UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
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Proxy Statement Pursuant to
Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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QUANTUM COMPUTING
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):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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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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Form, Schedule or Registration Statement No.:
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Date Filed:
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Table of
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QUANTUM COMPUTING
INC.
September 28, 2021
Dear Fellow Quantum Computing Stockholders:
We invite you to attend the 2021 Annual Meeting of Stockholders of
Quantum Computing Inc. to be held at the Quantum Computing
corporate offices located at 215 Depot Court SE, Suite 215,
Leesburg, VA 20175 on November 12, 2021, at 10:00 a.m. local
time.
The Notice of the Annual Meeting and Proxy Statement accompanying
this letter provide information concerning matters to be considered
and acted upon at the meeting. Immediately following the meeting, a
report on our operations will be presented, including a
question-and-answer and discussion
period. Our 2020 results are presented in detail in our Annual
Report.
Your
vote is very important. We encourage
you to read all of the important information in the Proxy Statement
and vote your shares as soon as possible. Whether or not you plan
to attend, you can be sure your shares are represented at the
Annual Meeting by promptly submitting your vote by the Internet, by
telephone or, if you request a paper copy of the proxy materials
and receive a proxy card, by mail.
On behalf of the Board of Directors, thank you for your continued
confidence and investment in Quantum Computing.
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Sincerely,
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/s/ Robert Liscouski
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Robert Liscouski
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Chairman of the Board of
Directors
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QUANTUM COMPUTING
INC.
215
Depot Court SE, Suite 215
Leesburg, VA 20175
Telephone: (703) 436-2161
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
to
be held on Friday,
November
12, 2021
To the Stockholders of Quantum Computing Inc.:
The 2021 Annual Meeting of the Stockholders (the “Annual Meeting”)
of Quantum Computing Inc. a Delaware corporation (together with its
subsidiaries, “Company”, “Quantum Computing”, “we”, “us” or “our”),
will be held on Friday, November 12, 2021, at 10:00 a.m. local time
at the Company’s offices at 215 Depot Court SE, Suite 215,
Leesburg, VA 20175. The purpose of the meeting is to consider and
act upon the following matters:
1. To elect five directors to
serve until the next annual meeting of stockholders and until their
respective successors shall have been duly elected and qualified
(Proposal No. 1);
2. To approve an amendment to
the Company’s 2019 Equity and Incentive Plan (the “2019 Plan”) to
increase the maximum number of shares of the Company’s common stock
available for issuance under the 2019 Plan from 1,500,000 shares to
3,000,000 shares (Proposal No. 2);
3. To approve, on a
non-binding advisory basis, the
compensation of the Company’s named executive officers as disclosed
in the accompanying Proxy Statement (Proposal No. 3);
4. To recommend, on a
non-binding advisory basis, the
frequency of future advisory votes on the compensation of the
Company’s named executive officers (Proposal No. 4);
5. To ratify the selection of BF
Borgers CPA PC as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2021
(Proposal No. 5); and
6. To transact such other
business as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
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 the Company’s common stock, par
value $0.0001 per share (the “Common Stock”), at the close of
business on September 20, 2021 (the “Record Date”) will be entitled
to notice of, and to vote at, the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual
Meeting. We are providing proxy material access to our stockholders
via the Internet at www.proxyvote.com.
Please give the proxy materials your careful attention.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert
Liscouski
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Robert Liscouski
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Chief Executive Officer and Chairman of the
Board of Directors
Leesburg, VA
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September 28, 2021
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Table of
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IMPORTANT NOTICE REGARDING
THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON NOVEMBER
12, 2021
The Notice and Proxy Statement and Annual Report on Form
10-K are available at www.proxyvote.com.
Your vote is important. We encourage you to review all of the
important information contained in the proxy materials before
voting.
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QUANTUM COMPUTING INC.
215 Depot Court SE, Suite 215
Leesburg, VA 20175
Telephone: (703) 436-2161
PROXY STATEMENT
ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON NOVEMBER
12, 2021
GENERAL INFORMATION ABOUT THE
PROXY
STATEMENT AND ANNUAL MEETING
General
The enclosed proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the “Board”) of
Quantum Computing Inc. (the “Company,” “we” or “us”), for use at
the 2021 Annual Meeting of the Company’s shareholders (the “Annual
Meeting”) to be held at 215 Depot Court SE, Suite 215, Leesburg, VA
20175, on November 12, 2021, at 10:00 a.m. local time, and at any
adjournment or postponement thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders.
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 contained in this Proxy
Statement. Whether or not you expect to attend the meeting in
person, please vote your shares as promptly as possible to ensure
that your vote is counted. It is contemplated that this Proxy
Statement and the accompanying form of Proxy will first be mailed
to the Company’s shareholders on or about October 1, 2021.
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
Chief Executive Officer of the Company, at its principal executive
offices located at 215 Depot Court SE, Suite 215, Leesburg, VA
20175, a written notice of revocation or a duly-executed Proxy bearing a later date or by
attending the Annual Meeting and voting in person.
Solicitation of
Proxies
The Company will solicit stockholders 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.
Record Date
Shareholders of record at the close of business on September 20,
2021 (the “Record Date”), will be entitled to receive notice of,
attend and vote at the meeting.
Voting Securities
As of September 20, 2021, there were 29,156,815 shares of Common
Stock issued and outstanding, which constitutes all of the
outstanding capital stock of the Company entitled to vote.
Shareholders are entitled to one vote for each share of Common
Stock held by them.
The presence in person or by proxy of the holders of a majority in
interest of all stock issued and outstanding is necessary to
constitute a quorum at this meeting. In the absence of a quorum at
the meeting, the meeting may be postponed or adjourned from time to
time without notice, other than announcement at the meeting, until
a quorum is formed. The enclosed Proxy reflects the number of
shares that you are entitled to vote. For purposes of the quorum
and the discussion below regarding the vote necessary to take
shareholder action, shareholders of record who are present at the
Annual Meeting in person or by proxy and who abstain, including
broker non-votes (as described below),
and brokers holding customers’ shares of record who cause
abstentions to be recorded at the meeting, are considered
shareholders who are present for purposes of determining the
presence of a quorum.
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Why
am I being provided with these proxy materials?
We have delivered printed versions of these proxy materials to you
by mail in connection with the solicitation by our Board of proxies
for the matters to be voted on at our Annual Meeting and at any
adjournment or postponement thereof.
What
do I do if my shares are held in “street name”?
If your shares are held in a brokerage account or by a bank or
other holder of record, you are considered the “beneficial owner”
of shares held in “street name.” As the beneficial owner, you have
the right to direct your broker, bank or other holder of record on
how to vote your shares by following their instructions for voting.
Please refer to information from your bank, broker or other nominee
on how to submit your voting instructions.
What
if other matters come up at the Annual Meeting?
At the date this Proxy Statement went to press, we did not know of
any matters to be properly presented at the Annual Meeting other
than those referred to in this Proxy Statement. If other matters
are properly presented at the meeting or any adjournment or
postponement thereof for consideration, and you are a stockholder
of record and have submitted a proxy card, the persons named in
your proxy card will have the discretion to vote on those matters
for you.
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.proxyvote.com
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 to Broadridge
Financial Solutions, Inc. 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.
Voting Procedures and Vote
Required
Your
vote is important no matter how many shares you
own. Please take the time to vote.
Take a moment to read the instructions below. Choose the way to
vote that is easiest and most convenient for you, and cast your
vote as soon as possible.
If you are the “record holder” of your shares, meaning that you own
your shares in your own name and not through a bank, broker or
other nominee, you may vote in one of three ways:
• You may vote over the
Internet. You may vote your shares by
following the “Vote by Internet” instructions on the accompanying
proxy card. If you vote over the Internet, you do not need to vote
by telephone or complete and mail your proxy card.
• You may vote in
Person. You may vote your shares in
person if you attend the Annual Meeting.
• You may vote by
mail. If you requested a proxy card
by mail, you may vote by completing, dating and signing the proxy
card delivered and promptly mailing it in the postage-paid envelope provided. If you vote by mail, you
do not need to vote over the Internet or by telephone.
Uninstructed
Shares
All proxies that are executed or are otherwise submitted over the
Internet or by telephone will be voted on the matters set forth in
the accompanying Notice of Annual Meeting of Stockholders in
accordance with the instructions set forth herein. However, if no
choice is specified on a proxy as to one or more of the proposals,
the proxy will be voted in accordance with the Board of Directors’
recommendations on such proposals as set forth in this proxy
statement.
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Votes Required to Approve a
Proposal
The holders of a majority in interest of all stock issued,
outstanding and entitled to vote at a meeting, present in person or
represented by proxy will constitute a quorum for the transaction
of business at the Annual Meeting. Shares of common stock
represented in person or by proxy (including shares which abstain
or do not vote with respect to one or more of the matters presented
for stockholder approval) will be counted for purposes of
determining whether a quorum is present at the Annual Meeting. If a
quorum is not present, the meeting may be adjourned until a quorum
is obtained.
The following votes are required for approval of the proposals
being presented at the Annual Meeting:
Proposal No. 1: Election of
Directors. Votes may be cast: “FOR
ALL” nominees, “WITHHOLD ALL” nominees or “FOR ALL EXCEPT” those
nominees noted by you on the appropriate portion of your proxy or
voting instruction card. At the Meeting, five directors are to be
elected, which number shall constitute our entire Board, to hold
office until the next annual meeting of stockholders and until
their successors shall have been duly elected and qualified.
Pursuant to our bylaws, as amended, directors are to be elected by
a majority of the votes of the shares present in person or
represented by proxy at the Meeting and entitled to vote on the
election of directors. This means that the five candidates
receiving the highest number of affirmative votes at the Meeting
will be elected as directors. Proxies cannot be voted for a greater
number of persons than the number of nominees named or for persons
other than the named nominees. Withholding a vote from a director
nominee will not be voted with respect to the director nominee
indicated and will have no impact on the election of directors
although it will be counted for the purposes of determining whether
there is a quorum. Broker non-votes
will have no effect on the outcome of this proposal.
Proposal No. 2: To Approve an
Amendment to the 2019 Plan. Votes may
be cast: “FOR,” “AGAINST” or “ABSTAIN.” The affirmative vote of the
holders of shares of common stock representing a majority of the
shares of Common Stock cast at the meeting in person or by proxy is
required for the approval of the proposed amendment to the 2019
Plan to increase the number of shares of the Company’s common stock
available for issuance under the 2019 Plan from 1,500,000 shares to
3,000,000 shares. Abstentions and broker non-votes will have no effect on the outcome of this
proposal.
Proposal No. 3: To Approve
the Compensation of the Company’s Named Executive
Officers. Votes may be cast: “FOR,”
“AGAINST” or “ABSTAIN.” The affirmative vote of the holders of
shares of common stock representing a majority of the shares of
Common Stock cast at the meeting in person or by proxy is required
for the approval, on a non-binding
advisory basis, of the compensation of the Company’s named
executive officers as disclosed in the accompanying proxy
statement. Abstentions and broker non-votes will have no effect on the outcome of this
proposal.
Proposal No. 4: To Recommend
the Frequency of Future Advisory Votes on
Compensation. Votes may be cast: “1
YEAR,” “2 YEARS,” “3 YEARS” or “ABSTAIN.” The selection of the
three options presented receiving the highest number of votes for
such option will be the option recommended by stockholders, on a
non-binding advisory basis, for the
frequency of future advisory votes on the compensation of the
Company’s named executive officers. Abstentions and broker
non-votes will have no effect on the
outcome of this proposal.
Proposal No. 5: To Ratify the
Selection of BF Borgers CPA PC as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31,
2021. Votes may be cast: “for,”
“against” or “abstain.” the affirmative vote of the holders
of shares of common stock representing a majority of the shares of
Common Stock cast at the meeting in person or by proxy is required
for the ratification of the selection of BF Borgers CPA PC as our
independent registered public accounting firm for the current
fiscal year. Abstentions will have no effect on the outcome of this
proposal. There will be no broker non-votes with respect to this proposal.
Tabulation and Reporting of
Voting Results
Preliminary voting results will be announced at the Annual Meeting.
Final voting results will be tallied by the inspector of election
after the taking of the vote at the Annual Meeting. The Company
will publish the final voting results in a Current Report on Form
8-K filed with the U.S. Securities and
Exchange Commission (the “SEC”) within four business days following
the Annual Meeting.
This proxy statement, the accompanying proxy card and our 2020
annual report to stockholders were first made available to
stockholders on or about October 1, 2021.
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A copy of our Annual Report on Form 10-K for the year ended December 31, 2020 as filed
with the Securities and Exchange Commission, or SEC, except for
exhibits, will be furnished without charge to any stockholder upon
written or oral request to Quantum Computing Inc., 215 Depot Court
SE, Suite 215, Leesburg, VA 20175.
Proxy Materials Are Available
on the Internet
The Company uses the Internet as the primary means of furnishing
proxy materials to stockholders. We send a Notice of Internet
Availability of Proxy Materials (the “Notice of Internet
Availability” to our stockholders with instructions on how to
access the proxy materials online at www.proxyvote.com or
request a printed copy of materials.
Stockholders may follow the instructions in the Notice of Internet
Availability to elect to receive future proxy materials in print by
mail or electronically by email. We encourage stockholders to take
advantage of the availability of the proxy materials online to
reduce environmental impact and mailing costs.
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QUESTIONS AND ANSWERS ABOUT
THESE PROXY MATERIALS AND VOTING
Why
am I receiving these materials?
We have sent you these proxy materials because the Board is
soliciting your proxy to vote at the Annual Meeting of
Shareholders. According to our records, you were a shareholder of
the Company as of the end of business on September 20, 2021.
You are invited to attend the Annual Meeting to vote on the
proposals described in this Proxy Statement. However, you do not
need to attend the meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed proxy card.
The Company intends to mail these proxy materials on or about
October 1, 2021 to all shareholders of record on the Record Date
entitled to vote at the Annual Meeting.
What
is included in these materials?
These materials include this proxy statement for the Annual Meeting
and the proxy card.
What
is the proxy card?
The proxy card enables you to appoint Robert Liscouski, our Chief
Executive Officer, as your representative at the Annual Meeting. By
completing and returning a proxy card, you are authorizing Mr.
Liscouski to vote your shares at the Annual Meeting in accordance
with your instructions on the proxy card. This way, your shares
will be voted whether or not you attend the Annual Meeting.
When
and where is the Annual Meeting being held?
The Annual Meeting will be held on November 12, 2021, commencing at
10:00 a.m., local time, at 215 Depot Court SE, Suite 215, Leesburg,
VA 20175.
Can
I view these proxy materials over the Internet?
Yes. The Notice of Meeting, this Proxy Statement and accompanying
proxy card are available at www.proxyvote.com.
Who
can vote at the Annual Meeting?
Only shareholders of record at the close of business on September
20, 2021 will be entitled to vote at the Annual Meeting. On this
Record Date, there were 29,156,815 shares of Common Stock
outstanding and entitled to vote.
The Annual Meeting will begin promptly at 10:00 a.m., local time.
Check-in will begin one-half hour prior to the meeting. Please allow
ample time for the check-in
procedures.
Shareholder of Record:
Shares Registered in Your Name
If on September 20, 2021 your shares were registered directly in
your name with Quantum Computing’s transfer agent, Worldwide Stock
Transfer, LLC, then you are a shareholder of record. As a
shareholder of record, you may vote in person at the meeting or
vote by proxy. Whether or not you plan to attend the meeting, we
urge you to fill out and return the enclosed proxy.
Beneficial Owner: Shares
Registered in the Name of a Broker or Bank
If on September 20, 2021 your shares were held in an account at a
brokerage firm, bank, dealer, or other similar organization, rather
than in your name, then you are the beneficial owner of shares held
in “street name” and these proxy materials are being forwarded to
you by that organization. The organization holding your account is
considered to be the shareholder of record for purposes of voting
at the Annual Meeting. As a beneficial owner, you have the right to
direct your broker or other agent regarding how to vote the shares
in your account. You are also invited to attend the Annual Meeting.
However, since you are not the shareholder of record, you may not
vote your shares in person at the meeting unless you request and
obtain a valid proxy from your broker or other agent.
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What
am I voting on?
The following matters are scheduled for a vote:
1. To elect five directors to
serve until the next annual meeting of stockholders and until their
respective successors shall have been duly elected and qualified
(Proposal No. 1);
2. To approve an amendment to
the Company’s 2019 Equity and Incentive Plan (the “2019 Plan”) to
increase the maximum number of shares of the Company’s common stock
available for issuance under the 2019 Plan from 1,500,000 shares to
3,000,000 shares (Proposal No. 2);
3. To approve, on a
non-binding advisory basis, the
compensation of the Company’s named executive officers as disclosed
in the accompanying Proxy Statement (Proposal No. 3);
4. To recommend, on a
non-binding advisory basis, the
frequency of future advisory votes on the compensation of the
Company’s named executive officers (Proposal No. 4);
5. To ratify the selection of BF
Borgers CPA PC as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2021
(Proposal No. 5); and
6. To transact such other
business as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
The Board is not currently aware of any other business that will be
brought before the Annual Meeting.
How
do I vote?
You may vote “For” or “Against”
or abstain from voting. The procedures for voting are fairly
simple:
Shareholder of Record:
Shares Registered in Your Name
If you are a shareholder of record as of the Record Date, you may
vote in person at the Annual Meeting or vote by proxy using the
enclosed proxy card. Whether or not you plan to attend the meeting,
we urge you to vote by proxy to ensure your vote is counted. You
may still attend the meeting and vote in person even if you have
already voted by proxy.
• To
vote in person, come to the Annual Meeting and we will give you a
ballot when you arrive. You should be prepared to present photo
identification for admittance. A list of shareholders eligible to
vote at the Annual Meeting will be available for inspection at the
Annual Meeting and for a period of ten days prior to the Annual
Meeting during regular business hours at our principal executive
offices, which are located at 215 Depot Court SE, Suite 215,
Leesburg, VA 20175.
• To
vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your completed and signed proxy card to us
before the Annual Meeting, we will vote your shares as you
direct.
Beneficial Owner: Shares
Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of
your broker, bank, or other agent, you should have received voting
instructions with these proxy materials from that organization
rather than from us. Simply complete and mail your voting
instructions as directed by your broker or bank to ensure that your
vote is counted. Alternatively, you may be able to vote by
telephone or over the Internet by following instructions provided
by your broker or bank. To vote in person at the Annual Meeting,
you must obtain a valid proxy from your broker, bank, or other
agent. Follow the instructions from your broker or bank included
with these proxy materials, or contact your broker or bank to
request a proxy form.
How
many votes do I have?
On each matter to be voted upon, you have one vote for each share
of Common Stock you own as of the Record Date.
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What
is a quorum for purposes of conducting the Annual
Meeting?
The presence, in person or by proxy, of the holders of a majority
in interest of all stock issued and outstanding, or 14,578,408
shares, entitled to vote at the meeting is necessary to constitute
a quorum to transact business. If a quorum is not present or
represented at the Annual Meeting, the shareholders entitled to
vote thereat, present in person or by proxy, may adjourn the Annual
Meeting from time to time without notice or other announcement
until a quorum is present or represented.
What
if I return a proxy card but do not make specific
choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted “FOR” the
election of the directors (Proposal No. 1), “FOR” approval of
the amendment to the 2019 Plan (Proposal No. 2), “FOR” approval, on
a non-binding advisory basis, of the
compensation of the Company’s named executive officers (Proposal
No. 3), to recommend that the frequency of future advisory votes on
the compensation of the Company’s named executive officers will be
“ONE
YEAR”, “FOR” ratification of
the appointment of BF Borgers CPA PC as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2021 (Proposal No. 5), and “FOR” approval of any
adjournment of the Annual Meeting, if necessary or appropriate, to
transact such other business as may properly come before the
meeting and all adjournments and postponements thereof; and if any
other matter is properly presented at the meeting, your proxy
holder (one of the individuals named on your proxy card) will vote
your shares using his best judgment.
How
does the Board recommend that I vote?
Our Board recommends that you vote your shares “FOR” the
election of the directors (Proposal No. 1), “FOR” approval of
the amendment to the 2019 Plan (Proposal No. 2), “FOR” approval, on
a non-binding advisory basis, of the
compensation of the Company’s named executive officers (Proposal
No. 3), to recommend that the frequency of future advisory votes on
the compensation of the Company’s named executive officers will be
“ONE
YEAR”, “FOR” ratification of
the appointment of BF Borgers CPA PC as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2021 (Proposal No. 5), and “FOR” approval of any
adjournment of the Annual Meeting, if necessary or appropriate, to
transact such other business as may properly come before the
meeting and all adjournments and postponements thereof. Unless you
provide other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board as set forth in this Proxy
Statement.
Who
is paying for this proxy solicitation?
We will bear the cost of mailing and solicitation of proxies.
Proxies may be solicited by mail or personally by our directors,
officers or employees, none of whom will receive additional
compensation for such solicitation. Those holding shares as of
record for the benefit of others, or nominee holders, are being
asked to distribute proxy soliciting materials to, and request
voting instructions from, the beneficial owners of such shares. We
will reimburse nominee holders for their reasonable out-of-pocket expenses.
What
does it mean if I receive more than one set of proxy
materials?
If you receive more than one set of proxy materials, your shares
may be registered in more than one name or in different accounts.
Please complete, sign and return each proxy card to
ensure that all of your shares are voted.
I
share the same address with another Quantum Computing Inc.
shareholder. Why has our household only received one set of proxy
materials?
The SEC’s rules permit us to deliver a single set of proxy
materials to one address shared by two or more of our shareholders.
This practice, known as “householding,” is intended to reduce the
Company’s printing and postage costs. We have delivered only one
set of proxy materials to shareholders who hold their shares
through a bank, broker or other holder of record and share a single
address, unless we received contrary instructions from any
shareholder at that address. However, any such street name holder
residing at the same address who wishes to receive a separate copy
of the proxy materials may make such a request by contacting the
bank, broker or other holder of record, or Broadridge Financial
Solutions, Inc. at 866-540-7095 or in
writing at Broadridge, Householding Department, 51 Mercedes
Way,
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Edgewood, NY 11717. Street name holders residing at the same
address who would like to request householding of Company materials
may do so by contacting the bank, broker or other holder of record
or Broadridge at the phone number or address listed above.
Can
I change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote at
the meeting. If you are the record holder of your shares, you may
revoke your proxy in any one of three ways:
• You
may submit another properly completed proxy card with a later
date;
• You
may send a timely written notice that you are revoking your proxy
to the Company at 215 Depot Court SE, Suite 215, Leesburg, VA
20175, Attn: Chief Executive Officer; or
• You
may attend the Annual Meeting and vote in person. Simply attending
the meeting will not, by itself, revoke your proxy.
If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your broker
or bank.
How
are votes counted?
Votes will be counted by the inspector of elections appointed for
the meeting, who will separately count “For,” “Abstain” and
“Against” votes, and
broker non-votes. Abstentions will not
be counted as votes for any matter.
Is
my vote kept confidential?
Proxy instructions, ballots and voting tabulations that identify
individual shareholders are handled in a manner that protects your
voting privacy. Your vote will not be disclosed either within the
Company or to third parties, except:
• as
necessary to meet applicable legal requirements;
• to
allow for the tabulation and certification of votes; and
• to
facilitate a successful proxy solicitation.
Occasionally, shareholders provide written comments on their proxy
cards, which may be forwarded to the Company’s management and the
Board.
How
can I find out the results of the voting at the Annual
Meeting?
Preliminary voting results will be announced at the Annual Meeting.
Final voting results will be disclosed in a Current Report on Form
8-K filed after the Annual
Meeting.
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CORPORATE
GOVERNANCE
Board of Directors
Set forth below are the names of and certain biographical
information about each member of our Board of Directors. The
information presented includes each director’s principal occupation
and business experience for the past five years and the names
of other public companies of which he or she has served as a
director during the past five years.
The Board of Directors, upon the recommendation of our Nominating
and Corporate Governance Committee, has nominated: Robert
Liscouski, Christopher Roberts, Bertrand Velge, William J. McGann,
and Robert Fagenson for election as directors, each to hold office
until their successors are elected and qualified or until their
earlier resignation or removal.
Name
|
|
Current
Age
|
|
Position
|
Robert Liscouski
|
|
67
|
|
Chairman of the Board of Directors, President, and Chief Executive
Officer (Principal Executive Officer)
|
Christopher Roberts
|
|
67
|
|
Chief Financial Officer, (Principal Financial Officer) (Principal
Accounting Officer), Director
|
Bertrand Velge
|
|
62
|
|
Director
|
William J. McGann*
|
|
63
|
|
Director
|
Robert Fagenson
|
|
72
|
|
Director
|
The following noteworthy experience, qualifications, attributes and
skills for each Board member, led to our conclusion that the person
should serve as a director in light of our business and
structure:
Robert Liscouski, President,
Chief Executive Officer and Chairman of the Board
Mr. Liscouski, age 67, is the Chairman and CEO of Quantum
Computing. Mr. Liscouski is CEO and Founder of Convergent Risk
Group LLC and a proven security professional, thought leader and
successful entrepreneur with over 35 years of senior level
security operational and company leadership experience in
government and public and private companies.
Mr. Liscouski is a recognized Security Industry leader in
assessing, mitigating and managing physical and cyber security risk
in private sector enterprises and state and federal government
agencies. Mr. Liscouski has extensive experience in leading
innovative start up and turn around companies as well as building
programs for large government organizations and is recognized as a
leader in identifying emerging security technologies. He serves as
a “Trusted Advisor” to senior officials within government and
private sector, providing guidance in areas such as physical and
cyber security, crisis management, organizational development and
strategic planning. Mr. Liscouski’s career has spanned local
law enforcement, senior government and private sector positions
from operations to senior leadership and Boards of Directors. He
started his career as an undercover and homicide investigator, and
Special Agent with the Diplomatic Security Service and progressed
to senior federal government positions where he served as a senior
advisor to the intelligence community and was appointed by
President George W. Bush as the first Assistant Secretary for
Infrastructure Protection at the Department of Homeland Security.
He most recently was President of a public company that became a
leader in the explosive trace detection industry culminating in the
sale of the technology to L3 Communications. Mr. Liscouski is
a frequent contributor to CNBC, CNN, Fox News, and other business
and security media on Homeland Security and Terrorism issues.
Christopher Roberts, Chief
Financial Officer and Director
Mr. Roberts, age 67, is the Company’s Chief Financial Officer.
Mr. Roberts has a law degree from the University of Virginia
Law School and a B.S, in Electrical Engineering and an M.B.A., both
from the Massachusetts Institute of Technology. His M.B.A. was
concentrated in Finance and Management of Technology. He started
his career working for Raytheon Co. (a Fortune 500 company).
Thereafter, he practiced law at two large NYC law firms. Since
leaving the private practice of law, Mr. Roberts has worked
primarily in financial management roles with a number of government
contractors in the aerospace, defense and Information technology
sectors.
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Mr. Roberts has more than 37 years’ experience in public
and private corporate finance and government contracting, including
professional services, software products, and hardware
manufacturing businesses. Mr. Roberts has served as the Chief
Financial Officer of both public and private companies during the
course of his career, including Secure Point Technologies, Systems
Made Simple, Inc. (now a subsidiary of Leidos), Integral Systems
Inc. (a publicly company traded on NASDAQ under the symbol “ISYS.”
now a subsidiary of Kratos), and Pearson Analytic Solutions (now a
subsidiary of General Dynamics). From 2012 to November 2016,
he worked first as the CFO, and later as the President of Systems
Made Simple, Inc., a wholly owned subsidiary of Leidos.
Mr. Roberts is a co-author of
Antitrust for Business, and has published articles on antitrust and
patent law, space policy, information technology, and corporate
finance.
William J.
McGann, Director
Mr. McGann, age 63, was appointed to the Board on September 22,
2021. Mr. McGann is presently the Chief Technology Officer for the
Security, Detection and Automation business at Leidos Corporation.
Central to his role is the creation of innovative customer
solutions driven by a strong portfolio of physics, chemistry, and
software-based products. Mr. McGann
has a strong, directed passion for transforming credible science
into practical technology solutions in solving some of the world’s
greatest challenges. Prior to joining Leidos, Mr. McGann held
numerous business and technology leadership positions and roles
including: (a) Founder of the first explosives trace detection
company, Ion Track Instruments, (b) Chief Technology Officer for GE
Security, (c) VP of Engineering for United Technologies Fire and
Security business, (d) CEO and board member of Implant Sciences
Corp., and (e) Chief Technology Officer at L3Harris Aviation
Security and Detection business. Mr. McGann holds a Ph.D. in
Chemical Physics from the University of Connecticut and
undergraduate degrees in Chemistry and Biology.
Bertrand Velge,
Director
Mr. Velge, age 62, is the Managing Director of Graftyset,
Ltd., a privately held company based in the United Kingdom.
Graftyset is a wholesale distributor of wine, beer and other
alcoholic and non-alcoholic beverage,
based in Sidcup, Kent (UK). Mr. Velge has served as Managing
Director since the company was incorporated in 2003 under the name
of Otterden Vintners, Ltd. Mr. Velge also served as Director
for Aliunde Ltd. since 2005. Mr. Velge has over
twenty years of experience in multi-disciplinary venture investing and was managing
director and co-founder of a fund that
trades equities in Europe, Asia and the US focusing on IPOs. He
speaks English, Flemish and French, and is a graduate of the
Universite Catholique de Louvain.
Robert Fagenson,
Director
Mr. Fagenson serves as a member of the board of directors of
National Holdings Corporation (“NHS”) since March 2012. He
serves as vice chairman of the board of directors of NHS since
September 2016. Mr. Fagenson previously served as
co-chief executive officer of NHS from
January 3, 2017 to January 31, 2017, as chief executive
officer and chairman of the board of directors of NHS from
December 2014 to September 2016, and as executive
vice-chairman of the board of
directors of NHS from July 2012 to December 2014.
Mr. Fagenson has been a branch owner at NHS, an operating
company of NHS, since 2012, and president of Fagenson &
Co., Inc., a family investment company, since 1982.
Mr. Fagenson spent the majority of his career at the
New York Stock Exchange (NYSE), where he was managing partner
of one of the exchange’s largest specialist firms. While at the
NYSE, Mr. Fagenson served as a governor on the trading floor
and was elected to the NYSE board of directors in 1993, where he
served for six years, eventually becoming vice chairman of the
NYSE board of directors from 1998 to 1999 and 2003 to 2004.
Mr. Fagenson has served as director of the New York City
Police Museum since 2005, and as director of the Federal Law
Enforcement Officers Association Foundation since 2009. He has also
served on the board of directors of Sigma Alpha Mu Foundation since
2011 and on the board of directors of New York Edge since
2015. In addition, Mr. Fagenson served as the non-executive chairman of Document Security Systems,
Inc. from 2012 to 2018 (NYSEMKT: DSS). He is currently a
member of the alumni boards of the Whitman School of Business at
Syracuse University.
Mr. Fagenson received his B.S. in Transportation
Sciences & Finance from Syracuse University in 1970. The
Board believes that Mr. Fagenson’s experience in the
securities industry and knowledge of the Company as its former
chief executive officer qualifies him to serve as a member of the
board.
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Family
Relationships
There are no family relationships between any of our directors or
executive officers.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the
Company’s executive officers and directors, and persons who own
more than 10% of the Company’s common stock, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the
SEC.
Based solely on the Company’s review of the copies of such Forms
and written representations from certain reporting persons, the
Company believes that all filings required to be made by the
Company’s Section 16(a) reporting persons during the
Company’s fiscal year ended December 31, 2020 were made on a
timely basis.
Code of Ethics
The Company currently maintains a Code of Ethics which applies to
all directors, officers, and employees. A copy of our Code of
Ethics can be found on our website at www.quantumcomputinginc.com.
Board Composition and
Director Independence
Our board of directors consists of five members. The directors will
serve until our next annual meeting and until their successors are
duly elected and qualified. The Company defines “independent” as
that term is defined in Rule 5605(a)(2) of the NASDAQ listing
standards.
In making the determination of whether a member of the board is
independent, our board considers, among other things, transactions
and relationships between each director and his immediate family
and the Company, including those reported under the caption
“Certain Relationships
and Related-Party
Transactions”. The
purpose of this review is to determine whether any such
relationships or transactions are material and, therefore,
inconsistent with a determination that the directors are
independent. On the basis of such review and its understanding of
such relationships and transactions, our board affirmatively
determined that Bertrand Velge, William J. McGann and Robert
Fagenson are qualified as independent and that they have no
material relationship with us that might interfere with his or her
exercise of independent judgment.
Board Committees; Audit
Committee Financial Expert; Stockholder Nominations
Our board of directors has established an audit committee, a
compensation committee and a nominating and corporate governance
committee. Each committee has its own charter, which is available
on our website at www.quantumcomputinginc.com.
Each of the board committees has the composition and
responsibilities described below.
Members will serve on these committees until their resignation or
until otherwise determined by our Board of Directors.
Bertrand Velge, William J. McGann and Robert Fagenson are our
independent directors.
The members of each committee are, as follows:
Audit Committee: Bertrand Velge, William J. McGann and Robert
Fagenson with Mr. Fagenson serving as the Chairman. Our Board
has determined the Mr. Fagenson is currently qualified as an
“audit committee financial expert”, as such term is defined in
Item 407(d)(5) of Regulation S-K.
Compensation Committee: Bertrand Velge, William J. McGann and
Robert Fagenson. Mr. McGann serves as Compensation Committee
Chairman.
Nominating and Governance Committee: Bertrand Velge, William J.
McGann and Robert Fagenson. Mr. Velge serves as Chairman of
the Nominating and Governance Committee.
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Audit Committee
The Audit Committee oversees our accounting and financial reporting
processes and oversee the audit of our consolidated financial
statements and the effectiveness of our internal control over
financial reporting. The specific functions of this Committee
include, but are not limited to:
• selecting
and recommending to our board of directors 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.
Compensation
Committee
Our Compensation Committee assists the board of directors in the
discharge of its responsibilities relating to the compensation of
the board of directors and our executive officers.
The 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 and 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.
Nominating and Corporate
Governance Committee
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.
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The Committee’s responsibilities include:
• recommending
to the board of directors nominees for election as directors at any
meeting of stockholders and nominees to fill vacancies on the
board;
• considering
candidates proposed by stockholders in accordance with the
requirements in the Committee charter;
• overseeing
the administration of the Company’s code of business conduct and
ethics;
• reviewing
with the entire board of directors, 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 of directors on an annual basis the directors to be
appointed to each committee of the board of directors;
• overseeing
an annual self-evaluation of the board
of directors 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.
Code of Business Conduct
and Ethics
We have adopted a code of business conduct and ethics applicable to
our principal executive, financial and accounting officers and all
persons performing similar functions. A copy of that code is
available on our corporate website at www.quantumcomputinginc.com.
We expect that any amendments to such code, or any waivers of its
requirements, will be disclosed on our website.
Disclosure of Commission
Position on Indemnification of Securities Act
Liabilities
Our directors and officers are indemnified as provided by the
Delaware corporate law and our bylaws. We have agreed to indemnify
each of our directors and certain officers against certain
liabilities, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the provisions described above, or
otherwise, we have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than
our payment of expenses incurred or paid by our director, officer
or controlling person in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
We have been advised that in the opinion of the SEC indemnification
for liabilities arising under the Securities Act is against public
policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by one of our directors,
officers, or controlling persons in connection with the securities
being registered, we will, unless in the opinion of our legal
counsel the matter has been settled by controlling precedent,
submit the question of whether such indemnification is against
public policy to a court of appropriate jurisdiction. We will then
be governed by the court’s decision.
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Involvement in Certain Legal
Proceedings.
Our Chief Executive Officer, Mr. Robert Liscouski, was
President of Implant Sciences Corporation, which filed a petition
for bankruptcy on October 11, 2016 in the Delaware Bankruptcy
Court.
With the exception of the foregoing, to the best of our knowledge,
none of our directors or executive officers has, during the past
ten 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.
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EXECUTIVE
COMPENSATION
Summary Compensation
Table
The following summary compensation table sets forth all
compensation awarded to, earned by, or paid to the named executive
officers paid by us during the years ended December 31,
2020 and 2019.
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
Robert
Liscouski
Chief Executive
Officer (PEO)
|
|
2020
|
|
360,000
|
|
40,000
|
|
1,264,000
|
|
75,000
|
|
0
|
|
0
|
|
0
|
|
1,739,000
|
2019
|
|
360,000
|
|
0
|
|
|
|
0
|
|
0
|
|
0
|
|
0
|
|
360,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Christopher
Roberts Treasurer (PFO)
|
|
2020
|
|
202,750
|
|
|
|
1,264,000
|
|
45,000
|
|
0
|
|
0
|
|
0
|
|
1,511,750
|
2019
|
|
175,237
|
|
0
|
|
|
|
0
|
|
0
|
|
0
|
|
0
|
|
175,237
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Executive Employment
Agreements
Mr. Liscouski
Employment Agreement
We entered into an employment agreement with Robert Liscouski, our
Chief Executive Officer, on April 26, 2021 (the “Liscouski
Employment Agreement”). The agreement is for an indefinite term,
subject to periodic review by the Board of Directors, stipulates a
base salary (the “Base Salary”) of $400,000 per year. For the
fiscal year ending December 31, 2021 and for subsequent
fiscal years, the Liscouski Employment Agreement allows for an
annual incentive bonus in the amount up to $150,000 per year,
subject to Mr. Liscouski achieving certain performance based
milestones that are established by the Board of Directors. In
connection with the Liscouski Employment Agreement,
Mr. Liscouski was issued options for 250,000 restricted shares
of the Company’s common stock in 2021.
As a full-time employee of the
Company, Mr. Liscouski will be eligible to participate in the
Company’s benefit programs.
Mr. Liscouski’s employment may be terminated by the Company
with or without “Cause”. “Cause” shall mean (i) conviction or
entry of nolo contendere to any felony or a crime involving moral
turpitude, fraud or embezzlement of Company property;
(ii) dishonesty, gross negligence or gross misconduct that is
materially injurious to the Company or material failure to perform
her/his duties under this Agreement which has not been cured by
Mr. Liscouski within 10 days after he shall have received
written notice from the Company stating with reasonable specificity
the nature of such failure to perform; and (iii) illegal use
or use of drugs, alcohol, or other related substances that is
materially injurious to the Company. If the Company terminates
Mr. Liscouski’s employment without “Cause” the Company will
continue payment of Mr. Liscouski’s Base Salary for an
additional twelve (12) months from the date Mr. Liscouski
is terminated.
Severance
Arrangements
Robert Liscouski is entitled to receive a severance payment, upon
the execution of a release in favor of the Company, if terminated
by us without cause. The severance benefits would include a payment
in an amount equal to one year of such executive officer’s
annualized base salary compensation plus accrued paid time off.
Additionally, he would also be entitled to receive medical and
dental insurance coverage for one year following the date of
termination.
Mr. Roberts Employment
Agreement
We entered into an employment agreement with Christopher Roberts,
our Chief Financial Officer, on April 26, 2021 (the “Roberts
Employment Agreement”) whereby Mr. Roberts is to provide the
Company with financial and accounting and business strategy
services. The agreement is for an indefinite term, subject to
periodic review by the Board of Directors, stipulates a base salary
(the “Base Salary”) of $300,000 per year. For the fiscal year
ending December 31, 2021 and for subsequent fiscal years,
the Roberts Employment Agreement allows for an annual incentive
bonus in
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the amount up to $150,000 per year, subject to Mr. Roberts
achieving certain performance based milestones that are established
by the Board of Directors. In connection with the Roberts
Employment Agreement, Mr. Roberts was issued options for
400,000 restricted shares of the Company’s common stock in
2021.
As a full-time employee of the
Company, Mr. Roberts will be eligible to participate in the
Company’s benefit programs.
Mr. Roberts’ employment may be terminated by the Company with
or without “Cause”. “Cause” shall mean (i) conviction or entry
of nolo contendere to any felony or a crime involving moral
turpitude, fraud or embezzlement of Company property;
(ii) dishonesty, gross negligence or gross misconduct that is
materially injurious to the Company or material failure to perform
her/his duties under this Agreement which has not been cured by
Mr. Liscouski within 10 days after he shall have received
written notice from the Company stating with reasonable specificity
the nature of such failure to perform; and (iii) illegal use
or use of drugs, alcohol, or other related substances that is
materially injurious to the Company. If the Company terminates
Mr. Roberts’s employment without “Cause” the Company will
continue payment of Mr. Roberts’s Base Salary for an
additional twelve (12) months from the date Mr. Roberts
is terminated.
Severance
Arrangements
Mr. Roberts is entitled to receive a severance payment, upon
the execution of a release in favor of the Company, if terminated
by us without cause. The severance benefits would include a payment
in an amount equal to one year of such executive officer’s
annualized base salary compensation plus accrued paid time off.
Additionally, the he would also be entitled to receive medical and
dental insurance coverage for six months following the date of
termination.
Outstanding Equity
Awards at Fiscal Year End
The following table sets forth information regarding equity awards
held by the Named Executive Officers as of December 31,
2020:
|
|
Option
Awards(1)
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options,
Exercisable
(#)
|
|
Number of
Securities
Underlying
Unexercised
Options, Not
Exercisable
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
Robert Liscouski
|
|
—
|
|
75,000
|
|
1.00
|
|
May 1, 2025
|
|
400,000
|
|
5,644,000
|
Christopher Roberts
|
|
|
|
45,000
|
|
1.00
|
|
May 1, 2025
|
|
400,000
|
|
5,644,000
|
Director
Compensation
The Company’s directors did not receive compensation for their
services as directors in fiscal year 2020. Beginning in 2021,
Directors will receive cash compensation of $5,000 per quarter for
their service.
16
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of
September 20, 2021 concerning the beneficial ownership of
common stock for: (i) each director and director nominee,
(ii) each Named Executive Officer in the Summary Compensation
Table under “Executive Compensation” above, (iii) all
executive officers and directors as a group, and (iv) each
person (including any “group” as that term is used in
Section 13(d)(3) of the Exchange Act) known by us to
be the beneficial owner of 5% or more of our common stock. The
address for each of the persons below who are beneficial owners of
5% or more of our common stock is our corporate address at 215
Depot Court SE, Suite 215, Leesburg, VA 20175.
Beneficial ownership has been determined in accordance with the
rules of the SEC and is calculated based on 29,156,815 shares of
our common stock issued and outstanding as of September 20,
2021. Shares of common stock subject to options, warrants,
preferred stock or other securities convertible into common stock
that are currently exercisable or convertible, or exercisable or
convertible within 60 days of September 20, 2021, are
deemed outstanding for computing the percentage of the person
holding the option, warrant, preferred stock, or convertible
security but are not deemed outstanding for computing the
percentage of any other person.
Except as indicated by the footnotes below, we believe, based on
the information furnished to us, that the persons and entities
named in the table below have sole voting and investment power with
respect to all shares of common stock that they beneficially
own.
The following table sets forth, as of September 20, 2021, the
number of shares of common stock owned of record and beneficially
by our executive officers, directors and persons who hold 5% or
more of the outstanding shares of common stock of the Company.
The amounts and percentages of our common stock beneficially owned
are reported on the basis of SEC rules governing the determination
of beneficial ownership of securities. Under the SEC rules, a
person is deemed to be a “beneficial owner” of a security if that
person has or shares “voting power,” which includes the power to
vote or to direct the voting of such security, or “investment
power,” which includes the power to dispose of or to direct the
disposition of such security. A person is also deemed to be a
beneficial owner of any securities of which that person has the
right to acquire beneficial ownership within 60 days through
the exercise of any stock option, warrant or other right. Under
these rules, more than one person may be deemed a beneficial owner
of the same securities and a person may be deemed to be a
beneficial owner of securities as to which such person has no
economic interest. Unless otherwise indicated, each of the
shareholders named in the table below, or his or her family
members, has sole voting and investment power with respect to such
shares of our common stock. Except as otherwise indicated, the
address of each of the shareholders listed below is: c/o Quantum
Computing Inc., 215 Depot Court SE, Suite 215, Leesburg,
VA 20175.
Applicable percentage ownership is based on 29,156,815 shares of
Common Stock outstanding as of September 20, 2021. In
computing the number of shares of Common Stock beneficially owned
by a person and the percentage ownership of that person, we deemed
to be outstanding all shares of Common Stock as held by that person
or entity that are currently exercisable or that will become
exercisable within 60 days of September 20, 2021.
17
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Name
and Address of Beneficial Owner
|
|
Common
Stock Owned
Beneficially
|
|
Percent of
Class
|
Named Executive Officers and
Directors
|
|
|
|
|
Robert Liscouski, Chief Executive Officer and Chairman(1)
|
|
1,012,500
|
|
3.47
|
Christopher Roberts, Chief Financial Officer(2)
|
|
725,000
|
|
2.49
|
Bertrand Velge(3)
|
|
2,167,888
|
|
7.44
|
Justin Schreiber(4)
|
|
1,250,000
|
|
4.29
|
Robert Fagenson(5)
|
|
100,000
|
|
0.34
|
All
directors and officers as a group (5 persons)
|
|
5,255,388
|
|
17.68
|
5% or greater
shareholders
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
Total
|
|
5,255,388
|
|
17.68
|
18
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TRANSACTIONS
WITH
RELATED PERSONS
The following is a summary of transactions since January 1,
2018 to which we have been or will be a party in which the amount
involved exceeded or will exceed $ (one percent of the average of
our total assets at year-end for our
last two completed fiscal years) and in which any of our
directors, executive officers or beneficial holders of more than 5%
of any class of our capital stock, or any immediate family member
of, or person sharing a household with, any of these individuals,
had or will have a direct or indirect material interest, other than
compensation arrangements that are described under the section
captioned “Executive compensation.”
Other than as disclosed below, there have been no transactions
involving the Company since the beginning of the last fiscal year,
or any currently proposed transactions, in which the Company was or
is to be a participant and the amount involved exceeds $120,000 or
one percent of the average of the Company’s total assets at
year-end for the last two completed
fiscal years, and in which any related person had or will have
a direct or indirect material interest.
To finance the acquisition of the control block of shares in IBGH,
an investor group (the “Initial Investors.”), loaned Convergent
Risk Group, LLC (Convergent) $275,000, in exchange for Promissory
Notes from Convergent (the “Promissory Notes”) in the total amount
of $275,000. Convergent, a Virginia limited liability company, is
owned 100% by Mr. Robert Liscouski, who is the CEO and
currently the majority shareholder of the Company. To induce
Mr. Liscouski to serve as CEO of the Company, the Company
assumed the “Promissory Notes” in the total amount of $275,000 and
certain liabilities (the “Liabilities”). The Liabilities and the
Promissory Notes are collectively the “Convergent Liabilities.” The
Convergent Liabilities assumed by the Company were exchanged for
Convertible Promissory Notes issued by the Company for $275,000
(the same amount that Convergent had issued them for). The
Convertible Promissory Notes were convertible into common stock of
the Company at a conversion price of $0.10 per share. As of
December 31, 2020 all of the Convertible Promissory Notes had
been converted to common stock.
To provide the Company with advertising and marketing services, the
Company contracted with JLS Ventures LLC (“JLS”), an entity wholly
owned by Justin Schreiber, a former member of the Company’s board
of directors, to procure and manage advertising services. The
agreement with JLS is for a period of one year and is terminable
upon thirty days’ notice. During the year ending
December 31, 2021, the Company reimbursed JLS $140,698 for
costs associated with advertisement procurement.
19
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AUDIT-RELATED
MATTERS
Audit Committee
Report
The Audit Committee of the Board of Directors is comprised of
independent directors and operates under a written charter adopted
by the Board of Directors. The Audit Committee Charter is reviewed
and updated as needed per applicable rules of the SEC and The
Nasdaq Stock Market.
The Audit Committee serves in an oversight capacity. Management is
responsible for the Company’s internal controls over financial
reporting. The independent auditors are responsible for performing
an independent audit of the Company’s financial statements per the
standards of the Public Company Accounting Oversight Board
(“PCAOB”) and issuing a report thereon. The Audit Committee’s
primary responsibility is to monitor and oversee these processes
and to select and retain the Company’s independent auditors. In
fulfilling its oversight responsibilities, the Audit Committee
reviewed with management the Company’s audited financial statements
and discussed not only the acceptability but also the quality of
the accounting principles, the reasonableness of the significant
judgments and estimates, critical accounting policies, and the
clarity of disclosures in the audited financial statements prior to
issuance.
The Audit Committee reviewed and discussed the audited financial
statements as of and for the year ended December 31, 2020,
with the Company’s independent auditors, BF Borgers CPA
P.C. LLP (“Borgers”), and discussed not only the acceptability
but also the quality of the accounting principles, the
reasonableness of the significant judgments and estimates, critical
accounting policies and the clarity of disclosures in the audited
financial statements prior to issuance. The Audit Committee
discussed with Borgers the matters required to be discussed by the
applicable requirements of the PCAOB and the SEC. The Audit
Committee has received the written disclosures and the letter from
Borgers required by the applicable requirements of the PCAOB
regarding independent auditor communications with the Audit
Committee concerning independence and has discussed with
Borgers.
Based on the review and discussions with our independent registered
public accounting firm, Borgers, the Audit Committee has
recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in our Annual
Report on Form 10-K for the
year ended December 31, 2020, for filing with the SEC.
MEMBERS OF THE AUDIT
COMMITTEE:
Robert
Fagenson — Chairman of the Committee
William J.
McGann
Bertrand Velge
20
Table of
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PRINCIPAL ACCOUNTING FEES AND
SERVICES
BF Borgers CPA PC served as our independent registered public
accountants for the years ended December 31, 2019 and
2020.
Audit Fees
For the Company’s fiscal years ended December 31, 2020
and 2019, we were billed approximately $43,200 and $57,100,
respectively, for professional services rendered by our independent
auditors for the audit and review of our financial statements.
Tax
Fees
For the Company’s fiscal years ended December 31, 2020
and 2019, there were no fees for professional services rendered by
our independent auditors for tax compliance, tax advice, and tax
planning.
All
Other Fees
For the Company’s fiscal years ended December 31, 2020
and 2019, we were billed approximately $5,400 and $20,000,
respectively, for professional services rendered by our independent
auditors related to the Registration Statement on
Form 10-12(g) and amendments
thereto filed with the SEC in those years.
Pre-Approval
Policies
All of the above services and fees were reviewed and approved by
the entire Board. No services were performed before or without
approval.
21
Table of
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MATTERS TO BE VOTED
ON
PROPOSAL NO. 1: ELECTION OF
DIRECTORS
The Company’s Board of Directors is currently comprised of five
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 2022, or until their successors are duly elected and
qualified. Of the Board members whose term expires at the Annual
Meeting, Robert Liscouski, Christopher Roberts, Bertrand Velge,
William J. McGann and Robert Fagenson are all standing for
reelection. 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
|
|
Age
|
|
Position(s)
|
Robert Liscouski
|
|
67
|
|
Chairman of the Board of Directors, President, and Chief Executive
Officer (Principal Executive Officer)
|
Christopher Roberts
|
|
67
|
|
Chief Financial Officer, (Principal Financial Officer) (Principal
Accounting Officer), Director
|
Bertrand Velge
|
|
62
|
|
Director
|
William J. McGann
|
|
63
|
|
Director
|
Robert Fagenson
|
|
73
|
|
Director
|
Vote
Required
The five nominees for director receiving the highest number of
votes “FOR” election will be elected as directors. This is called a
plurality. Withholding a vote from a director nominee will not be
voted with respect to the director nominee indicated and will have
no impact on the election of directors although it will be counted
for the purposes of determining whether there is a quorum. Broker
non-votes will have no effect on the
outcome of this proposal.
Recommendation of our
Board
Our Board unanimously recommends that you vote
“FOR”
the election of each of the nominees for directors.
22
Table of
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PROPOSAL NO. 2: APPROVAL OF
AN AMENDMENT TO THE 2019 PLAN
On July 22, 2021, the Board approved, subject to stockholder
approval, an amendment to the 2019 Plan to increase the maximum
number of shares of common stock available for issuance under the
2019 Plan by an additional 1,500,000 shares.
Currently, the maximum number of shares of common stock available
for issuance under the 2019 Plan is 1,500,000.
As of September 20, 2021, there are 0 shares of common stock
available for future award grants under the 2019 Plan. As of such
date, there were (i) options to purchase an aggregate of
1,500,000 shares of common stock outstanding under the 2019 Plan at
a weighted-average exercise price of
$3.98 per share, and (ii) 0 shares of unvested restricted
common stock outstanding under the 2019 Plan. Between the dates
whereby the 2019 Plan has become effective, November 14, 2019
and September 20, 2021, 30,000 shares of common stock have
become issued and outstanding as a result of vested awards under
the 2019 Plan.
The Company faces intense competition in recruiting high quality
personnel, and in retaining our employees. The Board continues to
believe that stock-based incentives
are important factors in attracting, retaining and awarding
officers, employees, directors and consultants and closely aligning
their interests with those of our stockholders.
As of September 20, 2021, 29,156,815 shares of the Company’s
common stock are issued and outstanding. The Company faces intense
competition in recruiting high quality personnel, and in retaining
our employees. The Board continues to believe that
stock-based incentives are important
factors in attracting, retaining and awarding officers, employees,
directors and consultants and closely aligning their interests with
those of our stockholders.
The Board believes that increasing the number of shares available
for issuance under the 2019 Plan by 1,500,000 shares, which will be
effected by increasing the Baseline Amount from 1,500,000 shares to
3,000,000 shares, is consistent with the Company’s compensation
philosophy (and with responsible compensation policies generally)
and will preserve the Company’s ability to attract and retain
capable officers, employees, directors and consultants. The Company
does not have any shares available under the 2019 Plan. The Board
believes it is imperative in view of our compensation structure and
strategy and that the availability of the additional shares will
help the Company to have a more sufficient number of shares of
common stock authorized for issuance under the 2019 Plan. The Board
adopted this amendment to ensure that, as we grow over the coming
year, we can operate effectively in our recruitment efforts, and
create incentives for the retention of employees and other service
providers, by granting the equity arrangements available under the
2019 Plan to employees, directors, and key consultants at levels
determined appropriate by the Compensation Committee. In addition
to our five directors (which include our Chief Executive Officer
and Chief Financial Officer), approximately 26 employees and
approximately 10 key consultants are eligible to participate in the
2019 Plan.
Summary of 2019 Plan, as
Proposed to be Amended
The following is a summary of the material terms and conditions of
the 2019 Plan, as proposed to be amended, and is qualified in its
entirety by the provisions contained in the 2019 Plan, as amended
(the “Amended 2019 Plan”), a copy of which is attached to this
Proxy Statement as Annex A:
Common Stock Reserved for
Issuance under the 2019 Plan. As
amended, the maximum number of shares of common stock available for
issuance under the 2019 Plan will be 3,000,000.
Currently the maximum number of shares of common stock available
for issuance under the 2019 Plan is 1,500,000. As a result, the
effect of the proposed amendment to the 2019 Plan will be to
increase the shares available for issuance under 2019 Plan from
1,500,000 shares to 3,000,000 shares.
Plan
Highlights
Options are subject to the
following conditions:
(i) The Committee (as defined below)
determines the exercise price of Incentive Options at the time the
Incentive Options are granted. The assigned exercise price must be
no less than 100% of the Fair Market Value (as defined in the 2019
Plan) of the Company’s Common Stock. In the event that the
recipient is a Ten Percent Owner (as defined in the 2019 Plan), the
exercise price must be no less than 110% of the Fair Market Value
of the Company.
23
Table of
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(ii) The exercise price of each
Non-qualified Option will be at least
100% of the Fair Market Value of such share of the Company’s Common
Stock on the date the Non-qualified
Option is granted, unless the
Committee, in its sole and absolute discretion, elects to set the
exercise price of such Non-qualified
Option below Fair Market Value.
(iii) The Committee fixes the term of
Options, provided that
Options may not be exercisable more than ten years from the
date the Option is granted, and provided
further that Incentive Options granted to a Ten Percent
Owner may not be exercisable more than five years from the
date the Incentive Option is granted.
(iv) 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.
(v) The Committee may designate the vesting
period of Options. In the event that the Committee does not
designate a vesting period for Options, the Options will vest in
equal amounts on each fiscal quarter of the Company through the
five (5) year anniversary of the date on which the Options
were granted. The vesting period accelerates upon the consummation
of a Sale Event (as defined in the 2019 Plan).
(vi) Options are not transferable except to a
recipient’s family members or partnerships in which such family
members are the only partners and Options are exercisable only by
the Options’ recipient, except upon the recipient’s death.
(vii) Incentive Options may not be issued in an amount
or manner where the amount of Incentive Options exercisable in one
year entitles the holder to Common Stock of the Company with an
aggregate Fair Market value of greater than $100,000.
Awards of
Restricted Stock are subject to the following
conditions:
(i) The Committee grants Restricted
Stock Options and determines the restrictions on each Restricted
Stock Award (as defined in the 2019 Plan). Upon the grant of a
Restricted Stock Award and the payment of any applicable purchase
price, grantee is considered the record owner of the Restricted
Stock and entitled to vote the Restricted Stock if such Restricted
Stock is entitled to voting rights.
(ii) Restricted Stock may not be delivered
to the grantee until the Restricted Stock has vested.
(iii) Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except
as provided in the 2019 Plan or in the Award Agreement (as defined
in the 2019 Plan).
Upon a Termination Event (as defined in the 2019 Plan), the Company
or its assigns shall have the right and option to repurchase from a
Holder of Shares (as defined in the 2019 Plan) received pursuant to
a Restricted Stock Award any Shares that are still subject to a
risk of forfeiture as of the Termination Event (as defined in the
2019 Plan).
Purpose
The objective of the 2019 Plan is to encourage and enable the
officers, employees, directors, consultants and other key persons
of the Company and its subsidiaries, 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.
24
Table of
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Grants
The 2019 Plan permits the granting of incentive stock options,
nonqualified stock options, stock awards, restricted stock units,
stock appreciation rights (“SARs”) and other
equity-based awards (collectively,
“grants”). Although all
employees and all of the employees of our subsidiaries are eligible
to receive grants under our Plan, the grant to any particular
employee is subject to the discretion of the Board, or at the
discretion of the Board, or by a committee of the Board, comprised
of not less than two directors (such body that administers the 2019
Plan, the “Committee”).
The maximum number of shares of our Common Stock that we may issue
under the 2019 Plan may not exceed 1,500,000, and no more than
250,000 may be granted as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”). If a grant expires
or terminates for any reason before it is fully vested or
exercised, or if any grant is forfeited, we may again make the
number of shares subject to that grant that the participant has not
purchased or that has not vested subject to another grant under the
2019 Plan.
We have made and will make appropriate adjustments to outstanding
grants and to the number or kind of shares subject to the 2019 Plan
in the event of a stock split, reverse stock split, stock dividend,
share combination or reclassification and certain other types of
corporate transactions, including a merger or a sale of all or
substantially all of our assets.
All grants will be determined by the Board or a committee of the
Board (the “Committee”) and at this time, 1,500,000 stock option
grants have been determined and awarded.
Administration
The 2019 Plan shall be administered by the Compensation Committee
of the Board, comprised of not less than three directors or the
Board of Directors in the absence of a Compensation Committee of
the Board. All references herein to the “Committee” shall be deemed
to refer to the group then responsible for administration of the
2019 Plan at the relevant time (i.e., either the Board of Directors
or a committee or committees of the Board, as applicable).
(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
2019 Plan, the price, exercise price, conversion ratio or other
price relating thereto;
(iv) to determine and, subject to the 2019 Plan,
to modify from time to time the terms and conditions, including
restrictions, not inconsistent with the terms of the 2019 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 any restrictions imposed under the 2019
Plan or 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 2019 Plan and
for its own acts and proceedings as it shall deem advisable; to
interpret the terms and provisions of the 2019 Plan and any Award
(including Award Agreements); to make all determinations it deems
advisable for the administration of the 2019 Plan; to decide all
disputes arising in connection with the 2019 Plan; and to otherwise
supervise the administration of the 2019 Plan.
All decisions and interpretations of the Committee shall be binding
on all persons, including the Company and all Holders.
25
Table of
Contents
Grant Instruments
All grants will be subject to the terms and conditions set forth in
our Plan and to such other terms and conditions consistent with our
Plan as the Committee deems appropriate and as are specified in
writing by the Committee to the individual in a grant instrument or
an amendment to the grant instrument. All grants will be made
conditional upon the acknowledgement of the grantee in writing or
by acceptance of the grant, that all decisions and determinations
of the Compensation Committee will be final and binding on the
grantee, his or her beneficiaries and any other person having or
claiming an interest under such grant.
Terms and Conditions of
Grants
The grant instrument will state the number of shares subject to the
grant and the other terms and conditions of the grant, consistent
with the requirements of our Plan. The purchase price per share
subject to an option (or the exercise price per share in the case
of a SAR) must equal at least the fair market value of a share of
the Company’s common stock on the date of grant. 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%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% of the Fair
Market Value on the Grant Date.
Under the 2019 Plan, the term “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).
“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.
Transferability
Restricted Stock, Stock Options, SARs and, prior to exercise, the
Shares issuable upon exercise of such Stock Option, 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.
Amendment and
Termination
The Board may, at any time, amend or discontinue the 2019 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 2019 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 12 shall limit the
Board’s or Committee’s authority to take any action permitted
pursuant to
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Section 3(c). The Board reserves the right to amend the 2019
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.
Federal Income Tax
Consequences
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current
law of participation in our Plan and does not attempt to describe
all possible federal or other tax consequences of such
participation or tax consequences based on particular
circumstances.
Stock option grants under the 2019 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.
The foregoing is only a summary of the effect of federal income
taxation on the participant and the Company under the 2019 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.
Tax
Withholding
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.
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.
No
Dissenters’ Rights
Under the Delaware General Corporation Law, the Stockholders are
not entitled to dissenters’ rights with respect to the 2019 Plan,
and the Company will not independently provide Stockholders with
any such right.
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Vote
Required
The affirmative vote of the holders of shares of common stock
representing a majority of the shares of Common Stock cast at the
meeting in person or by proxy is required for the approval of the
proposed amendment to the Amended 2019 Plan to increase the maximum
number of shares of the Company’s common stock available for
issuance under the Amended 2019 Plan from 1,500,000 shares to
3,000,000 shares. Abstentions and broker non-votes will have no effect on the outcome of this
proposal.
Recommendation of our
Board
Our Board unanimously recommends that you vote
“FOR”
the approval of the proposed amendment to the 2019 Plan to increase
the maximum number of shares of the Company’s common stock
available for issuance under the 2019 Plan
FROM
1,500,000
shares
TO 3,000,000 SHARES.
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Proposal
No. 3:
Non-Binding
Advisory Vote to Approve the Compensation
of the Company’s
Named Executive Officers.
Pursuant to the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 and
Section 14A of the Exchange Act, we are conducting a
stockholder advisory vote on the compensation paid to our named
executive officers. This proposal, commonly known as
“say-on-pay,” gives our stockholders the opportunity to
express their views on our named executive officers’ compensation.
The vote is advisory, and, therefore, it is not binding on our
Board, our Compensation Committee, or the Company. Nevertheless,
our Compensation Committee will take into account the outcome of
the vote when considering future executive compensation decisions.
We currently intend to conduct this advisory vote annually, subject
to the outcome of the advisory vote on the frequency of future
advisory votes on named executive officer compensation, as
discussed in Proposal No. 5.
Our executive compensation program is designed to attract, motivate
and retain our named executive officers who are critical to our
success. Our Board believes that our executive compensation program
is well tailored to retain and motivate key executives while
recognizing the need to align our executive compensation program
with the interests of our stockholders and our “pay-for-performance”
philosophy. Our Compensation Committee continually reviews the
compensation programs for our named executive officers to ensure
they achieve the desired goals of aligning our executive
compensation structure with our stockholders’ interests and current
market practices.
We encourage our stockholders to read the “Summary Compensation
Table” and other related compensation tables and narrative
disclosures in the “Executive Compensation” section of this Proxy
Statement, which describe the 2020 compensation of our named
executive officers.
We are asking our stockholders to approve, on an advisory basis,
the compensation of our named executive officers as disclosed in
this Proxy Statement pursuant to Item 402 of
Regulation S-K, including the
compensation tables and the narrative disclosures that accompany
the compensation tables.
Vote
Required
The affirmative vote of the holders of shares of common stock
representing a majority of the shares of Common Stock cast at the
meeting in person or by proxy is required for the approval, on a
non-binding advisory basis, of the
compensation of the Company’s named executive officers as disclosed
in this Proxy Statement. Abstentions and broker non-votes will have no effect on the outcome of this
proposal.
Recommendation of our
Board
Our Board unanimously recommends that you vote
“FOR”
the approval, on a
non-binding
advisory basis, of the compensation of the Company’s named
executive officers as disclosed in THIS proxy statement.
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Proposal
No. 4:
Non-Binding
Advisory on the Frequency of Future Advisory Votes to Approve the
Compensation of the Company’s Named Executive Officers
In Proposal No. 3, we are providing our stockholders the
opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named
executive officers. In this Proposal No. 4, we are asking our
stockholders to cast a non-binding
advisory vote regarding the frequency of future executive
compensation advisory votes. Stockholders may vote for a frequency
of every one, two, or three years, or may abstain. This vote
is required by Section 14A of the Exchange Act.
Our Board will take into consideration the outcome of this vote in
making a determination about the frequency of future executive
compensation advisory votes. However, because this vote is advisory
and non-binding, our Board may decide
that it is in the best interests of our stockholders and the
Company to hold the advisory vote to approve executive compensation
more or less frequently.
In the future, we will propose an advisory vote on the frequency of
the executive compensation advisory vote at least once every six
calendar years.
After careful consideration, our Board believes that the executive
compensation advisory vote should be held annually, and therefore
our Board unanimously recommends that you vote for a frequency of
ONE YEAR for future executive compensation advisory votes. Our
Board believes that an annual executive compensation advisory vote
will facilitate more direct stockholder input about executive
compensation. An annual executive compensation advisory vote is
consistent with our policy of reviewing our compensation program
annually, as well as seeking frequent input from our stockholders
on corporate governance and executive compensation matters.
The approval of this Proposal No. 4 requires the affirmative
vote of the holders of shares of common stock representing a
majority of the shares of Common Stock cast at the meeting in
person or by proxy. However, because stockholders have several
voting choices with respect to this proposal, it is possible that
no single choice will receive a majority vote. In light of the
foregoing, our Board will consider the outcome of the vote when
determining the frequency of future non-binding advisory votes on executive compensation.
Moreover, because this vote is non-binding, our Board may determine the frequency of
future advisory votes on executive compensation in its
discretion.
Vote
Required
The selection of the three options presented receiving the highest
number of votes for such option will be the option recommended by
stockholders, on a non-binding
advisory basis, for the frequency of future advisory votes on the
compensation of the Company’s named executive officers. Abstentions
and broker non-votes will have no
effect on the outcome of this proposal.
Recommendation of our
Board
Our Board unanimously recommends that you vote FOR “ONE
YEAR”
as the preferred frequency of future advisory votes on the
compensation of our named executive officers.
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Proposal
No. 5: RatifICATION OF the Selection of bf borgers cpa pc as THE
COMPANY’S Independent Registered Public Accounting Firm for the
Fiscal Year Ending December 31, 2021
The Audit Committee of our Board of Directors has selected the firm
of BF Borgers CPA PC as our independent registered public
accounting firm for the fiscal year ending December 31, 2021.
BF Borgers CPA PC has served as our independent registered public
accounting firm since the fiscal year ended December 31, 2018.
Although stockholder ratification of the selection of BF Borgers
CPA PC is not required by law or Delaware rules, our Audit
Committee believes that it is advisable and has decided to give our
stockholders the opportunity to ratify this selection. If this
proposal is not approved at the Annual Meeting, our Audit Committee
may reconsider this selection.
Vote
Required
The affirmative vote of the holders of shares of common stock
representing a majority of the shares of Common Stock cast is
required for the ratification of the selection of BF Borgers CPA PC
as our independent registered public accounting firm for the
current fiscal year. Abstentions will have no effect on the outcome
of this proposal. There will be no broker non-votes with respect to this proposal.
Recommendation of our
Board
OUR
BOARD
unanimously RECOMMENDS THAT YOU
VOTE “FOR” THE RATIFICATION
OF THE SELECTION OF BF BORGERS CPA PC AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2021.
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OTHER BUSINESS
We have not received notice of and do not expect any other matters
to be presented for vote at the Annual Meeting, other than the
proposals described in this Proxy Statement. However, if any other
matters are properly presented to the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote,
or otherwise act, in accordance with their judgment on such
matters. If you grant a proxy, the person named as proxy holder,
Robert Liscouski, 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.
HOUSEHOLDING OF ANNUAL
MEETING MATERIALS
The SEC has adopted rules that permit companies and intermediaries
such as brokers to satisfy delivery requirements for the proxy
statements and annual reports or Notices of Internet Availability
of Proxy Materials, as applicable, with respect to two or more
stockholders sharing the same address by delivering a single proxy
statement and annual report or the Notice of Internet Availability
of Proxy Materials, as applicable, addressed to those stockholders.
This process, which is commonly referred to as “householding,”
potentially provides extra convenience for stockholders and cost
savings for companies. We and some brokers household proxy
materials, delivering a single proxy statement and annual report or
the Notice of Internet Availability of Proxy Materials, as
applicable, to multiple stockholders sharing an address unless
contrary instructions have been received from one or more of the
affected stockholders. Once you have received notice from your
broker or us that they or we will be householding materials to your
address, householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in householding and would prefer to
receive a separate proxy statement and annual report, or the Notice
of Internet Availability of Proxy Materials, as applicable, or if
you are receiving multiples copies of the proxy statement and
annual report or the Notice of Internet Availability of Proxy
Materials, as applicable, and wish to receive only one, please
notify your broker if your shares are held in a brokerage account
or us if you hold registered shares. You can notify us by sending a
written request addressed to Attn: Chief Executive Officer, Quantum
Computing Inc., 215 Depot Court SE, Suite 215, Leesburg, VA 20175.
We will deliver promptly, upon written request, a separate copy of
the proxy statement and annual report or the Notice of Internet
Availability of Proxy Materials, as applicable, to a registered
stockholder at a shared address to which a single copy of the
applicable document(s) was delivered.
In addition, 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.
*************
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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.
September 28, 2021
|
|
By Order of the Board of Directors,
|
|
|
/s/ Robert Liscouski
|
|
|
Robert Liscouski
|
|
|
Chief Executive Officer and
Chairman of the Board of Directors
|
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(The following is the text of
the proposed First Amendment to the 2019 Equity and Incentive Plan.
This text is followed by the current text of the 2019 Equity and
Incentive Plan (without giving effect to the proposed
amendment.)
FIRST AMENDMENT TO
QUANTUM COMPUTING INC.
2019 EQUITY AND INCENTIVE PLAN
WHEREAS, Quantum Computing Inc. (the “Company”)
desires to amend the Quantum Computing Inc. 2019 Equity and
Incentive Plan (the “Plan”) to increase the aggregate number of
shares authorized for issuance under the Plan from 1,500,000 shares
to 3,000,000 shares common stock, $0.0001 par value per share, of
the Company (the “Common Stock”) (the “Plan
Amendment”); and
WHEREAS, on July 22, 2021, subject to stockholder approval,
the Board of Directors of the Company approved the Plan
Amendment.
NOW, THEREFORE, in accordance with Section 11 of the Plan, the
Plan is hereby amended as follows:
1. Section 3(a) of the
Plan is hereby amended by deleting paragraph 3(a) thereof in
its entirety and substituting the following in lieu thereof:
“(a) Stock
Issuable. The maximum number of
Shares reserved and available for issuance under the Plan shall be
3,000,000 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, as otherwise limited by Section 5(b) hereof, Code
Section 422 and the regulations promulgated hereunder. The Shares
available for issuance under the Plan may be authorized but
unissued Shares or Shares reacquired by the Company. 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 four hundred
thousand dollars ($400,000) in any calendar year.
2. The Plan Amendment shall be
effective upon approval of the stockholders of the Company at the
2021 Annual Meeting of Stockholders. If the Plan Amendment is not
so approved at such meeting, then the amendment to the Plan set
forth herein shall be void ab initio.
3. Except herein provided, the
Plan is hereby ratified, confirmed and approved in all
respects.
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Annex A
QUANTUM COMPUTING INC.
2019 EQUITY AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE
PLAN: DEFINITIONS
The name of the plan is the QUANTUM COMPUTING INC. 2019 EQUITY AND
INCENTIVE PLAN (the “Plan”). The purpose of the Plan is to
encourage and enable the officers, employees, directors,
Consultants and other key persons of QUANTUM COMPUTING INC., a
Delaware corporation (including any successor entity, the
“Company”) and its Subsidiaries, 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 shall be defined as 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” 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 “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
such condition which renders a Person (A) unable to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expect to last for a continuous period of
not less than 12 months, (B) by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous
Annex A-1
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period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months
under an accident and health plan covering employees of the
Company, (C) determined to be totally disabled by the Social
Security Administration, or (D) determined to be disabled
under a disability insurance program which provides for a
definition of disability that meets the requirements of this
section.
“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
notice of the condition giving rise to Good Reason no more than
90 days from the date on which such event occurred which gave
rise to Good Reason for Termination of the Service Relationship,
and the Company fails to cure such event within 30 days after
such notice.
“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 or any
Permitted Transferee.
“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.
“Permitted
Transferees” shall mean any of the following to whom a
Holder may transfer Shares hereunder (as set forth in
Section 9(a)(ii)(A)): the Holder’s child, stepchild,
grandchild, parent, step-parent,
grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law,
son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Holder’s household
(other than a tenant or employee), a trust in which these persons
have more than fifty percent of the beneficial interest, a
foundation in which these persons control the management of assets,
and any other entity in which these persons own more than fifty
percent of the voting interests; provided, however, that any such
trust does not require or permit distribution of any Shares during
the term of the Award Agreement unless subject to its terms. Upon
the death of the Holder, the term Permitted Transferees shall also
include such deceased Holder’s estate, executors, administrators,
personal representatives, heirs, legatees and distributees, as the
case may be.
“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.
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“Sale Event” means
the consummation of i) a change in the ownership of the Company,
ii) a change in effective control of the Company, or iii) a change
in the ownership of a substantial portion of the assets of the
Company. The occurrence of a Sale Event shall be acknowledged by
the plan administrator or board of directors, by strictly applying
these provisions without any discretion to deviate from the
objective application of the definitions provided herein. ;
provided, however, that any capital raising event, or a merger
effected solely to change the Company’s domicile shall not
constitute a “Sale Event.”
Except as otherwise provided herein, a change in the ownership of
the Company occurs on the date that any one person, or more than
one person acting as a group acquires ownership of stock of the
Company that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or
total voting power of the stock of the Company. However, if any one
person, or more than one person acting as a group, is considered to
own more than 50 percent of the total fair market value or total
voting power of the stock of the Company the acquisition of
additional stock by the same person or persons is not considered to
cause a change in the ownership of the Company (or to cause a
change in the effective control of the Company). An increase in the
percentage of stock owned by any one person, or persons acting as a
group, as a result of a transaction in which the corporation
acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this section. This section
applies only when there is a transfer of stock of the Company (or
issuance of stock) which remains outstanding after the
transaction.
A change in the effective control of the Company occurs only on
either of the following dates: (1) The date any one person, or
more than one person acting as a group acquires (or has acquired
during the 12-month period ending on
the date of the most recent acquisition by such person or persons)
ownership of stock of the Company possessing 30 percent or more of
the total voting power of the stock of the Company; (2) The
date a majority of members of the Company’s board of directors is
replaced during any 12-month period by
directors whose appointment or election is not endorsed by a
majority of the members of the Company’s board of directors before
the date of the appointment or election.
A change in the ownership of a substantial portion of the Company’s
assets occurs on the date that any one person, or more than one
person acting as a group acquires (or has acquired during the 12-
month period ending on the date of the most recent acquisition by
such person or persons) assets from the Company that have a total
gross fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the Company
immediately before such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of
the corporation, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such
assets.
“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, par value $0.0001 per share, 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.
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“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. ADMINISTRATION OF PLAN; COMMITTEE
AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
(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 of Directors
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 12, 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 shall be evidenced by Award Agreements that set forth the
terms, conditions and limitations for each Award.
(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,
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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. STOCK ISSUABLE UNDER THE PLAN; MERGERS
AND OTHER TRANSACTIONS; SUBSTITUTION
(a) Stock Issuable. The maximum
number of Shares reserved and available for issuance under the Plan
shall be 1,500,000 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. 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 four hundred thousand dollars ($400,000) 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
shall 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 Delaware
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
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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 pursuant to
Section 3(c), 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.
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
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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
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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.
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SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock
Awards. The Committee may, in its sole discretion, grant (or
sell at par value or such other 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 12 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 par
value or such other 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.
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(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. TRANSFER RESTRICTIONS; COMPANY RIGHT
OF FIRST REFUSAL; COMPANY REPURCHASE RIGHTS
(a) Restrictions on Transfer.
(i) Non-Transferability of Stock
Options. Restricted Stock awards granted under
Section 7, Stock Options, SARs and, prior to exercise, the
Shares issuable upon exercise of such Stock Option, 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.
(ii) Shares. No Shares shall be
sold, assigned, transferred, pledged, hypothecated, given away or
in any other manner disposed of or encumbered, whether voluntarily
or by operation of law, unless (i) the transfer is in
compliance with the terms of the applicable Award Agreement, all
applicable securities laws (including, without limitation, the
Securities Act), and with the terms and conditions of this
Section 9, (ii) the transfer does not cause the Company
to become subject to the reporting requirements of the
Exchange Act, and the transferee consents in writing to be
bound by the provisions of the Plan and the Award Agreement,
including this Section 10. In connection with any proposed
transfer, the Committee may require the transferor to provide at
the transferor’s own expense an opinion of counsel to the
transferor, satisfactory to the Committee, that such transfer is in
compliance with all foreign, federal and state securities laws
(including, without limitation, the Securities Act). Any attempted
transfer of Shares not in accordance with the terms and conditions
of this Section 9 shall be null and void, and the Company
shall not reflect on its records any change in record ownership of
any Shares as a result of any such transfer, shall otherwise refuse
to recognize any such transfer and shall not in any way give effect
to any such transfer of Shares. The Company shall be entitled to
seek protective orders, injunctive relief and other remedies
available at law or in equity including, without limitation,
seeking specific performance or the rescission of any transfer not
made in strict compliance with the provisions of this
Section 10. Subject to the foregoing general provisions, and
unless otherwise provided in the applicable Award Agreement, Shares
may be transferred pursuant to the following specific terms and
conditions (provided that with respect to any transfer of
Restricted Stock, all vesting and forfeiture provisions shall
continue to apply with respect to the original recipient):
(A) Transfers to Permitted
Transferees. The Holder may transfer any or all of the
Shares to one or more Permitted Transferees; provided, however,
that following such transfer, such Shares shall continue to be
subject to the terms of this Plan (including this Section 9)
and such Permitted Transferee(s) shall, as a condition to any
such transfer, deliver a written acknowledgment to that effect to
the Company and shall deliver a stock power to the
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Company with respect to the Shares. Notwithstanding the foregoing,
the Holder may not transfer any of the Shares to a Person whom the
Company reasonably determines is a direct competitor or a potential
competitor of the Company or any of its Subsidiaries.
(B) Transfers Upon Death. Upon the
death of the Holder, any Shares then held by the Holder at the time
of such death and any Shares acquired after the Holder’s death by
the Holder’s legal representative shall be subject to the
provisions of this Plan, and the Holder’s estate, executors,
administrators, personal representatives, heirs, legatees and
distributees shall be obligated to convey such Shares to the
Company or its assigns under the terms contemplated by the Plan and
the Award Agreement.
(b) Right of First Refusal. In the
event that a Holder desires at any time to sell or otherwise
transfer all or any part of his or her Shares (other than shares of
Restricted Stock which by their terms are not transferrable), the
Holder first shall give written notice to the Company of the
Holder’s intention to make such transfer. Such notice shall state
the number of Shares that the Holder proposes to sell (the “Offered
Shares”), the price and the terms at which the proposed sale is to
be made and the name and address of the proposed transferee. At any
time within 30 days after the receipt of such notice by the
Company, the Company or its assigns may elect to purchase all or
any portion of the Offered Shares at the price and on the terms
offered by the proposed transferee and specified in the notice. The
Company or its assigns shall exercise this right by mailing or
delivering written notice to the Holder within the foregoing
30-day period. If the Company or its
assigns elect to exercise its purchase rights under this
Section 9(b), the closing for such purchase shall, in any
event, take place within 45 days after the receipt by the
Company of the initial notice from the Holder. In the event that
the Company or its assigns do not elect to exercise such purchase
right, or in the event that the Company or its assigns do not pay
the full purchase price within such 45-day period, the Holder shall be required to pay a
transaction processing fee of $10,000 to the Company (unless waived
by the Committee) and then may, within 60 days thereafter,
sell the Offered Shares to the proposed transferee and at the same
price and on the same terms as specified in the Holder’s notice.
Any Shares not sold to the proposed transferee shall remain subject
to the Plan. If the Holder is a party to any stockholders
agreements or other agreements with the Company and/or certain
other of the Company’s stockholders relating to the Shares,
(i) the transferring Holder shall comply with the requirements
of such stockholders agreements or other agreements relating to any
proposed transfer of the Offered Shares, and (ii) any proposed
transferee that purchases Offered Shares shall enter into such
stockholders agreements or other agreements with the Company and/or
certain of the Company’s stockholders relating to the Offered
Shares on the same terms and in the same capacity as the
transferring Holder.
(c) Company’s Right of
Repurchase.
(i) Right of Repurchase for Unvested
Shares Issued Upon the Exercise of an Option. Upon a
Termination Event, the Company or its assigns shall have the right
and option to repurchase from a Holder of Shares acquired upon
exercise of a Stock Option which is still subject to a risk of
forfeiture as of the Termination Event. Such repurchase rights may
be exercised by the Company within the later of
(A) six months following the date of such Termination
Event or (B) seven months after the acquisition of Shares
upon exercise of a Stock Option. The repurchase price shall be
equal to the lower of the original per share price paid by the
Holder, subject to adjustment as provided in
Section 3(b) of the Plan, or the current Fair Market
Value of such Shares as of the date the Company elects to exercise
its repurchase rights.
(ii) Right of Repurchase With Respect to
Restricted Stock. Upon a Termination Event, the Company or
its assigns shall have the right and option to repurchase from a
Holder of Shares received pursuant to a Restricted Stock Award any
Shares that are still subject to a risk of forfeiture as of the
Termination Event. Such repurchase right may be exercised by the
Company within six months following the date of such
Termination Event. The repurchase price shall be the lower of the
original per share purchase price paid by the Holder, subject to
adjustment as provided in Section 3(b) of the Plan, or
the current Fair Market Value of such Shares as of the date the
Company elects to exercise its repurchase rights.
(iii) Procedure. Any repurchase right
of the Company shall be exercised by the Company or its assigns by
giving the Holder written notice on or before the last day of
the repurchase period of its intention to exercise such repurchase
right. Upon such notification, the Holder shall promptly surrender
to the Company, free and clear of any liens or encumbrances, any
certificates representing the Shares being purchased, together with
a duly executed stock power for the transfer of such Shares to the
Company or the Company’s assignee or assignees. Upon the Company’s
or
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its assignee’s receipt of the certificates from the Holder, the
Company or its assignee or assignees shall deliver to him, her or
them a check for the applicable repurchase price; provided,
however, that the Company may pay the repurchase price by
offsetting and canceling any indebtedness then owed by the Holder
to the Company.
(d) Escrow Arrangement.
(i) Escrow. In order to carry out
the provisions of this Section 9 of this Plan more
effectively, the Company shall hold any Shares issued pursuant to
Awards granted under the Plan in escrow together with separate
stock powers executed by the Holder in blank for transfer. The
Company shall not dispose of the Shares except as otherwise
provided in this Plan. In the event of any repurchase by the
Company (or any of its assigns), the Company is hereby authorized
by the Holder, as the Holder’s attorney-in-fact, to date and
complete the stock powers necessary for the transfer of the Shares
being purchased and to transfer such Shares in accordance with the
terms hereof. At such time as any Shares are no longer subject to
the Company’s repurchase and first refusal rights, the Company
shall, at the written request of the Holder, deliver to the Holder
a certificate representing such Shares with the balance of the
Shares to be held in escrow pursuant to this Section.
(ii) Remedy. Without limitation of
any other provision of this Plan or other rights, in the event that
a Holder or any other Person is required to sell a Holder’s Shares
pursuant to the provisions of Sections 9(b) or (c) hereof
and in the further event that he or she refuses or for any reason
fails to deliver to the Company or its designated purchaser of such
Shares the certificate or certificates evidencing such Shares
together with a related stock power, the Company or such designated
purchaser may deposit the applicable purchase price for such Shares
with a bank designated by the Company, or with the Company’s
independent public accounting firm, as agent or trustee, or in
escrow, for such Holder or other Person, to be held by such bank or
accounting firm for the benefit of and for delivery to him, her,
them or it, and/or, in its discretion, pay such purchase price by
offsetting any indebtedness then owed by such Holder as provided
above. Upon any such deposit and/or offset by the Company or its
designated purchaser of such amount and upon notice to the Person
who was required to sell the Shares to be sold pursuant to the
provisions of Sections 9(b) or (c), such Shares shall at such
time be deemed to have been sold, assigned, transferred and
conveyed to such purchaser, such Holder shall have no further
rights thereto (other than the right to withdraw the payment
thereof held in escrow, if applicable), and the Company shall
record such transfer in its stock transfer book or in any
appropriate manner.
(e) Lockup Provision. If requested
by the Company, a Holder shall not sell or otherwise transfer or
dispose of any Shares (including, without limitation, pursuant to
Rule 144 under the Securities Act) held by him or her for such
period following the effective date of a public offering by the
Company of Shares as the Company shall specify reasonably and in
good faith. If requested by the underwriter engaged by the Company,
each Holder shall execute a separate letter confirming his or her
agreement to comply with this Section.
(f) Adjustments for Changes in Capital
Structure. If, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in the Common Stock,
the outstanding Shares are increased or decreased or are exchanged
for a different number or kind of securities of the Company, the
restrictions contained in this Section 9 shall apply with
equal force to additional and/or substitute securities, if any,
received by Holder in exchange for, or by virtue of his or her
ownership of, Shares.
(g) Termination. The terms and
provisions of Section 9(b) and
Section 9(c) (except for the Company’s right to
repurchase Shares still subject to a risk of forfeiture upon a
Termination Event) shall terminate upon consummation of any Sale
Event, in either case as a result of which Shares are registered
under Section 12 of the Exchange Act and
publicly-traded on any national
security exchange.
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.
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(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. It is the intent of
the Board that payments and benefits under the Plan comply with or
be exempt from Section 409A and the regulations and guidance
promulgated thereunder and, accordingly, to the maximum extent
permitted the Plan shall be interpreted to be in compliance
therewith or exempt therefrom. In no event whatsoever shall the
Company be liable for any additional tax, interest or penalty that
may be imposed upon a Participant by Section 409A or damages
to a Participant for failing to comply with Section 409A
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 12 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 paragraph (0(4) of
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; provided that stock
certificates to be held in escrow pursuant to Section 9 of the
Plan shall be deemed delivered when the Company shall have recorded
the issuance in its records. 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
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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
shall be approved by stockholders in accordance with applicable
state law and the Company’s articles of incorporation and bylaws
within 12 months thereafter. If the stockholders fail to
approve the Plan within 12 months after its adoption by the
Board of Directors, then any Awards granted or sold under the Plan
shall be rescinded and no additional grants or sales shall
thereafter be made under the Plan. Subject to such approval by
stockholders and to the requirement that no Shares may be issued
hereunder prior to such approval, Stock Options and other Awards
may be granted hereunder on and after adoption of the Plan by the
Board. No grants of Stock Options and other Awards may be made
hereunder after the tenth anniversary of the date the Plan is
adopted by the Board or the date the Plan is approved by the
Company’s stockholders, whichever is earlier.
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 Delaware 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 Delaware.
DATE ADOPTED BY THE BOARD OF DIRECTORS: February 19,
2019.
DATE ADOPTED BY THE SHAREHOLDERS: August 29, 2019.
Annex A-14
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1
1 NAME THE COMPANY NAME INC. - COMMON 123,456,789,012.12345 THE
COMPANY NAME INC. - CLASS A 123,456,789,012.12345 THE COMPANY NAME
INC. - CLASS B 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS
C 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS D
123,456,789,012.12345 THE COMPANY NAME INC. - CLASS E
123,456,789,012.12345 THE COMPANY NAME INC. - CLASS F
123,456,789,012.12345 THE COMPANY NAME INC. - 401 K
123,456,789,012.12345 x 02 0000000000 JOB # 1 OF 2 1 OF 2 PAGE
SHARES CUSIP # SEQUENCE # THIS PROXY CARD IS VALID ONLY WHEN SIGNED
AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN
THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK
AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature
(Joint Owners) Date CONTROL # SHARES To withhold authority to vote
for any individual nominee(s), mark “For All Except” and write the
number(s) of the nominee(s) on the line below. 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0000520169_1 R1.0.0.177 For Withhold For All All
All Except The Board of Directors recommends you vote FOR the
following: 1. Election of Directors Nominees 01) Robert Liscouski
02) Robert Fagenson 03) Christopher Roberts 04) William J. McGann
05) Bertrand Velge QUANTUM COMPUTING INC. 215 DEPOT COURT SE, SUITE
215 LEESBURG, VA 20175 Investor Address Line 1 Investor Address
Line 2 Investor Address Line 3 Investor Address Line 4 Investor
Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A
1A1 Investor Address Line 1 Investor Address Line 2 Investor
Address Line 3 Investor Address Line 4 Investor Address Line 5 John
Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 VOTE BY INTERNET -
www.proxyvote.com Use the Internet to transmit your voting
instructions and for electronic delivery of information. Vote by
11:59 P.M. ET on 10/26/2021. Have your proxy card in hand when you
access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to
reduce the costs incurred by our company in mailing proxy
materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via
e-mail or the
Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials
electronically in future years. VOTE BY PHONE -
1-800-690-6903 Use any
touch-tone telephone to
transmit your voting instructions. Vote by 11:59 P.M. ET on
10/26/2021. Have your proxy card in hand when you call and then
follow the instructions. VOTE BY MAIL Mark, sign and date your
proxy card and return it in the postage-paid envelope we
have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends
you vote FOR proposals 2 and 3. For Against Abstain 2. To approve
an amendment to the Company’s 2019 Equity and Incentive Plan to
increase the maximum number of shares available from 1,500,000
3,000,000. 3. To approve, on a non-binding basis, the
compensation of the Company’s executive officers. The Board of
Directors recommends you vote 1 YEAR on the following proposal: 1
year 2 years 3 years Abstain 4. To recommend, on a
non-binding advisory
basis, the frequency of future advisory votes on the compensation
of the Company’s executive officers. The Board of Directors
recommends you vote FOR the following proposal: For Against Abstain
5. To ratify the selection of BF Borgers CPA PC as the Company’s
independent registered public accounting firm for the fiscal year
ending December 31, 2021. NOTE: To transact such
other business as may properly come before the meeting. Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator, or other fiduciary, please give full title
as such. Joint owners should each sign personally. All holders must
sign. If a corporation or partnership, please sign in full
corporate or partnership name by authorized officer. Yes No Please
indicate if you plan to attend this meeting
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Contents

0000520169_2 R1.0.0.177 Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting: The Notice and Proxy Statement and Form
10-K are available
at www.proxyvote.com QUANTUM COMPUTING INC. Annual Meeting of
Shareholders November 12, 2021 10:00 AM This proxy is
solicited by the Board of Directors The shareholder(s) hereby
appoint(s) Robert Liscouski as proxy, with the power to appoint his
substitute, and hereby authorize him to represent and to vote, as
designated on the reverse side of this ballot, all of the shares of
Common stock of QUANTUM COMPUTING INC. that the shareholder(s)
is/are entitled to vote at the Annual Meeting of Shareholders to be
held at 10:00 AM, EDT on November 12, 2021, at
215 Depot Court SE, Leesburg, VA 20175, and any adjournment or
postponement thereof. This proxy, when properly executed, will be
voted in the manner directed herein. If no such direction is made,
this proxy will be voted in accordance with the Board of Directors’
recommendations. Continued and to be signed on reverse
side
Table of
Contents

Your Vote Counts! Get informed
before you vote View the Notice of Proxy Statement, Annual
Report,1234567890123456789012345678901234567890, 123456789012345678
9012345678901234567890, 1234567890123456789012345678901234567890,
12345678901234567890123456789012345 67890 online OR you can receive
a free paper copy of voting material(s) by requesting prior to
<matcutoff>. If you would like to request a copy of the
voting material(s), you may (1) visit www.ProxyVote.com, (2) call
1-800-579-1639 or (3) send
an email to sendmaterial@proxyvote.com. If sending an email, please
include your control number (indicated below) in the subject line.
Smartphone users Point your camera here and vote without entering a
control number For complete information and to vote, visit
www.ProxyVote.com Control # FLASHID-JOB# Ricky
Campana P.O. Box 123456 Suite 500 51 Mercedes Way Edgewood, NY
11717 1 OF 2 322,224 148,294 30# XXXX XXXX XXXX XXXX QUANTUM
COMPUTING INC. 2021 Annual Meeting Vote by November
11, 2021 11:59
PM
ET QUANTUM COMPUTING INC. 215 DEPOT COURT SE, SUITE 215 LEESBURG,
VA 20175 You invested in QUANTUM COMPUTING INC. and it’s time to
vote! You have the right to vote on proposals being presented at
the Annual Meeting. This is an important notice regarding the
availability of proxy material for the shareholder meeting to be
held on November 12, 2021. & Proxy Statement,
Form 10-K online OR you
can receive a free paper or email copy of the material(s) by
requesting prior to October 13, 2021. If you would like to
request a copy of the material(s) for this and/or future
shareholder meetings, you may (1) visit www.ProxyVote.com, (2) call
1-800-579-1639 or (3) send
an email to sendmaterial@proxyvote.com. sending an email, please
include your control number (indicated below) in the subject line.
Unless requested, you will not otherwise receive a paper or email
copy. Vote in Person at the Meeting* November 12, 2021
10:00 AM EDT 215 Depot Court SE Leesburg, VA 20175 *Please check
the meeting materials for any special requirements for meeting
attendance. At the meeting, you will need to request a ballot to
vote these shares.
Table of
Contents

THIS IS NOT A VOTABLE BALLOT This is
an overview of the proposals being presented at the Vote at
www.ProxyVote.com Prefer to receive an email instead? While voting
on www.ProxyVote.com, be sure to click “Sign up for
E-delivery”. Voting
Items Board Recommends FLASHID-JOB# Control #
XXXX XXXX XXXX XXXX THE COMPANY NAME INC. - COMMON ASDFGHJKL
123456789.1234 THE COMPANY NAME INC. - CLASS A 123456789.1234 THE
COMPANY NAME INC. - CLASS B 123456789.1234 THE COMPANY NAME INC. -
CLASS C 123456789.1234 THE COMPANY NAME INC. - CLASS D
123456789.1234 THE COMPANY NAME INC. - CLASS E 123456789.1234 THE
COMPANY NAME INC. - CLASS F 123456789.1234 THE COMPANY NAME INC. -
401 K 123456789.1234 SHARE CLASSES REPRESENTED FOR VOTING upcoming
shareholder meeting. Please follow the instructions on the reverse
side to vote these important matters. 1. Election of Directors
Nominees: 01) Robert Liscouski 03) Christopher Roberts 05) Bertrand
Velge 02) Robert Fagenson 04) William J. McGann For 2. To approve
an amendment to the Company’s 2019 Equity and Incentive Plan to
increase the maximum number of shares available from 1,500,000 to
3,000,000. For 3. To approve, on a non-binding basis, the
compensation of the Company’s executive officers. For 4. To
recommend, on a non-binding advisory
basis, the frequency of future advisory votes on the compensation
of the Company’s executive officers. Year 5. To ratify the
selection of BF Borgers CPA PC as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2021. For NOTE: To transact such
other business as may properly come before the meeting.