UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Definitive
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UNICO AMERICAN CORPORATION
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(Name
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UNICO
AMERICAN CORPORATION
26050
Mureau Road
Calabasas,
CA 91302
_____________________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be
Held Thursday, May 27, 2021
Dear
Stockholder:
You are
cordially invited to attend the Annual Meeting of Stockholders (the
“Annual Meeting”) of Unico American Corporation (the
“Company”) to be held virtually via a live webcast on
Thursday, May 27, 2021, at 2:00 p.m. Pacific Time. The stockholders
will be able to participate in the Annual Meeting, and vote and
submit your questions during the Annual Meeting via live webcast by
visiting www.virtualshareholdermeeting.com/UNAM2021. Participants
must register for the meeting by providing their name and email
address, though advance registration is not required. There will be
no physical location for shareholders to attend.
The
Annual Meeting will be held to consider and act upon the following
matters:
1.
The election of six
(6) directors to hold office until the next annual meeting of
stockholders or until their successors are elected and
qualified;
2.
To consider and
approve the adoption of the Company’s 2021 Equity Incentive
Plan; and
3.
The transaction of
such other business as may properly be brought before the
meeting.
The
Board of Directors has fixed the close of business on April 13,
2021, as the record date for the determination of stockholders who
will be entitled to notice of and to vote at the meeting. The
voting rights of the stockholders are described in the Proxy
Statement.
IT IS
IMPORTANT THAT ALL STOCKHOLDERS BE REPRESENTED AT THE ANNUAL
MEETING. STOCKHOLDERS WHO DO NOT PLAN TO ATTEND THE MEETING
VIRTUALLY ARE REQUESTED TO VOTE, DATE, AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING POSTAGE-PAID AND ADDRESSED RETURN
ENVELOPE. PROXIES ARE REVOCABLE AT ANY TIME, AND STOCKHOLDERS WHO
ARE PRESENT AT THE VIRTUAL MEETING MAY WITHDRAW THEIR PROXIES AND
VOTE AT THE VIRTUAL MEETING IF THEY SO DESIRE.
By
Order of the Board of Directors,
Michael
Budnitsky
President and Chief
Executive Officer
Calabasas,
California
April
27, 2021
This page intentionally left blank.
UNICO AMERICAN CORPORATION
26050 Mureau Road
Calabasas, CA 91302
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
May 27,
2021
This
Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Unico American Corporation, a
Nevada corporation (the “Company” or
“Unico”), for use at the Annual Meeting of Stockholders
of the Company to be held virtually via live webcast on Thursday,
May 27, 2021, at 2:00 p.m. Pacific Time. The stockholders will
be able to participate in the Annual Meeting, and vote and submit
your questions during the Annual Meeting via live webcast by
visiting www.virtualshareholdermeeting.com/UNAM2021.
Participants must register for the meeting by providing their name
and email address, though advance registration is not required.
There will be no physical location for shareholders to attend
Accompanying this Proxy Statement is a proxy card, which you may
use to indicate your vote as to each of the proposals described in
this Proxy Statement.
All
shares represented by proxies that are properly completed, signed,
and returned to the Company prior to the Annual Meeting and, which
have not been revoked, will be voted in accordance with
instructions contained in the proxies. At the Annual Meeting, the
scheduled matters to be acted upon by the stockholders
are:
(i) the
election of six (6) directors to hold office until the next annual
meeting of stockholders or until their successors are elected and
qualified, and
(ii)
the approval of the adoption of the Company’s 2021 Equity
Incentive Plan.
The
Board of Directors recommends a vote FOR the nominees for directors
listed in the proxy and FOR the approval of the 2021 Equity
Incentive Plan.
In the
absence of voting instructions to the contrary, shares represented
by properly executed proxies will be voted in accordance with the
foregoing recommendations. The Company does not know of any other
matter that will be presented for action at the Annual Meeting, but
if any other matter is properly presented, the persons that are
named in the accompanying proxy will vote thereon in accordance
with their best judgment. A stockholder may revoke his or her proxy
at any time before it is voted either by filing with the Secretary
of the Company at its principal executive offices a written notice
of revocation or a duly executed proxy bearing a later date or by
casting a vote online during the Annual Meeting at
www.virtualshareholdermeeting.com/UNAM2021.
The
close of business on April 13, 2021, has been fixed as the record
date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof. As of
the record date, the Company had outstanding 5,304,885 shares of
common stock, the only outstanding voting security of the Company.
For each share held on the record date, a stockholder is entitled
to one vote on all matters to be considered at the Annual
Meeting.
For
purposes of the Annual Meeting, the holders of a majority of the
voting power of the capital stock issued and outstanding and
entitled to vote thereof, present in person or represented by
proxy, constitute a quorum. Abstentions are included in the
determination of shares present for quorum purposes. Broker
non-votes occur when nominees, such as brokers and banks holding
shares on behalf of the beneficial owners, are prohibited from
exercising discretionary voting authority for beneficial owners who
have not provided voting instructions. Brokers and other nominees
may vote without instruction only on “routine”
proposals. On “non-routine” proposals, nominees cannot
vote without instructions from the beneficial owner, resulting in
so-called “broker non-votes.” So long as the broker has
discretion to vote on at least one proposal, broker non-votes are
counted in determining a quorum but are not counted for purposes of
determining the number of shares present in person or represented
by proxy on a voting matter.
As to
Proposal 1, the vote for directors, the Company’s Articles of
Incorporation do not provide for cumulative voting. Pursuant to the
Company’s bylaws, directors are elected by a plurality of the
voting power of the capital stock present in person or represented
by proxy at the meeting and entitled to vote on the election of
directors. As a result, the six (6) director nominees who receive
the highest number of shares voted “for” their election
are elected. For the election of directors, you may vote
“for” or “withhold” authority to vote for
each nominee. If you “withhold” authority to vote with
respect to one or more director nominees, your vote will no effect
on the election of such nominees. Proposal 1 is not considered a
“routine” proposal, and accordingly, brokers and other
nominees do not have discretion to vote without instructions from
beneficial owners. Therefore, no vote will be cast on this Proposal
by those shares of our common stock and such broker non-votes will
have no effect on the outcome of Proposal 1.
As to
Proposal 2, the affirmative vote of a majority of the voting power
of the capital stock present in person or represented by proxy at
the meeting and entitled to vote on the subject matter is required
to approve the adoption of the Company’s 2021 Equity
Incentive Plan. Because abstentions represent shares entitled to
vote, the effect of an abstention will be the same as a vote
against Proposal 2. Proposal 2 is not considered a
“routine” proposal, and accordingly, brokers and other
nominees do not have discretion to vote without instructions from
beneficial owners. Therefore, no vote will be cast by those shares
of our common stock and such broker non-votes will have no effect
on the outcome of Proposal 2.
The
Company will bear the cost of the Annual Meeting and the cost of
soliciting proxies, including the cost of preparing, assembling and
mailing the proxy material. In addition to solicitation by mail,
officers and other employees of the Company may solicit proxies by
telephone, facsimile, or personal contact without additional
compensation.
Securities
and Exchange Commission (“SEC”) rules allow delivery of
a single document to households at which two or more stockholders
reside. This procedure, referred to as “householding,”
reduces the volume of duplicate information received by
stockholders, as well as the Company’s expenses. If a
stockholder of record is eligible for householding, but it and
other stockholders of record with which it shares an address
receive multiple copies of this proxy statement and the
Company’s annual report, or if a stockholder of record holds
stock in more than one account, and in either case the stockholder
wishes to receive a single copy of this proxy statement and the
Company’s annual report for its household, the stockholder
should notify the Company’s Corporate Secretary. If a
stockholder participates in householding and wishes to receive a
separate copy of this proxy statement and the Company’s
annual report, or does not wish to participate in householding and
prefers to receive separate copies of this proxy statement and the
Company’s annual report in the future, it should notify the
Company’s Corporate Secretary. A stockholder may notify the
Company’s Corporate Secretary in writing at Unico American
Corporation, 26050 Mureau Road, Calabasas, CA 91302, Attention:
Corporate Secretary, or by telephone at 818-591-9800, extension
608.
If a
stockholder holds its shares through an intermediary that is
utilizing householding and the stockholder wishes to receive
separate copies of the Company’s annual report and proxy
statement in the future, or if it is receiving multiple copies of
the Company’s proxy materials and annual report and wishes to
receive only one, it should contact its bank, broker, or other
nominee record holder.
The
Company’s principal executive offices are located at 26050
Mureau Road, Calabasas, CA 91302. The approximate mailing date of
this Proxy Statement and the Company’s proxy card is May 3,
2021.
PROPOSAL
1 – ELECTION OF DIRECTORS
The
Company’s Bylaws provide for a range of three to eleven
directors and allow the Board of Directors to fix the exact number
of authorized directors within that range. The current number of
authorized directors is six (6).
Directors
are elected at each Annual Meeting of Stockholders to serve
thereafter until their successors have been duly elected and
qualified. Except as otherwise indicated, each nominee is currently
a director having served in that capacity since the date indicated
in the following table. All nominees have
advised the Company that they are able and willing to serve as
directors. If any nominee refuses or is unable to serve (an event
which is not anticipated), the persons named in the accompanying
proxy card will vote for another person nominated by the Board of
Directors. Unless otherwise directed in the accompanying proxy
card, the persons named therein will vote FOR the election of the
six (6) nominees listed in the following table:
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Name
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Age
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Present
Position with Company
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First
Elected
Director
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Gerard
J. Altonji
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64
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Director
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2020
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Erwin
Cheldin
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89
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Director
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1969
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John B.
Keefe, Sr.
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67
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Director
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2020
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Joycelyn
M. Ray (1)
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52
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Director
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-
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Steven
L. Shea (1)
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61
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Chairman
of the Board and Director
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-
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Jeffrey
M. Tuder
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47
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Director
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2020
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(1)
Ms. Ray and Mr.
Shea were appointed to the Board of Directors of Unico in
2020.
Each
nominee for election to the Board of Directors has extensive
management and leadership experience gained through executive and
professional service in insurance and other industries. In these
roles, the directors have developed attributes and skills in
management of capital, risk and operations. This experience with
the Company provides the current directors with a thorough
understanding of the Company’s policies and processes, rules
and regulations, risks and mitigating solutions and controls
environment.
Set
forth below are the names of the nominees for election to the Board
of Directors, along with their present and prior positions,
principal occupations and the specific individual qualifications
and skills of such directors that contribute to the overall
effectiveness of the Board of Directors and its
committees.
Gerard J. Altonji has 40 years of experience in various
roles with increasing responsibility in the insurance
industry. From 2016 to present, Mr. Altonji has served as
President of Altonji Consulting LLC which provides rating agency
support, capital management, profitability and strategic insight to
small and medium-sized property & casualty insurance
companies. From 1999 to 2016, Mr. Altonji worked at A.M. Best
Rating Services, Inc. eventually as an Assistant Vice
President. Prior to 1999, Mr. Altonji held positions at Risk
Enterprise Management, Ltd. (a subsidiary of Zurich Insurance
Company), Talegen Holdings, Inc. (previously, Crum & Forster
Corp.), Marsh &McLennan, Inc. and CIGNA Group. The
Company believes that Mr. Altonji’s knowledge and expertise
in the insurance industry qualify him for service on the Board of
Directors.
Erwin Cheldin is the Company’s former President, Chief
Executive Officer and Chairman of the Board. Mr. Cheldin is a
founder of the Company. He retired from being an employee of the
Company effective April 1, 2009. Mr. Cheldin became an officer and
director of the Company in 1969. Mr. Cheldin has over 50 years of
experience in all phases of the property and casualty insurance
industry. The Company believes that Mr. Cheldin’s historical
knowledge of the Company and its operations and long standing
service to the Company qualify him for service on the Board of
Directors.
Mr. Cheldin is the father of Mr. Cary L. Cheldin, who was the
Company’s Chairman of the Board, President and Chief
Executive Officer until August 2020.
John B. Keefe, Sr., has 40 years of experience as a mergers
and acquisitions insurance company executive, investment banker and
broker, and property and casualty industry equity analyst. From
2014 to present, Mr. Keefe, has served as President of J. Keefe
Insurance, LLC which delivers various consulting services to
insurance and investing companies. From 2008 to 2014, Mr. Keefe,
provided mergers and acquisitions services in a senior management
capacity at Nationwide Insurance and Harleysville Group. From 1980
to 2008, Mr. Keefe, held roles of increasing responsibility at
various brokerage and investment firms, including Senior Vice
President at New York Stock Exchange member firms Ferris, Baker
Watts, Inc. and Anderson & Strudwick, Inc. Mr. Keefe holds the
Chartered Financial Analyst designation. The Company believes that
Mr. Keefe’s knowledge and expertise in the insurance and
investment industries qualify him for service on the Board of
Directors.
Joycelyn M. Ray is an
accomplished ethics and compliance professional with significant
experience in developing, implementing and managing effective
ethics and compliance programs and solutions in global
organizational settings. She has been a compliance leader in the
insurance industry since 1994 and has successfully designed, led
and implemented key governance, risk and compliance initiatives
nationwide and globally. Currently, she is working with a local
non-profit charter school system in Texas as the Director of
Compliance. Prior to that, Ms. Ray served as the Vice President of
Corporate Compliance at Tokio Marine HCC for 14 years until she
semi-retired in November 2020. Throughout the course of her 26-year
insurance compliance career, Ms. Ray has held compliance positions
of increasing responsibility with several successful insurance
entities including American General Life Insurance Company, CNA and
Berkley Underwriting Partners, LCC (a division of W.R. Berkley
Corp). Ms. Ray also serves on the boards of the David McWilliams
YMCA in Houston, Texas and the Sheraton Vistana Resort in Orlando,
Texas. The Company believes Ms. Ray’s knowledge and expertise
in insurance compliance qualify her for service on the Board of
Directors.
Steven L. Shea is a seasoned board
level executive with more than thirty five years of experience in
the fields of corporate finance, investment banking and
institutional investment management. Mr. Shea’s specific
areas of expertise include mergers and acquisitions, public and
private finance, investment trading, management and research. Mr.
Shea became an expert in corporate governance and compliance
through advisory service to numerous public companies and as a
member of the boards of directors of both public and private
companies. Since 2015, Mr. Shea has served as a Chairman of the
board of directors of Blonder Tongue Labs, Inc., a publicly traded
company currently listed on the New York Stock Exchange, and has
served as a member of their board of directors since 2009. Mr. Shea
has also held executive level positions at Tufton Capital
Management, LLC (formerly Hardesty Capital Management, LLC), and
Ferris, Baker, Watts, Inc. (acquired by Royal Bank of Canada). The
Company believes Mr. Shea’s public company director
experience and expertise in capital markets qualify him for service
on the Board of Directors.
Jeffrey M. Tuder is the Managing Member
of Tremson Capital Management, a private investment firm he founded
in 2015. Prior to founding Tremson, Mr. Tuder served in roles
with increasing responsibility at Nassau Capital, Fortress
Investment Group, LLC, CapitalSource Finance, LLC, JHL Capital
Group, LLC, and, most recently, as the Director of Research for KSA
Capital Management, LLC from 2012 until 2015. Mr. Tuder currently
serves as a Director for Inseego Corporation (Nasdaq: INSG) where
he is Chairman of the Audit and Compensation Committees, and as a
Director for Seachange International (Nasdaq: SEAC), where he is
Vice Chairman and Chairman of the Audit Committee.
Previously, Mr. Tuder served as a Director for MRV Communications,
Inc. (Nasdaq: MRVC) until August 2017, where he was Chairman of the
Audit Committee prior to its sale to Adva Optical Networking. The
Company believes Mr. Tuder’s public company Director
experience and expertise in private equity and hedge fund
investments qualify him for service on the Board of
Directors.
The Board of Directors has determined that each of Ms. Ray and
Messrs. Altonji, Keefe, Shea and Tuder, are independent directors
as defined by the Nasdaq Listing Rules.
During
the year ended December 31, 2010, the Company’s Board of
Directors held four regular meetings and eight special meetings.
The independent directors met without any management directors or
employees present four times during the year ended December 31,
2020. Non-employee directors received an annual retainer of
$15,000, payable in equal quarterly installments and the following
positions received additional compensation per year:
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Committee
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Audit
Committee
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$6,000
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$4,000
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Compensation
Committee
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$2,500
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$2,000
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Nominating &
Corporate Governance (“NGC”) Committee
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$2,500
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$2,000
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Mr.
Cheldin attended at least 75% of the meetings of the Board of
Directors. Mr. Keefe attended all combined total meetings of the
Board of Directors and the committees on which he served after his
appointment to the Board on March 11, 2020. Messrs. Altonji and
Tuder attended all combined total meetings of the Board of
Directors and the committees on which they served after their
election to the Board on May 26, 2020. Ms. Ray and Mr. Shea
attended all combined total meetings of the Board of Directors and
the committees on which they served after their appointed to the
Board on November 16, 2020.
Director Compensation
The
compensation of the Company’s non-employee directors paid by
the Company for the last completed fiscal year is as
follows:
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Compensation
Committee
Fees
$
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Fees
Earned or Paid in
Cash
$
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Gerard J.
Altonji
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11,250
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3,000
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1,000
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1,750
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17,000
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17,000
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Erwin
Cheldin
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15,000
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-
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-
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-
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15,000
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15,000
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Ronald A. Closser
(1)
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7,500
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2,000
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1,125
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1,125
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11,750
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11,750
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Janet D. Frank
(2)
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3,750
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1,000
|
625
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-
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5,375
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5,375
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Andrew L. Furgatch
(3)
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7,500
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-
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-
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-
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7,500
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7,500
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Rhonda L.
Gillenwaters (4)
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11,250
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1,000
|
1,750
|
1,500
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15,500
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15,500
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John B. Keefe,
Sr.
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15,000
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5,500
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-
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1,000
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21,500
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21,500
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Joycelyn M.
Ray
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3,750
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-
|
625
|
500
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4,875
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4,875
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David T. Russell
(3)
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7,500
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3,000
|
-
|
1,000
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11,500
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11,500
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Steven L.
Shea
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3,750
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1,000
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-
|
500
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5,250
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5,250
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|
Samuel J. Sorich
(3)
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7,500
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-
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1,000
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1,250
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9,750
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9,750
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|
Jeffrey M.
Tuder
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11,250
|
3,500
|
1,500
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-
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16,250
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16,250
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|
Ernest A. Wish
(5)
|
3,750
|
-
|
-
|
625
|
4,375
|
4,375
|
(1)
Mr. Closser
resigned from the Board of Directors effective February 17,
2021.
(2)
Ms. Frank resigned
from the Board of Directors effective April 1, 2020.
(3)
Messrs. Furgatch,
Russell, and Sorich did not stand for re-election as directors at
the Annual Meeting in 2020.
(4)
Ms. Gillenwaters
resigned from the Board of Directors effective November 15,
2020.
(5)
Mr. Wish resigned
from the Board of Directors effective March 3, 2020.
The
Company’s Directors do not receive equity awards and
therefore none of the Directors had outstanding options or stock
awards at fiscal year end.
Board Leadership Structure
The
Company’s current six-member Board is led by its Chairman Mr.
Shea, an independent director. Other Board members include Mr.
Erwin Cheldin, the retired Chairman, President and Chief Executive
Officer, and four independent directors. The Board does not have a
lead independent director.
In
March 2021, the Board decided to separate the roles of Chairman of
the Board and Chief Executive Officer of the Company, appointing
Mr. Shea as Chairman of the Board. Prior to February, 2021, the
roles had been combined, but upon the departure of Mr. Closser as
the Company’s Chairman and Chief Executive Officer, and the
appointment of Mr. Budnitsky as the Company’s Chief Executive
Officer and President on an interim basis, the Board decided to
separate the two positions. The Board of Directors has determined
that separating the Chairman and Chief Executive Officer positions
is the appropriate leadership structure for the Company at this
time and provides effective oversight of management and strong
leadership of the independent directors and stockholders. The
Chairman has significant core responsibilities,
including:
●
Chairs the Annual
Meeting of Stockholders;
●
Guides discussions
at Board meetings and encourages director participation and
input;
●
Engages with
directors between Board meetings to further identify items for
consideration;
●
Sets Board meeting
schedules and agendas in consultation with the Company’s
Chief Executive Officer;.
The
Board believes that separating the Chairman and Chief Executive
Officer roles fosters clear accountability, effective decision
making, and alignment on corporate strategy, while providing
additional independent oversight of management. The Company will
continue to evaluate its structure and practices to maintain the
highest standards of corporate governance.
The
Board of Directors is primarily responsible for assessing risks
associated with the Company’s business. However, the Board
delegates certain responsibilities to committees of the Board of
Directors, including certain risk oversight responsibilities to the
Audit Committee.
Committees of the Board of Directors
The
Board of Directors has established an Audit Committee in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The members presently consist of Messrs. Tuder (Chair), Keefe, and
Shea. The Audit Committee of the Board of Directors oversees the
accounting and financial reporting processes of the Company and the
audits of the Company’s consolidated financial statements.
The Audit Committee also reviews with management the
Company’s policies and procedures with respect to risk
assessment and risk management, including reviewing certain risks
associated with the Company’s financial and accounting
systems, accounting policies, investment strategies, regulatory
compliance, insurance programs and other matters.
The
Audit Committee has a written charter, a copy of which was attached
to the Proxy Statement filed with respect to the annual meeting
held on May 23, 2019. The Audit Committee met four times during the
year ended December 31, 2020, and held two meetings subsequent to
the year ended December 31, 2020, to discuss accounting and
financial statement matters related to the fiscal year ended
December 31, 2020. Messrs. Tuder, Keefe, and Shea are independent
and are in compliance with the independent standards applicable to
audit committee members contained in the Nasdaq Listing Rules. The
Board of Directors has determined that each of Messrs. Tuder, Keefe
and Shea qualifies as an “Audit Committee Financial
Expert” as that term is defined in the rules and regulations
established by the SEC.
The
Board of Directors has established a Compensation Committee
presently consisting of Ms. Ray (Chair) and Messrs. Altonji,
Shea and Tuder, all of whom are independent and are in compliance
with the independent standards applicable to compensation committee
members contained in the Nasdaq Listing Rules. The Company’s
compensation program is designed to provide executive officers with
total compensation commensurate with responsibilities and
competitive with compensation provided to executives in like
positions, as determined by the Compensation Committee. The
Compensation Committee considers and recommends to the Board of
Directors compensation for executive officers. The Compensation
Committee met one time during the year ended December 31, 2020, and
held one meeting subsequent to the year ended December 31, 2020.
The Compensation Committee has a written charter, a copy of which
was attached to the Proxy Statement filed with respect to the
annual meeting held on May 23, 2019.
The
Board of Directors has established a Nominating & Corporate
Governance Committee presently consisting of Messrs. Altonji
(Chair), Keefe and Shea and Ms. Ray, all of whom are independent
and are in compliance with the independent standards applicable to
nominating & corporate governance committee members contained
in the Nasdaq Listing Rules. The Nominating & Corporate
Governance Committee reviews, advises and makes recommendations to
the Board with respect to corporate governance matters, oversees
periodic evaluations of the Board and Board committees, including
establishing criteria to be used in connection with such
evaluations, and advises the Board with respect to Board
composition, procedures and committees. The Nominating &
Corporate Governance Committee met one time during the year ended
December 31, 2020, and held one meeting subsequent to the year
ended December 31, 2020. The Nominating & Corporate
Governance Committee has a written charter, a copy of which was
attached to the Proxy Statement filed with respect to the annual
meeting held on May 23, 2019.
The
Nominating & Corporate Governance Committee does not have a
formal policy with regard to the consideration of any director
candidates recommended by stockholders. The Nominating &
Corporate Governance Committee, however, would consider qualified
nominees recommended by stockholders. Stockholders who wish to
recommend a qualified nominee should submit complete information as
to the identity and qualifications of the person recommended to the
Secretary of the Company at 26050 Mureau Road, Calabasas, CA 91302.
The Nominating & Corporate Governance Committee generally
requires that nominees be persons of sound ethical character, be
able to represent all stockholders fairly, have no material
conflicts of interest, have demonstrated professional achievement,
have meaningful experience, and have a general appreciation of the
major business issues facing the Company. The Nominating &
Corporate Governance Committee does not have a formal policy
regarding diversity, but, as described above, considers a broad
range of attributes and characteristics in identifying and
evaluating nominees for election to the Board of Directors. The
Nominating & Corporate Governance Committee views diversity
broadly to include diversity of experience, skills and viewpoint in
addition to more traditional diversity concepts. Absent special
circumstances, the Nominating & Corporate Governance Committee
will continue to nominate qualified incumbent directors whom the
Nominating & Corporate Governance Committee believes will
continue to make important contributions to the Board of
Directors.
Compensation Committee Interlocks and Insider
Participation
No
present member of the Compensation Committee is, or has been at any
time, an officer or employee, nor has any member had any
relationship with us requiring disclosure under Item 404 of
Regulation S-K. None of the Company’s executive officers
currently serves, or in the past year has served, as a member of
the board of directors or compensation committee of any
nonaffiliated entity that has one or more executive officers
serving on the Company’s Board of Directors or Compensation
Committee.
Communications with the Board of Directors
The
Company provides a process for stockholders to send communications
to the Board of Directors or any of the directors. Stockholders may
send written communications to the Board of Directors or any
director, c/o Secretary, Unico American Corporation, 26050 Mureau
Road, Calabasas, CA 91302. All communications will be compiled by
the Secretary of the Company and will be submitted to the members
of the Board of Directors or to the individual director to whom it
was addressed on a periodic basis. The Company does not have a
policy with regard to directors’ attendance at the Annual
Meeting of Stockholders. Four of the current directors attended the
2020 Annual Meeting of Stockholders.
Anti-Hedging and Pledging Policy
The
Board has adopted an Insider Trading Policy that prohibits all of
the Company’s directors, officers, employees and consultants
(“covered individuals”) from hedging, engaging in
short-sales, transacting in publicly traded options, and pledging
securities of the Company.
Hedging. Certain
hedging and monetization transactions, such as zero-cost collars
and forward sale contracts, involve the establishment of a short
position in securities of the Company and limit or eliminate the
covered individual’s ability to profit from an increase in
the value of securities of the Company. Accordingly, these
transactions can cause a covered individual’s interests to be
misaligned with other stockholders of the Company. The Company
therefore prohibits covered individuals from engaging in all
hedging and monetization transactions involving securities of the
Company.
Short Sales. Short
sales of securities of the Company evidence an expectation on the
part of the seller that the securities will decline in value, and
signal to the market a lack of confidence in the Company or its
short-term prospects. Short sales may also reduce the
seller’s incentive to improve Company performance. The
Company therefore prohibits short sales by covered
individuals.
Publicly Traded Options. A
transaction in options is essentially a bet on the short-term
movement of Company stock and can therefore create the appearance
that a covered individual is trading based on inside information.
These transactions may also focus a covered individual’s
attention on short-term performance at the expense of the
Company’s long-term objectives. The Company therefore
prohibits transactions in puts, calls and other derivative
securities involving Company stock by covered
individuals.
Pledging. Securities
of the Company held in a margin account or pledged as collateral
for a loan may be sold without the covered individual’s
consent if he or she fails to meet a margin call or defaults on a
loan, which may occur at a time when the covered individual is
aware of material nonpublic information or is otherwise not
permitted to trade in Company securities. Therefore, these
activities are prohibited for covered individuals.
Code of Ethics
The
Company has adopted a Code of Ethics that applies to its principal
executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions. A copy of the Code of Ethics may be obtained without
charge upon written request to the Secretary, Unico American
Corporation, 26050 Mureau Road, Calabasas, CA 91302.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of April 13, 2021, the names and
holdings of all persons who are known by the Company to own
beneficially more than 5% of its outstanding common stock, its only
class of outstanding voting securities, and the beneficial
ownership of such securities held by each director, nominee for
director, and all executive officers and nominees for director as a
group. Unless otherwise indicated, the Company believes that each
of the persons and entities set forth below has the sole power to
vote and dispose of the shares listed opposite his or its name as
beneficially owned by him or it. Except as otherwise noted below,
the street address of each beneficial owner is c/o Unico American
Corporation, 26050 Mureau Road, Calabasas, CA 91302.
Name and Address of
Beneficial Owner
|
Amount Beneficially
Owned
|
|
|
|
|
|
|
Certain Beneficial
Owners
|
|
|
|
Erwin
Cheldin
|
2,353,717
|
44.4%
|
|
|
|
|
|
Ambina Unico
Holdings LLC (1)
309 Greenwich Ave,
Suite 201, Greenwich, CT 06830
|
644,133
|
12.1%
|
|
|
|
|
|
The Lion Fund,
L.P., Sardar Biglari and Biglari Capital Corp. (2)
17802 IH 10 West,
Suite 400, San Antonio TX 78257
|
527,100
|
9.9%
|
|
|
|
|
|
Dimensional Fund
Advisors LP (3)
Building
One
6300 Bee Cave Road,
Austin TX 78746
|
396,237
|
7.5%
|
Executive Officers,
Directors and Director Nominees
|
Amount Beneficially
Owned
|
|
|
Erwin
Cheldin
|
2,353,717
|
44.4%
|
|
Michael
Budnitsky
|
6,999
|
0.1%
|
|
John B. Keefe,
Sr.
|
2,000
|
0.0%
|
|
Gerard J.
Altonji
|
0
|
0.0%
|
|
Donny J.
Esparza
|
0
|
0.0%
|
|
Joycelyn M.
Ray
|
0
|
0.0%
|
|
Steven L.
Shea
|
0
|
0.0%
|
|
Jeffrey M.
Tuder
|
0
|
0.0%
|
|
All
executive officers, directors and director nominees as a group (8
persons)
|
2,362,716
|
44.5%
|
(1)
Per Schedule 13D/A
dated October 10, 2020.
(2)
Per Form 13F dated
February 16, 2021.
(3)
Per Schedule 13G/A
dated February 16, 2021.
EXECUTIVE
COMPENSATION AND OTHER INFORMATION
The
executive officers of the Company, along with their respective ages
and positions as of April 13, 2021, are as follows:
|
Name
|
Age
|
Present
Position with Company
|
|
|
|
|
|
Michael
Budnitsky (1)
|
46
|
President, Chief Executive Officer, Treasurer, Chief Financial
Officer, Secretary, and Director
|
|
Donny
J. Esparza (2)
|
47
|
Senior Vice President of Marketing and
Distribution
|
(1) Mr.
Budnitsky was appointed Interim President and Chief Executive
Officer, on an interim basis, on February 11, 2021.
(2) Mr.
Esparza was appointed Vice President of
Marketing and Distribution on September 28,
2020.
Michael Budnitsky has served as Chief Executive Officer
and President of the Company on an interim basis since February 11,
2021, and as Treasurer, Chief Financial Officer, and Secretary of
the Company since August 1, 2016. From September 2014 through July
2016, Mr. Budnitsky served as Vice President of Accounting of the
Company and was responsible for various accounting and finance
functions, including financial and tax reporting, Sarbanes Oxley
compliance, and oversight of the accounting department. From May
2005 until joining the Company in 2014, Mr. Budnitsky worked at HCC
Surety Group, eventually as its Vice President, Controller. Prior
thereto, Mr. Budnitsky worked as a financial reporting manager at
the Automobile Club of Southern California and as an audit manager
at KPMG LLP. Mr. Budnitsky is an active Certified Public Accountant
in California.
Donny J. Esparza has served
as Senior Vice President
of Marketing and Distribution since September 28, 2020. Before joining the
Company, Mr. Esparza served as the Director of Business
Development & Distribution for Pacific Compensation, a wholly
owned subsidiary of Copperpoint Mutual Insurance Company
from 2016 to 2020. Prior to Pacific
Compensation, from 2008 to October 2016, he served as the
Regional Marketing Officer for Zenith Insurance Company, a
wholly owned subsidiary of Fairfax Financial Holdings
Limited. Mr. Esparza began his insurance career as a
Claims Specialist at State Farm Insurance in
1994.
Summary of Executive Compensation
Summary Compensation Table
The
following table sets forth information for years ended December 31,
2020 and 2019, as to executive compensation paid to the
Company’s named executive officers.
Name and Principal
Position
|
|
|
|
|
|
Non-equity
Incentive
Plan
Compensation
|
Nonqualified Deferred
Compensation Earnings
|
All
Other
Compensation
(1)
|
|
|
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Budnitsky
|
2020
|
253,226
|
50,000
|
-
|
-
|
-
|
-
|
28,320
|
331,546
|
|
President,
Chief
Executive
Officer,
Treasurer,
Chief
Financial
Officer and
Secretary
|
2019
|
249,000
|
12,500
|
-
|
-
|
-
|
-
|
25,631
|
287,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donny J.
Esparza
|
2020
|
55,385
|
50,000
|
-
|
-
|
-
|
-
|
5,239
|
110,624
|
|
Senior
Vice President of
Marketing
and
Distribution
|
2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Ronald A. Closser
(2)
|
2020
|
230,769
|
-
|
-
|
-
|
-
|
-
|
-
|
230,769
|
|
President
and Chief
Executive
Officer
|
2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cary L. Cheldin
(3)
|
2020
|
258,874(4)
|
-
|
-
|
-
|
-
|
-
|
1,452,775(7)
|
1,711,649
|
|
President
and Chief
Executive
Officer
|
2019
|
331,000
|
54,000
|
-
|
-
|
-
|
-
|
27,660
|
412,660
|
|
|
|
|
|
|
|
|
|
|
|
David A. Lawless
(5)
|
2020
|
288,362
|
-
|
-
|
-
|
-
|
-
|
24,221
|
312,583
|
|
Senior
Vice President
And
Chief Administrative Officer
|
2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
See “All
Other Compensation” table below.
(2)
Mr. Closser was
appointed to serve as the
Company’s President, Chief Executive Officer and Chairman of
the Board on August 10, 2021. Mr. Closser left the position of the
Company’s President and Chief Executive Officer on February
10, 2021. Mr. Closser resigned from the position of the Chairman
and member of the board of directors on February 17,
2021.
(3)
Mr. Cheldin
resigned and retired of the
Company’s President and Chief Executive Officer and Chairman
and member of the board of directors on August 10, 2020. 2020
salary includes amounts owed to Mr. Cheldin through August 10,
2020.
(4)
See “All
Other Compensation” for a description of the amounts paid to
Mr. Cheldin in connection with his resignation and
retirement.
(5)
Mr. Lawless was
appointed Senior Vice President and Chief Administrative Officer on
January 8, 2020. On September 21,
2020, the Company decided to eliminate the position of Chief
Administrative Officer. Consequently, employment of Mr. Lawless was
terminated, effective immediately, as a result of the position
elimination
All Other Compensation
The
following table summarizes all other compensation paid or earned by
the named executive officers noted above for the years ended
December 31, 2020.
|
Name
|
|
Perquisites
and Other Personal Benefits
|
Contribution
to Profit Sharing Plan (2)
|
|
|
|
|
$
|
$
|
|
|
Michael
Budnitsky
|
2020
|
19,770(1)
|
8,550
|
28,320
|
|
|
|
|
|
|
|
Donny
J. Esparza
|
2020
|
5,239(1)
|
-
|
5,239
|
|
|
|
|
|
|
|
Ronald
A. Closser
|
2020
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Cary
L. Cheldin (3)
|
2020
|
1,444,375(3)
|
8,400
|
1,452,775
|
|
|
|
|
|
|
|
David
A. Lawless
|
2020
|
24,221(1)
|
-
|
24,221
|
(1)
Represents payments
for medical, dental, life, and disability insurance.
(2)
Represents amounts
contributed or accrued to the person’s account under the
Unico American Corporation Profit Sharing Plan (the
“Plan”), all of which are vested. See more information
about the Plan in “Profit Sharing Plan.”
(3)
Represents $14,800
in payments for medical, dental, life and disability insurance paid
to Mr. Cheldin through August 10 2020, as well as amounts paid to
Mr. Cheldin pursuant to the Letter Agreement and Advisory
Agreement, each dated August 10, 2020 between Mr. Cheldin and the
Company (collectively, the “Letter Agreement”). Amounts
paid under the Letter Agreement include $1,261,783 in severance,
$14,069 paid during 2020 for health-insurance related benefits, and
$50,000 paid during 2020 under his agreement to perform certain
advisory services. Under the terms of the Letter Agreement, the
Company expects to pay an additional $103,723 between 2021 and 2023
for certain health insurance-related benefits, which amount is
included in the table. In addition, the Company will pay up to an
additional $70,000 during 2021 in exchange for certain advisory
services.
The Company's compensation policies for executive officers seek to
align the Company's executive officers' interests and motivations
with those of the Company's stockholders by rewarding both short
and long-term objectives. Overall compensation of the Company's
executive officers should provide a competitive level of total
compensation that enables the Company to attract, retain and
incentivize highly qualified executive officers with the background
and experience necessary to lead the Company and achieve its
business goals.
Pay Ratio Disclosure
The Company is currently considered a “smaller reporting
company” for the purposes
of the SEC’s executive compensation disclosure rules.
The Company
has elected to comply with the scaled disclosure requirements
applicable to smaller reporting companies and has therefore omitted
the pay ratio disclosure required under Item 402(u) of Regulation
S-K.
Employment Agreements
Employment Agreement with Cary L. Cheldin and Agreements Related to
Severance and Retirement
The
Company had an employment agreement (the “Cheldin Employment
Agreement”) with Mr. Cary L. Cheldin, its former President
and Chief Executive Officer, until August 10, 2020, the effective
date of Mr. Cheldin’s retirement and resignation as the
Company’s President and Chief Executive Officer and Chairman
and member of the Board. In connection with Mr. Cheldin’s
retirement and resignation, on August 10, 2020, the Company and Mr.
Cheldin entered into (i) a Letter Agreement (the “Letter
Agreement”) setting forth the details of Mr. Cheldin’s
retirement and departure from the Company, and (ii) and an Advisory
Agreement, (the “Advisory Agreement”) pursuant to which
Mr. Cheldin agreed to provide certain transitional services to the
Company for a period of twelve months. Details of the Cheldin
Employment Agreement, the Letter Agreement and the Advisory
Agreement are set forth below.
Cheldin Employment Agreement. On and effective as of March
17, 2015, the Company entered into the Cheldin Employment Agreement
with Mr. Cheldin (the “Executive”). The Cheldin
Employment Agreement was approved by the Company’s Board of
Directors on March 16, 2015, and was further amended as of March
27, 2019, March 23, 2018 and March 27, 2017. The material terms of
the Cheldin Employment Agreement were as follows:
The
Cheldin Employment Agreement provided for an annual salary of no
less than $315,000. The annual salary was subject to increase from
time to time at the discretion of the Board of Directors of the
Company. The Cheldin Employment Agreement also provided for a
mandatory annual bonus payable on or before December 31 of each
year. The amount of each mandatory bonus was to be determined by
the Board of Directors but would not be less than $54,000, less any
amounts paid to the Executive as a discretionary bonus since the
immediately preceding January 1. Pursuant to amendments to the
employment agreement dated as of March 27, 2017, March 23, 2018,
and March 27, 2019, the Executive waived his rights to his
mandatory bonus for fiscal years 2016, 2017, and 2018.
The
Executive’s employment under the Cheldin Employment Agreement
terminated on August 10, 2020, upon his retirement and
resignation.
Letter Agreement. On August 10, 2020, the Company and Mr.
Cheldin entered into the Letter Agreement, pursuant to which the
Cheldin Employment Agreement was terminated and the Company agreed
to provide Mr. Cheldin with a retirement package consisting of the
following: (i) an amount in cash equal to all accrued and unpaid salary and other
compensation, including accrued, but unused vacation, incurred
prior to August 10, 2020, and any unreimbursed business expenses,
(ii) an aggregate amount of cash equal to $1,261,783.33, plus (iii)
cash payments for certain health related benefits for the three
year and one month period following August 10, 2020. Pursuant to
the Letter Agreement, the Company agreed to the continuation of
certain indemnification obligations, as provided in the Cheldin
Employment Agreement.
The Letter Agreement also provided Mr. Cheldin the option (the
“Purchase Option”), exercisable on or before thirty
days after August 10, 2020, to require the Company (or a third
party, at the Company’s sole discretion) to purchase all
shares of the Company’s common stock held by Mr. Cheldin as
of August 10, 2020 at a purchase price of $5.00 per share. Mr.
Cheldin exercised such option on September 4, 2020. On October 5,
2020, the Company assigned its rights and obligations with respect
to the Purchase Option to Ambina Holdings, LLC, which subsequently
completed the purchase of Mr. Cheldin’s shares of common
stock.
Advisory
Agreement. In connection with
Mr. Cheldin’s retirement, on August 10, 2020, the Company and
Mr. Cheldin entered into the Advisory Agreement, pursuant to which
Mr. Cheldin agreed to provide certain transitional services to the
Company for a period of twelve months. In consideration for Mr.
Cheldin’s advisory services, the Company will pay to him a
monthly fee of $10,000, as well as reasonable out-of-pocket
expenses incurred by Mr. Cheldin in connection with the provision
of services pursuant to the Advisory Agreement.
Interim Employment Agreement with Ronald A. Closser
In connection with Mr. Cheldin’s retirement, effective as of
August 10, 2020, the Board appointed Mr. Closser to serve as the
Company’s President, interim Chief Executive Officer and
Chairman of the Board. Mr. Closser previously served an independent
director on the Board and as the Chairman of the Compensation
Committee of the Board and as the Chairman of the Nominating &
Corporate Governance Committee of the Board. In connection with Mr.
Closser’s appointment, the Company entered into an Interim
Employment Agreement with Mr. Closser on August 10, 2020 (the
“Interim Employment Agreement”). The term of the
Interim Employment Agreement (the “Term”) commenced as
of August 10, 2020, and would continue on a month-to-month basis
until Mr. Closser’s employment with the Company is terminated
by the Board with thirty days’ advanced written notice. Mr.
Closser was permitted to terminate his employment as President and
interim CEO upon providing thirty days’ advance written
notice; provided, however, that Mr. Closser has to serve as
President and interim CEO for a period of not less than six months,
to the extent requested by the Company.
The Interim Employment Agreement provided that Mr. Closser would
receive as his sole compensation, a monthly salary of $50,000
(prorated, if applicable) during the Term. Mr. Closser also was
entitled to reimbursement of reasonable, documented, out-of-pocket
business expenses and to participate in such employee and executive
benefit plans and programs as the Company may offer from time to
time to its executives, subject to the terms and conditions of such
plans. Following the execution of the Interim Employment Agreement,
Mr. Closser no longer received compensation for his service as a
member of the Board. The Interim Employment Agreement terminated on
February 10, 2021, when Mr. Closser left his position as the
interim President and Chief Executive Officer of the
Company.
Severance Arrangements for Michael Budnitsky and Donny J.
Esparza
Pursuant to their employment offer letters, Messrs. Budnitsky and
Esparza are entitled to a severance payment equal to three
years’ salary for Mr. Budnitsky and two years’ salary
for Mr. Esparza in the event their employment is terminated due to
a change in ownership of the Company.
No Option/SAR Grants and Stock Awards in Last Fiscal
Year
No
stock options, stock appreciation rights or stock awards were
granted to any named executive officer during the year ended
December 31, 2020.
Stock Option Plans
The
Company’s 2011 Incentive Stock Option Plan, which expired in
March 2021 (the “2011 Plan”) covered 200,000 shares of
the Company’s common stock (subject to adjustment in the case
of stock splits, reverse stock splits, stock dividends, etc.) and
was adopted by the Board of Directors in March 2011 and approved by
stockholders on May 26, 2011.
For a
description of the Company’s 2021 Equity Incentive Plan,
please see “Proposal 2 — Approval of the 2021 Equity
Incentive Plan”.
Equity Compensation Plan Information
Please
see page 20 below.
Profit Sharing Plan
The
Unico American Corporation Profit Sharing Plan (“Plan”)
covers the Company’s employees who are at least 21 years of
age and have met certain service and eligibility requirements.
Unico American Corporation is the Plan sponsor and the Plan
administrator. Fidelity Management Trust Company is the Plan
trustee. The Plan is intended to be a qualified retirement plan
under the Code. As required by the Plan, on an annual basis, the
Company must contribute 3% of participants’ eligible
compensation to the account of each participant. In addition,
pursuant to the terms of the Plan, the Company may contribute to
participants an amount determined by the Board of Directors. Under
the Plan, participants have the option to make 401(k) and/or Roth
401(k) deferral contributions which are not matched by the Company.
Participants must be employed by the Company on the last day of the
Plan year and must have met certain service and eligibility
requirements to be eligible for a contribution. Participants are
eligible to request a distribution of their vested account balance
in connection with minimum required distributions or upon death,
retirement or termination of employment.
Report of the Audit Committee
Neither
the following report of the Audit Committee nor any other
information included in this Proxy Statement pursuant to Item
407(d)1-3 of Regulation S-K constitutes “soliciting
material” and none of such information should be deemed to be
“filed” with the Securities and Exchange Commission or
incorporated by reference into any other filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically
incorporates such information by reference in any of those
filings.
Management
is responsible for the Company’s financial reporting process
including its system of internal control and for the preparation of
consolidated financial statements in accordance with U.S. generally
accepted accounting principles (GAAP). The Company’s
independent auditors are responsible for auditing those
consolidated financial statements. Our responsibility is to monitor
and oversee these processes. It is not our duty or our
responsibility to conduct auditing or accounting reviews or
auditing or accounting procedures. We are not employees of the
Company; and we may not be, and we may not represent ourselves to
be or to serve as, accountants or auditors by profession or experts
in the fields of accounting or auditing. Therefore, we have relied
on management’s representation that the consolidated
financial statements have been prepared with integrity and
objectivity and in conformity with GAAP and on the representations
of the independent auditors included in their report on the
Company’s consolidated financial statements. Our oversight
does not provide us with an independent basis to determine that
management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls
and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, our
considerations and discussions with management and the independent
auditors do not assure that the Company’s consolidated
financial statements are presented in accordance with GAAP, that
the audit of the Company’s consolidated financial statements
has been carried out in accordance with auditing standards
generally accepted in the United States of America, or that the
Company’s independent accountants are in fact
“independent.”
The
Audit Committee has reviewed and discussed the audited consolidated
financial statements of the Company for the fiscal year ended
December 31, 2020, with the Company’s
management.
The
Audit Committee has discussed with JLK Rosenberger LLP the matters
required to be discussed pursuant to Statement of Auditing
Standards No. 61, “Communication with Audit
Committees,” as amended and as adopted by the Public Company
Accounting Oversight Board (“PCAOB”) in Rule 3200T.
Additionally, the Audit Committee has received the written
disclosures and the letter from JLK Rosenberger LLP, the
Company’s independent registered public accounting firm,
required by applicable requirements of the PCAOB regarding JLK
Rosenberger LLP’s communications with the Audit Committee
concerning independence, and has discussed with JLK Rosenberger LLP
its independence.
Based
on the review and discussions described above, the Audit Committee
recommended to the Board of Directors of the Company that the
audited consolidated financial statements of the Company be
included in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2020.
Members
of the Audit Committee:
RELATED-PARTY
TRANSACTIONS
The
Company has entered into indemnification agreements with each of
its directors and its current executive officers. These agreements
require the Company to indemnify these individuals to the fullest
extent permitted under Nevada law against liabilities that may
arise by reason of their service to the Company, and to advance
expenses incurred as a result of any proceeding against them as to
which they could be indemnified.
For
information regarding employment agreements and agreements related
to severance and retirement of certain officers of the Company,
please see “Executive Compensation and Other Information
— Employment Agreements.”
Wish
Properties Inc., an office of Wish Sotheby’s International
Realty, owned by Mr. Ernest A. Wish, a former director of the
Company, leased 4,189 square feet at the building owned by Crusader
Insurance Company, a wholly owned subsidiary of the Company. The
lease commenced on July 13, 2017, and had a six month term.
Effective January 8, 2018, the lease was amended to extend its
termination date until January 11, 2019, and to allow an option to
extend the term of the lease for three additional twelve month
terms commencing on January 11, 2019. The lease ended on February
11, 2019. The monthly lease payment was $8,378 through February 11,
2019. The Company believes the terms of the lease were at least as
favorable to the Company as could have been obtained from other
third parties.
Altonji
Consulting, LLC, owned by Mr. Altonji, a director of the Company,
provided consulting services under a contract. The total cost of
the services was $20,000 of which Altonji Consulting, LLC, received
$15,000 and $5,000 in 2020 and 2021, respectively. All services
were provided and the contract is completed.
The
Board recognizes that related-party transactions present a
heightened risk of conflicts of interest. Other than as described
above, we are currently not party to any transactions with related
parties. Related-party transactions have been proposed
infrequently, and given the size of the Company, the management
team and the Board, the Company believes that such proposed
transactions are capable of being appropriately considered on a
case-by-case basis. The Audit Committee will review any potential
related-party transactions as they arise and are reported to the
Board or the Audit Committee, regardless of whether the
transactions are reportable pursuant to Item 404 of Regulation S-K.
For any related-party transaction to be consummated or to continue,
the disinterested members of the Audit Committee must approve or
ratify the transaction. Additionally, on an annual basis, the
Company distributes a directors and officers questionnaire to all
executive officers and directors of the Company. The Company
reviews responses provided on the questionnaires to ensure any
transactions with executive officers or directors are approved as
described above and disclosed in compliance under Item 404(a) of
Regulation S-K.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file
with the SEC initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the
Company. To the Company's knowledge, based solely on review of
copies of reports furnished to the Company and written
representations that no other reports were required during the year
ended December 31, 2020, all Section 16(a) filing
requirements applicable to its executive officers, directors, and
greater than 10% beneficial owners were complied with.
PROPOSAL
1 – ELECTION OF NOMINEES AS MEMBERS OF THE BOARD OF
DIRECTORS
At the Annual Meeting, the Company’s stockholders will vote
on the election of six (6) director nominees named in this Proxy
Statement as directors, each to serve until the Company’s
2022 Annual Meeting of Stockholders and until their respective
successors are elected and qualified.
Each of the nominees has agreed to be named and to serve, and the
Company expects each nominee to be able to serve if elected. If any
nominee is unable to serve, the Nominating and Corporate Governance
Committee will recommend to the Company’s Board a replacement
nominee. The Board may then designate the other nominee to stand
for election. If you voted for the unavailable nominee, your vote
will be cast for his or her replacement.
The Board of Directors unanimously recommends a vote
“FOR” each of the nominees for election as
directors.
PROPOSAL
2 – APPROVAL OF THE 2021 EQUITY INCENTIVE PLAN
On
March 4, 2021, the Compensation Committee (the “Compensation
Committee”) of our Board of Directors (the
“Board”) recommended that our Board approve the Unico
American Corporation 2021 Equity Incentive Plan (the
“Plan”) and submit the Plan to a vote of our
shareholders. On March 8, 2021, our Board approved the Plan,
subject to shareholder approval, and directed that the Plan be
submitted to our shareholders for their approval at our 2021 annual
meeting of shareholders. If approved by our shareholders, the Plan
will become effective as of the date of approval.
If the
Plan is not approved, then it will not become effective and no
equity grants will be made under the Plan. Accordingly, we would be
unable to provide any equity-based compensation and we would likely
be required to increase our levels of cash compensation.
Accordingly, the approval of the Plan by our shareholders is
critically important.
The
purpose of the Plan is to enable the Company and its affiliates to
recruit and retain highly qualified employees, directors and
consultants, and to provide them with an incentive for productivity
and an opportunity to share in the growth and value of the
Company.
The
proposed Plan will make 500,000 shares of our common stock
available for issuance to eligible participants.
Background and Reason for the Proposal
The ability to grant equity and equity derivative awards is
essential to our ability to attract and retain highly talented
employees. Without the ability to grant such awards, we would be at
a disadvantage against our competitors for recruiting and retaining
key talent. We adopted the Plan to have a share reserve over
approximately the next 10 years to provide equity-based incentives
to eligible service providers who are selected to receive awards
under the 2021 Plan.
Summary of the Plan
The principal provisions of the Plan are summarized below. This
summary is qualified in its entirety by reference to the actual
Plan proposed in this proxy statement, a copy of which is attached
as Appendix
A.
Administration
The Plan vests the power to administer and interpret the Plan in a
committee designated by the Board. Our Board has designated the
Compensation Committee as the committee authorized to administer
the Plan. In this capacity, the Compensation Committee has the
authority to, among other things: select the persons to be granted
awards; determine the type, size and terms and conditions of such
awards, approve forms of award agreement to be used for awards
under the Plan, and accelerate the vesting or exercisability of an
outstanding award. The Compensation Committee may amend any
outstanding award at any time; provided, however, that no such
amendment may materially impair a participant’s rights
without the participant’s consent. Subject to requirements of
applicable law and the Company’s governing documents, the
Compensation Committee may delegate to one or more of our officers
the authority to grant awards to participants who are not subject
to Section 16 of the Securities Exchange Act of 1934.
Unless shareholder approval is required under applicable law or
exchange listing requirements, the Board may amend or terminate the
Plan at any time.
Eligibility
Any of our employees, directors, consultants, and other service
providers, and those of our affiliates, are eligible to participate
in the Plan. As of April 27, 2021, the Company employed or engaged
approximately 70 employees, six directors, one consultant and no
other service providers who would be eligible to participate in the
Plan. Participants will be selected in the discretion of the
Compensation Committee.
Shares of Stock Available for Issuance
Subject to certain adjustments, the maximum number of shares of
common stock that may be issued under the Plan in connection with
awards is 500,000 (the “Share Pool”).
If any award granted under the Plan expires, terminates, is
canceled or is forfeited, the shares underlying the award will be
available for new grants under the Plan. However, shares that are
withheld for the payment of taxes or in satisfaction of the
exercise price for an option award will not again become available
for new grants under the Plan.
Any shares issued by the Company through the assumption or
substitution of outstanding grants in connection with the
acquisition of another entity will not reduce the Share
Pool.
The market value of a share of our common stock as of April 27,
2021 was $4.76.
Adjustments
In the
event of any merger, consolidation, reorganization,
recapitalization, stock split, reverse stock split, split up, spin-off, combination of shares,
exchange of shares, stock dividend, dividend in kind, or other like
change in capital structure (other than ordinary cash dividends) to
shareholders of the Company, or other similar corporate event or
transaction that affects our common stock, the Compensation
Committee shall make such adjustments to the number and kind of
shares authorized by the Plan, the number and kind of shares
subject to outstanding awards, the exercise prices of outstanding
awards and any other affected term or condition of the Plan or
outstanding awards, in each case as it determines to be
equitable.
Vesting
The Compensation Committee determines the vesting conditions for
awards. Vesting conditions may include the continued employment or
service of the participant, the attainment of specified individual
or corporate performance goals, and/or other factors in the
Compensation Committee’s discretion.
Types of Awards
The Plan provides for the grant of the following equity-based
incentive awards to participants: (i) non-qualified stock options,
(ii) stock appreciation rights, (iii) restricted stock, (iv)
restricted stock units (“RSUs”), and (v) other
stock-based awards.
Non-Qualified Stock Options. A
non-qualified stock option entitles the holder to purchase from us
a stated number of shares of common stock at a stated price. The
Compensation Committee will specify the number of shares of common
stock subject to each option and the exercise price for such
option, provided that the exercise price may not be less than the
fair market value of a share of common stock on the date the option
is granted. The maximum term of an option shall be determined by
the Compensation Committee on the date of grant but shall not
exceed 10 years.
Generally, options may be exercised in whole or in part through a
cash payment. The Compensation Committee, however, may in its
discretion permit payment of the exercise price through other
methods. For example, the Compensation Committee may permit the
optionholder to surrender previously acquired shares, or to
“net settle” the option, which involves the
cancellation of a portion of the option to cover the cost of
exercising the balance of the option.
Stock Appreciation Rights. A
stock appreciation right represents the right to receive, upon
exercise, any appreciation in a share of common stock over a
particular time period. The base price of a stock appreciation
right granted under the Plan shall not be less than the fair market
value of a share of common stock on the date the stock appreciation
right is granted. The maximum term of a stock appreciation right
shall be determined by the Compensation Committee on the date of
grant but shall not exceed 10 years. Distributions with respect to
stock appreciation rights may generally be made in cash, shares of
common stock, or a combination of both, at the Compensation
Committee’s discretion.
Unless otherwise provided in an award agreement or determined by
the Compensation Committee, if a participant terminates employment
with us (or our affiliates) due to death or disability, the
participant’s unexercised options and stock appreciation
rights may be exercised, to the extent they were exercisable at the
time of the participant’s death or disability (or on such
accelerated basis as the Compensation Committee may determine at or
after grant), for a period of twelve months from the termination
date or until the expiration of the original award term, whichever
period is shorter. If a participant’s employment with us (or
our affiliates) is terminated for “cause” (as defined
in the Plan), (i) all unexercised options and stock appreciation
rights (whether vested or unvested) shall terminate and be
forfeited on the termination date, and (ii) any shares in respect
of exercised options or stock appreciation rights for which we have
not yet delivered share certificates will be forfeited and we will
refund to the participant the option exercise price paid for those
shares, if any. Unless otherwise provided in an award agreement or
determined by the Compensation Committee, if a participant’s
employment terminates for any other reason, the participant’s
unexercised options and stock appreciation rights may be exercised,
to the extent they were exercisable at the time of the
participant’s termination (or on such accelerated basis as
the Compensation Committee may determine at or after grant), for a
period of ninety days from the termination date or until the
expiration of the original option or stock appreciation right term,
whichever period is shorter. Unless otherwise provided by the
Compensation Committee, any options and stock appreciation rights
that are not exercisable at the time of termination of employment
shall terminate and be forfeited on the termination
date.
Restricted Stock. A restricted
stock award is a grant of shares of common stock, which are subject
to forfeiture restrictions during a restriction period. The
Compensation Committee will determine the price, if any, to be paid
by the participant for each share of common stock subject to a
restricted stock award. If the specified vesting conditions are not
attained, the underlying common stock will be forfeited to us.
Conversely, if and when the vesting conditions are satisfied, the
forfeiture restrictions will lapse. During the restriction period,
a participant will have the right to vote the shares underlying the
restricted stock and receive dividends with respect to restricted
stock. However, the Compensation Committee may specify that any
such dividends are subject to the same vesting conditions as the
underlying restricted stock to which they relate, and may also
require that the dividends be invested in additional restricted
shares. Unless otherwise provided in an award agreement or
determined by the Compensation Committee, upon termination a
participant will forfeit all restricted stock that then remains
subject to forfeiture.
Restricted Stock Units. An RSU
represents a right to receive, on the achievement of specified
vesting conditions, an amount equal to the fair market value (at
the time of distribution) of one share of our common stock. Unless
otherwise provided in an award agreement or determined by the
Compensation Committee, upon a termination of service, a
participant will forfeit all of the participant’s RSUs that
then remain subject to forfeiture.
Other Stock-Based Awards. Other
stock-based awards (including awards to receive unrestricted shares
of our common stock or immediate cash payments) may be granted to
participants. The Compensation Committee will determine the terms
and conditions of each such award, including, as applicable, the
term, any exercise or purchase price, vesting conditions and other
terms and conditions. Payment in respect of an other stock-based
award may be made in cash, shares of our common stock, or a
combination of both, at the discretion of the Compensation
Committee.
Change in Control
In the event of a change in control (as defined in the Plan), the
Compensation Committee may, in its sole and absolute discretion, on
a participant-by-participant basis: (i) cause any or all
outstanding awards to become vested and immediately exercisable (as
applicable), in whole or in part; (ii) cause any outstanding option
or stock appreciation right to become fully vested and immediately
exercisable for a reasonable period in advance of the change in
control and, to the extent not exercised prior to that change in
control, cancel that option or stock appreciation right upon
closing of the change in control; (iii) cancel any award in
exchange for a substitute award; (iv) redeem any restricted stock
or RSU for cash and/or other substitute consideration with value
equal to the fair market value of an unrestricted share on the date
of the change in control; or (v) cancel any outstanding option or
stock appreciation right with respect to all common stock for which
the award remains unexercised in exchange for a cash payment equal
to the excess (if any) of the fair market value of the common stock
subject to the option or stock appreciation right over the exercise
price of the option or stock appreciation right (and if the fair
market value does not exceed the exercise or base price of the
award, cancel the award without payment of any consideration). In
the discretion of the Compensation Committee, any cash or
substitute consideration payable upon cancellation of an award may
be subject to vesting terms substantially identical to those that
applied to the cancelled award immediately prior to the change in
control, or earn-out, escrow, holdback or similar arrangements, to
the extent such arrangements are applicable to any consideration
paid to shareholders in connection with the change in
control.
Repricing
Neither the Board nor the Compensation Committee may, without
obtaining prior approval of our shareholders: (i) implement any
cancellation/re-grant program pursuant to which outstanding options
or stock appreciation rights under the Plan are cancelled and new
options or stock appreciation rights are granted in replacement
with a lower exercise or base price per share; (ii) cancel
outstanding options or stock appreciation rights under the Plan
with an exercise or base price per share in excess of the then
current fair market value per share for consideration payable in
our equity securities; or (iii) otherwise directly reduce the
exercise or base price in effect for outstanding options or stock
appreciation rights under the Plan.
Federal Income Tax Consequences
The federal income tax consequences arising with respect to grants
awarded under the Plan will depend on the type of grant. The
following provides only a general description of the application of
federal income tax laws to certain grants under the Plan. This
discussion is intended for the information of shareholders
considering how to vote at the meeting and not as tax guidance to
participants in the Plan, as the consequences may vary with the
types of grants made, the identity of the recipients, and the
method of payment or settlement. The summary does not address the
effects of other federal taxes (including possible “golden
parachute” excise taxes) or taxes imposed under state, local,
or foreign tax laws. Tax laws are subject to change.
Under
the Internal Revenue Code of 1986, as amended (the
“Code”) as currently in effect, a grant under the Plan
of options, stock appreciation rights, restricted stock or RSUs
would have no federal income tax consequence at the time of grant.
Generally, all amounts taxable as ordinary income to participants
under the Plan in respect of awards are expected to be deductible
by the Company as compensation at the same time the participant
recognizes the ordinary income, subject to certain caps on the deductibility of executive
compensation imposed by Section 162(m) of the
Code.
Non-Qualified Stock Options. There are generally no federal income tax
consequences to a participant or to the Company upon the grant of a
nonqualified stock option. Upon the exercise of a non-qualified
stock option, a participant will recognize ordinary income in an
amount equal to the excess of the fair market value of the shares
at the time of exercise over the aggregate exercise price paid. The
Company generally will be entitled to a corresponding federal
income tax deduction. The participant will have a tax basis in the
shares equal to the exercise price plus the amount of income
recognized at the time of exercise.
When a participant sells shares of stock acquired through the
exercise of a non-qualified stock option, the participant will have
a capital gain or loss in an amount equal to the difference between
the amount realized on the sale and the tax basis in the shares.
The capital gain tax rate will depend on a number of factors,
including the length of time the participant held the shares prior
to selling them.
Stock Appreciation Rights. There are generally no federal income tax
consequences to a participant or to the Company upon the grant of a
stock appreciation right. Upon exercise of a stock appreciation
right, the value of the shares or cash received is taxable to the
participant as ordinary income. The Company will generally be
entitled to a corresponding tax federal income
deduction.
When a participant sells shares of stock acquired through the
exercise of a stock appreciation right, the participant will have a
capital gain or loss in an amount equal to the difference between
the amount realized on the sale and the tax basis in the shares.
The capital gain tax rate will depend on a number of factors,
including the length of time the participant held the shares prior
to selling them.
Restricted Stock A participant
will generally not recognize federal taxable income when he or she
receives a grant of restricted stock, and the Company will not be
entitled to a deduction, until the stock is transferable by the
participant or is otherwise no longer subject to a substantial risk
of forfeiture. When the stock is either transferable or is no
longer subject to a substantial risk of forfeiture, a participant
will recognize ordinary income in an amount equal to the fair
market value of the shares at that time (less any amounts paid for
the shares), and generally, the Company will be entitled to a
deduction in the same amount. Any gain or loss recognized by the
participant upon a later disposition of the shares will be capital
gain or loss. A participant’s holding period for purposes of
determining whether that capital gain or loss is long-term or
short-term will be counted from the date the stock became
transferable or ceased to be subject to a substantial risk of
forfeiture.
A participant may elect to recognize ordinary income in the year
when the share award is granted in an amount equal to the fair
market value of the shares subject to the award (less any amounts
paid for such shares) at the time of grant, determined without
regard to any restrictions. This election is referred to as a
Section 83(b) election. In that event, the Company will be
entitled to a corresponding deduction in the same year. Any gain or
loss recognized by the participant upon a later disposition of the
shares will be capital gain or loss. A participant’s holding
period for purposes of determining whether that capital gain or
loss is long-term or short-term will be counted from the date of
the original transfer to the participant. The participant may not
claim a credit for any tax previously paid on stock that is later
forfeited.
Restricted Stock Units There
are generally no federal income tax consequences to a participant
or to the Company upon the grant of a restricted stock unit. Upon
distribution of shares or cash in respect of a restricted stock
unit, the fair market value of those shares or the amount of that
cash will be taxable to the participant as ordinary income and the
Company will receive a deduction equal to the income recognized by
the participant. The subsequent disposition of shares acquired
pursuant to a restricted stock unit will result in capital gain or
loss (based on the difference between the price received on
disposition and the market value of the shares at the time of their
distribution). The capital gain tax rate will depend on a number of
factors, including the length of time the participant held the
shares prior to selling them.
Miscellaneous
Generally, awards granted under the Plan shall be nontransferable
except by will or by the laws of descent and distribution. The
awards will be subject to our recoupment and stock ownership
policies, as may be in effect from time to time. Awards will be
subject to applicable tax withholding requirements and the
Compensation Committee may authorize the withholding of shares
subject to the award to satisfy required tax
withholding.
Subject to any required shareholder approval, the Board may at any
time terminate or make such amendments or modifications of the Plan
as the Board may deem advisable. However, no such amendment may
adversely change the terms of an outstanding award, without the
participant’s consent. If not sooner terminated by the Board,
the Plan will expire ten years after it is approved by the
Company’s shareholders.
Equity Compensation Plan Information
The
table below sets forth information with respect to compensation
plans under which our equity securities are authorized for issuance
as of December 31, 2020.
|
|
Number of Securities
to be issued upon exercise of outstanding options, warrants and
rights (a)
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
Number of securities
available for future issuance under equity compensation plans
(excluding securities reflected in column (a)) (c)
|
|
|
|
|
|
|
Equity Compensation
Plans approved by stockholders
|
-
|
N/A
|
100,000(1)
|
Equity Compensation
Plans not approved by stockholders
|
-
|
N/A
|
-
|
|
Total
|
-
|
N/A
|
100,000
|
(1)
These securities
were available for issuance as of December 31, 2020 under the
Company’s 2011 Incentive Stock Option Plan, which expired in
March 2021. Accordingly, as of the date of this proxy statement
such securities are no longer available for issuance
thereunder.
New Plan Benefits
If the
Plan is approved by shareholders, awards under the Plan will be
determined by the Compensation Committee in its discretion, and it
is therefore not possible to predict the number, name or positions
of persons who will benefit from the Plan, if it is
approved by shareholders, or the terms of any such
benefits.
Vote Required
Approval
of the Plan requires the affirmative vote of a majority of the
voting power of the capital stock present in person or represented
by proxy at the meeting and entitled to vote on the subject matter.
Because abstentions represent shares entitled to vote, the effect
of an abstention will be the same as a vote against the Plan. The
Plan is not considered a “routine” proposal, and
accordingly, brokers and other nominees do not have discretion to
vote without instructions from beneficial owners. Therefore, no
vote will be cast by those shares of our common stock and such
broker non-votes will have no effect on the outcome of Proposal 2.
The Company intends that the proxy in
the form presented will be voted, unless otherwise indicated, for
the approval of the Plan. If the Company receives a signed proxy
with no instructions indicated, the shares represented by such
proxy will be voted “FOR” the approval of the
Plan.
The Board of Directors deems Proposal No. 2 “Approval of the
2021 Equity Incentive Plan”, to be in our and our
shareholders’ best interests and unanimously recommends a
vote “FOR” approval thereof.
APPOINTMENT
OF AUDITORS
JLK Rosenberger LLP has served as the Company’s independent
auditors since 2015. The Audit Committee has selected it to
continue as the Company’s auditors and to audit the books and
other records of the Company for the year ended December 31,
2021. A representative of JLK Rosenberger LLP is expected to
attend the Annual Meeting of Stockholders. Such representative will
have the opportunity to make a statement and will be available to
respond to appropriate questions.
AUDIT
AND NON-AUDIT FEES
Audit Fees
The
aggregate fees billed by JLK Rosenberger LLP for professional
services rendered for the audit of the Company’s consolidated
financial statements for the fiscal years ended December 31, 2020
and 2019, and for the reviews of the consolidated financial
statements included in the Company’s quarterly reports on
Form 10-Q for the fiscal years ended December 31, 2020 and 2019,
were approximately $226,000 and $214,000,
respectively.
Audit Related Fees
There
were no audit related services by JLK Rosenberger LLP for each year
ended December 31, 2020 and 2019.
Tax Fees
There
were no services rendered or fees billed for tax compliance,
consulting, or planning services by JLK Rosenberger LLP for either
of the fiscal years ended December 31, 2020 and 2019.
All Other Fees
There
were no services rendered or fees billed related to compliance and
planning during the fiscal years ended December 31, 2020 and
2019.
The
policy of the Audit Committee is to pre-approve all audit and
non-audit services provided by the Company’s independent
auditors.
OTHER
MATTERS
The
Board of Directors is not aware of any business to be presented at
the Annual Meeting except for the matters set forth in the Notice
of Annual Meeting of Stockholders and described in this Proxy
Statement. Unless otherwise directed, all shares represented by
proxies that are properly completed, signed, and returned to the
Company prior to the Annual Meeting and, which have not been
revoked will be voted in favor of the proposals described in this
Proxy Statement. If any other matters come before the Annual
Meeting, the proxy holders will vote on those matters using their
best judgment.
STOCKHOLDERS’
PROPOSALS
Stockholders
desiring to exercise their right under the proxy rules of the
Securities and Exchange Commission to submit proposals for
consideration by the stockholders or to nominate an individual for
election to the Company’s Board of Directors at the 2022
Annual Meeting are advised that their proposals must be received by
the Company at Unico American Corporation, 26050 Mureau Road,
Calabasas, California 91302, Attention: Corporate Secretary, no
later than December 28, 2021, for inclusion in the Company’s
Proxy Statement and form of proxy relating to that
meeting.
Alternatively,
stockholders intending to present a proposal or nominate a director
for election at next year’s Annual Meeting of Stockholders
without having the proposal or nomination included in our Proxy
Statement must deliver written notice of the nomination or proposal
to our Corporate Secretary at our principal executive offices no
earlier than January 27, 2022, which is the 120th day prior to the
first anniversary of the date of the 2021 Annual Meeting, and no
later than February 26, 2022, which is the 90th day prior to the
first anniversary of the date of the 2020 Annual Meeting. The
stockholder’s written notice must include certain information
concerning the stockholder and each nominee and proposal, as
specified in our Bylaws. Such nominations or proposals should be
sent to Unico American Corporation, 26050 Mureau Road, Calabasas,
California 91302, Attention: Corporate Secretary.
ANNUAL
REPORT TO STOCKHOLDERS
The
Company's 2020 Annual Report on Form 10-K includes the
Company’s consolidated balance sheets as of December 31, 2020
and 2019, and the related consolidated statements of operations,
comprehensive loss, changes in stockholders’ equity and cash
flows for each of the years in the two year period ended
December 31, 2020, and is included in the Annual Report
of the Company being mailed to the stockholders along with this
Proxy Statement. The Annual Report including Form 10-K is not to be
considered a part of the soliciting material.
By
Order of the Board of Directors,
Michael
Budnitsky
President and Chief
Executive Officer
Calabasas,
California
April
27, 2021
Important Notice Regarding the Availability of Proxy Materials for
the Stockholder Meeting to Be Held on May 27, 2021. The Proxy
Statement and the Annual Report to Stockholders are available at
http://materials.proxyvote.com/904607.
Appendix A
UNICO
AMERICAN CORPORATION
2021
EQUITY INCENTIVE PLAN
Section
1. Purpose;
Definitions. The
purposes of the Unico American Corporation 2021 Equity
Incentive Plan (as amended from time to time, the
“Plan”)
are to: (a) enable Unico American Corporation (the
“Company”) and its
affiliated companies to recruit and retain highly qualified
employees, directors and consultants; (b) provide those employees,
directors and consultants with an incentive for productivity; and
(c) provide those employees, directors and consultants with an
opportunity to share in the growth and value of the
Company.
For purposes of the
Plan, the following terms will have the meanings defined below,
unless the context clearly requires a different
meaning:
(a) “Affiliate” means, with
respect to a Person, a Person that directly or indirectly controls,
is controlled by, or is under common control with such
Person.
(b) “Applicable Law” means the
legal requirements relating to the administration of and issuance
of securities under stock incentive plans, including, without
limitation, the requirements of state corporations law, federal,
state and foreign securities law, federal, state and foreign tax
law, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted.
(c) “Award” means an award of
Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units or Other Stock Based Awards made under this
Plan.
(d) “Award Agreement” means,
with respect to any particular Award, the written document that
sets forth the terms of that particular Award.
(e) “Board” means the Board of
Directors of the Company, as constituted from time to
time.
(f) “Other Stock Based Award”
means an award that is granted under Section 10.
(g) “Cause”
means (i) Participant’s refusal to comply with any lawful
directive or policy of the Company which refusal is not cured by
the Participant within ten (10) days of such written notice from
the Company; (ii) the Company’s determination that
Participant has committed any act of dishonesty, embezzlement,
unauthorized use or disclosure of confidential information or other
intellectual property or trade secrets, common law fraud or other
fraud against the Company or any Subsidiary or Affiliate; (iii) a
material breach by the Participant of any written agreement with or
any fiduciary duty owed to any Company or any Subsidiary or
Affiliate; (iv) Participant’s conviction (or the entry of a
plea of a nolo contendere or equivalent plea) of a felony or any
misdemeanor involving material dishonesty or moral turpitude; or
(v) Participant’s habitual or repeated misuse of, or habitual
or repeated performance of Participant’s duties under the
influence of, alcohol, illegally obtained prescription controlled
substances or non-prescription controlled substances.
Notwithstanding the foregoing, if a Participant and the Company (or
any of its Affiliates) have entered into an employment agreement,
consulting agreement or other similar agreement that specifically
defines “Cause,” then with respect to such Participant,
“Cause” shall have the meaning defined in such other
agreement.
(h) “Change in Control” shall
mean the occurrence of any of the following events: (i) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
50% or more of the total power to vote for the election of
directors of the Company (“Voting Securities”),
notwithstanding the foregoing, solely with respect to Erwin Cheldin
and his Affiliates, a Change in Control shall not be deemed to
occur under this subsection, unless Erwin Cheldin and his
Affiliates become a beneficial owner, directly or indirectly, of
60% or more of the Company’s Voting Securities; (ii) during
any twelve month period, individuals who at the beginning of such
period constitute the Board and any new director (other than a
director designated by a person who has entered into an agreement
with the Company to effect a transaction described in Section
1(h)(i),
Section
1(h)(iii),
Section
1(h)(iv) or
Section
1(h)(v)
hereof) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least
a majority of the directors then still in office who either were
directors at the beginning of the period of whose election or
nomination for election was previously approved, cease for any
reason to constitute a majority thereof; (iii) the merger or
consolidation of the Company with another corporation where the
stockholders of the Company, immediately prior to the merger or
consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such stockholders to 50%
or more of all votes to which all stockholders of the surviving
corporation (or its ultimate parent) would be entitled in the
election of directors (without consideration of the rights of any
class of stock to elect directors by a separate class vote); (iv)
the sale or other disposition of all or substantially all of the
assets of the Company; or (v) a liquidation or dissolution of the
Company.
Notwithstanding
anything in the Plan or an Award Agreement to the contrary, if an
Award is subject to Section 409A of the Code, no event that, but
for the application of this paragraph, would be a Change in Control
as defined in the Plan or the Award Agreement, as applicable, shall
be a Change in Control unless such event is also a “change in
control event” as defined in Section 409A of the
Code.
(i) “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and any
successor thereto.
(j) “Committee” means the
committee designated by the Board to administer the Plan under
Section 2. To the
extent required under Applicable Law, the Committee shall have at
least two members and each member of the Committee shall be a
Non-Employee Director.
(k) “Director” means a member
of the Board.
(l) “Disability” means a
condition rendering a Participant Disabled.
(m) “Disabled” will have the
same meaning as set forth in Section 22(e)(3) of the
Code.
(n) “Exchange Act” means the
Securities Exchange Act of 1934, as amended.
(o) “Fair Market Value” means,
as of any date, the value of a Share determined as follows:
(i) if the Shares are listed on any established stock exchange
or a national market system, including, without limitation, the
Nasdaq Global Market, the Fair Market Value of a Share will be the
closing sales price for such stock as quoted on that system or
exchange (or the system or exchange with the greatest volume of
trading in Shares) at the close of regular hours trading on the day
of determination (or if such day is not a trading day, the
immediately preceding trading day); (ii) if the Shares are
regularly quoted by recognized securities dealers but selling
prices are not reported, the Fair Market Value of a Share will be
the mean between the high bid and low asked prices for Shares at
the close of regular hours trading on the day of determination; or
(iii) if Shares are not traded as set forth above, the Fair
Market Value will be determined in good faith by the Committee
taking into consideration such factors as the Committee considers
appropriate, such determination by the Committee to be final,
conclusive and binding. Notwithstanding the foregoing, in
connection with a Change in Control, Fair Market Value shall be
determined in good faith by the Committee, such determination by
the Committee to be final conclusive and binding.
(p) “Non-Employee Director”
will have the meaning set forth in Rule 16b-3(b)(3)(i)
promulgated by the Securities and Exchange Commission under the
Exchange Act, or any successor definition adopted by the Securities
and Exchange Commission.
(q) “Non-Qualified Stock
Option” means any Option that is not intended to be an
“Incentive Stock Option” as defined in Section 422
of the Code.
(r) “Option” means any option
to purchase Shares (including an option to purchase Restricted
Stock, if the Committee so determines) granted pursuant to
Section 5
hereof.
(s) “Participant” means an
employee, consultant, Director, or other service provider of or to
the Company or any of its respective Affiliates to whom an Award is
granted.
(t) “Person” means an
individual, partnership, corporation, limited liability company,
trust, joint venture, unincorporated association, or other entity
or association.
(u) “Restricted Stock” means
Shares that are subject to restrictions pursuant to Section 8
hereof.
(v) “Restricted Stock Unit”
means a right granted under and subject to restrictions pursuant to
Section
9 hereof.
(w) “Shares” means shares of
the Company’s common stock, no par value, subject to
substitution or adjustment as provided in Section 3(d)
hereof.
(x) “Stock Appreciation Right”
means a right granted under and subject to Section 6 hereof.
(y) “Subsidiary” means, in
respect of the Company, a subsidiary company as defined in
Sections 424(f) and (g) of the Code.
Section
2. Administration.
The Plan shall be administered by the Committee. Any action of the
Committee in administering the Plan shall be final, conclusive and
binding on all persons, including the Company, its Subsidiaries,
Affiliates, their respective employees, the Participants, persons
claiming rights from or through Participants and stockholders of
the Company.
The Committee will
have full authority to grant Awards under this Plan and determine
the terms of such Awards. Such authority will include the right
to:
(a) select the
individuals to whom Awards are granted (consistent with the
eligibility conditions set forth in Section 4);
(b) determine the type
of Award to be granted;
(c) determine the
number of Shares, if any, to be covered by each Award;
(d) establish the other
terms and conditions of each Award;
(e) approve forms of
agreements (including Award Agreements) for use under the
Plan;
(f) accelerate the
vesting or exercisability of an Award; and
(g) modify or amend
each Award, subject to the Participant’s consent if such
modification or amendment would adversely change the terms of such
Award.
The Committee will
have the authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it, from time
to time, deems advisable; to interpret the terms and provisions of
the Plan and any Award issued under the Plan (and any Award
Agreement); and to otherwise take any action that may be necessary
or desirable to facilitate the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or in any Award Agreement in the
manner and to the extent it deems necessary to carry out the intent
of the Plan.
To the extent
permitted by Applicable Law and the Company’s governing
documents, the Committee may delegate to one or more officers of
the Company the authority to grant Awards to Participants who are
not subject to the requirements of Section 16 of the Exchange Act
and the rules and regulations thereunder. The Committee may revoke
any such allocation or delegation at any time for any reason with
or without prior notice.
Section
3. Shares
Subject to the Plan.
(a) Shares Subject to the Plan.
Subject to adjustment as provided in Section 3(b) and Section
3(d) of the Plan, the maximum number of Shares that may be issued
in respect of Awards under the Plan is 500,000 Shares (the
“Plan
Limit”). Any Shares issued hereunder may consist, in
whole or in part, of authorized and unissued Shares or treasury
shares. Any Shares issued by the Company through the assumption or
substitution of outstanding grants in connection with the
acquisition of another entity shall not reduce the maximum number
of Shares available for delivery under the Plan.
(b) Effect of the Expiration or
Termination of Awards. If and to the extent that an Option
or a Stock Appreciation Right expires, terminates or is canceled or
forfeited for any reason without having been exercised in full, the
Shares associated with that Award will again become available for
grant under the Plan. Similarly, if and to the extent an Award of
Restricted Stock or Restricted Stock Units is canceled or forfeited
for any reason, the Shares subject to that Award will again become
available for grant under the Plan.
(c) Shares Withheld in Satisfaction of
Taxes or Exercise Price. Shares withheld following the
Effective Date in settlement of a tax withholding obligation
associated with an Award or in satisfaction of the exercise price
payable upon exercise of an option will not again become available
for grant under the Plan.
(d) Other Adjustment. In the event
of any corporate event or transaction such as a merger,
consolidation, reorganization, recapitalization, stock split,
reverse stock split, split up, spin-off, combination of shares,
exchange of shares, stock dividend, dividend in kind, or other like
change in capital structure (other than ordinary cash dividends) to
stockholders of the Company, or other similar corporate event or
transaction affecting the Shares, the Committee, to prevent
dilution or enlargement of Participants’ rights under the
Plan, shall, in such manner as it deems equitable, substitute or
adjust, in its sole discretion, the number and kind of shares that
may be issued under the Plan or under any outstanding Awards, the
number and kind of shares subject to outstanding Awards, the
exercise price, grant price or purchase price applicable to
outstanding Awards, and/or any other affected terms and conditions
of this Plan or outstanding Awards.
(e) Change in Control.
Notwithstanding anything to the contrary set forth in the Plan,
upon or in anticipation of any Change in Control, the Committee
may, in its sole and absolute discretion and without the need for
the consent of any Participant, take one or more of the following
actions contingent upon the occurrence of that Change in
Control:
(i) cause any or all
outstanding Awards to become vested and immediately exercisable (as
applicable), in whole or in part;
(ii) cause any
outstanding Option or Stock Appreciation Right to become fully
vested and immediately exercisable for a reasonable period in
advance of the Change in Control and, to the extent not exercised
prior to that Change in Control, cancel that Option or Stock
Appreciation Right upon closing of the Change in
Control;
(iii) cancel any Award in
exchange for a substitute award;
(iv) redeem any
Restricted Stock or Restricted Stock Unit for cash and/or other
substitute consideration with value equal to the Fair Market Value
of an unrestricted Share on the date of the Change in Control;
and/or
(v) cancel any Option
or Stock Appreciation Right in exchange for cash and/or other
substitute consideration with a value equal to: (A) the number
of Shares subject to that Option or Stock Appreciation Right,
multiplied by (B) the difference, if any, between the Fair
Market Value per Share on the date of the Change in Control and the
exercise price of that Option or the base price of the Stock
Appreciation Right; provided, that if the Fair Market Value
per Share on the date of the Change in Control does not exceed the
exercise price of any such Option or the base price of any such
Stock Appreciation Right, the Committee may cancel that Option or
Stock Appreciation Right without any payment of consideration
therefor.
In the discretion
of the Committee, any cash or substitute consideration payable upon
cancellation of an Award may be subjected to (i) vesting terms
substantially identical to those that applied to the cancelled
Award immediately prior to the Change in Control, or
(ii) earn-out, escrow, holdback or similar arrangements, to
the extent such arrangements are applicable to any consideration
paid to stockholders in connection with the Change in
Control.
Section
4. Eligibility.
Employees, Directors, consultants, and other individuals who
provide services to the Company or its Affiliates are eligible to
be granted Awards under the Plan.
Section
5. Options.
Options granted under the Plan are Non-Qualified Stock
Options.
The Award Agreement
evidencing any Option will incorporate the following terms and
conditions and will contain such additional terms and conditions,
not inconsistent with the terms of the Plan, as the Committee deems
appropriate in its sole and absolute discretion:
(a) Option Price. The exercise
price per Share under an Option will be determined by the Committee
and will not be less than 100% of the Fair Market Value of a Share
on the date of the grant.
(b) Option Term. The term of each
Option will be fixed by the Committee, but no Option will be
exercisable more than 10 years after the date the Option is
granted. No Option may be exercised by any Person after expiration
of the term of the Option.
(c) Exercisability. Options will
vest and be exercisable at such time or times and subject to such
terms and conditions as determined by the Committee. Such terms and
conditions may include the continued employment or service of the
Participant, the attainment of specified individual or corporate
performance goals, or such other factors as the Committee may
determine in its sole discretion (the “Vesting
Conditions”).
(d) Method of Exercise. Subject to
the terms of the applicable Award Agreement, the exercisability
provisions of Section
5(c) and the termination provisions of Section 7,
Options may be exercised in whole or in part from time to time
during their term by the delivery of written notice to the Company
specifying the number of Shares to be purchased. Such notice will
be accompanied by payment in full of the purchase price, either by
certified or bank check, or such other means as the Committee may
accept. The Committee may, in its sole discretion, permit payment
of the exercise price of an Option in the form of previously
acquired Shares based on the Fair Market Value of the Shares on the
date the Option is exercised or by means of a “net
settlement,” whereby the Option exercise price will not be
due in cash and where the number of Shares issued upon such
exercise will be equal to: (A) the product of (i) the
number of Shares as to which the Option is then being exercised,
and (ii) the excess, if any, of (a) the then current Fair
Market Value per Share over (b) the Option exercise price,
divided by (B) the then current Fair Market Value per
Share.
An Option will not
confer upon the Participant any of the rights or privileges of a
stockholder in the Company unless and until the Participant is
issued Shares following Participant’s exercise of the
Option.
(e) Termination of Service. Unless
otherwise specified in the applicable Award Agreement or as
otherwise provided by the Committee at or after the time of grant,
Options will be subject to the terms of Section 7 with
respect to exercise upon or following termination of employment or
other service.
Section
6. Stock Appreciation
Right. Subject to the
other terms of the Plan, the Committee may grant Stock Appreciation
Rights to eligible individuals. Each Stock Appreciation Right shall
represent the right to receive, upon exercise, an amount equal to
the number of Shares subject to the Award that is being exercised
multiplied by the excess of (i) the Fair Market Value of a Share on
the date the Award is exercised, over (ii) the base price specified
in the applicable Award Agreement. Unless otherwise provided in an
Award Agreement, distributions may be made in cash, Shares, or a
combination of both, at the discretion of the Committee. The Award
Agreement evidencing each Stock Appreciation Right shall indicate
the base price, the term and the Vesting Conditions for such Award.
A Stock Appreciation Right base price may never be less than the
Fair Market Value of the underlying common stock of the Company on
the date of grant of such Stock Appreciation Right. The term of
each Stock Appreciation Right will be fixed by the Committee, but
no Stock Appreciation Right will be exercisable more than 10 years
after the date the Stock Appreciation Right is granted. Subject to
the terms and conditions of the applicable Award Agreement, Stock
Appreciation Rights may be exercised in whole or in part from time
to time during their term by the delivery of written notice to the
Company specifying the portion of the Award to be exercised. Unless
otherwise specified in the applicable Award Agreement or as
otherwise provided by the Committee at or after the time of grant,
Stock Appreciation Rights will be subject to the terms of
Section
7 with respect to exercise upon or following termination of
employment or other service.
Section
7. Termination of
Service. Unless
otherwise specified with respect to a particular Option or Stock
Appreciation Right in the applicable Award Agreement or otherwise
determined by the Committee, any portion of an Option or Stock
Appreciation Right that is not exercisable upon termination of
service will expire immediately and automatically upon such
termination and any portion of an Option or Stock Appreciation
Right that is exercisable upon termination of service will expire
on the date it ceases to be exercisable in accordance with this
Section
7.
(a) Termination by Reason of Death.
If a Participant’s service with the Company or any Affiliate
terminates by reason of death, any Option or Stock Appreciation
Right held by such Participant may thereafter be exercised, to the
extent it was exercisable at the time of his or her death or on
such accelerated basis as the Committee may determine at or after
grant, by the legal representative of the estate or by the legatee
of the Participant, for a period expiring (i) at such time as
may be specified by the Committee at or after grant, or
(ii) if not specified by the Committee, then 12 months from
the date of death, or (iii) if sooner than the applicable
period specified under (i) or (ii) above, upon the
expiration of the stated term of such Option or Stock Appreciation
Right.
(b) Termination by Reason of
Disability. If a Participant’s service with the
Company or any Affiliate terminates by reason of Disability, any
Option or Stock Appreciation Right held by such Participant may
thereafter be exercised by the Participant or his or her personal
representative, to the extent it was exercisable at the time of
termination, or on such accelerated basis as the Committee may
determine at or after grant, for a period expiring (i) at such
time as may be specified by the Committee at or after grant, or
(ii) if not specified by the Committee, then 12 months from
the date of termination of service, or (iii) if sooner than
the applicable period specified under (i) or (ii) above, upon the
expiration of the stated term of such Option or Stock Appreciation
Right.
(c) Cause. If a Participant’s
service with the Company or any Affiliate is terminated for Cause:
(i) any Option or Stock Appreciation Right, or portion
thereof, not already exercised will be immediately and
automatically forfeited as of the date of such termination, and
(ii) any Shares for which the Company has not yet delivered
share certificates will be immediately and automatically forfeited
and the Company will refund to the Participant the Option exercise
price paid for such Shares, if any.
(d) Other Termination. If a
Participant’s service with the Company or any Affiliate
terminates for any reason other than death, Disability or Cause,
any Option or Stock Appreciation Right held by such Participant may
thereafter be exercised by the Participant, to the extent it was
exercisable at the time of such termination, or on such accelerated
basis as the Committee may determine at or after grant, for a
period expiring (i) at such time as may be specified by the
Committee at or after grant, or (ii) if not specified by the
Committee, then 90 days from the date of termination of service, or
(iii) if sooner than the applicable period specified under (i)
or (ii) above, upon the expiration of the stated term of such
Option or Stock Appreciation Right.
Section
8. Restricted Stock.
(a) Issuance. Restricted Stock may
be issued either alone or in conjunction with other Awards. The
Committee will determine the time or times within which Restricted
Stock may be subject to forfeiture, and all other conditions of
such Awards. The purchase price for Restricted Stock may, but need
not, be zero.
(b) Certificates. Upon the Award of
Restricted Stock, the Committee may direct that a certificate or
certificates representing the number of Shares subject to such
Award be issued to the Participant or placed in a restricted stock
account (including an electronic account) with the transfer agent
and in either case designating the Participant as the registered
owner. The certificate(s), if any, representing such shares shall
be physically or electronically legended, as applicable, as to
sale, transfer, assignment, pledge or other encumbrances during the
Restriction Period. If physical certificates are issued, they will
be held in escrow by the Company or its designee during the
Restriction Period. As a condition to any Award of Restricted
Stock, the Participant may be required to deliver to the Company a
share power, endorsed in blank, relating to the Shares covered by
such Award.
(c) Restrictions and Conditions.
The Award Agreement evidencing the grant of any Restricted Stock
will incorporate the following terms and conditions and such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee deems appropriate in its sole and
absolute discretion:
(i) During a period
commencing with the date of an Award of Restricted Stock and ending
at such time or times as specified by the Committee (the
“Restriction
Period”), the Participant will not be permitted to
sell, transfer, pledge, assign or otherwise encumber Restricted
Stock awarded under the Plan. The Committee may condition the lapse
of restrictions on Restricted Stock upon one or more Vesting
Conditions.
(ii) While any Share of
Restricted Stock remains subject to restriction, the Participant
will have, with respect to the Restricted Stock, the right to vote
the Shares. If any cash distributions or dividends are payable with
respect to the Restricted Stock, the Committee, in its sole
discretion, may require the cash distributions or dividends to be
subjected to the same Restriction Period as is applicable to the
Restricted Stock with respect to which such amounts are paid, or,
if the Committee so determines, reinvested in additional Restricted
Stock to the extent Shares are available under Section 3(a) of
the Plan. A Participant shall not be entitled to interest with
respect to any dividends or distributions subjected to the
Restriction Period. Any distributions or dividends paid in the form
of securities with respect to Restricted Stock will be subject to
the same terms and conditions as the Restricted Stock with respect
to which they were paid, including, without limitation, the same
Restriction Period.
(iii) Subject to the
provisions of the applicable Award Agreement or as otherwise
determined by the Committee, if a Participant’s service with
the Company and its Affiliates terminates prior to the expiration
of the applicable Restriction Period, the Participant’s
Restricted Stock that then remains subject to forfeiture will then
be forfeited automatically.
Section
9. Restricted Stock
Units. Subject to the
other terms of the Plan, the Committee may grant Restricted Stock
Units to eligible individuals and may impose one or more Vesting
Conditions on such units. Each Restricted Stock Unit will represent
a right to receive from the Company, upon fulfillment of any
applicable conditions, an amount equal to the Fair Market Value (at
the time of the distribution) of one Share. Distributions may be
made in Shares. All other terms governing Restricted Stock Units,
such as Vesting Conditions, time and form of payment and
termination of units shall be set forth in the applicable Award
Agreement. The Participant shall not have any stockholder rights
with respect to the Shares subject to a Restricted Stock Unit Award
until that Award vests and the Shares are actually issued
thereunder. Subject to the provisions of the applicable Award
Agreement or as otherwise determined by the Committee, if a
Participant’s service with the Company terminates prior to
the Restricted Stock Unit Award vesting in full, any portion of the
Participant’s Restricted Stock Units that then remain subject
to forfeiture will then be forfeited automatically.
Section
10. Other Stock Based
Awards. Subject to the other terms of the Plan, the
Committee may grant Other Stock Based Awards (including Awards to
receive unrestricted Shares or immediate cash payments) to eligible
individuals. The Award Agreement evidencing an Other Stock Based
Award shall set forth the terms and conditions of such Other Stock
Based Award, including, as applicable, the term, any exercise or
purchase price, performance goals, Vesting Conditions and other
terms and conditions. Payment in respect of an Other Stock Based
Award may be made in cash, Shares, or a combination of cash and
Shares, as determined by the Committee.
Section
11. Amendments and
Termination.
Subject to
any stockholder approval that may be required under Applicable Law,
the Plan may be amended or terminated at any time or from time to
time by the Board. Notwithstanding the foregoing, no
amendment may be made which would adversely change the terms of an
outstanding Award, without that Participant’s
consent.
Section
12. Prohibition on
Repricing Programs. Neither the Committee nor the Board
shall (i) implement any cancellation/re-grant program pursuant
to which outstanding Options or Stock Appreciation Rights under the
Plan are cancelled and new Options or Stock Appreciation Rights are
granted in replacement with a lower exercise or base price per
share, (ii) cancel outstanding Options or Stock Appreciation
Rights under the Plan with exercise prices or base prices per share
in excess of the then current Fair Market Value per Share for
consideration payable in equity securities of the Company or
(iii) otherwise directly reduce the exercise price or base
price in effect for outstanding Options or Stock Appreciation
Rights under the Plan, without in each such instance obtaining
stockholder approval.
Section
13. Conditions
Upon Grant of Awards and Issuance of Shares.
(a) The implementation
of the Plan, the grant of any Award and the issuance of Shares in
connection with the issuance, exercise or vesting of any Award made
under the Plan shall be subject to the Company’s procurement
of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the Awards made under the Plan
and the Shares issuable pursuant to those Awards.
(b) No Shares or other
assets shall be issued or delivered under the Plan unless and until
there shall have been compliance with all applicable requirements
of Applicable Law.
Section
14. Limits on
Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged,
encumbered, or hypothecated to, or in favor of, or subject to any
lien, obligation, or liability of such Participant to, any party,
other than the Company, any Subsidiary or Affiliate, or assigned or
transferred by such Participant other than by will or the laws of
descent and distribution, and such Awards and rights shall be
exercisable during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative.
Notwithstanding the foregoing, the Committee may, in its
discretion, provide that Awards or other rights or interests of a
Participant granted pursuant to the Plan be transferable, without
consideration, to immediate family members (i.e., children,
grandchildren or spouse), to trusts for the benefit of such
immediate family members and to partnerships in which such family
members are the only partners. The Committee may attach to such
transferability feature such terms and conditions as it deems
advisable. In addition, a Participant may, in the manner
established by the Committee, designate a beneficiary (which may be
a person or a trust) to exercise the rights of the Participant, and
to receive any distribution, with respect to any Award upon the
death of the Participant. A beneficiary, guardian, legal
representative or other person claiming any rights under the Plan
from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award Agreement applicable to such
Participant, except as otherwise determined by the Committee, and
to any additional restrictions deemed necessary or appropriate by
the Committee.
Section
15. Withholding of
Taxes. No later than the date as of which an amount first
becomes includible in the gross income of the Participant for
federal income tax purposes with respect to any Award under the
Plan, the Participant will pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal,
state or local taxes of any kind required by law to be withheld
with respect to such amount. To the extent authorized by the
Committee, the required tax withholding may be satisfied by the
withholding of Shares subject to the Award based on the Fair Market
Value of such Shares on the date of withholding, but in any case
not in excess of the amount determined based on the maximum
statutory tax rate in the applicable jurisdiction. The obligations
of the Company under the Plan will be conditioned on such payment
or arrangements and the Company will have the right to deduct any
such taxes from any payment of any kind otherwise due to the
Participant.
Section
16. General
Provisions.
(a) The Committee may
require each Participant to represent to and agree with the Company
in writing that the Participant is acquiring securities of the
Company for investment purposes and without a view to distribution
thereof and as to such other matters as the Committee believes are
appropriate.
(b) The Awards shall be
subject to the Company’s stock ownership policies, as in
effect from time to time.
(c) All certificates
for Shares or other securities delivered under the Plan, if any,
will be subject to such share-transfer orders and other
restrictions as the Board or the Committee may deem advisable under
the rules, regulations and other requirements of the Securities Act
of 1933, as amended, the Exchange Act, any stock exchange upon
which the Shares are then listed, and any other Applicable Law, and
the Board or the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions.
(d) Nothing contained
in the Plan will prevent the Board or the Committee from adopting
other or additional compensation arrangements, subject to
stockholder approval if such approval is required.
(e) Neither the
adoption of the Plan nor the execution of any document in
connection with the Plan will: (i) confer upon any employee or
other service provider of the Company or an Affiliate any right to
continued employment or engagement with the Company or such
Affiliate, or (ii) interfere in any way with the right of the
Company or such Affiliate to terminate the employment or engagement
of any of its employees or other service providers at any
time.
(f) The Awards (whether
vested or unvested) shall be subject to rescission, cancellation or
recoupment, in whole or in part, under any current or future
“clawback” or similar policy of the Company that is
applicable to the Participant. Notwithstanding any other provisions
in this Plan, any Award which is subject to recovery under any law,
government regulation or stock exchange listing requirement will be
subject to such deductions and clawback as may be required to be
made pursuant to such law, government regulation or stock exchange
listing requirement.
Section
17. Effective Date of
Plan. The Plan will
become effective upon its approval by the stockholders of the
Company (the “Effective
Date”).
Section
18. Term of
Plan. Unless the Plan
shall have been previously terminated in accordance with
Section 11, the
Plan shall terminate on the 10-year anniversary of the Effective
Date, and no Awards under the Plan shall be granted after such
termination.
Section
19. Invalid
Provisions. In the
event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any Applicable Law, such invalidity
or unenforceability will not be construed as rendering any other
provisions contained herein as invalid or unenforceable, and all
such other provisions will be given full force and effect to the
same extent as though the invalid or unenforceable provision was
not contained herein.
Section
20. Governing
Law. The Plan and all
Awards granted hereunder will be governed by and construed in
accordance with the laws and judicial decisions of the State of
California, without regard to the application of the principles of
conflicts of laws.
Section
21. Notices.
Any notice to be given to the Company pursuant to the provisions of
this Plan must be given in writing and addressed, if to the
Company, to its principal executive office to the attention of its
Chief Financial Officer (or
such other Person as the Company may designate in writing from time
to time) and, if to a Participant, to the address contained in the
Company’s personnel files, or at such other address as that
Participant may hereafter designate in writing to the Company. Any
such notice will be deemed duly given: if delivered personally or
via recognized overnight delivery service, on the date and at the
time so delivered; if sent via telecopier or email, on the date and
at the time telecopied or emailed with confirmation of delivery;
or, if mailed, five (5) days after the date of mailing by
registered or certified mail.
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