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
Filed
by the Registrant [X]
Filed
by a Party other than the Registrant [ ]
Check
the appropriate box:
[ ]
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Preliminary
Proxy Statement
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[ ]
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Confidential,
For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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[ ]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material Pursuant to §240.14a-12
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AKERS
BIOSCIENCES, INC.
(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]
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No
fee required.
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[ ]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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[ ]
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Fee
paid previously with preliminary materials.
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[ ]
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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AKERS
BIOSCIENCES, INC.
201
Grove Road
Thorofare,
NJ 08086
(856)
848-2116
NOTICE
OF ANNUAL
MEETING
OF SHAREHOLDERS
TO
BE HELD AUGUST 7, 2017
TO
OUR SHAREHOLDERS:
You
are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of Akers Biosciences, Inc.,
a New Jersey corporation (together with its subsidiaries, “Company”, “Akers”, “we”, “us”
or “our”), which will be held on August 7, 2017, at 4:00 P.M. EST at 50 South 16
th
Street, Suite
2710, Philadelphia, PA 19106, for the following purposes:
1.
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To
elect five (5) directors to hold office for a one year term and until each of their successors are elected and qualified;
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2.
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To
ratify the appointment of Morison Cogen LLP as our independent certified public accounting firm for the fiscal year ending
December 31, 2017;
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3.
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To
approve the adoption of the Akers Biosciences, Inc. 2017 Equity Incentive Plan; and
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4.
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To
transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof.
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The
foregoing items of business are more fully described in the Proxy Statement that is attached and made a part of this Notice. Only
stockholders of record of our common stock, no par value per share, at the close of business on July 7, 2017 (the “Record
Date”), will be entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof.
All
shareholders are cordially invited to attend the Annual Meeting in person. Your vote is important regardless of the number
of shares you own. Only record or beneficial owners of Akers common stock as of the Record Date may attend the Annual Meeting
in person. When you arrive at the Annual Meeting, you must present photo identification, such as a driver’s license. Beneficial
owners also must provide evidence of stockholdings as of the Record Date, such as a recent brokerage account or bank statement.
Whether
or not you expect to attend the Annual Meeting, please submit a proxy to vote your shares either via Internet or by mail. If you
choose to submit your proxy by mail, please complete, sign, date and return the enclosed proxy card in the enclosed postage-paid
envelope in order to ensure representation of your shares. It will help in our preparations for the meeting if you would check
the box on the form of proxy if you plan on attending the Annual Meeting. Your proxy is revocable in accordance with the procedures
set forth in the Proxy Statement.
In
addition to mailing a printed copy of our proxy materials, to each stockholder of record, the Company will utilize the voluntary
“notice and access” system adopted by the SEC relating to the delivery of proxy materials over the Internet. As a
result, we will provide access to these materials in a fast and efficient manner via the Internet. Akers believes that these rules
allow us to use Internet technology that many stockholders prefer, continue to provide our stockholders with the information they
need and, at the same time, assure more prompt delivery of the proxy materials.
Accordingly,
on or about July 24, 2017 we will begin mailing a Notice of Internet Availability of Proxy Materials to all stockholders
of record as of the Record Date. All stockholders may request to receive a printed set of our proxy materials.
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By
Order of the Board of Directors
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/s/
Thomas J. Knox
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Thomas
J. Knox
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Chairman
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July
24, 2017
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Thorofare,
New Jersey
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YOUR
VOTE IS IMPORTANT
WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, TO ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN IF YOU HAVE PREVIOUSLY SENT
IN YOUR PROXY.
TABLE
OF CONTENTS
AKERS
BIOSCIENCES, INC.
201
Grove Road
Thorofare,
NJ 08086
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD ON AUGUST 7, 2017
GENERAL
INFORMATION ABOUT THE PROXY
STATEMENT
AND ANNUAL MEETING
General
This
Proxy Statement is being furnished to the shareholders of Akers Biosciences, Inc. (together with its subsidiaries, the “Company”,
“Akers”, “we”, “us” or “our”) in connection with the solicitation of proxies by
our Board of Directors (the “Board of Directors” or the “Board”) for use at the Annual Meeting of Shareholders
to be held on August 7, 2017 at 4:00 P.M. EST at 50 South 16
th
Street, Suite 2710, Philadelphia, PA 19106, and at any
and all adjournments or postponements thereof (the “Annual Meeting”), for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. Accompanying this Proxy Statement is a proxy/voting instruction form (the “Proxy”)
for the Annual Meeting, which you may use to indicate your vote as to the proposals described in this Proxy Statement. It is contemplated
that this Proxy Statement and the accompanying form of Proxy will be first mailed to the Company’s shareholders on or about
July 24, 2017.
The
Company will solicit shareholders by mail through its regular employees and will request banks and brokers and other custodians,
nominees and fiduciaries, to solicit their customers who have stock of the Company registered in the names of such persons and
will reimburse them for reasonable, out-of-pocket costs. In addition, the Company may use the service of its officers and directors
to solicit proxies, personally or by telephone, without additional compensation.
Voting
Securities
Only
shareholders of record as of the close of business on July 7, 2017 (the “Record Date”) will be entitled to vote at
the Annual Meeting and any adjournment or postponement thereof. As of the Record Date, there were approximately 8,891,245
shares of common stock of the Company issued and outstanding and entitled to vote representing approximately 750 holders of record.
Shareholders may vote in person or by proxy. Each holder of shares of common stock is entitled to one vote for each share of stock
held on the proposals presented in this Proxy Statement. The Company’s Bylaws provide that at least 33.34% of the shares
of stock entitled to vote, whether present in person or represented by proxy, shall constitute a quorum for the transaction of
business at the Annual Meeting. The enclosed Proxy reflects the number of shares that you are entitled to vote. Shares of common
stock may not be voted cumulatively.
Voting
of Proxies
All
valid proxies received prior to the Annual Meeting will be voted. The Board of Directors recommends that you vote by proxy even
if you plan to attend the Annual Meeting. You can vote your shares by proxy via Internet or mail. To vote via Internet,
go to www.vstocktransfer.com/proxy and follow the instructions. To vote by mail, fill out the enclosed Proxy, sign and date it,
and return it in the enclosed postage-paid envelope. Voting by proxy will not limit your right to vote at the Annual Meeting if
you attend the Annual Meeting and vote in person. However, if your shares are held in the name of a bank, broker or other holder
of record, you must obtain a proxy executed in your favor, from the holder of record to be able to vote at the Annual Meeting.
Revocability
of Proxies
All
Proxies which are properly completed, signed and returned prior to the Annual Meeting, and which have not been revoked, will be
voted in favor of the proposals described in this Proxy Statement unless otherwise directed. A shareholder may revoke his or her
Proxy at any time before it is voted either by filing with the Secretary of the Company, at its principal executive offices located
at 201 Grove Road, Thorofare, New Jersey 08086, a written notice of revocation or a duly-executed Proxy bearing a later date or
by attending the Annual Meeting and voting in person.
Voting
Procedures and Vote Required
The
presence, in person or by proxy, of at least 33.34% of the issued and outstanding shares of common stock entitled to vote at the
Annual Meeting is necessary to establish a quorum for the transaction of business. Shares represented by proxies which contain
an abstention, as well as “broker non-vote” shares (described below) are counted as present for purposes of determining
the presence or absence of a quorum for the Annual Meeting.
All
properly executed proxies delivered pursuant to this solicitation and not revoked will be voted at the Annual Meeting as specified
in such proxies.
Vote
Required for Election of Directors (Proposal No. 1).
Our Certificate of Incorporation, as amended, does not authorize cumulative
voting. New Jersey law provides that directors are to be elected by a plurality of the votes of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election of directors. This means that the five (5) candidates
receiving the highest number of affirmative votes at the Annual Meeting will be elected as directors. Only shares that are voted
in favor of a particular nominee will be counted toward that nominee’s achievement of a plurality. Shares present at the
Annual Meeting that are not voted for a particular nominee or shares present by proxy where the shareholder properly withheld
authority to vote for such nominee will not be counted toward that nominee’s achievement of a plurality.
Vote
Required for Ratification of Auditors (Proposal No. 2).
New Jersey Law and our Bylaws provide that, on all matters (other
than the election of directors and except to the extent otherwise required by our Certificate of Incorporation, as amended, or
applicable New Jersey law), the affirmative vote of a majority of the shares present, in person or by proxy, and voting on the
matter, will be required for approval. Accordingly, the affirmative vote of a majority of the shares present at the Annual Meeting,
in person or by proxy, and voting on the matter, will be required to ratify the Board’s selection of Morison Cogen LLP as
our independent auditors for the fiscal year ending December 31, 2017.
Vote
Required to Approve the Adoption of the Akers Biosciences, Inc. 2017 Equity Incentive Plan (Proposal No. 3).
New Jersey
Law and our Bylaws provide that, on all matters (other than the election of directors and except to the extent otherwise required
by our Certificate of Incorporation, as amended, or applicable New Jersey law), the affirmative vote of a majority of the shares
present, in person or by proxy, and voting on the matter, will be required for approval. Accordingly, the affirmative vote of
a majority of the shares present at the Annual Meeting, in person or by proxy, and voting on the matter, will be required to approve
the Akers Biosciences, Inc. 2017 Equity Incentive Plan.
If
you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute
“broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter
without instructions from the beneficial owner and instructions are not given. Brokers that have not received voting instructions
from their clients cannot vote on their clients’ behalf on “non-routine” proposals. Broker non-votes are counted
for the purposes of obtaining a quorum for the Annual Meeting, and in tabulating the voting result for any particular proposal,
shares that constitute broker non-votes are not considered entitled to vote. The vote on Proposal No. 1 is considered “non-routine,”
the vote on Proposal No. 2 is considered “routine,” and the vote on Proposal No. 3 is considered “non-routine.”
Abstentions are counted as “shares present” at the Annual Meeting for purposes of determining the presence of a quorum
but are not counted in the calculation of the vote.
Votes
at the Annual Meeting will be tabulated by one or more inspectors of election appointed by the Chairman of the Board.
Shareholders
will not be entitled
to dissenter’s rights with respect to any matter to be considered at the Annual Meeting.
Shareholders
List
For
a period of at least ten days prior to the Annual Meeting, a complete list of shareholders entitled to vote at the Annual Meeting
will be available at the principal executive offices of the Company located at 201 Grove Road, Thorofare, NJ 08086 so that shareholders
of record may inspect the list only for proper purposes.
Expenses
of Solicitation
The
Company will pay the cost of preparing, assembling and mailing this proxy-soliciting material, and all costs of solicitation,
including certain expenses of brokers and nominees who mail proxy material to their customers or principals.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of the Record Date, information regarding beneficial ownership of our capital stock by:
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Each
person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock;
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Each
of our named executive officers;
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Each
of our directors; and
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All
of our current executive officers and directors as a group.
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Beneficial
ownership is determined according to the rules of the Securities and Exchange Commission (the “SEC”) and generally
means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power
of that security, including options that are currently exercisable or exercisable within sixty (60) days of the Record Date. Except
as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in the table
below have sole voting and investment power with respect to all shares of common stock shown that they beneficially own, subject
to community property laws where applicable.
Common
stock subject to stock options currently exercisable or exercisable within sixty (60) days of the Record Date are deemed to be
outstanding for computing the percentage ownership of the person holding these options and the percentage ownership of any group
of which the holder is a member but are not deemed outstanding for computing the percentage of any other person.
Unless
otherwise indicated, the address of each beneficial owner listed in the table below is c/o Akers Biosciences, Inc., 201 Grove
Road, Thorofare, New Jersey USA 08086.
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Percentage
of
Ownership as of
July 7, 2017
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Name
of Beneficial Owner:
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5%
Stockholders:
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Chubeworkx
Guernsey Limited (1)
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5.77
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%
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Empery
Asset Management LP (2)
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8.15
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%
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Hudson
Bay Master Fund, LTD (3)
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7.11
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%
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Named
Executive Officers and Directors:
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Raymond
F. Akers, Jr. Phd (4)
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0
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%
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Thomas
Knox
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5.59
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%
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Brandon
Knox
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1.62
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%
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Robert
Andrews
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0.54
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%
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Raza
Bokhari
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0.36
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%
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John
J. Gormally
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0.34
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%
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Gary
M. Rauch
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0.48
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%
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All
executive officers and directors as a group (7 persons)
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8.93
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%
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(1)
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Mark Chasey is Chairman
of Chubeworkx Guernsey Limited and has beneficial ownership of the shares reported.
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(2)
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Empery
Asset Management LP (“EAM”), has discretionary authority to vote and dispose
of these shares held by various entities for which EAM serves as investment manager and
EAM may be deemed to be the beneficial owner of such shares. Martin Hoe and Ryan Lane,
in their capacity as investment managers of EAM, may also be deemed to have investment
discretion and voting power over these shares. EAM, Mr. Hoe and Mr. Lane each disclaim
any beneficial ownership of these shares. EAM’s beneficial ownership percentage
excludes warrants to purchase 170,000 shares of the Company’s common stock which
would be exercisable but for the 4.99% blocker contained in the warrants.
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(3)
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Hudson Bay Capital
Management LP, the investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities.
Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management
LP. Each of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities.
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(4)
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Dr. Akers gifted
all stock and option awards to the Akers Family Trust, a trust to which he is not a named beneficiary.
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PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The
Company’s Board of Directors is currently comprised of five authorized directors. A total of five directors will be elected
at the Annual Meeting to serve until the next annual meeting of shareholders to be held in 2018, or until their successors are
duly elected and qualified. Of the Board members whose term expires at the Annual Meeting, Raymond F. Akers is standing for reelection
and Thomas Knox, Brandon Knox, Robert Andrews and Raza Bokhari are not seeking reelection. John J. Gormally, Bill J. White, Richard
C. Tarbox III and Christopher C. Schreiber are seeking election for their initial terms as members of the Board. The persons
named as “Proxies” in the enclosed Proxy will vote the shares represented by all valid returned proxies in accordance
with the specifications of the shareholders returning such proxies. If no choice has been specified by a shareholder, the shares
will be voted FOR the nominees. If at the time of the Annual Meeting any of the nominees named below should be unable or unwilling
to serve, which event is not expected to occur, the discretionary authority provided in the Proxy will be exercised to vote for
such substitute nominee or nominees, if any, as shall be designated by the Board of Directors. If a quorum is present and voting,
the nominees for directors receiving the highest number of votes will be elected. Abstentions and broker non-votes will have no
effect on the vote.
NOMINEES
FOR ELECTION AS DIRECTOR
Nominees
The
persons nominated as directors are as follows:
Name
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Age
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Position
with the
Company/Independence
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New
Board Term Expires
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Raymond
F. Akers Jr.
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59
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Vice
Chairman, Secretary, Chief Scientific Director
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2018
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John
J. Gormally
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61
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Chief
Executive Officer
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2018
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Bill
J. White
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56
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Independent
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2018
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Richard
C. Tarbox III
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65
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Independent
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2018
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Christopher
C. Schreiber
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52
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Independent
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2018
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The
following sets forth certain information about each of the director nominees:
Raymond
F. Akers Jr., Ph.D.
served as Executive Chairman of the Board from December 31, 2009 through April 22, 2016 when he resigned
as Executive Chairman and was appointed as the Company’s Chief Scientific Director while also remaining a director of the
Company. Additionally, Dr. Akers has served as Secretary of the Company since his appointment to the position on August
5, 2013. Dr. Akers founded the Company in 1989. He has over 30 years of experience in the diagnostics industry having co-founded
Drug Screening Systems, Inc., a publicly listed company, in 1987, and Akers Medical Technology Inc. in 1984. He was Chief Executive
Officer and Vice President of Research and Development of Drug Screening Systems, Inc. until the sale of that company in 1989
and served as President and Chief Executive Officer of Akers Medical Technology Inc. until 1987.
Dr.
Akers holds a Ph.D. in Neurochemistry from Northwestern University. Dr. Akers has either invented or directed the research and
development of all of the Company’s products and technologies.
Dr.
Akers was selected to serve on the Board because of his experience in assisting diagnostic companies develop infrastructure, including
but not limited to general management and business development.
John
J. Gormally
has served as the Company’s Chief Executive Officer since appointed to the position on November 16, 2015.
Mr. Gormally has over 30 years of experience as a member of senior management in the healthcare industry. He joined
Becton, Dickinson and Company (“Becton”), a medical technology company that manufactures and sells a range of medical
supplies and diagnostic equipment, in 1978 as a senior sales representative. Mr. Gormally served in a wide range of positions
with Becton through 2013, focusing primarily on commercialization of Becton’s products and fostering sales growth. From
1999 to 2001, Mr. Gormally served as the Vice President of U.S. Sales and Operations for ConvaTec, a former division of Bristol-Myers
Squibb Company. From 2001 to 2002, he served as the Vice President of Global Sales and Marketing for BEI Medical Systems Company,
Inc., prior to rejoining Becton from 2002 to 2013. In 2013, Mr. Gormally founded Gormally Elite Medical LLC, a healthcare consulting
firm that specializes in human resources and developing go-to-market commercialization strategies.
Mr.
Gormally earned an undergraduate degree from DeSales University in 1978 and is currently an MBA candidate at Northeastern University.
Mr.
Gormally was selected to serve on the Board in part because of his significant experience running companies operating in the medical
device area.
Bill
J. White
has more than 30 years of experience in financial management, operations and business development. He currently serves
as Chief Financial Officer, Treasurer and Secretary of Intellicheck Mobilisa, Inc., a technology company listed on the NYSE MKT.
Prior to working at Intellicheck Mobilisa, Inc., he served 11 years as the Chief Financial Officer, Secretary and Treasurer of
FocusMicro, Inc. (“FM”). As co-founder of FM, Mr. White played an integral role in growing the business from the company’s
inception to over $36 million in annual revenue in a five-year period. Mr. White has broad domestic and international experience
including managing rapid and significant growth, import/export, implementing tough cost management initiatives, exploiting new
growth opportunities, merger and acquisitions, strategic planning, resource allocation, tax compliance and organization development.
Prior to co-founding FM, he served 15 years in various financial leadership positions in the government sector. Mr. White started
his career in Public Accounting.
Mr.
White holds a Bachelor of Arts in Business Administration from Washington State University and is a Certified Fraud Examiner.
Mr.
White was selected to serve on the Board in part because of his significant financial and accounting experience with public companies.
Richard
C. Tarbox III
combines over 40 years of management experience in the medical device and diagnostics sector of the healthcare
industry. Mr. Tarbox presently serves as a registered investment banker at Aquilo Partners, L.P., focusing his practice on the
needs of clients in the life science tools and diagnostics sectors. Previously, he held executive roles, primarily in business
development and operations management, with Becton Dickinson, Thermo Fisher Scientific and Cardinal Health, Baxter International
Inc. and American Hospital Supply Corporation. He has also served a number of companies in the industry as an officer and member
of the board of directors including; Alverix, Inc., as Chief Executive Officer and board member from 2010 to 2014, Quidel Corporation,
as Corporate Development Officer from 2007 to 2009, ClearData Networks, as Chief Operating Officer and a board member from
1999 to 2001, Bioseparations Inc., as Chief Executive Officer and a board member from 1995 to 1998, Metrika Laboratories, as a
board member from 1994 to 1995, DenOptix, Inc., as a board member from 1995 to 1998 and Ostex International Inc., as Chief Operating
Officer from 1992 to 1995. Mr. Tarbox currently serves as a member of the advisory boards of Qorvo Inc. and Safeguard Scientifics,
Inc.
Mr.
Tarbox is a graduate of the University of Washington, where he received his Bachelor’s Degree in Clinical Psychology and
the Kellogg School of Management at Northwestern University where he earned a Master’s degree in Business Management.
Mr.
Tarbox was selected to serve on the Board in part because of his significant experience in the medical device and diagnostics
industry, as well as his management experience.
Christopher
C. Schreiber
combines over 30 years of experience in the securities industry. As the Managing Director of Capital Markets
at Taglich Brothers, Inc., Mr. Schreiber builds upon his extensive background in capital markets, deal structures, and syndications.
Prior to his time at Taglich Brothers, he was a member of the board of directors of Paulson Investment Company, a 40-year-old
full service Investment Banking firm. In addition, Mr. Schreiber serves has a director and partner of Long Island Express North,
an elite lacrosse training organization for teams and individuals. He also volunteers on the board of directors for Fox Lane Youth
Lacrosse, a community youth program.
Mr.
Schreiber is a graduate of John Hopkins University, where he received a Bachelor’s Degree in Political Science.
Mr.
Schreiber was selected to serve on the Board in part because of his significant experience in capital markets and knowledge of
the Company.
Required
Vote
Our
Certificate of Incorporation, as amended, does not authorize cumulative voting. New Jersey law provides that directors are to
be elected by a plurality of the votes of the shares present in person or represented by proxy at the Annual Meeting and entitled
to vote on the election of directors. This means that the five (5) candidates receiving the highest number of affirmative votes
at the Annual Meeting will be elected as directors. Only shares that are voted in favor of a particular nominee will be counted
toward that nominee’s achievement of a plurality. Shares present at the Annual Meeting that are not voted for a particular
nominee or shares present by proxy where the shareholder properly withheld authority to vote for such nominee will not
be counted toward that nominee’s achievement of a plurality.
At
the Annual Meeting a vote will be taken on a proposal to approve the election of the five (5) director nominees.
RECOMMENDATION
OF THE BOARD OF DIRECTORS:
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF (I) RAYMOND F. AKERS JR., PHD, (II) JOHN J. GORMALLY, (III)
BILL J. WHITE, (IV) RICHARD C. TARBOX III AND (V) CHRISTOPHER C. SCHREIBER AS DIRECTORS.
CORPORATE
GOVERNANCE
Board
of Directors
The
Board oversees our business affairs and monitors the performance of our management. In accordance with our corporate governance
principles, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions
with the Chief Executive Officer, Chief Scientific Director, other key executives, and by reading the reports and other materials
sent to them and by participating in Board and committee meetings. Our directors hold office until the next annual meeting of
shareholders and until their successors are elected and qualified or until their earlier resignation or removal, or if for some
other reason they are unable to serve in the capacity of director.
Director
Independence
The
Board currently consists of five (5) members: Raymond F. Akers, Jr., Phd, Thomas Knox, Brandon Knox, Robert E. Andrews and Raza
Bokhari. All of our directors will serve until our Annual Meeting and until their successors are duly elected and qualified. Dr.
Akers is nominated for reelection to the Board, the other current Board members have chosen not to seek re-election.
As
we are listed on the NASDAQ Capital Market, our determination of independence of directors is made using the definition of “independent
director” contained in Rule 5605(a)(2) of the Marketplace Rules of the NASDAQ Stock Market. The board affirmatively determined
that Thomas Knox, Brandon Knox, Robert E. Andrews, and Raza Bokhari are “independent” directors, as that term is defined
in the NASDAQ Stock Market Rules. Additionally, the Board has determined that current director nominees Bill J. White,
Richard C. Tarbox III and Christopher C. Schreiber will be, if elected to the Board, “independent” directors, as that
term is defined in the NASDAQ Stock Market Rules.
Board
Meetings and Attendance
The
Board held approximately seven (7) meetings in 2016. No director attended, either in person or via telephone, fewer than 50% of
the aggregate of all meetings of the Board, for which at the time of the meeting they were a member of the Board. The Board also
approved certain actions by unanimous written consent.
Stockholder
Communications with the Board
Shareholders
wishing to communicate with the Board, the non-management directors, or with an individual Board member may do so by writing to
the Board, to the non-management directors, or to the particular Board member, and mailing the correspondence to: c/o John Gormally,
Chief Executive Officer, Akers Biosciences, Inc. 201 Grove Road, Thorofare, NJ 08086. The envelope should indicate that it contains
a shareholder communication. All such shareholder communications will be forwarded to the director or directors to whom the communications
are addressed.
Board
Committees
Our
Board of Directors has three (3) standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate
Governance Committee. Each committee has a charter, which is available on our website at
www.akersbiosciences.com
. Information
contained on our website is not incorporated herein by reference. Each of the board committees has the composition and responsibilities
described below. The members of these committees are:
Current
Committee Composition
Audit
Committee
|
|
Compensation
Committee
|
|
Nominating
and Corporate
Governance Committee
|
Thomas
Knox*
|
|
Thomas
Knox
|
|
Thomas
Knox
|
Brandon
Knox
|
|
Brandon
Knox
|
|
Brandon
Knox*
|
Robert
E. Andrews
|
|
Robert
E. Andrews*
|
|
Robert
E. Andrews
|
Raza
Bokhari
|
|
Raza
Bokhari
|
|
Raza
Bokhari
|
*
Denotes Chairman of committee.
Committee
Composition after the Annual Meeting
†
Audit
Committee
|
|
Compensation
Committee
|
|
Nominating
and Corporate
Governance Committee
|
Bill J. White *
|
|
Bill J. White
|
|
Bill J. White
|
Richard C. Tarbox III
|
|
Richard C. Tarbox III
|
|
Richard C. Tarbox III*
|
Christopher C. Schreiber
|
|
Christopher C. Schreiber*
|
|
Christopher C. Schreiber
|
†
Assumes
the election of Bill J. White, Richard C. Tarbox III and Christopher C. Schreiber, who have each been appointed to committees
by resolution of the Board effective upon their election to the Board.
*
Denotes Chairman of committee subject to election to the Board at the Annual Meeting.
Audit
Committee
We
have an Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of our Audit Committee
are currently Thomas Knox, Brandon Knox, Robert E. Andrews and Raza Bokhari. The current members of the Audit Committee are not
seeking reelection to the Board at the Annual Meeting. The Board has selected Bill J. White, Richard C. Tarbox III and Christopher
C. Schreiber to serve on the Audit Committee, subject to their election to the Board. Mr. White will serve as Chairman of the
Audit Committee. Each of the current and newly appointed Audit Committee members is “independent” within the meaning
of Rule 10A-3 under the Exchange Act and the NASDAQ Stock Market Rules. Mr. T. Knox currently serves as the “audit committee
financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Board has determined that Mr.
White will serve as the “audit committee financial expert” upon election and appointment to the Audit Committee.
The
Audit Committee oversees our accounting and financial reporting processes and oversees the audit of our financial statements and
the effectiveness of our internal control over financial reporting. The specific functions of the Audit Committee include, but
are not limited to:
|
●
|
selecting
and recommending to the Board the appointment of an independent registered public accounting firm and overseeing the engagement
of such firm;
|
|
|
|
|
●
|
approving the fees
to be paid to the independent registered public accounting firm;
|
|
|
|
|
●
|
helping to ensure
the independence of the independent registered public accounting firm;
|
|
|
|
|
●
|
overseeing the integrity
of our financial statements;
|
|
|
|
|
●
|
preparing an audit
committee report as required by the SEC to be included in our annual proxy statement;
|
|
|
|
|
●
|
resolving
any disagreements
between management and the auditors regarding financial reporting;
|
|
|
|
|
●
|
reviewing with management
and the independent auditors any correspondence with regulators and any published reports that raise material issues regarding
the Company’s accounting policies;
|
|
|
|
|
●
|
reviewing and approving
all related party transactions; and
|
|
|
|
|
●
|
overseeing compliance
with legal and regulatory requirements.
|
The
Audit Committee held approximately four (4) telephonic meetings in 2016. All members of the Audit Committee attended, either in
person or via telephone, at least 50% of the aggregate of all meetings of the Audit Committee.
Compensation
Committee
The
members of our Compensation Committee are currently Thomas Knox, Brandon Knox, Robert E. Andrews and Raza Bokhari. The current
members of the Compensation Committee are not seeking reelection to the Board at the Annual Meeting. The Board has selected Bill
J. White, Richard C. Tarbox III and Christopher C. Schreiber to serve on the Compensation Committee, subject to their election
to the Board. Mr. Schreiber will serve as Chairman of the Compensation Committee. Each of the current and newly appointed
Compensation Committee members is “independent” within the meaning of the NASDAQ Stock Market Rules. In addition,
each current and new member of our Compensation Committee qualifies as a “non-employee director” under Rule 16b-3
of the Exchange Act. Our Compensation Committee assists the Board in the discharge of its responsibilities relating to the compensation
of the Board and our executive officers.
The
Compensation Committee’s compensation-related responsibilities include, but are not limited to:
|
●
|
reviewing
and approving on an annual basis the corporate goals and objectives with respect to compensation for our Chief Executive Officer;
|
|
|
|
|
●
|
reviewing,
approving and recommending to our board of directors on an annual basis the evaluation process and compensation structure
for our other executive officers;
|
|
|
|
|
●
|
determining
the need for an the appropriateness of employment agreements and change in control agreements for each of our executive officers
and any other officers recommended by the Chief Executive Officer or board of directors;
|
|
|
|
|
●
|
providing
oversight of management’s decisions concerning the performance and compensation of other company officers, employees,
consultants and advisors;
|
|
●
|
reviewing
our incentive compensation and other equity-based plans and recommending changes in such plans to our board of directors as
needed, and exercising all the authority of our board of directors with respect to the administration of such plans;
|
|
|
|
|
●
|
reviewing
and recommending to our board of directors the compensation of independent directors, including incentive and equity-based
compensation; and
|
|
|
|
|
●
|
selecting,
retaining and terminating such compensation consultants, outside counsel or other advisors as it deems necessary or appropriate.
|
The
Compensation Committee held approximately four (4) meetings in 2016 and acted by written consent. All members of the Compensation
Committee attended, either in person or via telephone, at least 50% of the aggregate of all meetings of the Compensation Committee.
Nominating
and Corporate Governance Committee
The
members of our Nominating and Corporate Governance Committee are currently Robert E. Andrews, Thomas Knox, Brandon Knox and Raza
Bokhari. The current members of the Nominating and Corporate Governance Committee are not seeking reelection to the Board at the
Annual Meeting. The Board has selected Bill J. White, Richard C. Tarbox III and Christopher C. Schreiber to serve on the Nominating
and Corporate Governance Committee, subject to their election to the Board. Mr. Tarbox will serve as Chairman of the Nominating
and Corporate Governance Committee. Each of the current and newly appointed Nominating and Corporate Governance Committee members
is “independent” within the meaning of the NASDAQ Stock Market Rules. The purpose of the Nominating and Corporate
Governance Committee is to recommend to the Board nominees for election as directors and persons to be elected to fill any vacancies
on the Board, develop and recommend a set of corporate governance principles and oversee the performance of the board.
The
Nominating and Corporate Governance Committee’s responsibilities include:
|
●
|
recommending to
the Board nominees for election as directors at any meeting of shareholders and nominees to fill vacancies on the Board;
|
|
|
|
|
●
|
considering candidates
proposed by shareholders in accordance with the requirements in the Committee charter;
|
|
|
|
|
●
|
overseeing the
administration of the Company’s Code of Ethics;
|
|
|
|
|
●
|
reviewing with
the entire Board, on an annual basis, the requisite skills and criteria for Board candidates and the composition of the Board
as a whole;
|
|
|
|
|
●
|
the authority
to retain search firms to assist in identifying board candidates, approve the terms of the search firm’s engagement
and cause the Company to pay the engaged search firm’s engagement fee;
|
|
|
|
|
●
|
recommending to
the Board on an annual basis the directors to be appointed to each committee of the Board;
|
|
|
|
|
●
|
overseeing an
annual self-evaluation of the Board and its committees to determine whether it and its committees are functioning effectively;
and
|
|
|
|
|
●
|
developing and
recommending to the Board a set of corporate governance guidelines applicable to the Company.
|
The
Nominating and Corporate Governance Committee may delegate any of its responsibilities to subcommittees as it deems appropriate.
The Nominating and Corporate Governance Committee is authorized to retain independent legal and other advisors, and conduct or
authorize investigations into any matter within the scope of its duties.
The
Nominating and Corporate Governance Committee held approximately one (1) meeting in 2016. The meeting of the Nominating and Corporate
Governance Committee was attended by all members of the Nominating and Corporate Governance Committee.
Family
Relationships
Thomas
Knox and Brandon Knox are father and son, respectively. Neither Thomas nor Brandon Knox are seeking reelection to the Board. There
are no other family relationships among any of our directors, director candidates or executive officers.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, none of our directors or executive officers has, during the past ten (10) years:
|
●
|
Been convicted in
a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
|
|
|
●
|
Had any bankruptcy
petition filed by or against the business or property of the person, or of any partnership, corporation or business association
of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior
to that time;
|
|
|
|
|
●
|
Been subject to
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or
federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement
in any type of business, securities, futures, commodities, investment, banking, savings and loan or insurance activities,
or to be associated with persons engaged in any such activity;
|
|
|
|
|
●
|
Been found by a
court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended
or vacated;
|
|
●
|
Been the subject
of, or a party to, any federal or state judicial or administrative order, judgment, decree or finding, not subsequently reversed,
suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement
or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
|
|
|
●
|
Been the subject
of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization
(as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity
Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members
or persons associated with a member.
|
Except
as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or
executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates
which are required to be disclosed pursuant to the rules and regulations of the Commission.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more
of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and
regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based
solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the
fiscal year ended December 31, 2016, were timely.
Code
of Ethics
The
Board has adopted a Code of Business Ethics and Conduct (the “Code of Conduct”) which constitutes a “code of
ethics” as defined by applicable SEC rules and a “code of conduct” as defined by applicable NASDAQ rules. We
require all employees, directors and officers, including our principal executive officer and principal financial officer, to adhere
to the Code of Conduct in addressing legal and ethical issues encountered in conducting their work. The Code of Conduct requires
that these individuals avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an
honest and ethical manner and otherwise act with integrity. The Code of Conduct is available on our website at
www.akersbio.com.
The Company will post any amendments to the Code of Conduct, as well as any waivers that are required to be disclosed by the
rules of the SEC on such website. Information contained on our website is not a part of, and is not incorporated into, this proxy
statement, and the inclusion of our website address in this proxy statement is an inactive textual reference only.
Director
Compensation
The
following sets forth the compensation awarded to, earned by or paid to the named director by us during the year ended December
31, 2016.
Name
|
|
Fees
earned
or
paid
in
cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-
equity
incentive
plan
compensation
($)
|
|
|
All
other
compensation
($)
|
|
|
Total
($)
|
|
Raymond F. Akers, Jr.
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Thomas Knox (1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Brandon Knox (2)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Robert E. Andrews (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Dr. Raza Bokhari (4)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
Mr.
T. Knox is not seeking reelection to the Board.
|
|
|
(2)
|
Mr.
B. Knox is not seeking reelection to the Board
|
|
|
(3)
|
Mr.
Andrews is not seeking reelection to the Board.
|
|
|
(4)
|
Dr.
Bokhari is not seeking reelection to the Board.
|
Executive
Compensation
The
compensation provided to our “named executive officers” for 2016, 2015 and 2014 is set forth in detail in the
Summary Compensation Table and other tables and the accompanying footnotes and narrative that follow this section. This section
explains our executive compensation philosophy, objectives and design, our compensation-setting process, our executive compensation
program components and the decisions made for compensation in respect of 2016 for each of our named executive officers.
Compensation-Setting
Process/Role of Our Compensation Committee
The
Compensation Committee has responsibility for the Company’s compensation practices with appropriate approval and general
oversight from the Board. This responsibility includes the determination of compensation levels and awards provided to the named
executive officers. The Compensation Committee provides a recommendation for the performance review and any compensation adjustments
to the Board for approval. Grants of equity-based compensation are approved by the Compensation Committee in accordance with the
Company’s stock incentive and award plan established by the Compensation Committee.
Base
Salary
We
provide base salary as a fixed source of compensation for our executive officers, allowing them a degree of certainty when having
a meaningful portion of their compensation “at risk” in the form of equity awards covering the shares of a Company
for whose shares there has been limited liquidity to date. The Board recognizes the importance of base salaries as an element
of compensation that helps to attract highly qualified executive talent.
Base
salaries for our executive officers were established primarily based on individual negotiations with the executive officers when
they joined us and reflect the scope of their anticipated responsibilities, the individual experience they bring, the Board members’
experiences and knowledge in compensating similarly situated individuals at other companies, our then-current cash constraints
and a general sense of internal pay equity among our executive officers and key personnel.
The
Compensation Committee does not apply specific formulas in determining base salary increases. Actual base salaries may differ
from the competitive market rates target as a result of various other factors including relative depth of experience, prior individual
performance and expected future contributions, internal pay equity considerations within our Company and the degree of difficulty
in replacing the individual.
Summary
Compensation Table
The
compensation provided to our “named executive officers” for 2016, 2015 and 2014 is set forth in detail in the Summary
Compensation Table and other tables and the accompanying footnotes and narrative that follow this section. This section explains
our executive compensation philosophy, objectives and design, our compensation-setting process, our executive compensation program
components and the decisions made for compensation in respect of 2016 for each of our named executive officers.
Our
named executive officers who appear in the 2016 Summary Compensation Table are:
Raymond
F. Akers, Jr., PhD
|
|
Chief
Scientific Director and Secretary
|
|
|
|
John
J. Gormally
|
|
Chief
Executive Officer
|
|
|
|
Gary
M. Rauch
|
|
Vice
President, Finance and Treasurer
|
Summary
Compensation Table
The
following table summarizes information regarding the compensation awarded to, earned by or paid to, our Chief Executive Officer,
and our other most highly compensated executive officers who earned in excess of $100,000 during 2016, 2015 and 2014.
|
|
|
|
|
|
Cash
|
|
Stock
|
|
Option
|
|
All
|
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Other
|
|
|
Total
|
Principal
Position
|
|
Year
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
$
|
Raymond F Akers, Jr PhD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executive Chairman
|
|
|
2016
|
|
|
|
269,231
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
7,800
|
(1)
|
|
|
277,031
|
|
Secretary, Chief Scientific Director
|
|
|
2015
|
|
|
|
397,450
|
|
|
|
—
|
|
|
|
256,900
|
|
|
|
—
|
|
|
7,800
|
(1)
|
|
|
662,150
|
|
|
|
|
2014
|
|
|
|
394,231
|
|
|
|
—
|
|
|
|
—
|
|
|
|
124,270
|
|
|
7,800
|
(1)
|
|
|
526,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Gormally (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
2016
|
|
|
|
248,500
|
|
|
|
—
|
|
|
|
54,725
|
|
|
|
—
|
|
|
7,800
|
(3)
|
|
|
311,025
|
|
|
|
|
2015
|
|
|
|
24,038
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
650
|
(3)
|
|
|
24,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary M Rauch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President, Finance and
|
|
|
2016
|
|
|
|
95,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
95,000
|
|
Treasurer
|
|
|
2015
|
|
|
|
95,000
|
|
|
|
—
|
|
|
|
27,675
|
|
|
|
—
|
|
|
—
|
|
|
|
122,675
|
|
|
|
|
2014
|
|
|
|
78,414
|
|
|
|
—
|
|
|
|
—
|
|
|
|
46,601
|
|
|
11,250
|
(4)
|
|
|
138,765
|
|
(1)
|
Other Compensation
for Dr. Akers consisted of a car allowance.
|
|
|
(2)
|
Mr. Gormally was
appointed as Chief Executive Officer on November 16, 2015.
|
|
|
(3)
|
Other Compensation
for Mr. Gormally consisted of a car allowance.
|
|
|
(4)
|
Mr. Rauch became
an employee of the Company effective February 2, 2014. Prior to this date, Mr. Rauch was paid a fee pursuant to his consultant
agreement. Fees paid to Mr. Rauch for his pre-employment period are recorded as other compensation.
|
Employment
Agreements
On
December 2, 2015, the Company and John J. Gormally finalized the terms of his employment and entered into an employment
agreement (the “Employment Agreement”), pursuant to which Mr. Gormally will serve as the Company’s Chief Executive
Officer. Mr. Gormally shall have such duties, responsibilities and authority as are commensurate and consistent with the position
of Chief Executive Officer of a public company.
The
Company shall pay Mr. Gormally a salary at a rate of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000) per year (the “Base
Salary”). On January 31, 2017, pursuant to the terms of the Employment Agreement, the Board adjusted Mr. Gormally’s
salary to Three Hundred Twenty-Five Thousand and 00/100 Dollars ($325,000) effective as of January 1, 2017. In addition,
subject to the discretion of the Company’s Compensation Committee and the Board, provided that the Employment Agreement
has not been terminated, Mr. Gormally shall be eligible for an annual performance-based cash bonus of up to 100% of the Base Salary
(the “Cash Incentive Bonus”). Mr. Gormally shall receive certain grants of the Company’s restricted common stock
(each an “Incentive Award” and together with the Cash Incentive Bonus, the “Incentive Compensation”) on
a bi-annual basis, with such awards expected to be made on or about February 15 and August 15 of each year, under the Company’s
Amended and Restated 2013 Incentive Stock and Award Plan. Each Incentive Award will vest or has vested as follows: (i) 1/3 vested
on the date of grant; (ii) 1/3 vest on the first anniversary of the date of grant and (iii) 1/3 shall vest on the second anniversary
of the date of grant. The Incentive Awards will be made within the following ranges, in the aggregate, for each such year: (i)
for 2016, up to 140,000 shares of restricted common stock, but no less than 27,500 shares of restricted common stock; (ii) for
2017, up to 125,000 shares of restricted common stock, but no less than 25,000 shares of restricted common stock; (iii) for 2018,
up to 125,000 shares of restricted common stock, but no less than 25,000 shares of restricted common stock; (iv) for 2019, up
to 125,000 shares of restricted common stock, but no less than 25,000 shares of restricted common stock; and (v) for 2020, up
to 125,000 shares of restricted common stock, but no less than 25,000 shares of restricted common stock.
The
Employment Agreement may be terminated by either party upon thirty (30) days’ written notice to the other party or
sooner upon the parties’ mutual written consent. In the event that Mr. Gormally is terminated without Cause (as defined
in the Employment Agreement), including termination pursuant to thirty (30) days’ written notice, or Mr. Gormally
terminates his employment for Good Reason (as defined in the Employment Agreement) the Company shall pay Mr. Gormally severance
in accordance to the following: (i) if the date of termination is prior to the four month anniversary of the effective date of
the Employment Agreement (the “Four Month Anniversary”), Mr. Gormally shall receive no severance; (ii) if the
date of termination is after the Four Month Anniversary but prior to the one year anniversary (the “One Year Anniversary”)
of the effective date of the Employment Agreement, the Company shall pay Mr. Gormally severance equal to one third (1/3) of his
Base Salary; (iii) if the date of termination is on or after the One Year Anniversary but prior to the two year anniversary (the
“Two Year Anniversary”) of the effective date of the Employment Agreement, the Company shall pay Mr. Gormally severance
equal to one half (1/2) of the Mr. Gormally’s then current Base Salary; and (iv) if the date of termination is on or after
the Two Year Anniversary, the Company shall pay Mr. Gormally severance equal to one year of Mr. Gormally’s then current
Base Salary. If Mr. Gormally is terminated for Cause the Company will not pay any severance.
Outstanding
Equity Awards at Fiscal Year-End 2016
There
were no outstanding equity awards at Fiscal Year-End 2016.
Certain
Relationships and Related Transactions, and Director Independence.
Other
than compensation arrangements, the following is a description of transactions to which we were a participant or will be a participant
to, in which:
|
●
|
the
amounts involved exceeded or will exceed the lesser of 1% of our total assets or $120,000; and
|
|
|
|
|
●
|
any
of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family
of the foregoing persons, had or will have a direct or indirect material interest.
|
Effective
January 23, 2014, our Audit Committee considers and approves or disapproves any related person transaction as required by NASDAQ
regulations.
On
June 19, 2012, the Company entered into a 3-year exclusive License and Supply Agreement ChubeWorkx Guernsey Limited (“ChubeWorkx”)
for the purchase and distribution of the Company’s proprietary breathalyzers outside of North America. ChubeWorkx paid a
licensing fee of $1,000,000 which was recognized over the term of the agreement through June 30, 2015.
On
June 13, 2013, the Company announced an expansion of the License and Supply Agreement with ChubeWorkx to include worldwide marketing
and distribution of the “Be CHUBE” program using the Company’s breathalyzer.
On
December 31, 2014, the outstanding ChubeWorkx Receivable was converted to a note receivable. The note is payable in sixty equal
installments of $27,734 commencing January 1, 2015 and has an interest rate of 5% per annum.
On
March 9, 2015, the Company contributed capital of $64,675 in Hainan Savy Akers Biosciences, Ltd. (“Hainan Savy”),
a company incorporated in the People’s Republic of China, resulting in a 19.9% ownership interest. The contribution was
adjusted downward to $64,091 on April 8, 2015; the net effect of the currency conversion when the contribution was processed in
Hainan. Mr. Thomas Knox, a member of the Company’s Board of Directors, is also an investor in the joint venture.
On
February 12, 2016 and May 25, 2016, the Company purchased several manufacturing molds for $41,073 and $27,988, respectively, through
Hainan Savy, the Company’s joint venture partner in the Peoples Republic of China.
The
Company began purchasing plastic and electronic components through Hainan Savy for use in the production of finished goods in
the first half of 2016.
On
August 17, 2016, the Company entered into a settlement agreement (the “Settlement Agreement”)
with ChubeWorkx which settled all pending claims between the Company and ChubeWorkx. Specifically, the Company and ChubeWorkx
agreed to voluntarily dismiss the action brought by the Company against ChubeWorkx for outstanding amounts due to Akers Bio under
a promissory note in a United States Federal Court suit, District of New Jersey and various claims brought by ChubeWorkx against
the Company arising from an exclusive licensing agreement between ChubeWorkx and the Company (“Licensing Agreement”)
in a suit brought in The High Court of Justice, Queen’s Bench Division Commercial Court, Royal Courts of Justice, United
Kingdom.
Under
the terms of the Settlement Agreement, the Company will recover the full outstanding principal amount in the current fiscal year
in the form of $750,000 of BreathScan® Alcohol Detector inventory – which the Company intends to subsequently sell –
and the balance of $549,609 in cash. Akers Bio established an allowance for this doubtful note in the Company’s financial
statements for the year ended December 31, 2015. As a result of the Settlement Agreement, the Company reversed the allowance for
doubtful note in the amount of $1,299,609.
In
addition to addressing the promissory note described above, the Settlement Agreement also allows the Company to market and sell
all of the Company’s breath technology tests worldwide, unencumbered by any past/future claims by ChubeWorkx under the Licensing
Agreement (entered into with ChubeWorkx in 2012 and subsequently amended in 2013). Under the terms of the Settlement Agreement,
ChubeWorkx no longer holds any rights pertaining to Akers Bio’s BreathScan® technology, which serves as the basis for
a number of commercialized products including BreathScan® Alcohol Detector and BreathScan OxiChek™; and a number of
products in development.
In
return for the Company regaining the full rights to sell breath technology products, under the terms of the Settlement Agreement,
ChubeWorkx is entitled to receive a royalty of 5% of the Company’s gross revenues (the “ChubeWorkx Royalty”)
until ChubeWorkx has earned an aggregate $5,000,000, after which point ChubeWorkx will no longer be entitled to receive any royalties
from the Company and the Company shall have no further obligation to ChubeWorkx. The Settlement Agreement further allows the Company
to retain 50% of the ChubeWorkx Royalty until the full $549,609 cash component of the monies owed by ChubeWorkx to the Company
as described above has been satisfied. The Company has recorded royalty expenses of $248,671 for the period January 1, 2016
through June 30, 2017.
Other
terms of the Settlement include: 1) the pledge as security by the Company to ChubeWorkx all Company assets, worthy to satisfy
its obligations, including all inventory and receivables, with the exception of (i) distribution contracts of the Company or any
of its affiliates, (ii) customer lists, (iii) manufacturing processes (including all intellectual property required to use those
processes and exploit products made thereby) and (iv) all equipment required to perform said manufacturing processes and other
equipment; and 2) the grant of voting proxy by ChubeWorkx to the Company which allows the Company to vote ChubeWorkx’s shares
for corporate formalities under certain conditions.
The
pledged assets are only at risk in the event that the Company cannot satisfy any outstanding royalty payment obligations subject
to various cure periods and/or through a restructuring and/or liquidation under the United States Bankruptcy laws of the Company
in favor of payment of said obligation.
COMPENSATION
COMMITTEE REPORT
Recommendations
of the Compensation Committee.
The Compensation Committee of the Board is currently comprised of Thomas Knox,
Brandon Knox, Robert E. Andrews, and Raza Bokhari, each of whom the Board has determined to be independent. This report shall
not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”)
or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) by virtue of any general statement in such
filing incorporating the Annual Report by reference, except to the extent that the Company specifically incorporates the information
contained in this section by reference and shall not otherwise be deemed filed under either the Securities Act or the Exchange
Act.
The
Compensation Committee has reviewed and discussed with management the disclosure regarding Executive Compensation contained in
this proxy statement for the Annual Meeting. Based on the review and discussions, the Compensation Committee recommended to the
Board that such disclosure be included in this proxy statement.
This
Compensation Report has been furnished by the Compensation Committee of the Board.
Robert
E. Andrews, Chairman
Thomas
Knox
Brandon
Knox
Raza
Bokhari
AUDIT
COMMITTEE REPORT
The
following Report of the Audit Committee (the “Audit Report”) does not constitute soliciting material and should not
be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates this Audit Report by reference therein.
Role
of the Audit Committee
The
Audit Committee’s primary responsibilities fall into three broad categories:
First,
the Audit Committee is charged with monitoring the preparation of quarterly and annual financial reports by the Company’s
management, including discussions with management and the Company’s outside auditors about draft annual financial statements
and key accounting and reporting matters.
Second,
the Audit Committee is responsible for matters concerning the relationship between the Company and its outside auditors,
including recommending their appointment or removal; reviewing the scope of their audit services and related fees, as well as
any other services being provided to the Company; and determining whether the outside auditors are independent (based in part
on the annual letter provided to the Company pursuant to Independence Standards Board Standard No. 1).
Third,
the Audit Committee reviews financial reporting, policies, procedures and internal controls of the Company. The Audit
Committee has implemented procedures to ensure that during the course of each fiscal year it devotes the attention that it
deems necessary or appropriate to each of the matters assigned to it under the Audit Committee’s charter. In overseeing
the preparation of the Company’s financial statements, the Audit Committee met with management and the Company’s
outside auditors, including meetings with the Company’s outside auditors without management present, to review and discuss
all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit
Committee that all financial statements were prepared in accordance with generally accepted accounting principles, and the
Audit Committee discussed the statements with both management and the outside auditors. The Audit Committee’s
review included discussion with the outside auditors of matters required to be discussed pursuant to Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
With
respect to the Company’s outside auditors, the Audit Committee, among other things, discussed with Morison Cogen
LLP matters relating to its independence, including the disclosures made to the Audit Committee as required by the Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
Recommendations
of the Audit Committee.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to the Board that the Board approve the inclusion of the Company’s audited financial statements in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2016, for filing with the SEC.
This
report has been furnished by the Audit Committee of the Board.
Thomas
Knox, Chairman
Robert
E. Andrews
Brandon
Knox
Raza
Bokhari
PROPOSAL
NO. 2
RATIFICATION
OF APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
The
Board has appointed Morison Cogen LLP (“Morison Cogen”), as our independent registered public accounting firm to examine
the consolidated financial statements of the Company for fiscal year ending December 31, 2017. The Board seeks an indication from
shareholders of their approval or disapproval of the appointment.
Morison
Cogen will audit our consolidated financial statements for the fiscal year ended December 31, 2017. We anticipate that a representative
of Morison Cogen will be present by telephone at the Annual Meeting, will have the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.
Our
consolidated financial statements for the fiscal years ended December 31, 2016 were audited by Morison Cogen.
In
the event shareholders fail to ratify the appointment of Morison Cogen, the Board of Directors will reconsider this appointment.
Even if the appointment is ratified, the Board of Directors, in its discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year if the Board of Directors determines that such a change would be
in the interests of the Company and its shareholders.
The
following table sets forth the aggregate fees billed for each of the last two fiscal years for professional services rendered
by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements
included in the Company’s quarterly reports or services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit-Related
fees include services for the review of interim financial statements, tax fees include the preparation of tax returns and other
fees include services performed in relation to the preparation of Form S-3 for the public offering on NASDAQ.
|
|
2016
|
|
2015
|
Audit Fees
|
|
$
|
100,000
|
|
$
|
60,318
|
|
Audit-Related Fees
|
|
$
|
69,000
|
|
$
|
54,800
|
|
Tax Fees
|
|
$
|
9,500
|
|
$
|
5,500
|
|
All Other Fees
|
|
$
|
15,144
|
|
$
|
4,648
|
|
TOTAL
|
|
$
|
193,644
|
|
$
|
125,266
|
|
Audit
Committee Pre-Approval Policies and Procedures
The
Company’s Audit Committee has adopted policies and procedures that shall require the pre-approval by the Audit Committee
of all fees paid to, and all services performed by, the Company’s independent accounting firms. At the beginning of each
year, the Audit Committee shall approve the proposed services, including the nature, type and scope of services contemplated and
the related fees, to be rendered by these firms during the year. In addition, Audit Committee pre-approval is also required for
those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved
by the Audit Committee.
The
affirmative vote of the holders of a majority of the Company’s common stock represented and voting at the Annual Meeting
either in person or by proxy will be required for approval of this proposal. Neither abstentions nor broker non-votes shall have
any effect on the outcome of this vote.
RECOMMENDATION
OF THE BOARD OF DIRECTORS:
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF MORISON COGEN AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
PROPOSAL
NO. 3
APPROVAL
OF THE ADOPTION OF THE AKERS BIOSCIENCES, INC.
2017
EQUITY INCENTIVE PLAN
Shareholders
are being asked to approve the Akers Biosciences, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) which was adopted
by the Board on July 12, 2017, subject to shareholder approval. If approved by shareholders, the 2017 Plan will supplement
the Company’s existing Amended and Restated 2013 Incentive Stock and Award Plan (the “2013 Plan”) in providing
stock-based incentive compensation to select officers, employees, non-employee directors, consultants and service providers. As
of July 7, 2017, 3,292 shares were available for award under the 2013 Plan, all of which were available only for award in the
form of restricted stock and non-qualified stock options. As of July 7, 2017, the aggregate of all restricted stock and options
outstanding under the 2013 Plan was 259,000, with a weighted average exercise price of $4.23 and a weighted average remaining
term of 2.55 years.
The
Company’s Compensation Committee believes this remaining amount of shares to be insufficient to meet the Company’s
needs. The Company continues to focus on equity awards in the form of restricted stock grants and non-qualified options. The 2017
Plan was designed by the Compensation Committee with the assistance of management as part of a comprehensive compensation strategy
to provide long-term incentives for employees and non-employees to contribute to the growth of the Company and attain specific
performance goals.
Approval
of the 2017 Plan will allow the Company to award stock options in the form of non-qualified and incentive options, stock appreciation
rights, restricted stock, and restricted stock units to employees and to non-employee directors, consultants and service providers.
In determining the number of shares available under the 2017 Plan, we considered the historical burn-rate of the Company’s
2013 Plan, and the potential dilution to shareholders. The 1,350,000 shares available under the 2017 Plan represent 15.2% of the
Company’s outstanding Common Stock as of July 7, 2017. The NASDAQ Capital Market closing price of a share of Common Stock
on July 7, 2017 was $1.20. Based on historical burn rates and our current stock price, the Compensation Committee believes the
1,350,000 shares that may be awarded under the 2017 Plan should be sufficient to cover grants in the coming years.
We
are also seeking approval of the performance criteria under the 2017 Plan for purposes of Section 162(m) of the Internal Revenue
Code of 1986, which would allow certain awards granted under the 2017 Plan to qualify as performance-based compensation (see discussion
of Tax Consequences below).
The
purpose of awards under the 2017 Plan (see Award Types described below) is to attract and retain talented employees and the services
of select non-employees, further align employee and shareholder interests and closely link employee compensation with Company
performance.
Key
Terms
-
The following is a summary of the material features of the 2017 Plan, which is qualified by reference to the
full text of the 2017 Plan, which is set forth as Appendix A:
Eligible
Participants:
|
Eligible
participants under the 2017 Plan will be such full or part-time officers and other employees, directors, consultants and key
persons of the Company and any Company subsidiary who are selected from time to time by the Board or committee of the Board
authorized to administer the 2017 Plan, as applicable, in its sole discretion.
|
Shares
Authorized:
|
1,350,000
shares, subject to adjustment only to reflect stock splits
and similar events. Shares underlying awards that are forfeited, expire, cancelled or lapse become available for future grants.
|
|
|
Shares
Authorized as a Percent of Outstanding Common Stock:
|
15.2%
|
|
|
Award
Types:
|
(1)
|
Non-qualified
and incentive stock option
—the right to purchase a certain number of shares of stock, at a certain exercise price,
in the future.
|
(2)
|
Restricted
stock
—share award may be conditioned upon continued employment, the passage of time or the achievement of performance
objectives.
|
(3)
|
Unrestricted
Stock Award
: Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in
lieu of cash compensation due to such grantee.
|
(4)
|
Restricted
stock unit
—the right to receive, at a specified future date, shares of common stock or an amount equal to the fair
market value of a specified number of shares of common stock. Restricted stock units may be conditioned upon continued employment,
the passage of time or the achievement of performance objectives. Payments in respect of restricted stock units may be made
in shares, cash or a combination of both, in the Committee’s discretion.
|
(5)
|
Stock
appreciation right
—the right to receive the net of the market price of a share of stock and the exercise price of
the right, in stock, in the future.
|
|
|
Award
Terms:
|
Stock
options and stock appreciation rights will have a term no longer than ten years. All awards made under the 2017 Plan may be
subject to vesting and other contingencies as determined by the Compensation Committee and will be evidenced by agreements
which set forth the terms and conditions of each award. The Compensation Committee, in its discretion, may accelerate or extend
the period for the exercise or vesting of any awards.
|
|
|
Not
Permitted:
|
(1)
|
Granting
stock options or stock appreciation rights at a price below fair market value on the date of grant or 110% of fair
market value in the case of incentive options issued to a holder of 10% or more of the voting power of the Company.
|
|
(2)
|
Granting
stock options and stock appreciation rights to any one employee during any fiscal year in excess of 250,000 shares.
|
|
(3)
|
Granting
restricted stock, restricted stock units and stock bonuses to any one employee during any fiscal year in excess of 500,000
shares.
|
|
(4)
|
Granting
shares of Company Stock subject to incentive awards awarded during a single fiscal year
to any non-employee director, taken together with any cash fees paid to such non-employee
director during the fiscal year, in excess of $250,000 in total value.
|
|
|
Performance
Criteria
|
The
Compensation Committee may grant restricted stock or restricted stock units with vesting conditions based on continuing employment
(or other service relationship), achievement of pre-established performance goals and objectives which may be based on targets
for revenue, revenue growth, EBITDA, net income, earnings per share and/or other such criteria as the Compensation Committee
may determine. The Compensation Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective
fashion the manner of calculating the performance criteria it selects to use for the performance period for a participant.
|
Clawback
|
Any
awards and shares of stock issued pursuant to the 2017 Plan that are subject to recovery
under any applicable law, government regulation or rule or listing standard of any stock
exchange, will be subject to such deductions and clawback as may be required to be made
pursuant to such applicable law, government regulation or rule or listing standard of
any stock exchange (or any policy adopted by the Company pursuant to any such applicable
law, government regulation or rule or listing standard of any stock exchange).
|
Tax
Consequences
–
Stock option grants under the 2017 Plan may be intended to qualify as incentive stock options under
Internal Revenue Code of 1986, as amended (“IRC”) §422 or may be non-qualified stock options governed by IRC
§83. Generally, no federal income tax is payable by a participant upon the grant of a stock option and no deduction is taken
by the Company. Under current tax laws, if a participant exercises a non-qualified stock option, he or she will have taxable income
equal to the difference between the market price of the stock on the exercise date and the stock option grant price. The Company
will be entitled to a corresponding deduction on its income tax return. A participant will have no taxable income upon exercising
an incentive stock option if the shares received are held for the applicable holding periods (except that alternative minimum
tax may apply), and the Company will receive no deduction when an incentive stock option is exercised. The Company may be entitled
to a deduction in the case of a disposition of shares acquired under an incentive stock option that occurs before the applicable
holding periods have been satisfied.
Restricted
stock and restricted stock units are also governed by IRC §83. Generally, no taxes are due when the award is made. Restricted
stock generally becomes taxable when it is no longer subject to a “substantial risk of forfeiture” (i.e., becomes
vested or transferable). Restricted stock units become taxable when settled. When taxable to the participant, income tax is paid
on the value of the stock or units at ordinary rates. The Company will generally be entitled to a corresponding deduction on its
income tax return. Any additional gain on shares received are then taxed at capital gains rates when the shares are sold.
The
grant of a stock appreciation right will not result in income for the participant or in a tax deduction for the Company. Upon
the settlement of such a right, the participant will recognize ordinary income equal to the aggregate value of the payment received,
and the Company generally will be entitled to a tax deduction in the same amount.
Awards
granted under the 2017 Plan may qualify as “performance-based compensation” under IRC §162(m) and thus preserve
federal income tax deductions by the Company with respect to annual compensation required to be taken into account under §162(m)
that is in excess of $1 million and paid to one of the Company’s most highly compensated executive officers. To qualify,
options and other awards must be granted under the 2017 Plan by a committee consisting of two or more “outside directors”
(as defined under §162(m)) and options and stock appreciation rights must satisfy the 2017 Plan’s limit on the total
number of shares that may be awarded to any one participant during any fiscal year. In addition, for awards other than options
and stock appreciation rights to qualify, the grant, issuance, vesting or retention of the award must be contingent upon satisfying
one or more of the performance criteria, as established and certified by a committee consisting solely of two or more “outside
directors.” Certain awards that may be made under the 2017 Plan may not qualify as performance based compensation and that
performance-based compensation awards that are intended to be exempt from the deduction limitation may not meet the requirements
to qualify for such exemption.
The
foregoing is only a summary of the effect of federal income taxation on the participant and the Company under the 2017 Plan. It
does not purport to be complete and does not discuss the tax consequences arising in the context of a participant’s death
or the income tax laws of any municipality, state or foreign country in which the participant’s income may be taxable.
Transferability
– Unrestricted stock awarded under the 2017 Plan may be transferred by the recipient. Restricted stock, stock options,
stock appreciation rights and, prior to exercise, the shares issuable upon exercise of such awards granted under the 2017
Plan generally are not transferable except by will or the laws of descent and distribution.
Administration
-
The Board will initially administer the 2017 Plan. The Compensation Committee will recommend to the Board
the employees and non-employees who receive awards, the number of shares covered thereby, and, subject to the terms and limitations
expressly set forth in the 2017 Plan, the terms, conditions and other provisions of the grants. The Board intends to appoint
the Compensation Committee to administer the 2017 Plan at such time as the newly elected directors comprising the Compensation
Committee are prepared to administer the 2017 Plan.
Amendments
-
The Board may, at any time, suspend or terminate the 2017 Plan or revise or amend it in any respect whatsoever; provided,
however, that shareholder approval shall be required if and to the extent required by Exchange Act Rule 16b-3 or by any
comparable or successor exemption under which the Board believes it is appropriate for the 2017 Plan to qualify, or if and to
the extent the Board determines that such approval is appropriate for purposes of satisfying IRC §162(m), §422 or §409A
or any applicable rule or listing standard of any stock exchange, automated quotation system or similar organization. Nothing
in the 2017 Plan restricts the Compensation Committee’s ability to exercise its discretionary authority to administer the
2017 Plan, which discretion may be exercised without amendment to the 2017 Plan. No action may, without the consent of a participant,
reduce the participant’s rights under any outstanding award.
THE
BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADOPTION OF THE AKERS BIOSCIENCES, INC. 2017
EQUITY INCENTIVE PLAN.
FUTURE
SHAREHOLDER PROPOSALS
The Board has not yet determined the date
on which the next Annual Meeting of shareholders will be held. Shareholders may submit proposals on matters appropriate for shareholder
action at annual meetings in accordance with the rules and regulations adopted by the Securities and Exchange Commission. Any
proposal which an eligible shareholder desires to have included in our proxy statement and presented at the next Annual Meeting
of Shareholders will be included in our proxy statement and related proxy card if it is received by us a reasonable time before
we begin to print and send our proxy materials and if it complies with Securities and Exchange Commission rules regarding inclusion
of proposals in proxy statements. In order to avoid controversy as to the date on which we receive a proposal, it is suggested
that any shareholder who wishes to submit a proposal submit such proposal by certified mail, return receipt requested.
Other deadlines apply to the submission of
shareholder proposals for the next Annual Meeting that are not required to be included in our proxy statement under Securities
and Exchange Commission rules. With respect to these shareholder proposals for the next Annual Meeting, a shareholder’s
notice must be received by us a reasonable time before we begin to print and send our proxy materials. The form of proxy distributed
by the Board of Directors for such meeting will confer discretionary authority to vote on any such proposal not received by such
date. If any such proposal is received by such date, the proxy statement for the meeting will provide advice on the nature of
the matter and how we intend to exercise our discretion to vote on each such matter if it is presented at that meeting.
AVAILABILITY
OF ANNUAL REPORT ON FORM 10-K AND HOUSEHOLDING
A
copy of the Company’s Annual Report on Form 10-K as filed with the SEC is available upon written request and without charge
to shareholders by writing to the Company at 201 Grove Road, Thorofare, NJ 08086 or by calling telephone number (856) 848-8698.
In
certain cases, only one Proxy Statement may be delivered to multiple shareholders sharing an address unless the Company has received
contrary instructions from one or more of the shareholders at that address. The Company will undertake to deliver promptly upon
written or oral request a separate copy of the Proxy Statement, as applicable, to a shareholder at a shared address to which a
single copy of such documents was delivered. Such request should also be directed to Chief Executive Officer, Akers Biosciences,
Inc., at the address or telephone number indicated in the previous paragraph. In addition, shareholders sharing an address can
request delivery of a single copy of Proxy Statements if they are receiving multiple copies of Proxy Statements by directing such
request to the same mailing address.
OTHER
BUSINESS
We
have not received notice of and do not expect any matters to be presented for vote at the Annual Meeting, other than the proposals
described in this Proxy Statement. If you grant a proxy, the person named as proxy holder, John Gormally, or their nominees or
substitutes, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual
Meeting. If for any unforeseen reason, any of our nominees are not available as a candidate for director, the proxy holder will
vote your proxy for such other candidate or candidates nominated by our Board.
ADDITIONAL
INFORMATION
We
are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance
therewith, we file periodic reports, documents and other information with the SEC relating to our business, financial statements
and other matters. Such reports and other information may be inspected and are available for copying at the offices of the SEC,
100 F Street, N.E., Washington, D.C. 20549 or may be accessed at
www.sec.gov
. Information regarding the operation of the
public reference rooms may be obtained by calling the SEC at 1-800-SEC-0330. You are encouraged to review our Annual Report on
Form 10-K, together with any subsequent information we filed or will file with the SEC and other publicly available information.
*************
It
is important that the proxies be returned promptly and that your shares be represented. Stockholders are urged to mark, date,
execute and promptly return the accompanying proxy card.
July
24, 2017
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By
Order of the Board of Directors,
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/s/
Thomas J. Knox
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Thomas
J. Knox
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Chairman
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PROXY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AKERS
BIOSCIENCES, INC.
The
undersigned hereby appoints Akers Biosciences, Inc. as Proxy with full power of substitution to vote all the shares of common
stock which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders to be held on
August 7, 2017, at 4:00 P.M. EST at 50 South 16
th
Street, Suite 2710, Philadelphia, PA 19106, or at any postponement
or adjournment thereof, and upon any and all matters which may properly be brought before the Annual Meeting or any postponement
or adjournments thereof, hereby revoking all former proxies.
Election
of Directors
The
nominees for the Board of Directors are:
Raymond
F. Akers Jr., Phd
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John
J. Gormally
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Bill
J. White
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Richard
C. Tarbox III
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Christopher
C. Schreiber
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The
Board of Directors recommends a vote FOR Proposal No. 1, Proposal No. 2 and Proposal No. 3.
1.
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To
elect five (5) directors to hold office for a one year term or until each of their successors are elected and qualified (except
as marked to the contrary above).
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FOR
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AGAINST
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ABSTAINS
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WITHHOLDS
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Instruction:
To withhold authority to vote for any individual nominee(s), write the nominee(s) name on the spaces provided below:
2.
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To
ratify the appointment of Morison Cogen LLP as the independent registered public accounting firm of the Company.
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FOR
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AGAINST
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ABSTAINS
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[ ]
WITHHOLDS
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3.
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To
approve the adoption of the Akers Biosciences, Inc. 2017
Equity
Incentive Plan.
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FOR
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AGAINST
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ABSTAINS
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WITHHOLDS
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4.
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To
withhold the proxy’s discretionary vote on Your behalf with regards to any other matters that are properly presented
for a vote at the Annual Meeting, please mark the box below.
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[ ]
WITHHOLDS
This
Proxy, when properly executed, will be voted in the matter directed herein by the undersigned shareholder. If no direction is
made, this Proxy will be voted FOR each of the proposals.
Dated:
_____, 2017
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Signature
of Shareholder
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Signature
of Shareholder
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Please
date and sign exactly as your name(s) appears hereon. If the shares are registered in more than one name, each joint owner or
fiduciary should sign personally. When signing as executor, administrator, trustee or guardian give full titles. Only authorized
officers should sign for a corporation.
Appendix
A
AKERS
BIOSCIENCES, INC.
2017
EQUITY INCENTIVE PLAN
SECTION
1.
GENERAL PURPOSE OF THE PLAN: DEFINITIONS
The
name of the plan is the AKERS BIOSCIENCES, INC. 2017 EQUITY INCENTIVE PLAN (the “Plan”). The purpose of the Plan is
to encourage and enable the officers, employees, directors, Consultants (as defined below) and other key persons of AKERS BIOSCIENCES,
INC., a New Jersey corporation (including any successor entity, the “Company”) and its Subsidiaries (as defined below),
upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business, to acquire
a proprietary interest in the Company.
The
following terms have the definitions set forth below:
“Affiliate”
of any Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with the first mentioned Person. A Person shall be deemed to control another Person if such first Person
possesses directly or indirectly the power to direct, or cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, by contract or otherwise.
“Award”
or
“Awards,”
except where referring to a particular category of grant under the Plan, shall include Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights (“SAR”), Restricted Stock Awards (including
preferred stock), Unrestricted Stock Awards, Restricted Stock Units or any combination of the foregoing.
“Award
Agreement”
means a written or electronic agreement setting forth the terms and provisions applicable to an Award granted
under the Plan. Each Award Agreement may contain terms and conditions in addition to those set forth in the Plan; provided, however,
in the event of any conflict in the terms of the Plan and the Award Agreement, the terms of the Plan shall govern.
“Board”
means the Board of Directors of the Company.
“Cause”
has the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not contain a definition
of “Cause,” it shall mean (i) the grantee’s dishonest statements or acts with respect to the Company or any
Affiliate of the Company, or any current or prospective customers, suppliers vendors or other third parties with which such entity
does business; (ii) the grantee’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty
or fraud; (iii) the grantee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction
of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the grantee by
the Company; (iv) the grantee’s gross negligence, willful misconduct or insubordination with respect to the Company or any
Affiliate of the Company; or (v) the grantee’s material violation of any provision of any agreement(s) between the grantee
and the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions.
“Chief
Executive Officer”
means the Chief Executive Officer of the Company or, if there is no Chief Executive Officer, then
the President of the Company.
“Code”
means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
“Committee”
means the Committee of the Board referred to in Section 2.
“Consultant”
means any entity or natural person that provides bona fide services to the Company (including a Subsidiary), and such services
are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.
“Disability”
means “disability” as defined in Section 422(c) of the Code.
“Effective
Date”
means the date on which the Plan is adopted as set forth in this Plan.
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Fair
Market Value”
of the Stock on any given date means the fair market value of the Stock determined in good faith by the
Committee based on the reasonable application of a reasonable valuation method that is consistent with Section 409A of the Code.
If the Stock is admitted to trade on a national securities exchange, the determination shall be made by reference to the closing
price reported on such exchange. If there is no closing price for such date, the determination shall be made by reference to the
last date preceding such date for which there is a closing price. If the date for which Fair Market Value is determined is the
first day when trading prices for the Stock are reported on a national securities exchange, the Fair Market Value shall be the
“Price to the Public” (or equivalent).
“Good
Reason”
shall have the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not
contain a definition of “Good Reason,” it shall mean (i) a material diminution in the grantee’s base salary
except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees of the
Company or (ii) a change of more than 100 miles in the geographic location at which the grantee provides services to the Company,
so long as the grantee provides at least 90 days’ notice to the Company following the initial occurrence of any such event
and the Company fails to cure such event within 30 days thereafter.
“Grant
Date”
means the date that the Committee designates in its approval of an Award in accordance with applicable law as
the date on which the Award is granted, which date may not precede the date of such Committee approval.
“Holder”
means, with respect to an Award or any Shares, the Person holding such Award or Shares, including the initial recipient of
the Award.
“Incentive
Stock Option”
means any Stock Option designated and qualified as an “incentive stock option” as defined
in Section 422 of the Code.
“Non-Qualified
Stock Option”
means any Stock Option that is not an Incentive Stock Option.
“Option”
or
“Stock Option”
means any option to purchase shares of Stock granted pursuant to Section 5.
“Person”
shall mean any individual, corporation, partnership (limited or general), limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization or any similar entity.
“Restricted
Stock Award”
means Awards granted pursuant to Section 7 and “Restricted Stock” means Shares issued pursuant
to such Awards.
“Restricted
Stock Unit”
means an Award of phantom stock units to a grantee, which may be settled in cash or Shares as determined
by the Committee, pursuant to Section 8.
“Sale
Event”
means the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or substantially
all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation
pursuant to which the holders of the Company’s outstanding voting power immediately prior to such transaction do not own
a majority of the outstanding voting power of the surviving or resulting entity (or its ultimate parent, if applicable), (iv)
the acquisition of all or a majority of the outstanding voting stock of the Company in a single transaction or a series of related
transactions by a Person or group of Persons, or (v) any other acquisition of the business of the Company, as determined by the
Board; provided, however, that any capital raising event, or a merger effected solely to change the Company’s domicile shall
not constitute a “Sale Event.”
“Section
409A”
means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
“Securities
Act”
means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Service
Relationship”
means any relationship as a full-time employee, part-time employee, director or other key person (including
Consultants) of the Company or any Subsidiary or any successor entity (e.g., a Service Relationship shall be deemed to continue
without interruption in the event an individual’s status changes from full-time employee to part-time employee or Consultant).
“Shares”
means shares of Stock.
“Stock”
means the Common Stock, having no par value, of the Company.
“Stock
Appreciation Right” means any right to receive from the Company upon exercise by an optionee or settlement, in cash, Shares,
or a combination thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise or settlement over (ii)
the exercise price of the right on the date of grant, or if granted in connection with an Option, on the date of grant of the
Option.
“Subsidiary”
means any corporation or other entity (other than the Company) in which the Company has more than a 50 percent interest, either
directly or indirectly.
“Ten
Percent Owner”
means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent of the Company
or any Subsidiary.
“Termination
Event”
means the termination of the Award recipient’s Service Relationship with the Company and its Subsidiaries
for any reason whatsoever, regardless of the circumstances thereof, and including, without limitation, upon death, disability,
retirement, discharge or resignation for any reason, whether voluntarily or involuntarily. The following shall not constitute
a Termination Event: (i) a transfer to the service of the Company from a Subsidiary or from the Company to a Subsidiary, or from
one Subsidiary to another Subsidiary or (ii) an approved leave of absence for military service or sickness, or for any other purpose
approved by the Committee, if the individual’s right to re-employment is guaranteed either by a statute or by contract or
under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing.
“Unrestricted
Stock Award”
means any Award granted pursuant to Section 7 and “Unrestricted Stock” means Shares issued
pursuant to such Awards.
SECTION
2.
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ADMINISTRATION
OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
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(a)
Administration
of Plan
. The Plan shall be administered by the Board, or at the discretion of the Board, by a committee of the Board, comprised
of not less than two directors. All references herein to the “Committee” shall be deemed to refer to the group then
responsible for administration of the Plan at the relevant time (i.e., either the Board or a committee or committees of the Board,
as applicable).
(b)
Powers
of Committee
. The Committee shall have the power and authority to grant Awards consistent with the terms of the Plan, including
the power and authority:
(i) to
select the individuals to whom Awards may from time to time be granted;
(ii) to
determine the time or times of grant, and the amount, if any, of Incentive Stock Options, Non-Qualified Stock Options, SARs, Restricted
Stock Awards, Unrestricted Stock Awards, Restricted Stock Units, or any combination of the foregoing, granted to any one or more
grantees;
(iii) to
determine the number and types of Shares to be covered by any Award and, subject to the provisions of the Plan, the price, exercise
price, conversion ratio or other price relating thereto;
(iv) to
determine and, subject to Section 13, to modify from time to time the terms and conditions, including restrictions, not
inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees,
and to approve the form of Award Agreements;
(v) to
accelerate at any time the exercisability or vesting of all or any portion of any Award;
(vi) to
impose any limitations on Awards, including limitations on transfers, repurchase provisions and the like, and to exercise repurchase
rights or obligations;
(vii) subject
to Section 5(a)(ii) and any restrictions imposed by Section 409A, to extend at any time the period in which Stock Options may
be exercised; and
(viii) at
any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including Award Agreements);
to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All
decisions and interpretations of the Committee shall be binding on all persons, including the Company and all Holders.
(c)
Award
Agreement
. Awards under the Plan may be evidenced by Award Agreements that set forth the terms, conditions and limitations
for each Award. In the event an Award is granted under the Plan absent an Award Agreement, the Award will be governed by the terms
and conditions of the Plan.
(d)
Indemnification
.
Neither the Board nor the Committee, nor any member of either or any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and
the Committee (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under the Company’s governing documents, including its certificate
of incorporation or bylaws, or any directors’ and officers’ liability insurance coverage which may be in effect from
time to time and/or any indemnification agreement between such individual and the Company.
(e)
Foreign
Award Recipients
. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries
in which the Company and any Subsidiary operate or have employees or other individuals eligible for Awards, the Committee, in
its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries, if any, shall be covered by the
Plan; (ii) determine which individuals, if any, outside the United States are eligible to participate in the Plan; (iii) modify
the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws;
(iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines
such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to the Plan as appendices);
provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section 3(a) hereof;
and (v) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain
approval or comply with any local governmental regulatory exemptions or approvals.
SECTION
3.
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STOCK
ISSUABLE UNDER THE PLAN; MERGERS AND OTHER TRANSACTIONS; SUBSTITUTION
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(a)
Stock
Issuable
. The maximum number of Shares reserved and available for issuance under the Plan shall be 1,350,000 Shares, subject
to adjustment as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited,
canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than
by exercise) shall be added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares
may be issued up to such maximum number pursuant to any type or types of Award, and no more than 250,000 Shares may be issued
pursuant to Incentive Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or
Shares reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, (i) Options
with respect to no more than 250,000 Shares shall be granted to any one individual in any calendar year period and (ii) no more
than 500,000 Shares shall be granted to any one individual in any calendar year period. The value of any Shares granted to a non-employee
director of the Company, when added to any annual cash payments or awards, shall not exceed an aggregate value of two hundred
fifty thousand dollars ($250,000) in any calendar year.
(b)
Changes
in Stock
. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding Shares
are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional
Shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to
such Shares or other securities, in each case, without the receipt of consideration by the Company, or, if, as a result of any
merger or consolidation, or sale of all or substantially all of the assets of the Company, the outstanding Shares are converted
into or exchanged for other securities of the Company or any successor entity (or a parent or subsidiary thereof), the Committee
may make an appropriate and proportionate adjustment in (i) the maximum number of Shares reserved for issuance under the Plan,
(ii) the number and kind of Shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase
price, if any, per Share subject to each outstanding Award, and (iv) the exercise price for each Share subject to any then outstanding
Stock Options under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number
of Stock Options) as to which such Stock Options remain exercisable. The Committee shall in any event make such adjustments as
may be required by the laws of New Jersey and the rules and regulations promulgated thereunder. The adjustment by the Committee
shall be final, binding and conclusive. No fractional Shares shall be issued under the Plan resulting from any such adjustment,
but the Committee in its discretion may make a cash payment in lieu of fractional shares.
(c)
Sale
Events
.
(i)
Options
.
(A) In
the case of and subject to the consummation of a Sale Event, the Plan and all outstanding Options and SARs issued hereunder shall
become one hundred percent (100%) vested upon the effective time of any such Sale Event. New stock options or other awards of
the successor entity or parent thereof shall be substituted therefor, with an equitable or proportionate adjustment as to the
number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree (after taking into account
any acceleration hereunder and/or pursuant to the terms of any Award Agreement).
(B) In
the event of the termination of the Plan and all outstanding Options and SARs issued hereunder, each Holder of Options shall be
permitted, within a period of time prior to the consummation of the Sale Event as specified by the Committee, to exercise all
such Options or SARs which are then exercisable or will become exercisable as of the effective time of the Sale Event; provided,
however, that the exercise of Options not exercisable prior to the Sale Event shall be subject to the consummation of the Sale
Event.
(C) Notwithstanding
anything to the contrary in Section 3(c)(i)(A), in the event of a Sale Event, the Company shall have the right, but not the obligation,
to make or provide for a cash payment to the Holders of Options, without any consent of the Holders, in exchange for the cancellation
thereof, in an amount equal to the difference between (A) the value as determined by the Committee of the consideration payable
per share of Stock pursuant to the Sale Event (the “Sale Price”) times the number of Shares subject to outstanding
Options being cancelled (to the extent then vested and exercisable, including by reason of acceleration in connection with such
Sale Event, at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding vested and
exercisable Options.
(ii)
Restricted
Stock and Restricted Stock Unit Awards
.
(A) In
the case of and subject to the consummation of a Sale Event, all unvested Restricted Stock and unvested Restricted Stock Unit
Awards issued hereunder shall become one hundred percent (100%) vested, with an equitable or proportionate adjustment as to the
number and kind of shares subject to such awards as such parties shall agree (after taking into account any acceleration hereunder
and/or pursuant to the terms of any Award Agreement).
(B) Such
Restricted Stock shall be repurchased from the Holder thereof at the then Fair Market Value of such shares, (subject to adjustment
as provided in Section 3(b)) for such Shares.
(C) Notwithstanding
anything to the contrary in Section 3(c)(ii)(A), in the event of a Sale Event, the Company shall have the right, but not the obligation,
to make or provide for a cash payment to the Holders of Restricted Stock or Restricted Stock Unit Awards, without consent of the
Holders, in exchange for the cancellation thereof, in an amount equal to the Sale Price times the number of Shares subject to
such Awards, to be paid at the time of such Sale Event or upon the later vesting of such Awards.
SECTION
4.
ELIGIBILITY
Grantees
under the Plan will be such full or part-time officers and other employees, directors, Consultants and key persons of the Company
and any Subsidiary who are selected from time to time by the Committee in its sole discretion; provided, however, that Awards
shall be granted only to those individuals described in Rule 701(c) of the Securities Act.
SECTION
5.
STOCK OPTIONS
Upon
the grant of a Stock Option, the Company and the grantee shall enter into an Award Agreement. The terms and conditions of each
such Award Agreement shall be determined by the Committee, and such terms and conditions may differ among individual Awards and
grantees. In the event a Stock Option is granted under the Plan absent an Award Agreement, the Stock Option will be governed by
the terms and conditions of the Plan.
Stock
Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may
be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning
of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed
a Non-Qualified Stock Option.
(a)
Terms
of Stock Options
. The Committee in its discretion may grant Stock Options to those individuals who meet the eligibility requirements
of Section 4. Stock Options shall be subject to the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(i)
Exercise
Price
. The exercise price per share for the Shares covered by a Stock Option shall be determined by the Committee at the time
of grant but shall not be less than 100 percent of the Fair Market Value on the Grant Date. In the case of an Incentive Stock
Option that is granted to a Ten Percent Owner, the exercise price per share for the Shares covered by such Incentive Stock Option
shall not be less than 110 percent of the Fair Market Value on the Grant Date.
(ii)
Option
Term
. The term of each Stock Option shall be fixed by the Committee, but no Stock Option shall be exercisable more than ten
years from the Grant Date. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock
Option shall be no more than five years from the Grant Date.
(iii)
Exercisability;
Rights of a Stockholder
. Stock Options shall become exercisable and/or vested at such time or times, whether or not in installments,
as shall be determined by the Committee at or after the Grant Date. The Award Agreement may permit a grantee to exercise all or
a portion of a Stock Option immediately at grant; provided that the Shares issued upon such exercise shall be subject to restrictions
and a vesting schedule identical to the vesting schedule of the related Stock Option, such Shares shall be deemed to be Restricted
Stock for purposes of the Plan, and the optionee may be required to enter into an additional or new Award Agreement as a condition
to exercise of such Stock Option. An optionee shall have the rights of a stockholder only as to Shares acquired upon the exercise
of a Stock Option and not as to unexercised Stock Options. An optionee shall not be deemed to have acquired any Shares unless
and until a Stock Option shall have been exercised pursuant to the terms of the Award Agreement and this Plan and the optionee’s
name has been entered on the books of the Company as a stockholder.
(iv)
Method
of Exercise
. Stock Options may be exercised by an optionee in whole or in part, by the optionee giving written or electronic
notice of exercise to the Company, specifying the number of Shares to be purchased. Payment of the purchase price may be made
by one or more of the following methods (or any combination thereof) to the extent provided in the Award Agreement:
(A) In
cash, by certified or bank check, by wire transfer of immediately available funds, or other instrument acceptable to the Committee;
(B) If
permitted by the Committee, by the optionee delivering to the Company a promissory note, if the Board has expressly authorized
the loan of funds to the optionee for the purpose of enabling or assisting the optionee to effect the exercise of his or her Stock
Option; provided, that at least so much of the exercise price as represents the par value of the Stock shall be paid in cash if
required by state law;
(C) If
permitted by the Committee, through the delivery (or attestation to the ownership) of Shares that have been purchased by the optionee
on the open market or that are beneficially owned by the optionee and are not then subject to restrictions under any Company plan.
To the extent required to avoid variable accounting treatment under applicable accounting rules, such surrendered Shares if originally
purchased from the Company shall have been owned by the optionee for at least six months. Such surrendered Shares shall be valued
at Fair Market Value on the exercise date;
(D) If
permitted by the Committee and by the optionee delivering to the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase
price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe
as a condition of such payment procedure; or
(E) If
permitted by the Committee, and only with respect to Stock Options that are not Incentive Stock Options, by a “net exercise”
arrangement pursuant to which the Company will reduce the number of Shares issuable upon exercise by the largest whole number
of Shares with a Fair Market Value that does not exceed the aggregate exercise price.
Payment
instruments will be received subject to collection. No certificates for Shares so purchased will be issued to the optionee or,
with respect to uncertificated Stock, no transfer to the optionee on the records of the Company will take place, until the Company
has completed all steps it has deemed necessary to satisfy legal requirements relating to the issuance and sale of the Shares,
which steps may include, without limitation, (i) receipt of a representation from the optionee at the time of exercise of the
Option that the optionee is purchasing the Shares for the optionee’s own account and not with a view to any sale or distribution
of the Shares or other representations relating to compliance with applicable law governing the issuance of securities, (ii) the
legending of the certificate (or notation on any book entry) representing the Shares to evidence the foregoing restrictions, and
(iii) obtaining from optionee payment or provision for all withholding taxes due as a result of the exercise of the Option. The
delivery of certificates representing the shares of Stock (or the transfer to the optionee on the records of the Company with
respect to uncertificated Stock) to be purchased pursuant to the exercise of a Stock Option will be contingent upon (A) receipt
from the optionee (or a purchaser acting in his or her stead in accordance with the provisions of the Stock Option) by the Company
of the full purchase price for such Shares and the fulfillment of any other requirements contained in the Award Agreement or applicable
provisions of laws and (B) if required by the Company, the optionee shall have entered into any stockholders agreements or other
agreements with the Company and/or certain other of the Company’s stockholders relating to the Stock. In the event an optionee
chooses to pay the purchase price by previously-owned Shares through the attestation method, the number of Shares transferred
to the optionee upon the exercise of the Stock Option shall be net of the number of Shares attested to by the optionee.
(b)
Annual
Limit on Incentive Stock Options
. To the extent required for “incentive stock option” treatment under Section
422 of the Code, the aggregate Fair Market Value (determined as of the Grant Date) of the Shares with respect to which Incentive
Stock Options granted under the Plan and any other plan of the Company or its parent and any Subsidiary that become exercisable
for the first time by an optionee during any calendar year shall not exceed $100,000 or such other limit as may be in effect from
time to time under Section 422 of the Code. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified
Stock Option.
(c)
Termination
.
Any portion of a Stock Option that is not vested and exercisable on the date of termination of an optionee’s Service Relationship
shall immediately expire and be null and void. Once any portion of the Stock Option becomes vested and exercisable, the optionee’s
right to exercise such portion of the Stock Option (or the optionee’s representatives and legatees as applicable) in the
event of a termination of the optionee’s Service Relationship shall continue until the earliest of: (i) the date which is:
(A) 12 months following the date on which the optionee’s Service Relationship terminates due to death or Disability (or
such longer period of time as determined by the Committee and set forth in the applicable Award Agreement), or (B) three months
following the date on which the optionee’s Service Relationship terminates if the termination is due to any reason other
than death or Disability (or such longer period of time as determined by the Committee and set forth in the applicable Award Agreement),
or (ii) the Expiration Date set forth in the Award Agreement; provided that notwithstanding the foregoing, an Award Agreement
may provide that if the optionee’s Service Relationship is terminated for Cause, the Stock Option shall terminate immediately
and be null and void upon the date of the optionee’s termination and shall not thereafter be exercisable.
SECTION
6.
STOCK APPRECIATION RIGHTS
.
The
Committee is authorized to grant SARs to optionees with the following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine.
(a) SARs
may be granted under the Plan to optionees either alone or in addition to other Awards granted under the Plan and may, but need
not, relate to specific Option granted under Section 5.
(b) The
exercise price per Share under a SAR shall be determined by the Committee, provided, however, that except in the case of a substitute
Award, such exercise price shall not be less than the fair market value of a Share on the date of grant of such SAR.
(c) The
term of each SAR shall be fixed by the Committee but shall not exceed 10 years from the date of grant of such SAR.
(d) The
Committee shall determine the time or times at which a SAR may be exercised or settled in whole or in part. Unless otherwise determined
by the Committee or unless otherwise set forth in an Award Agreement, the provisions set forth in Section 5 above with respect
to exercise of an Award following termination of service shall apply to any SAR. The Committee may specify in an Award Agreement
that an “in-the-money” SAR shall be automatically exercised on its expiration date.
SECTION
7.
RESTRICTED STOCK AWARDS
(a)
Nature
of Restricted Stock Awards
. The Committee may, in its sole discretion, grant (or sell at a purchase price determined by the
Committee) to an eligible individual under Section 4 hereof a Restricted Stock Award under the Plan. The Committee shall determine
the restrictions and conditions applicable to each Restricted Stock Award at the time of grant. Conditions may be based on the
type of stock upon which restrictions are placed, continuing employment (or other Service Relationship), achievement of pre-established
performance goals and objectives and/or such other criteria as the Committee may determine. Upon the grant of a Restricted Stock
Award, the Company and the grantee shall enter into an Award Agreement. The terms and conditions of each such Award Agreement
shall be determined by the Committee, and such terms and conditions may differ among individual Awards and grantees.
(b)
Rights
as a Stockholder
. Upon the grant of the Restricted Stock Award and payment of any applicable purchase price, a grantee of
Restricted Stock shall be considered the record owner of and shall be entitled to vote the Restricted Stock if, and to the extent,
such Shares are entitled to voting rights, subject to such conditions contained in the Award Agreement. The grantee shall be entitled
to receive all dividends and any other distributions declared on the Shares; provided, however, that the Company is under no duty
to declare any such dividends or to make any such distribution. Unless the Committee shall otherwise determine, certificates evidencing
the Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in subsection
(d) below of this Section, and the grantee shall be required, as a condition of the grant, to deliver to the Company a stock power
endorsed in blank and such other instruments of transfer as the Committee may prescribe.
(c)
Restrictions
.
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically
provided herein or in the Award Agreement. Except as may otherwise be provided by the Committee either in the Award Agreement
or, subject to Section 10 below, in writing after the Award Agreement is issued, if a grantee’s Service Relationship with
the Company and any Subsidiary terminates, the Company or its assigns shall have the right, as may be specified in the relevant
instrument, to repurchase some or all of the Shares subject to the Award at such purchase price as is set forth in the Award Agreement.
(d)
Vesting
of Restricted Stock
. The Committee at the time of grant shall specify in the Award Agreement the date or dates and/or the
attainment of pre-established performance goals, objectives and other conditions on which the substantial risk of forfeiture imposed
shall lapse and the Restricted Stock shall become vested, subject to such further rights of the Company or its assigns as may
be specified in the Award Agreement.
SECTION
8.
UNRESTRICTED STOCK AWARDS
The
Committee may, in its sole discretion, grant (or sell at a purchase price determined by the Committee) to an eligible person under
Section 4 hereof an Unrestricted Stock Award under the Plan. Unrestricted Stock Awards may be granted in respect of past services
or other valid consideration, or in lieu of cash compensation due to such grantee.
SECTION
9.
RESTRICTED STOCK UNITS
(a)
Nature
of Restricted Stock Units
. The Committee may, in its sole discretion, grant to an eligible person under Section 4 hereof Restricted
Stock Units under the Plan. The Committee shall determine the restrictions and conditions applicable to each Restricted Stock
Unit at the time of grant. Vesting conditions may be based on continuing employment (or other Service Relationship), achievement
of pre-established performance goals and objectives which may be based on targets for revenue, revenue growth, EBITDA, net income,
earnings per share and/or other such criteria as the Committee may determine. Upon the grant of Restricted Stock Units, the grantee
and the Company shall enter into an Award Agreement. The terms and conditions of each such Award Agreement shall be determined
by the Committee and may differ among individual Awards and grantees. On or promptly following the vesting date or dates applicable
to any Restricted Stock Unit, but in no event later than March 15 of the year following the year in which such vesting occurs,
such Restricted Stock Unit(s) shall be settled in the form of cash or shares of Stock, as specified in the Award Agreement. Restricted
Stock Units may not be sold, assigned, transferred, pledged, or otherwise encumbered or disposed of.
(b)
Rights
as a Stockholder
. A grantee shall have the rights of a stockholder only as to Shares, if any, acquired upon settlement of
Restricted Stock Units. A grantee shall not be deemed to have acquired any such Shares unless and until the Restricted Stock Units
shall have been settled in Shares pursuant to the terms of the Plan and the Award Agreement, the Company shall have issued and
delivered a certificate representing the Shares to the grantee (or transferred on the records of the Company with respect to uncertificated
stock), and the grantee’s name has been entered in the books of the Company as a stockholder.
(c)
Termination
.
Except as may otherwise be provided by the Committee either in the Award Agreement or in writing after the Award Agreement is
issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantee’s
cessation of Service Relationship with the Company and any Subsidiary for any reason.
SECTION
10.
CERTAIN TRANSFER RESTRICTIONS
Restricted
Stock awards granted under Section 7, Stock Options, SARs and, prior to exercise, the Shares issuable upon exercise of such Stock
Options, shall not be transferable by the optionee otherwise than by will, or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee, or by the optionee’s
legal representative or guardian in the event of the optionee’s incapacity. Notwithstanding the foregoing, the Committee,
in its sole discretion, may provide in the Award Agreement regarding a given Stock Option or Restricted Stock award that the optionee
may transfer by gift, without consideration for the transfer, his or her Non-Qualified Stock Options to his or her family members
(as defined in Rule 701 of the Securities Act), to trusts for the benefit of such family members, or to partnerships in which
such family members are the only partners (to the extent such trusts or partnerships are considered “family members”
for purposes of Rule 701 of the Securities Act), provided that the transferee agrees in writing with the Company to be bound by
all of the terms and conditions of this Plan and the applicable Award Agreement, including the execution of a stock power upon
the issuance of Shares. Stock Options, SARs and the Shares issuable upon exercise of such Stock Options, shall be restricted as
to any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” (as defined
in the Exchange Act) or any “call equivalent position” (as defined in the Exchange Act) prior to exercise.
SECTION
11.
TAX WITHHOLDING
(a)
Payment
by Grantee
. Each grantee shall, no later than the date as of which the value of an Award or of any Shares or other amounts
received thereunder first becomes includable in the gross income of the grantee for income tax purposes, pay to the Company, or
make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required
by law to be withheld by the Company with respect to such income. The Company and any Subsidiary shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s
obligation to deliver stock certificates (or evidence of book entry) to any grantee is subject to and conditioned on any such
tax withholding obligations being satisfied by the grantee.
(b)
Payment
in Stock
. The Company’s minimum required tax withholding obligation may be satisfied, in whole or in part, by the Company
withholding from Shares to be issued pursuant to an Award a number of Shares having an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the minimum withholding amount due.
SECTION
12.
SECTION 409A AWARDS
.
To
the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section
409A (a “409A Award”), the Award shall be subject to such additional rules and requirements as may be specified by
the Committee from time to time. In this regard, if any amount under a 409A Award is payable upon a “separation from service”
(within the meaning of Section 409A) to a grantee who is considered a “specified employee” (within the meaning of
Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the
grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to
prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. The Company
makes no representation or warranty and shall have no liability to any grantee under the Plan or any other Person with respect
to any penalties or taxes under Section 409A that are, or may be, imposed with respect to any Award.
SECTION
13.
AMENDMENTS AND TERMINATION
The
Board may, at any time, amend or discontinue the Plan and the Committee may, at any time, amend or cancel any outstanding Award
for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the consent of the holder of the Award. The Committee may exercise its discretion to reduce
the exercise price of outstanding Stock Options or effect repricing through cancellation of outstanding Stock Options and by granting
such holders new Awards in replacement of the cancelled Stock Options. To the extent determined by the Committee to be required
either by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code or
otherwise, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders.
Nothing in this Section 13 shall limit the Board’s or Committee’s authority to take any action permitted pursuant
to Section 3(c). The Board reserves the right to amend the Plan and/or the terms of any outstanding Stock Options to the extent
reasonably necessary to comply with the requirements of the exemption pursuant to Rule 12h-1 of the Exchange Act.
SECTION
14.
STATUS OF PLAN
With
respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received
by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Committee shall
otherwise expressly so determine in connection with any Award.
SECTION
15.
GENERAL PROVISIONS
(a)
No
Distribution; Compliance with Legal Requirements
. The Committee may require each person acquiring Shares pursuant to an Award
to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution
thereof. No Shares shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange
or similar requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends
on certificates for Stock and Awards, as it deems appropriate.
(b)
Delivery
of Stock Certificates
. Stock certificates to grantees under the Plan shall be deemed delivered for all purposes when the Company
or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee,
at the grantee’s last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all purposes
when the Company or a stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt)
or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice
of issuance and recorded the issuance in its records (which may include electronic “book entry” records).
(c)
No
Employment Rights
. The adoption of the Plan and the grant of Awards do not confer upon any Person any right to continued employment
or Service Relationship with the Company or any Subsidiary.
(d)
Trading
Policy Restrictions
. Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading
policy-related restrictions, terms and conditions as may be established by the Committee, or in accordance with policies set by
the Committee, from time to time.
(e)
Designation
of Beneficiary
. Each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to
exercise any Award on or after the grantee’s death or receive any payment under any Award payable on or after the grantee’s
death. Any such designation shall be on a form provided for that purpose by the Committee and shall not be effective until received
by the Committee. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased
the grantee, the beneficiary shall be the grantee’s estate.
(f)
Legend
.
Any certificate(s) representing the Shares shall carry substantially the following legend (and with respect to uncertificated
Stock, the book entries evidencing such shares shall contain the following notation):
The
transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions
including repurchase and restrictions against transfers contained in the Plan and any agreements entered into thereunder by and
between the company and the holder of this certificate (a copy of which is available at the offices of the company for examination).
(g)
Information
to Holders of Options
. In the event the Company is relying on the exemption from the registration requirements of Section
12(g) of the Exchange Act contained in paragraph (f)(1) of Rule 12h-1 of the Exchange Act, the Company shall provide the information
described in Rule 701(e)(3), (4) and (5) of the Securities Act to all holders of Options in accordance with the requirements thereunder.
The foregoing notwithstanding, the Company shall not be required to provide such information unless the option holder has agreed
in writing, on a form prescribed by the Company, to keep such information confidential.
SECTION
16.
EFFECTIVE DATE OF PLAN
The Plan shall become
effective upon adoption by the Board and approval by stockholders in accordance with applicable state law and the Company’s
certificate of incorporation and bylaws.
SECTION
17.
GOVERNING LAW
This
Plan, all Awards and any controversy arising out of or relating to this Plan and all Awards shall be governed by and construed
in accordance with the laws of the State of New Jersey as to matters within the scope thereof, without regard to conflict of law
principles that would result in the application of any law other than the law of the State of New Jersey.
DATE
ADOPTED BY THE BOARD OF DIRECTORS SUBJECT TO SHAREHOLDER APPROVAL: July 12, 2017.
DATE
ADOPTED BY THE SHAREHOLDERS: ____________________.
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