement effective January 10, 2020, 172,222 of the options vested on January 10, 2020 and these options expire on January 10, 2023.
 
Employment Agreements
 
The material terms of employment agreements with the named executive officers previously entered into by the Company are described below.
 
 
 
 
-37-
 
 
 
Employment Agreement with Robert Fried
 
On June 22, 2018, the Company and Robert Fried, entered into an Amended and Restated Executive Employment Agreement (the “Fried Agreement”). The Fried Agreement amends the Executive Employment Agreement by and between the Company and Mr. Fried, dated March 12, 2017, as amended on December 20, 2017. Pursuant to the Fried Agreement, Mr. Fried is entitled to: (i) an annual base salary of $450,000; (ii) starting in fiscal year 2019, an increased annual base salary of $500,000; (iii) an annual cash bonus for fiscal year 2018 based on direct-to-customer net sales for 2018 and the Company’s gross profit for 2018; (iv) starting in fiscal year 2019, an annual cash bonus based on the achievement of individual and corporate performance targets and metrics to be determined by the Board of Directors of the Company or the Compensation Committee thereof after reasonable consultation with Mr. Fried (the “Performance Bonus”), with such Performance Bonus set at (a) a target of 60% of base salary (based on a performance achievement of 100%), (b) a threshold Performance Bonus of 30% of base salary (based on a performance achievement of 75%) and (c) a maximum Performance Bonus of 90% (based on a performance achievement of 150%); (v) an option to purchase up to 744,097 shares of Company common stock under the Amended 2017 Plan (the “Option”); (vi) up to 333,333 shares of fully-vested restricted Company common stock that will be granted upon the achievement of certain performance goals and (vii) starting in fiscal year 2019, annual equity grants in amounts commensurate with Mr. Fried’s position with the Company, in the discretion of the Company’s Board of Directors. In 2019, the Compensation Committee determined that the payout structure of Mr. Fried’s Performance Bonus will be aligned with the rest of the executive officers, which the minimum achievement threshold is 50% target and the maximum achievement threshold is 150% of the target, with a target of 60% of base salary.
 
Any unvested shares subject to the Option will vest in full upon termination by the Company of Mr. Fried’s employment without cause (and other than as a result of Mr. Fried’s death or disability) or Mr. Fried’s resignation for good reason. If Mr. Fried’s employment is terminated by the Company without cause (and other than as a result of Mr. Fried’s death or disability) or Mr. Fried resigns for good reason, then subject to executing a release, Mr. Fried will receive (i) continuation of his base salary for 18 months, (ii) COBRA premiums for 12 months, (iii) accelerated vesting of any unvested time-based vesting equity awards that would have otherwise become vested had Mr. Fried performed continuous service through the one year anniversary of such termination date (provided that vesting for the Option shall accelerate as described above), (iv) an extended exercise period for his options and stock appreciation rights and (v) a prorated Performance Bonus. In the case of Mr. Fried’s death or disability, Mr. Fried will be eligible to receive a prorated Performance Bonus.
 
Employment Agreement with Kevin Farr
 
On October 5, 2017, the Company entered into an Employee Agreement (the "Farr Agreement") with Kevin M. Farr who was appointed by the Board to serve as Chief Financial Officer, Secretary, principal accounting officer and principal financial officer. Mr. Farr is entitled to receive certain severance payments per the terms of the Farr Agreement. The key terms of the Farr Agreement, including the severance terms are as follows:
 
Mr. Farr is entitled to: (i) an annual base salary of $300,000 and (ii) a discretionary annual bonus based on the achievement of certain performance goals to be determined by the Board. Pursuant to the Farr Agreement, Mr. Farr also received an option to purchase up to 1,000,000 shares of ChromaDex common stock under the ChromaDex 2017 Equity Incentive Plan, subject to vesting in a series of 36 equal monthly installments over a three-year period, with an exercise price equal to $4.24 per share. The options will fully vest if the Company's stock price equals or exceeds $10 per share for over the previous 20 trading days. On March 24, 2019, Mr. Farr’s base salary increased to $309,000.
 
If Mr. Farr’s employment is terminated by the Company without cause or Mr. Farr resigns for good reason, then, subject to executing a release, Mr. Farr will receive (i) continuation of his base salary for 12 months, (ii) COBRA premiums for 12 months, (iii) a prorated annual cash bonus, based on the good faith determination of the Board of the actual results and period of employment during the year of such termination, (iv) accelerated vesting of time-based equity that would have otherwise become vested by the one year anniversary of such termination date and (v) an extended exercise period for his options.
 
Employment Agreement with Frank Jaksch, Jr.
 
On June 22, 2018, ChromaDex, Inc. and Frank L. Jaksch, Jr. entered into an amendment (the “Jaksch Amendment”) to the Amended and Restated Employment Agreement, dated April 19, 2010, by and between ChromaDex, Inc. and Mr. Jaksch (the “Jaksch Agreement”). The Jaksch Amendment provides that Mr. Jaksch shall serve as Executive Chairman and shall perform such duties as are customarily associated with the position of Executive Chairman. The Jaksch Agreement automatically renews unless terminated in accordance with its terms. On January 2, 2014, the Board approved raising the annual base salary of Mr. Jaksch to $275,000 per year and the annual cash bonus target up to 50% of his base salary. On March 14, 2016, the Board increased the base salary of Mr. Jaksch to $320,000. On April 25, 2016, Mr. Jaksch’s base salary increased to $370,000 as the Company’s common stock was listed on Nasdaq Stock Market. On March 24, 2019, Mr. Jaksch’s base salary increased to $381,100.
 
 
 
-38-
 
 
 
The severance terms provide that in the event Mr. Jaksch’s employment with the Company is terminated voluntarily, he will be entitled to any accrued but unpaid base salary, any stock vested through the date of his termination and a pro-rated portion of 50% of his salary for the bonus. In addition, if Mr. Jaksch leaves the Company for “Good Reason”, (as defined in Jaksch Agreement), he will also be entitled to severance equal to 50% of his salary, and he will be deemed to have been employed for the entirety of such year. Severance will then consist of 16 weeks of paid salary, unless Mr. Jaksch signs a release, in which case he will receive compensation up to 12 months paid salary.
 
In the event the Company terminates Mr. Jaksch’s employment “without Cause” (as defined in the Jaksch Agreement), Mr. Jaksch will be entitled to severance in the form of any stock vested through the date of his termination and continuation of his base salary for a period of eight weeks, or, if Mr. Jaksch enters into a standard separation agreement, Mr. Jaksch will receive continuation of base salary and health benefits, together with applicable fringe benefits until 24 months from the date of termination (the “Severance Period”), and he will receive a bonus of 50% of his base salary as well as the full vesting of any otherwise unvested stock awards.
 
Employment Agreement with Mark Friedman
 
On January 22, 2018, the Company entered into an Employee Agreement (the "Friedman Agreement") with Mark Friedman, who was appointed by the Board to serve as General Counsel and Corporate Secretary. Mr. Friedman is entitled to receive certain severance payments per the terms of the Friedman Agreement. The key terms of the Friedman Agreement, including the severance terms, are as follows:
 
Mr. Friedman is entitled to: (i) an annual base salary of $300,000 and (ii) a discretionary annual bonus based on the achievement of certain performance goals to be determined by the Board. Pursuant to the Friedman Agreement, Mr. Friedman also received an option to purchase up to 500,000 shares of ChromaDex common stock under the ChromaDex 2017 Equity Incentive Plan, which one-third of the shares vested on the one year anniversary and the remaining shares will vest in a series of 24 equal monthly installments thereafter, with an exercise price equal to $5.65 per share. Any unvested options will vest in full upon a change of control of the Company, subject to Mr. Friedman’s continuous service through such change of control or upon termination by the Company of Mr. Friedman’s employment without cause or Mr. Friedman’s resignation for good reason within 90 days before the change of control. On March 24, 2019, Mr. Friedman’s base salary increased to $309,000.
 
If Mr. Friedman’s employment is terminated by the Company without cause or Mr. Friedman resigns for good reason, then, subject to executing a release, Mr. Friedman will receive (i) continuation of his base salary for 12 months, (ii) COBRA premiums for 12 months, (iii) a prorated annual cash bonus, based on the good faith determination of the Board of the actual results and period of employment during the year of such termination, (iv) accelerated vesting of time-based equity that would have otherwise become vested by the one year anniversary of such termination date and (v) an extended exercise period for his options.
 
Employment Agreement with Megan Jordan
 
On July 23, 2019, the Company entered into an Employee Agreement (the "Jordan Agreement") with Megan Jordan, who was hired by the Company to serve as Senior Vice President of Corporate Affairs & Chief Communications Officer. Ms. Jordan is entitled to receive certain severance payments per the terms of the Jordan Agreement. The key terms of the Jordan Agreement, including the severance terms, are as follows:
 
Ms. Jordan is entitled to an annual base salary of $300,000 and a discretionary annual bonus calculated and paid commensurate with other executive officers of the Company. Pursuant to the Jordan Agreement, Ms. Jordan also received an option to purchase up to 320,000 shares of ChromaDex common stock under the ChromaDex 2017 Equity Incentive Plan, which one-third of the shares will vest on the on year anniversary and the remaining shares will vest in a series of 24 equal monthly installments thereafter, with an exercise price equal to $4.47 per share. Any unvested options will vest in full upon a change of control of the Company, subject to Ms. Jordan’s continuous service through such change of control.
 
If Ms. Jordan’s employment is terminated by the Company without cause or Ms. Jordan resigns for good reason, then, subject to executing a release, Ms. Jordan will receive (i) continuation of her base salary for 12 months, (ii) COBRA premiums for 12 months, (iii) a prorated annual cash bonus, based on the good faith determination of the Board of the actual results and period of employment during the year of such termination, (iv) accelerated vesting of time-based equity that would have otherwise become vested by the one year anniversary of such termination date and (v) an extended exercise period for her options.
 
 
 
 
-39-
 
 
 
Separation Agreement with Lisa Bratkovich
 
On January 7, 2020, it was agreed that Lisa Bratkovich would no longer serve as the Chief Marketing Officer of the Company, effective January 10, 2020. Ms. Bratkovich entered into an agreement (the “Separation Agreement”) with the Company regarding her separation from the Company whereby she will receive (a) continuation of her base salary for 12 months, (b) accelerated vesting of time-based equity that would have otherwise become vested by the one-year anniversary of the termination date and a period of three years after the termination date to exercise any vested stock options and (c) payment of COBRA group health insurance premiums for up to 12 months. The Separation Agreement contains a mutual non-disparagement obligation and a standard release of claims on the part of Ms. Bratkovich.
 
Potential Payments Upon Termination or Change of Control
 
Following table describes and quantifies the severance and other benefits potentially payable to our named executive officers as of December 31, 2019.
 
Potential Payments Upon Termination Table*
 
Name
 
Severance ($) (1)
 
 
Accrued Compensation ($) (2)
 
 
Option Awards ($) (3)
 
 
Restricted Stock Awards ($) (4)
 
 
Medical ($) (5)
 
 
Total ($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Robert Fried
 $750,000 
 $68,749 
 $291,735 
 $- 
 $- 
 $1,110,484 
Kevin Farr
 $309,000 
 $42,487 
 $45,080 
 $- 
 $- 
 $396,567 
Frank Jaksch, Jr.
 $831,812 
 $59,730 
 $29,694 
 $718,339 
 $- 
 $1,639,575 
Mark Friedman
 $309,000 
 $42,111 
 $25,636 
 $- 
 $21,349 
 $398,096 
Lisa Bratkovich
 $350,000 
 $40,553 
 $70,151 
 $- 
 $7,041 
 $467,745 
 
*Reflects a termination without cause, or in the case of resignation for good reason, not in connection with a change in control.
 
(1)
Continuation of base salary for 24 months for Frank Jaksch, Jr., 18 months for Rob Fried and 12 months for Kevin Farr, Mark Friedman and Lisa Bratkovich. The amount for Mr. Jaksch includes additional bonus.
 
(2)
Accrued compensation is comprised of any earned or accrued base salary, vacation pay and other payments and benefits earned and payable by law.
 
(3)
The amounts in this column represent the intrinsic value of “in-the-money” unvested options as of December 31, 2019 that would vest in accordance with the executive officer’s employment agreement. Values were derived using the closing price of the Company’s common stock on December 31, 2019 of $4.31.
 
(4)
The amount in this column represent the value of unvested restricted stock award as of December 31, 2019. Value was derived using the closing price of the Company’s common stock on December 31, 2019 of $4.31.
 
(5)
Medical is comprised of health insurance premiums for the period specified in each executive officer's employment agreement.
 
 
 
 
-40-
 
 
 
Potential Payments Upon Change in Control Table*
 
Name
 
Severance ($) (1)
 
 
Accrued Compensation ($) (2)
 
 
Option Awards ($) (3)
 
 
Restricted Stock Awards ($) (4)
 
 
Medical ($) (5)
 
 
Total ($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Robert Fried
 $750,000 
 $68,749 
 $291,735 
 $- 
 $- 
 $1,110,484 
Kevin Farr
 $309,000 
 $42,487 
 $61,394 
 $- 
 $- 
 $412,881 
Frank Jaksch, Jr.
 $831,812 
 $59,730 
 $29,694 
 $718,339 
 $- 
 $1,639,575 
Mark Friedman
 $309,000 
 $42,111 
 $41,949 
 $- 
 $21,349 
 $414,409 
Lisa Bratkovich
 $350,000 
 $40,553 
 $106,975 
 $- 
 $7,041 
 $504,569 
 
*Reflects involuntary termination benefits in the event of a termination without cause or resignation for good reason in connection with a change in control.
 
(1)
Continuation of base salary for 24 months for Frank Jaksch, Jr., 18 months for Rob Fried and 12 months for Kevin Farr, Mark Friedman and Lisa Bratkovich. The amount for Mr. Jaksch includes additional bonus.
 
(2)
Accrued compensation is comprised of any earned or accrued base salary, vacation pay and other payments and benefits earned and payable by law.
 
(3)
The amounts in this column represent the intrinsic value of “in-the-money” unvested options as of December 31, 2019 that would vest in accordance with the executive officer’s employment agreement. Values were derived using the closing price of the Company’s common stock on December 31, 2019 of $4.31.
 
(4)
The amount in this column represent the value of unvested restricted stock award as of December 31, 2019. Value was derived using the closing price of the Company’s common stock on December 31, 2019 of $4.31.
 
(5)
Medical is comprised of health insurance premiums for the period specified in each executive officer's employment agreement.
 
Grants of Plan-Based Awards
 
The following table summarizes the stock option awards granted to our named executive officers during the year ended
December 31, 2019:
 
NameGrant Date
 
All Other Option Awards: Number of Securities Underlying Options
 
 
Exercise or Base Price of Option Awards ($/Share)(1)
 
 
Grant DateFair Value of Stock and Option Awards($)(2)
 
  
 
 
 
 
 
 
 
 
 
Robert Fried2/21/2019
  162,569 
 $3.84 
 $381,622 
Kevin Farr2/21/2019
  89,254 
 $3.84 
 $210,450 
Frank Jaksch, Jr.2/21/2019
  55,040 
 $3.84 
 $129,329 
Mark Friedman2/21/2019
  89,254 
 $3.84 
 $210,450 
Lisa Bratkovich2/21/2019
  44,267 
 $3.84 
 $104,760 
 
(1)
The exercise price of the stock options awarded was determined in accordance with our Amended 2017 Equity Incentive Plan, which provides that the exercise price for an option granted be the closing price of our common stock on the date of grant.
 
(2)
Based upon the aggregate grant date fair value of stock option awards. See Note 14 of the ChromaDex Corporation Consolidated Financial Report included in the Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020, for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.
 
 
 
 
 
-41-
 
 
 
The following table summarizes the restricted stock awards granted to our named executive officers during the year ended December 31, 2019:
 
Name
 
Grant Date
 
 
All Other Stock Awards: Number of Shares of Stock or Units (1)
 
 
Grant Date Fair Value of Stock and Option Awards($)(2)
 
 
 
 
 
 
 
 
 
 
 
Robert Fried
  3/13/2019 
  166,666 
 $653,331 
Kevin Farr
  - 
  - 
  - 
Frank Jaksch, Jr.
  - 
  - 
  - 
Mark Friedman
  - 
  - 
  - 
Lisa Bratkovich
  - 
  - 
  - 
 
(1)
Awarded under our Amended 2017 Equity Incentive Plan.
 
(2)
Based on the closing price of our common stock on the date of grant.
 
Option Exercises and Stock Vested
 
The following table summarizes, with respect to our named executive officers, all options that were exercised and restricted
stock vested during the year ended December 31, 2019:
 
 
 
Option Awards
 
 
Restricted Stock Awards
 
Name
 
Number of Shares Acquired on Exercise(#)
 
 
Value Realized
on Exercise ($)
 
 
Number of Shares Vested (#)
 
 
Value Realized
on Vesting ($)
 
Robert Fried
  - 
 $- 
  166,666 
 $653,331 
Kevin Farr
  - 
 $- 
  - 
 $- 
Frank Jaksch, Jr.
  33,334 
 $68,335 
  - 
 $- 
Mark Friedman
  - 
 $- 
  - 
 $- 
Lisa Bratkovich
  - 
 $- 
  - 
 $- 
 
Outstanding Equity Awards at Fiscal Year End
 
The following table sets forth certain information regarding stock options and restricted stock granted to our named executive officers outstanding as of December 31, 2019.
 
 
 
 
-42-
 
 
 
Outstanding Stock Options at 2019 Fiscal Year-End
 
Name
 
Number of Securities Underlying Unexercised Options (#) Exercisable
 
 
Number of Securities Underlying Unexercised Options (#) Unexercisable
 
 
 
 
 
Equity Incentive Plan Awards: Number ofSecurities Underlying Unexercised Unearned Options (#)
 
 
Option Exercise Price ($)
 
Option Expiration Date
Robert Fried
  66,667 
   
 
 
 
   
  3.30 
7/30/2025
 
  20,000 
   
 
 
 
   
  2.605 
11/16/2026
 
  458,333 
  41,667 
  (1)
   
  2.715 
3/12/2027
 
  275,000 
  25,000 
  (2)
   
  5.85 
1/21/2028
 
  372,049 
  372,048 
  (3)
   
  3.83 
6/22/2028
 
   
  162,569 
  (4)
   
  3.84 
2/21/2029
Kevin Farr
  722,222 
  277,778 
  (5)
   
  4.24 
10/4/2027
 
   
  89,254 
  (6)
   
  3.84 
2/21/2029
Frank Jaksch, Jr.
  33,334 
   
    
   
  5.10 
5/20/2020
 
  41,667 
   
    
   
  4.62 
5/10/2021
 
  83,334 
   
    
   
  1.92 
8/28/2022
 
  633,810 
   
    
   
  2.835 
9/15/2022
 
  50,000 
   
    
   
  3.75 
6/18/2024
 
  50,001 
   
    
   
  3.66 
7/6/2025
 
  70,833 
  14,167 
  (7)
   
  4.04 
8/15/2026
 
  23,958 
  26,042 
  (8)
   
  5.85 
1/21/2028
 
   
  55,040 
  (9)
   
  3.84 
2/21/2029
Mark Friedman
  319,444 
  180,556 
  (10)
   
  5.65 
1/22/2028
 
   
  89,254 
  (11)
   
  3.84 
2/21/2029
Lisa Bratkovich
  100,000 
  100,000 
  (12)
   
  3.45 
1/10/2023
 
   
  44,627 
  (13)
   
  3.84 
1/10/2023
 
 
(1)
13,889 of Mr. Fried’s options vest on 12th of every month through March 12, 2020.
(2)
8,333 of Mr. Fried’s options vest on 12th of every month through March 12, 2020.
(3)
1/3rd of Mr. Fried’s options vested on June 22, 2019 and the remaining options vest in a series of 24 equal monthly installments thereafter.
(4)
1/3rd of Mr. Fried’s options vest on February 21, 2020 and the remaining options vest in a series of 24 equal monthly installments thereafter.
(5)
27,778 of Mr. Farr’s options vest on 5th of every month through October 5, 2020.
(6)
1/3rd of Mr. Farr’s options vest on February 21, 2020 and the remaining options vest in a series of 24 equal monthly installments thereafter.
(7)
1,771 of Mr. Jaksch’s options vest on 15th of every month through August 15, 2020.
(8)
1/4th of Mr. Jaksch’s options vested on January 21, 2019 and the remaining options vest in a series of 36 equal monthly installments thereafter.
(9)
1/3rd of Mr. Jaksch’s options vest on February 21, 2020 and the remaining options vest in a series of 24 equal monthly installments thereafter.
(10)
1/3rd of Mr. Friedman’s options vested on January 22, 2019 and the remaining options vest in a series of 24 equal monthly installments thereafter.
(11)
1/3rd of Mr. Friedman’s options vest on February 21, 2020 and the remaining options vest in a series of 24 equal monthly installments thereafter.
(12)Pursuant to the Separation Agreement effective January 10, 2020, a total of 172,222 of Ms. Bratkovich’s options were vested as of January 10, 2020.
(13)Pursuant to the Separation Agreement effective January 10, 2020, 27,272 of Ms. Bratkovich’s options vested on January 10, 2020.
 
 
 
-43-
 
 
 
Outstanding Restricted Stock at 2019 Fiscal Year-End
 
Name
 
Number of Shares or Units of Stock That Have Not Vested (#)Market Value of Shares of Units of Stock That Have Not Vested ($)Equity incentive plan awards: Number of  unearned shares, units or other rights that have not vested (#) (1)Equity incentive plan awards: Market orpayout value of unearned shares, units or other rights that have not vested ($) (2)
Robert Fried
   
   
   
 $ 
Kevin Farr
   
   
   
 $ 
Frank Jaksch, Jr.
   
   
  166,668 
 $718,339 
Mark Friedman
   
   
   
 $ 
Lisa Bratkovich
   
   
   
 $ 
 
(1)
Frank L. Jaksch Jr. was awarded 83,334 shares of restricted stock on June 6, 2012. Mr. Jaksch was awarded additional 83,334 shares of restricted stock on January 2, 2014. These shares were to originally vest upon the earlier to occur of the following: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination of the officers and members of the board of directors without cause for any reason. On March 7, 2016, the Company and Mr. Jaksch amended the restricted stock awards to provide that the awards shall not vest upon the market price of the Company’s stock exceeding a certain price or listing of the Company’s stock on a national securities exchange.
 
(2)The amounts in the column titled “Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested” above reflect the aggregate market value based on the closing market price of the Company’s stock on December 31, 2019.
 
Equity Compensation Plan Information
 
The following table provides information about our equity compensation plans as of December 31, 2019:
 
  A  
  B  
  C  
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 securitiesreflected incolumn (A))
 
 
    
    
    
Equity compensation plans approved by security holders (1)
  10,051,039 
 $3.80 
  2,891,115 
 
    
    
    
Equity compensation plans not approved by security holders (2)
  500,000 
 $5.65 
  - 
 
    
    
    
Total
  10,551,039 
 $3.89 
  2,891,115 
 
 (1) Includes the 2017 Equity Incentive Plan, as amended.
 (2) The Board of Directors approved an inducement grant to our General Counsel and Corporate Secretary as an inducement material to entering into employment with the Company pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules. The inducement grant consists of a stock option to purchase up to 500,000 shares of our common stock with a per share exercise price or $5.65, which was the adjusted closing price of our common stock on the January 22, 2018 grant date. The inducement grant vests over three years, with one-third of the underlying shares vesting on the first anniversary of the date of grant, and the remaining shares will vest monthly thereafter, at the rate of 1/36th of the shares subject to the option, until fully vested.
 
 
 
-44-
 
 
 
Chief Executive Officer Pay Ratio
 
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the related SEC rule (the “Rule”), the Company is required to provide to its shareholders specified disclosure regarding the relationship of CEO total compensation to the total compensation of its median employee, referred to as “pay-ratio” disclosure.
 
For fiscal 2019,
●            
the median of the annual total compensation of all employees of the Company (other than the CEO) was $104,057 and
●            
the annual total compensation of the CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $1,711,894.
●            
Based on this information, the ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was approximately 16 to 1.
 
Set forth below is a description of the methodology the Company used to identify the median employee for purposes of the Rule.
 
To determine the Company’s total population of employees as of December 31, 2019, the Company included all of its full-time and part-time employees, including employees of consolidated subsidiaries. To identify the “median employee” from the Company’s employee population as determined above, the Company compared the aggregate amount of each employee’s 2019 base salary, 2019 incentive bonus, equity awards granted in 2019 and matching 401(k) contributions. In making this determination, the Company annualized the compensation of employees who were employed by the Company for less than the entire fiscal year. This compensation measure was consistently applied to all employees included in the calculation and reasonably reflects the annual compensation of employees.
 
Using this approach, the Company selected the employee at the median of its employee population. The Company then calculated annual total compensation for this employee using the same methodology used to calculate annual total compensation for the named executive officers as set forth in the Summary Compensation Table. The Company determined that the employee’s annual total compensation for the fiscal year ended December 31, 2019 was $104,057.
 
 
-45-
 
 
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
Transactions with Related Persons
 
The following is a description of transactions since January 1, 2019 to which the Company has been a party, in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any of the Company’s executive officers, directors or holders of more than 5% of its common stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than compensation, termination and change of control arrangements, which are described under "Executive Compensation."
 
Sale of consumer products
 
During July 2017, the Company entered into an exclusivity agreement (the "Watsons Agreement") with A.S. Watson Retail (HK) Limited (“Watsons”), whereby the Company agreed to exclusively sell its TRU NIAGEN® dietary supplement product to Watsons in certain territories in Asia. During the years ended December 31, 2018 and December 31, 2019, the Company sold approximately $2.9 million and $7.3 million, respectively, of TRU NIAGEN® dietary supplement product pursuant to the Watsons Agreement. As of December 31, 2018 and December 31, 2019, the trade receivable from Watsons were approximately $0.7 million and $0.8 million, respectively.
 
Li Ka Shing, who beneficially owns more than 10% of the Company's common stock, beneficially owns approximately 30% of an entity that beneficially owns approximately 75% of Watsons. In accordance with the Company's Related-Person Transactions Policy, the Audit Committee ratified the terms of the Watsons Agreement.
 
Financing
 
In May 2019, the Company closed a financing transaction and issued convertible promissory notes (the “Notes”) in the aggregate principal amount of $10.0 million to Winsave Resources Limited and Pioneer Step Holdings Limited. The maturity date of the Notes was originally July 1, 2019 and was subsequently extended to August 15, 2019. The Notes accrued interest at a rate of 5.0% per annum for a total of approximately $123,000 through the maturity date. On the maturity date, the Notes automatically converted into approximately 2.3 million shares of the Company’s common stock at a price of $4.465 per share.
 
The following table sets forth the number of shares of common stock that were issued to holders of more than 5% of the Company’s common stock or entities affiliated with them:
Name
 
 
Shares of
Common Stock
 
Pioneer Step Holdings Limited
  1,133,627 
Winsave Resources Limited
  1,133,627 
 
In addition, Ms. Yu serves as the director nominated by Pioneer Step Holdings Limited pursuant to rights granted to Pioneer Step Holdings Limited pursuant to that certain Securities Purchase Agreement, dated April 26, 2017, by and among the Company and the certain purchasers named therein.
 
Employment Arrangements
 
The Company currently maintains written employment agreements with its named executive officers, as described in "Executive Compensation."
 
Equity Granted to Executive Officers and Directors
 
The Company has granted equity to its named executive officers and directors, as more fully described in "Executive Compensation."
 
 
 
-46-
 
 
 
Indemnification Agreements
 
The Company has entered, and intends to continue to enter, into indemnification agreements with its directors and executive officers, in addition to the indemnification provided for in the Company’s bylaws. These agreements, among other things, require the Company to indemnify directors and executive officers for certain expenses incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers.
 
Review, approval or ratification of transactions with related persons.
 
On an ongoing basis, the Audit Committee reviews all “related party transactions” (those transactions that are required to be disclosed by SEC Regulation S-K, Item 404 and under NASDAQ rules), if any, for potential conflicts of interest and all such transactions must be approved by the Audit Committee. In November 2016, the Company adopted a written Related-Person Transactions Policy that sets forth the Company’s policies and procedures regarding the identification, review, consideration and approval or ratification of “related-persons transactions.” For purposes of the Company’s policy only, a “related-person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company and any “related person” are participants involving an amount that exceeds $120,000. Transactions involving compensation for services provided to the Company as an employee, director, consultant or similar capacity by a related person are not covered by this policy. A related person is any executive officer, director, or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled by such persons. Under the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the proposed related-person transaction to the Audit Committee (or, where Audit Committee approval would be inappropriate, to another independent body of the Board of Directors) for consideration and approval or ratification.
 
 
-47-
 
 
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
As of April 20, 2020, there were approximately 59,787,897 shares of our Common Stock outstanding.   The following table sets forth certain information regarding the ownership of our Common Stock as of April 20, 2020 by: each person known to us to beneficially own more than 5% of our Common Stock; each director; each of our named executive officers; and all directors and executive officers as a group.  We calculated beneficial ownership according to Rule 13d-3 of the Exchange Act as of that date.  Shares issuable upon exercise of options or warrants that are exercisable or convertible within 60 days after April 20, 2020 are included as beneficially owned by the holder.  Beneficial ownership generally includes voting and dispositive power with respect to securities.  Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole dispositive power with respect to all shares beneficially owned. This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Unless otherwise indicated, the address for the following shareholders is c/o ChromaDex Corporation, 10900 Wilshire Blvd., Suite 600, Los Angeles, CA 90024.
 
Name of Beneficial Owner (1)
 
Shares of Common Stock Beneficially Owned (2)
 
 
Aggregate Percentage Ownership
 
 
 
 
 
 
 
 
Champion River Ventures (3)
  6,500,937 
  10.87%
Pioneer Step Holdings (4)
  5,467,587 
  9.14%
Dr. Phillip Frost (5)
  3,251,521 
  5.44%
Directors
    
    
Stephen Block (6)
  269,996 
  * 
Jeff Baxter (7)
  149,167 
  * 
Kurt Gustafson (8)
  80,000 
  * 
Steven Rubin (9)
  80,000 
  * 
Wendy Yu (10)
  46,667 
  * 
Tony Lau (11)
  46,667 
  * 
Frank L. Jaksch Jr. (12)
  3,321,257 
  5.46%
Robert Fried (13)
  2,886,860 
  4.72%
Executive Officers
    
    
Frank L. Jaksch Jr.
 
(See above)
 
    
Robert Fried
 
(See above)
 
    
Kevin Farr (14)
  962,703 
  1.59%
Mark Friedman (15)
  429,078 
  * 
Lisa Bratkovich (16)
  199,494 
  * 
All directors and current executive officers as a group
    
    
(11 persons) (17)
    
    
 
  8,302,395 
  12.92%
 
*            
Represents less than 1%.
 
(1) 
Addresses for the beneficial owners listed are: Champion River Ventures, 7/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong; Pioneer Step Holdings, 29th Floor, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong; and Dr. Phillip Frost, 4400 Biscayne Blvd., Suite 1500, Miami, FL 33137.
 
(2) 
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or dispositive power with respect to shares beneficially owned. Unless otherwise specified, reported ownership refers to both voting and dispositive power. Shares of Common Stock issuable upon the conversion of stock options or the exercise of warrants within the next 60 days are deemed to be converted and beneficially owned by the individual or group identified in the Aggregate Percentage Ownership column.
 
 
-48-
 
 
 
(3) 
Based on beneficial ownership reported on Schedule 13D/A filed with SEC on November 21, 2017, (i) Champion River Ventures Limited (“Champion River”) beneficially owned and had sole voting and dispositive power with respect to 6,500,937 shares (the “Champion Shares”), (ii) Prime Tech Global Limited (“Prime Tech”), by virtue of being the sole shareholder of Champion River, may be deemed to beneficially own and have sole voting and dispositive power with respect to the Champion Shares, (iii) Mayspin Management Limited (“Mayspin”), by virtue of being the sole shareholder of Prime Tech, may be deemed to beneficially own and have sole voting and dispositive power with respect to the Champion Shares, and (iv) Li Ka Shing, by virtue of being the sole shareholder of Mayspin, may be deemed to beneficially own and have sole voting and dispositive power with respect to the Champion Shares. Champion River has exercised its right to designate for appointment one director to our Board of Directors and has designated, and our Board of Directors has appointed, Tony Lau to fill such seat. In addition, Mr. Li is one of 14 directors of Li Ka Shing (Overseas) Foundation (“LKSOF”), which is the sole stockholder of Winsave Resources Limited (“Winsave”), which holds 2,353,139 shares of common stock. However, Mr. Li does not report as having Section 13(d) beneficial ownership over any of the shares owned by Winsave. Investment decisions by LKSOF are made by the majority vote of a board of directors currently consisting of 14 persons, of which Li Ka Shing (“Mr. Li”) is the Chairman. Investment decisions by Winsave are made by the majority vote of a board of directors currently consisting of five persons. Mr. Li is not a director or officer of Winsave. The registered office address for Champion River and Mayspin is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands and the registered office address for PrimeTech is P.O. Box 901, East Asia Chambers, Road Town, Tortola, British Virgin Islands, and the correspondence address for each of Champion River, PrimeTech, and Mayspin is c/o 7/F, Cheung Kong Center, 2 Queen’s Road Central, Hong Kong.
 
(4) 
Based on beneficial ownership reported on Schedule 13D/A filed with SEC on August 16, 2019, (i) Pioneer Step Holdings Limited (“Pioneer Step”) beneficially owned and had sole voting and dispositive power with respect to 5,467,587 shares (the “Pioneer Shares”) and (ii) Chau Hoi Shuen Solina Holly (“Solina Chau”), by virtue of being the sole shareholder of Pioneer Step, may be deemed to beneficially own and have sole voting and dispositive power with respect to the Pioneer Shares. Pioneer Step has exercised its right to designate for appointment one director to our board of directors and has designated, and our board of directors has appointed, Wendy Yu to fill such seat. The registered office address for Pioneer Step is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands and its correspondence address is c/o Suites PT. 2909 & 2910, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong. The business address of Solina Chau is c/o Suites PT. 2909 & 2910, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong.
 
(5) 
Based on beneficial ownership reported on form Schedule 13D/A filed with SEC on February 14, 2019. Includes 1,321,979 shares of common stock held by Frost Gamma Investments Trust of which Dr. Phillip Frost is the trustee. Frost Gamma Limited Partnership is the sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr. Frost is one of two limited partners of Frost Gamma Limited Partnership. The general partner of Frost Gamma Limited Partnership is Frost Gamma, Inc. and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada Corporation. Dr. Frost is also the sole shareholder of Frost-Nevada Corporation. Includes 1,929,542 shares held by Phillip and Patricia Frost Philanthropic Foundation, Inc. of which Dr. Phillip Frost is President.
 
(6)            
Includes 16,667 shares of common stock directly owned by Mr. Block. Includes 253,329 stock options exercisable within 60 days of April 20, 2020.
 
(7) 
Includes 149,167 stock options exercisable within 60 days of April 20, 2020.
 
(8) 
Includes 80,000 stock options exercisable within 60 days of April 20, 2020.
 
(9) 
Includes 80,000 stock options exercisable within 60 days of April 20, 2020.
 
(10) 
Includes 46,667 stock options exercisable within 60 days of April 20, 2020.
 
(11) 
Includes 46,667 stock options exercisable within 60 days of April 20, 2020.
 
(12) 
Includes 2,075,052 shares owned by Black Sheep, FLP beneficially owned by Mr. Jaksch because he has shared voting power and shared dispositive power for such shares. Includes 220,501 shares directly owned by Mr. Jaksch. Includes 1,025,704 stock options exercisable within 60 days of April 20, 2020.
 
(13) 
Includes 1,392,314 shares of common stock directly owned by Mr. Fried. Includes 52,001 shares of common stock held by Fried-Travis Revocable Trust U/A dated June 2, 1999, beneficially owned by Mr. Fried because he has shared voting power and shared dispositive power for such shares. Includes 6,745 shares held by Jeremy Fried and 6,001 shares held by Benjamin Fried, who are both sons of Robert Fried. Includes 1,429,799 stock options exercisable within 60 days of April 20, 2020.
  
(14)  
Includes 36,625 shares of common stock directly owned by Mr. Farr. Includes 926,078 stock options exercisable within 60 days of April 20, 2020.
 
(15) 
Includes 3,000 shares of common stock directly owned by Mr. Friedman. Includes 426,078 stock options exercisable within 60 days of April 20, 2020.
 
(16)  
Includes 199,494 stock options exercisable within 60 days of April 20, 2020.
 
(17)  
Includes the shares and stock options included above in footnotes (6) through (15) and held by Ms. Jordan.
 
 

 
-49-
 
 
 
HOUSEHOLDING OF PROXY MATERIALS
 
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements Notices of Internet Availability of Proxy Materials or other Annual Meeting materials with respect to two or more shareholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
 
This year, a number of brokers with account holders who are Company stockholders will be “householding” the Company’s proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, please notify your broker or the Company. Direct your written request to ChromaDex Corporation, ATTN: Secretary, 10900 Wilshire Blvd. Suite 600, Los Angeles, CA 90024 or contact the Secretary at 310-388-6706. Stockholders who currently receive multiple copies of the Notices of Internet Availability of Proxy Materials at their addresses and would like to request “householding” of their communications should contact their brokers.
 
 
-50-
 
 
OTHER BUSINESS
 
As of the date of this Proxy Statement, the management of the Company has no knowledge of any business that may be presented for consideration at the Annual Meeting, other than that described above. As to other business, if any, that may properly come before the Annual Meeting, or any adjournment thereof, it is intended that the Proxy hereby solicited will be voted in respect of such business in accordance with the judgment of the Proxy holders.
 
 
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Frank Jaksch
Executive Chairman of the Board
 
April 21, 2020
 
 
 
-51-
 
 
PROXY CARD
 
 
 
 -52-
 
 


  -53-
 
 
 
Appendix A
 
ChromaDex Corporation
 AMENDED 2017 Equity Incentive Plan
 
Adopted by the Board of Directors: April 6, 2017
Approved by the Stockholders: June 20, 2017
Amended by the Board of Directors: January 21, 2018
Amended by the Board of Directors: April 24, 2018
Approved by the Stockholders June 22, 2018
Amended by the Board of Directors: April 16, 2020
Approved by the Stockholders: __________, 2020
 
1. General.
 
(a) Successor to and Continuation of Prior Plan. The Plan is intended as the successor to and continuation of the ChromaDex Corporation Second Amended and Restated 2007 Equity Incentive Plan, (the “2007 Plan”). Following the Effective Date, no additional awards may be granted under the 2007 Plan. In addition, from and after 12:01 a.m. Pacific Time on the Effective Date, all outstanding awards granted under the 2007 Plan and the ChromaDex, Inc. 2000 Non-Qualified Incentive Stock Option Plan (the “2000 Plan” and together with the 2007 Plan, the “Prior Plans”) will remain subject to the terms of the 2007 Plan or 2000 Plan, as applicable; provided, however, that the following shares of Common Stock subject to any outstanding stock award granted under the Prior Plans (collectively, the “Prior Plans’ Returning Shares”) will immediately be added to the Share Reserve (as defined in Section 3(a)) as and when such shares become Prior Plans’ Returning Shares and become available for issuance pursuant to Awards granted under this Plan: (i) any shares subject to such stock award that are not issued because such stock award or any portion thereof expires or otherwise terminates without all of the shares covered by such stock award having been issued; (ii) any shares subject to such stock award that are not issued because such stock award or any portion thereof is settled in cash; (iii) any shares issued pursuant to such stock award that are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares; and (iv) any shares that are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award. All Awards granted on or after 12:01 a.m. Pacific Time on the Effective Date will be subject to the terms of this Plan.
 
(b) Eligible Award Recipients. Employees, Directors and Consultants are eligible to receive Awards. The persons eligible to receive Inducement Awards are Employees who meet the criteria set forth in Section 3(f).
 
(c) Available Awards. The Plan provides for the grant of the following types of Awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) Stock Appreciation Rights; (iv) Restricted Stock Awards; (v) Restricted Stock Unit Awards; (vi) Performance Stock Awards; (vii) Inducement Awards; and (viii) Other Stock Awards.
 
(d) Purpose. The Plan, through the granting of Awards, is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and provide a means by which the eligible recipients may benefit from increases in value of the Common Stock.
 
2. Administration.
 
(a) Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c). Notwithstanding anything to the contrary set forth herein, only an Inducement Committee has the power to grant Inducement Awards.
 
(b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
 
(i) To determine: (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted; (D) the provisions of each Award (which need not be identical), including when a Participant will be permitted to exercise or otherwise receive cash or Common Stock under the Award; (E) the number of shares of Common Stock subject to, or the cash value of, an Award; and (F) the Fair Market Value applicable to a Stock Award.
 
 
 
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(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a manner and to the extent it will deem necessary or expedient to make the Plan or Award fully effective.
 
(iii) To settle all controversies regarding the Plan and Awards granted under it.
 
(iv) To accelerate, in whole or in part, the time at which an Award may be exercised or vest (or at which cash or shares of Common Stock may be issued).
 
(v) To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan (including Section 2(b)(viii)) or an Award Agreement, suspension or termination of the Plan will not materially impair a Participant’s rights under an outstanding Award without his or her written consent.
 
(vi)  To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan or Awards granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from or compliant with the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. If required by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, or (E) materially expands the types of Awards available for issuance under the Plan. Except as otherwise provided in the Plan (including Section 2(b)(viii)) or an Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Award without his or her written consent.
 
(vii) To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of (A) Section 422 of the Code regarding incentive stock options or (B) Rule 16b-3.
 
(viii) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more outstanding Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided, however, that except as otherwise provided in the Plan (including this Section 2(b)(viii)) or an Award Agreement, the Board may not amend the terms of an outstanding Award if the Board, in its sole discretion, determines that the amendment, taken as a whole, will materially impair the Participant’s rights under such Award without his or her written consent.
 
Notwithstanding the foregoing or anything in the Plan to the contrary, unless prohibited by applicable law, the Board may amend the terms of any outstanding Award or the Plan, or may suspend or terminate the Plan, without the affected Participant’s consent, (A) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code, (B) to change the terms of an Incentive Stock Option, if such change results in impairment of the Award solely because it impairs the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code, (C) to clarify the manner of exemption from, or to bring the Award or the Plan into compliance with, Section 409A of the Code, or (D) to comply with other applicable laws or listing requirements.
 
(ix) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards.
 
(x) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).
 
 
 
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(c) Delegation to Committee.
 
(i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Committee may, at any time, abolish the subcommittee and/or revest in the Committee any powers delegated to the subcommittee. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
 
(ii) Rule 16b-3 Compliance. The Committee may consist solely of two (2) or more Non-Employee Directors, in accordance with Rule 16b-3.
 
(iii) Inducement Awards. Notwithstanding any other provision of the Plan to the contrary, all Inducement Awards must be granted by an Inducement Committee.
 
(d) Delegation to an Officer. The Board may delegate to one (1) or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock Awards) and, to the extent permitted by applicable law, the terms of such Awards; and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form of Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation of authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(z)(iii).
 
(e) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.
 
(f) Cancellation and Re-Grant of Stock Awards. Neither the Board nor any Committee will have the authority to (i) reduce the exercise or strike price of any outstanding Option or SAR under the Plan or (ii) cancel any outstanding Option or SAR that has an exercise or strike price greater than the then-current Fair Market Value of the Common Stock in exchange for cash or other Stock Awards under the Plan, unless the stockholders of the Company have approved such an action within twelve (12) months prior to such an event.
 
(g) Dividends and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares of Common Stock subject to a Stock Award, as determined by the Board and contained in the applicable Stock Award Agreement; provided, however, that (i) no dividends or dividend equivalents may be paid with respect to any such shares before the date such shares have vested under the terms of such Stock Award Agreement, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of such Stock Award Agreement (including, but not limited to, any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to the Company on the date, if any, such shares are forfeited to or repurchased by the Company due to a failure to meet any vesting conditions under the terms of such Stock Award Agreement.
 
3. Shares Subject to the Plan.
 
(a) Share Reserve.
 
(i) Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date will not exceed 20,793,960 shares, which is the sum of (A) 3,000,000 shares approved by the Board in April 2017 and subsequently approved by the Company’s stockholders, plus (B) an additional 6,000,000 shares approved by the Board in April 2018 and subsequently approved by the Company’s stockholders, plus (C) an additional 5,500,000 shares approved by the Board in April 2020 and subsequently approved by the Company’s stockholders, plus (D) the Prior Plans’ Returning Shares, if any, which become available for grant under this Plan from time to time (such aggregate number of shares described in (A), (B), (C), and (D) above, the “Share Reserve”), plus (E) 500,000 shares approved by the Board in January 2018 that may be issued pursuant to Inducement Awards granted under Section 3(f) of the Plan.
 
 
 
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(ii)  If a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan. Notwithstanding the foregoing, any Inducement Shares that become available for issuance under the Plan pursuant to this subsection 3(a) will only become available for issuance pursuant to Inducement Awards.
 
(iii) Effective for awards granted on or after June 19, 2020, the number of shares of Common Stock available for issuance under the Plan will be reduced by: (A) one share for each share of Common Stock issued pursuant to an Appreciation Award granted under the Plan and (B) 1.5 shares for each share of Common Stock issued pursuant to a Full Value Award granted under the Plan. The number of shares of Common Stock available for issuance under the Plan will be increased by: (A) one share for each Returning Share subject to an Appreciation Award and (B) 1.5 shares share for each Returning Share subject to a Full Value Award.
 
(iv) For clarity, the Share Reserve limit in Section 3(a) is a limit on the number of shares of Common Stock that may be issued pursuant to Stock Awards and does not limit the granting of Awards, except that the Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy its obligations to issue shares pursuant to such Awards. Shares may be issued in connection with a merger or acquisition as permitted by, as applicable, NASDAQ Listing Rule 5635(c), NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan.
 
(b) Shares Not Available For Subsequent Issuance. Effective on or after June 19, 2020, the following shares of Common Stock will not become available again for issuance under the Plan: (i) any shares that are reacquired or withheld (or not issued) by the Company to satisfy the exercise or purchase price of an Appreciation Award or a Full Value Award (including any shares subject to such award that are not delivered because such award is exercised through a reduction of shares subject to such award (i.e., “net exercised”)); (ii) any shares that are reacquired or withheld (or not issued) by the Company to satisfy a tax withholding obligation in connection with an Appreciation Award or a Full Value Award; and (iii) any shares repurchased by the Company on the open market with the proceeds of the exercise or purchase price of an Appreciation Award or a Full Value Award.
 
(c) Incentive Stock Option Limit. Subject to the Share Reserve and Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 23,087,920 shares of Common Stock.
 
(d) Reserved.
 
(e) Limits on Grants to Non-Employee Directors. The maximum number of shares of Common Stock subject to Stock Awards granted under the Plan or otherwise during any one calendar year to any Non-Employee Director, taken together with any cash fees paid by the Company to such Non-Employee Director during such calendar year for service on the Board, will not exceed six hundred thousand dollars ($600,000) in total value (calculating the value of any such Stock Awards based on the grant date fair value of such Stock Awards for financial reporting purposes), or, with respect to the calendar year in which a Non-Employee Director is first appointed or elected to the Board, nine hundred thousand dollars ($900,000).
 
(f) Inducement Shares. This subsection 3(f) will apply with respect to the shares reserved under this Plan by action of the Board (or a committee thereof) to be used exclusively for the grant of Inducement Awards in compliance with NASDAQ Listing Rule 5635(c)(4) (the “Inducement Shares”). Notwithstanding anything to the contrary in this Plan, an Inducement Award may be granted only to an Employee who has not previously been an Employee or a non-Employee Director of the Company or an Affiliate, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules.
 
(g) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.
 
 
 
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4. Eligibility.
 
(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate transaction such as a spin off transaction) or (ii) the Company, in consultation with its legal counsel, has determined that such Stock Awards are otherwise exempt from or alternatively comply with Section 409A of the Code.
 
(b) Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.
 
5. Provisions Relating to Options and Stock Appreciation Rights.
 
Each Option or SAR Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The terms and conditions of separate Option or SAR Agreements need not be identical; provided, however, that each Award Agreement will conform to (through incorporation of the provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following provisions:
 
(a) Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Award Agreement.
 
(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.
 
(c) Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment (or that otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment. The permitted methods of payment are as follows:
 
(i) by cash (including electronic funds transfers), check, bank draft or money order payable to the Company;
 
(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;
 
(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
 
 
 
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(iv) if an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or
 
(v) in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement.
 
(d) Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Award Agreement evidencing such SAR. The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such date. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Award Agreement evidencing such SAR.
 
(e) Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the restrictions set forth in this Section 5(e) on the transferability of Options and SARs will apply. Notwithstanding the foregoing or anything in the Plan or a Stock Award Agreement to the contrary, no Option or SAR may be transferred to any financial institution without prior stockholder approval.
 
(i) Restrictions on Transfer. An Option or SAR will not be transferable, except by will or by the laws of descent and distribution (or pursuant to Sections 5(e)(ii) and 5(e)(iii)), and will be exercisable during the lifetime of the Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided in the Plan, neither an Option nor a SAR may be transferred for consideration.
 
(ii) Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulations Section 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
 
(iii) Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.
 
(f) Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and become exercisable in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.
 
(g) Termination of Continuous Service. Except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date that is three (3) months following such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after such termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time frame, the Option or SAR (as applicable) will terminate.
 
 
 
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(h) Extension of Termination Date. Except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if the exercise of an Option or SAR following the termination of a Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement. In addition, except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if the sale of any Common Stock received upon exercise of an Option or SAR following the termination of a Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.
 
(i) Disability of Participant. Except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date that is twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after such termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time frame, the Option or SAR (as applicable) will terminate.
 
(j) Death of Participant. Except as otherwise provided in the applicable Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) a Participant dies within the period (if any) specified in the Award Agreement for exercisability after the termination of the Participant’s Continuous Service (for a reason other than death), then the Participant’s Option or SAR may be exercised (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance, or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within such period of time ending on the earlier of (i) the date that is eighteen (18) months following the date of death (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after the Participant’s death, the Option or SAR (as applicable) is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.
 
(k) Termination for Cause. Except as explicitly provided otherwise in the applicable Award Agreement or other individual written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated for Cause, the Participant’s Option or SAR will terminate immediately upon such termination of Continuous Service, and the Participant will be prohibited from exercising his or her Option or SAR from and after the time of such termination of Continuous Service.
 
(l) Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six (6) months following the date of grant of the Option or SAR (although the Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Award Agreement, in another written agreement between the Participant and the Company or an Affiliate, or, if no such definition, in accordance with the Company’s then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six (6) months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.
 
 
 
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6. Provisions of Stock Awards Other than Options and SARs.
 
(a) Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock underlying a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse, or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of separate Restricted Stock Award Agreements need not be identical; provided, however, that each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following provisions:
 
(i) Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash (including electronic funds transfers), check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
 
(ii) Vesting. Shares of Common Stock awarded under a Restricted Stock Award Agreement may be subject to forfeiture to or repurchase by the Company in accordance with a vesting schedule to be determined by the Board.
 
(iii) Termination of Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant that have not vested as of the date of such termination under the terms of the Participant’s Restricted Stock Award Agreement.
 
(iv) Transferability. Rights to acquire shares of Common Stock under a Restricted Stock Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement. Notwithstanding the foregoing or anything in the Plan or a Restricted Stock Award Agreement to the contrary, no Restricted Stock Award may be transferred to any financial institution without prior stockholder approval.
 
(v) Dividends. A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.
 
(b) Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and conditions as the Board deems appropriate. The terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical; provided, however, that each Restricted Stock Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following provisions:
 
(i) Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
 
(ii) Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
 
(iii) Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.
 
(iv) Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to the Restricted Stock Unit Award to a time after the vesting of the Restricted Stock Unit Award.
 
 
 
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(v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.
 
(vi) Termination of Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates, any portion of the Participant’s Restricted Stock Unit Award that has not vested as of the date of such termination will be forfeited upon such termination.
 
(c) Performance Awards.
 
(i) Performance Stock Awards. A Performance Stock Award is a Stock Award that is payable (including that may be granted, vest or be exercised) contingent upon the attainment during a Performance Period of specified Performance Goals. A Performance Stock Award may, but need not, require the Participant’s completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined by the Board, in its sole discretion. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance Stock Awards.
 
(ii) Board Discretion. With respect to any Performance Stock Award, the Board retains the discretion to (A) reduce or eliminate the compensation or economic benefit due upon attainment of the Performance Goals on the basis of any considerations as the Board, in its sole discretion, may determine and (B) define the manner of calculating the Performance Criteria it selects to use for a Performance Period.
 
(d) Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock appreciation rights with an exercise price or strike price less than one hundred percent (100%) of the Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards granted under Section 5 and this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards.
 
7. Covenants of the Company.
 
(a) Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy then-outstanding Stock Awards.
 
(b) Securities Law Compliance. The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan the authority required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of an Award or the subsequent issuance of cash or Common Stock pursuant to the Award if such grant or issuance would be in violation of any applicable securities law.
 
(c) No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising a Stock Award. Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.
 
 
 
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8. Miscellaneous.
 
(a) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock issued pursuant to Stock Awards will constitute general funds of the Company.
 
(b) Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.
 
(c) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to an Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance of shares of Common Stock under, the Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to such Award has been entered into the books and records of the Company.
 
(d) No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
 
(e) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company or any Affiliate is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board has the right in its sole discretion to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.
 
(f) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000) (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).
 
(g) Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Award, and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
 
 
 
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(h) Withholding Obligations. Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Award Agreement.
 
(i) Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).
 
(j) Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.
 
(k) Section 409A Compliance. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code. If the Board determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six (6) months following the date of the Participant’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment may be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six (6) month period elapses, with the balance paid thereafter on the original schedule.
 
(l) Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including, but not limited to, a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.
 
9. Adjustments upon Changes in Common Stock; Other Corporate Events.
 
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a) and 3(f); (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c); (iii) the class(es) and maximum number of securities that may be awarded to any Non-Employee Director pursuant to Section 3(e); and (iv) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board will make such adjustments, and its determination will be final, binding and conclusive.
 
 
 
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(b) Dissolution or Liquidation. Except as otherwise provided in the applicable Stock Award Agreement or other written agreement between a Participant and the Company or an Affiliate, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to a forfeiture condition or the Company’s right of repurchase may be reacquired or repurchased by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service; provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to forfeiture or repurchase (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion.
 
(c) Corporate Transactions. In the event of a Corporate Transaction, notwithstanding any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent upon the closing or consummation of the Corporate Transaction, unless otherwise provided in the instrument evidencing the Stock Award, in any other written agreement between the Company or any Affiliate and the Participant or in any director compensation policy of the Company, or unless otherwise expressly provided by the Board at the time of grant of the Stock Award:
 
(i) arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction);
 
(ii) arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);
 
(iii) accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised) to a date prior to the effective time of such Corporate Transaction as the Board determines (or, if the Board does not determine such a date, to the date that is five (5) days prior to the effective date of the Corporate Transaction), with such Stock Award terminating if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company a notice of exercise before the effective date of a Corporate Transaction, which exercise is contingent upon the effectiveness of such Corporate Transaction;
 
(iv) arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock Award;
 
(v) cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the Corporate Transaction, and pay such cash consideration (including no consideration) as the Board, in its sole discretion, may consider appropriate; and
 
(vi) cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time of the Corporate Transaction, in exchange for a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the per share amount payable to holders of Common Stock in connection with the Corporate Transaction, over (B) the per share exercise price under the applicable Award. For clarity, this payment may be zero ($0) if the value of the property is equal to or less than the exercise price. In addition, any escrow, holdback, earnout or similar provisions in the definitive agreement for the Corporate Transaction may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Common Stock.
 
The Board need not take the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of a Stock Award.
 
(d) Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a qualifying termination of Continuous Service that occurs in connection with Change in Control as may be provided in the Stock Award Agreement for such Stock Award, in any other written agreement between the Company or any Affiliate and the Participant or in any director compensation policy of the Company, but in the absence of such provision, no such acceleration will occur.
 
 
 
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10. Termination or Suspension of the Plan.
 
(a) The Board may suspend or terminate the Plan at any time. No Incentive Stock Option may be granted after the tenth (10th) anniversary of the earlier of (i) the Adoption Date or (ii) the date the Plan is approved by the stockholders of the Company. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
 
(b) No Impairment of Rights. Suspension or termination of the Plan will not materially impair rights and obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant or as otherwise permitted in the Plan (including Section 2(b)(viii)) or an Award Agreement.
 
11. Effective Date of Plan.
 
This Plan will become effective on the Effective Date.
 
12. Choice of Law.
 
The laws of the State of California will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.
 
13. Definitions. As used in the Plan, the following definitions will apply to the capitalized terms indicated below:
 
(a) Adoption Date” means April 6, 2017, which is the date the Plan was adopted by the Board.
 
(b) Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405. The Board will have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.
 
(c) Appreciation Award” means an Option or SAR granted under the Plan or the Prior Plans, in each case with respect to which the exercise or strike price is at least 100% of the Fair Market Value of the Common Stock subject to the Option or SAR, as applicable, on the date of grant.
 
(d)  “Award” or “Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Stock Appreciation Right, a Restricted Stock Award, a Restricted Stock Unit Award, a Performance Stock Award or any Other Stock Award.
 
(e) Award Agreement” or “Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.
 
(f) Board” means the Board of Directors of the Company.
 
(g) Capital Stock” means each and every class of common stock of the Company, regardless of the number of votes per share.
 
(h) Capitalization Adjustment��� means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Adoption Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
 
(i) Cause will have the meaning ascribed to such term in any written agreement between a Participant and the Company or an Affiliate defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) such Participant has breached his or her employment or service contract with the Company or an Affiliate, (ii) such Participant has engaged in disloyalty to the Company or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty, (iii) such Participant has disclosed trade secrets or confidential information of the Company or an Affiliate to persons not entitled to receive such information, (iv) such Participant has breached any written non-competition, non-solicitation, invention assignment or confidentiality agreement between the Participant and the Company or an Affiliate or (v) such Participant has engaged in such other behavior detrimental to the interests of the Company or an Affiliate as the Company determines. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Company, in its sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.
 
(j) Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
 
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;
 
(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;
 
(iii) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or
 
(iv) individuals who, on the Adoption Date, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.
 
Notwithstanding the foregoing definition or any other provision of this Plan, (A) the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change in Control (or any analogous term) in an individual written agreement between a Participant and the Company or an Affiliate will supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that (1) if no definition of Change in Control (or any analogous term) is set forth in such an individual written agreement, the foregoing definition will apply; and (2) no Change in Control (or any analogous term) will be deemed to occur with respect to Awards subject to such an individual written agreement without a requirement that the Change in Control (or any analogous term) actually occur. If required for compliance with Section 409A of the Code, in no event will an event be deemed a Change in Control if such event is not also a “change in the ownership of” the Company, a “change in the effective control of” the Company, or a “change in the ownership of a substantial portion of the assets of” the Company, each as determined under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder). The Board may, in its sole discretion and without a Participant’s consent, amend the definition of “Change in Control” to conform to the definition of a “change in control event” under Section 409A of the Code and the regulations thereunder.
 
 
 
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(k) Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
 
(l) Committee” means a committee of one (1) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).
 
(m) Common Stock” means the common stock of the Company.
 
(n) Company” means ChromaDex Corporation, a Delaware corporation.
 
(o) Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the Company’s securities to such person.
 
(p) Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board, in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.
 
(q) Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:
 
(i) a sale or other disposition of all or substantially all, as determined by the Board, in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;
 
(ii) a sale or other disposition of more than fifty percent (50%) of the outstanding securities of the Company;
 
(iii) a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
 
(iv) a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
 
If required for compliance with Section 409A of the Code, in no event will an event be deemed a Corporate Transaction if such event is not also a “change in the ownership of” the Company, a “change in the effective control of” the Company, or a “change in the ownership of a substantial portion of the assets of” the Company, each as determined under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder). The Board may, in its sole discretion and without a Participant’s consent, amend the definition of “Corporate Transaction” to conform to the definition of a “change in control event” under Section 409A of the Code and the regulations thereunder.
 
(r) Director” means a member of the Board.
 
 
 
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(s) Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.
 
(t) Effective Date” means the effective date of this Plan document, which is the date of the annual meeting of stockholders of the Company held in 2017, provided that this Plan is approved by the Company’s stockholders at such meeting.
 
(u) Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.
 
(v) Entity” means a corporation, partnership, limited liability company or other entity.
 
(w) Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
 
(x) Exchange Act Person means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company, or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.
 
(y) Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:
 
(i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable.
 
(ii) Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing sales price on the last preceding date for which such quotation exists.
 
(iii) In the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.
 
(z) Full Value Award” means an Award granted under the Plan or an award granted under the Prior Plans in each case that is not an Appreciation Award.
 
(aa) Incentive Stock Option” means an option granted pursuant to Section 5 that is intended to be, and that qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
 
(bb) “Inducement Award” means a Stock Award, other than an Incentive Stock Option, granted pursuant to Section 3(f) of the Plan.
 
(cc) “Inducement Committee” means a Committee consisting of the majority of the Company’s independent directors or the Company’s independent compensation committee, in either case in accordance with NASDAQ Listing Rule 5635(c)(4).
 
 
 
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(dd) Non-Employee Director means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K, or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.
 
(ee) Nonstatutory Stock Option” means an option granted pursuant to Section 5 that does not qualify as an Incentive Stock Option.
 
(ff) Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.
 
(gg) Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.
 
(hh) Option Agreement” means a written agreement between the Company and a holder of an Option evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.
 
(ii) Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is granted pursuant to the terms and conditions of Section 6(d).
 
(jj) Other Stock Award Agreement means a written agreement between the Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and conditions of the Plan.
 
(kk)  “Own, Owned, Owner, Ownership means a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.
 
(ll) Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
 
 
 
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(mm) Performance Criteria” means the one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: (i) cash flow; (ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, earnings before interest, taxes and depreciation and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity; (vii) total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; (viii) return on capital; (ix) return on assets or net assets; (x) revenue, growth in revenue or return on sales; (xi) income or net income; (xii) operating income, (xiii) net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue or return on operating profit; (xvii) regulatory filings; (xviii) regulatory approvals, litigation or regulatory resolution goals; (xix) other operational, regulatory or departmental objectives; (xx) budget comparisons; (xxi) growth in stockholder value relative to established indexes, or another peer group or peer group index; (xxiii) development and implementation of strategic plans and/or organizational restructuring goals; (xxiv) development and implementation of risk and crisis management programs; (xxv) improvement in workforce diversity; (xxvi) compliance requirements and compliance relief; (xxvii) safety goals; (xxviii) productivity goals; (xxix) workforce management and succession planning goals; (xxx) economic value added (including typical adjustments consistently applied from generally accepted accounting principles required to determine economic value added performance measures); (xxxi) measures of customer satisfaction, employee satisfaction or staff development; (xxxii) development or marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Company’s revenue or profitability or enhance its customer base; (xxxiii) merger and acquisitions; (xxxiv) implementation or completion of projects or processes (including, without limitation, clinical trial initiation, clinical trial enrollment and dates, clinical trial results, regulatory filing submissions, regulatory filing acceptances, regulatory or advisory committee interactions, regulatory approvals, new and supplemental indications for existing products, and product supply); (xxxv) initiation of phases of clinical trials and/or studies by specific dates; (xxxvi) acquisition of new customers, including institutional accounts; (xxxvii) customer retention and/or repeat order rate; (xxxviii) number of institutional customer accounts (xxxix) budget management; (xl) improvements in sample and test processing times; (xli) regulatory milestones; (xlii) progress of internal research or clinical programs; (xliii) progress of partnered programs; (xliv) partner satisfaction; (xlv) milestones related to samples received and/or tests run; (xlvi) expansion of sales in additional geographies or markets; (xlvii) research progress, including the development of programs; (xlviii) submission to, or approval by, a regulatory body (including, but not limited to the U.S. Food and Drug Administration) of an applicable filing or a product; (xlix) timely completion of clinical trials; (l) milestones related to samples received and/or tests or panels run; (li) expansion of sales in additional geographies or markets; (lii) research progress, including the development of programs; (liii) patient samples processed and billed; (liv) sample processing operating metrics (including, without limitation, failure rate maximums and reduction of repeat rates); (lv) strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property; (lvi) and other similar criteria consistent with the foregoing; and (lvii) other measures of performance selected by the Board.
 
(nn) Performance Goals” means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are unusual in nature or occur infrequently as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement.
 
 
 
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(oo) Performance Period” means the period of time selected by the Board 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 a Performance Stock Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Committee (or Board, if applicable).
 
(pp) Performance Stock Award” means a Stock Award granted under the terms and conditions of Section 6(c)(i).
 
(qq) Plan” means this ChromaDex Corporation Amended 2017 Equity Incentive Plan.
 
(rr) Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(a).
 
(ss) Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.
 
(tt) Restricted Stock Unit Award means a right to receive shares of Common Stock which is granted pursuant to the terms and conditions of Section 6(b).
 
(uu) Restricted Stock Unit Award Agreement means a written agreement between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement will be subject to the terms and conditions of the Plan.
 
(vv) Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
 
(ww) Rule 405” means Rule 405 promulgated under the Securities Act.
 
(xx) Securities Act” means the Securities Act of 1933, as amended.
 
(yy) Stock Appreciation Right” or “SAR means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.
 
(zz) Stock Appreciation Right Agreement” or “SAR Agreement” means a written agreement between the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be subject to the terms and conditions of the Plan.
 
(aaa)  “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%).
 
(bbb) Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.
 
 
 
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