def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ____)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement.
o Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)).
þ Definitive Proxy Statement.
o Definitive Additional Materials.
o Soliciting Material Pursuant to §240.14a-12.
Commission File No. 001-33169
WIRELESS RONIN TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Wireless
Ronin Technologies, Inc.
Baker
Technology Plaza
5929 Baker Road, Suite 475
Minnetonka, Minnesota 55345
April 26,
2011
Dear Shareholder:
I am pleased to invite you to attend the annual meeting of
shareholders of Wireless Ronin Technologies, Inc., to be held at
our headquarters at 5929 Baker Road, Suite 475, Minnetonka,
Minnesota 55345, on June 9, 2011, at 3:30 p.m. central
time. Details regarding the business to be conducted are more
fully described in the accompanying notice of annual meeting and
proxy statement. Also enclosed in this package is a proxy card
for you to record your vote and a return envelope for your proxy
card.
Your vote is important. Whether or not you plan to attend the
meeting, I hope that you will vote as soon as possible. Voting
will ensure your representation at the meeting, if you do not
attend in person. If you do attend in person, you may withdraw
your proxy and vote personally on any matters brought properly
before the meeting.
Sincerely,
WIRELESS RONIN TECHNOLOGIES, INC.
Scott W. Koller
President, Chief Executive Officer and Director
Wireless
Ronin Technologies, Inc.
Baker
Technology Plaza
5929 Baker Road, Suite 475
Minnetonka, Minnesota 55345
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD JUNE 9,
2011
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders
of Wireless Ronin Technologies, Inc., a Minnesota corporation,
will be held at our headquarters at 5929 Baker Road,
Suite 475, Minnetonka, Minnesota, on June 9, 2011, at
3:30 p.m. central time, or any adjournment or postponement
thereof, for the following purposes, as more fully described in
the accompanying proxy statement:
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1.
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To elect six directors for the ensuing year and until their
successors shall be elected and duly qualified;
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2.
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To consider and vote upon a proposal to amend our Amended and
Restated 2006 Equity Incentive Plan to increase the total number
of shares for which awards may be granted from 2,400,000 to
3,600,000;
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3.
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To consider and vote upon a proposal to amend our 2006
Non-Employee Director Stock Option Plan to replace automatic
grants with discretionary grants;
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4.
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To consider and vote upon a proposal to amend our Amended and
Restated 2007 Associate Stock Purchase Plan to increase the
total number of shares authorized for issuance from 400,000 to
600,000;
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5.
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To ratify the appointment of Baker Tilly Virchow Krause, LLP as
our independent registered public accounting firm for the year
ending December 31, 2011; and
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6.
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To consider such other business as may properly come before the
meeting or any adjournment or postponement thereof.
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Only shareholders of record at the close of business on
April 15, 2011, are entitled to notice of, and to vote at,
the meeting. Whether or not you expect to attend the meeting in
person, please mark, date and sign the enclosed proxy exactly as
your name appears thereon and promptly return it in the envelope
provided, which requires no postage if mailed in the United
States. Proxies may be revoked at any time before they are
exercised and, if you attend the meeting in person, you may
withdraw your proxy and vote personally on any matter brought
properly before the meeting.
Sincerely,
WIRELESS RONIN TECHNOLOGIES, INC.
Scott N. Ross
Senior Vice President, General Counsel and Secretary
Minnetonka, Minnesota
April 26, 2011
TABLE OF
CONTENTS
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A-1
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ii
Wireless
Ronin Technologies, Inc.
Baker
Technology Plaza
5929 Baker Road, Suite 475
Minnetonka, Minnesota 55345
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 9, 2011
INFORMATION
CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished by the board of directors of
Wireless Ronin Technologies, Inc. and contains information
relating to the annual meeting of our shareholders to be held on
June 9, 2011, beginning at 3:30 p.m. central time, at
our headquarters at 5929 Baker Road, Suite 475, Minnetonka,
Minnesota. This proxy statement and accompanying proxy card are
being distributed on or about April 26, 2011.
Important
Notice Regarding the Internet Availability of Proxy Materials
for the Shareholder Meeting to be Held on June 9,
2011
In accordance with rules and regulations adopted by the
U.S. Securities and Exchange Commission (the
SEC), we are now furnishing our proxy materials on
the Internet. Proxy materials means this proxy
statement, our 2010 Annual Report and any amendments or updates
to these documents. Our proxy materials are available on the
Internet to the general public at
www.wirelessronin.com/Proxy2011.html.
What
is the purpose of the annual meeting?
At our annual meeting, shareholders will vote on the following
items of business:
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1.
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The election of six directors for the ensuing year and until
their successors shall be elected and duly qualified;
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2.
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Approval of an amendment to our Amended and Restated 2006 Equity
Incentive Plan to increase the total number of shares for which
awards may be granted from 2,400,000 to 3,600,000;
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3.
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Approval of an amendment to our 2006 Non-Employee Director Stock
Option Plan to replace automatic grants with discretionary
grants;
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4.
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Approval of an amendment to our Amended and Restated 2007
Associate Stock Purchase Plan to increase the total number of
shares authorized for issuance from 400,000 to 600,000; and
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5.
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Ratification of the appointment of Baker Tilly Virchow Krause,
LLP as our independent registered public accounting firm
(independent auditors) for the year ending
December 31, 2011.
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You will also vote on such other matters as may properly come
before the meeting or any adjournment or postponement thereof.
What
are the boards recommendations?
Our board of directors recommends that you vote:
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FOR election of each of the nominees for director (see
Proposal 1);
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FOR the amendment to our Amended and Restated 2006 Equity
Incentive Plan to increase the total number of shares for which
awards may be granted from 2,400,000 to 3,600,000 (see
Proposal 2);
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FOR the amendment to our 2006 Non-Employee Director Stock
Option Plan to replace automatic grants with discretionary
grants (see Proposal 3);
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FOR the amendment to our Amended and Restated 2007
Associate Stock Purchase Plan to increase the total number of
shares authorized for issuance from 400,000 to 600,000 (see
Proposal 4); and
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FOR ratification of the appointment of Baker Tilly
Virchow Krause, LLP as our independent auditors for the year
ending December 31, 2011 (see Proposal 5).
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With respect to any other matter that properly comes before the
meeting, the proxy holders will vote as recommended by the board
of directors or, if no recommendation is given, in their own
discretion.
What
shares are entitled to vote?
As of April 15, 2011, the record date for the meeting, we
had 19,288,293 shares of common stock outstanding and
approximately 91 shareholders of record. Each share of our
common stock outstanding on the record date is entitled to one
vote on each item being voted on at the meeting. You can vote
all the shares that you owned on the record date. These shares
include (1) shares held directly in your name as the
shareholder of record, and (2) shares held for you as the
beneficial owner through a broker, bank or other nominee.
Shareholders do not have the right to cumulate votes in the
election of directors.
What
is the difference between holding shares as a shareholder of
record and as a beneficial owner?
Most shareholders hold their shares through a broker or other
nominee rather than directly in their own name. As summarized
below, there are some distinctions between shares held of record
and those owned beneficially.
Shareholder of Record. If your shares are
registered directly in your name with our transfer agent,
Registrar and Transfer Company, you are considered, with respect
to those shares, the shareholder of record, and we are sending
these proxy materials directly to you. As the shareholder of
record, you have the right to grant your voting proxy directly
to the named proxy holders or to vote in person at the meeting.
We have enclosed a proxy card for you to use.
Beneficial Owner. If your shares are held in a
brokerage account or by another nominee, you are considered the
beneficial owner of shares held in street name, and these proxy
materials are being forwarded to you together with a voting
instruction card. As the beneficial owner, you have the right to
direct your broker, trustee or nominee how to vote and are also
invited to attend the annual meeting.
Since a beneficial owner is not the shareholder of record, you
may not vote these shares in person at the meeting unless you
obtain a legal proxy from the broker, trustee or
nominee that holds your shares, giving you the right to vote the
shares at the meeting. Your broker, trustee or nominee has
enclosed or provided voting instructions for you to use in
directing the broker, trustee or nominee how to vote your shares.
Who
can attend the annual meeting?
All shareholders as of the record date, or their duly appointed
proxies, may attend the meeting. If you are not a shareholder of
record but hold shares through a broker or nominee (i.e., in
street name), you should provide proof of beneficial ownership
on the record date, such as your most recent account statement
prior to April 15, 2011, a copy of the voting instruction
card provided by your broker, trustee or nominee, or other
similar evidence of ownership. Registration and seating will
begin at 3:15 p.m. Cameras, recording devices and other
similar electronic devices will not be permitted at the meeting.
How
can I vote my shares in person at the annual
meeting?
Shares held in your name as the shareholder of record may be
voted in person at the meeting. Shares held beneficially in
street name may be voted in person only if you obtain a legal
proxy from the broker, trustee or nominee that holds your shares
giving you the right to vote the shares. Even if you plan to
attend the meeting, we recommend that you also submit your proxy
or voting instructions as described below so that your vote will
be counted if you later decide not to attend the meeting.
2
How
can I vote my shares without attending the annual
meeting?
Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may direct how your shares are
voted without attending the meeting. If you are a shareholder of
record, you may vote by submitting a proxy. If you hold shares
beneficially in street name, you may vote by submitting voting
instructions to your broker, trustee or nominee. For directions
on how to vote, please refer to the instructions included on
your proxy card or, for shares held beneficially in street name,
the voting instruction card provided by your broker, trustee or
nominee.
Can I
change my vote or revoke my proxy after I return my proxy
card?
Yes. Even after you have submitted your proxy, you may change
your vote or revoke your proxy at any time before the votes are
cast at the meeting by (1) delivering a written notice of
your revocation to our Corporate Secretary at our principal
executive office, (2) executing and delivering a later
dated proxy, or (3) appearing in person at the meeting,
filing a written notice of revocation with our Corporate
Secretary and voting in person the shares to which the proxy
relates. Any written notice or later dated proxy should be
delivered to Wireless Ronin Technologies, Inc., Baker Technology
Plaza, 5929 Baker Road, Suite 475, Minnetonka, Minnesota
55345, Attention: Scott N. Ross, Senior Vice President, General
Counsel and Secretary, or hand-delivered to Mr. Ross before
the vote at the meeting.
What
constitutes a quorum?
The presence at the meeting, in person or by proxy, of the
holders of at least a majority of the shares of our common stock
outstanding as of the record date will constitute a quorum.
There must be a quorum for any action to be taken at the meeting
(other than an adjournment or postponement of the meeting). If
you submit a properly executed proxy card, even if you abstain
from voting, then your shares will be counted for purposes of
determining the presence of a quorum. If a broker indicates on a
proxy that it lacks discretionary authority as to certain shares
to vote on a particular matter, commonly referred to as
broker non-votes, those shares will still be counted
for purposes of determining the presence of a quorum at the
meeting.
What
vote is required to approve each item?
Proposal 1. Assuming the presence of a
quorum, the six persons receiving the highest number of
FOR votes will be elected as directors.
Proposals 2 through 5. Assuming the
presence of a quorum, the affirmative vote of the greater of
(i) a majority of the outstanding shares of our common
stock present in person or by proxy and entitled to vote on the
item at the meeting and (ii) a majority of the minimum
number of shares entitled to vote that would constitute a quorum
for the transaction of business at the meeting, will be required
for approval of each of these proposals. Abstentions will be
considered shares entitled to vote in the tabulation of votes
cast and will have the same effect as negative votes on each of
these proposals.
If you hold your shares beneficially in street name and do not
provide your broker or nominee with voting instructions, your
shares may constitute broker non-votes. Generally,
broker non-votes occur on a matter when a broker is not
permitted to vote on that matter without instructions from the
beneficial owners and instructions are not given. Broker
non-votes are counted towards a quorum, but are not counted for
any purpose in determining whether a proposal has been approved.
What
does it mean if I receive more than one proxy
card?
If you receive more than one proxy card, it means that you hold
shares registered in more than one name or brokerage account.
You should sign and return each proxy card that you receive in
order to ensure that all of your shares are voted.
3
How
can I vote on each of the proposals?
With respect to the first proposal, you may vote FOR
each of the nominees, or your vote may be WITHHELD
with respect to any or all of the nominees. With respect
to the second through fifth proposals, you may vote FOR
or AGAINST the proposal, or you may
indicate that you wish to ABSTAIN from voting on
the proposal.
Each of your shares will be voted according to your directions
on the proxy card. If you sign your proxy card or broker voting
instruction card with no further instructions, your shares will
be voted in accordance with the recommendations of our board of
directors (FOR each of the nominees for director
named in the proxy statement, FOR the amendment to
our Amended and Restated 2006 Equity Incentive Plan, FOR
the amendment to our 2006 Non-Employee Director Stock
Option Plan, FOR the amendment to our Amended and
Restated 2007 Associate Stock Purchase Plan, and FOR
ratification of the appointment of independent auditors).
Who
will count the proxy votes?
Votes will be counted by Scott N. Ross, our Senior Vice
President, General Counsel and Secretary, who has been appointed
to act as the inspector of election for the annual meeting.
How
will voting on any other business be conducted?
We do not expect any matters to be presented for a vote at the
meeting other than the matters described in this proxy
statement. If you grant a proxy, either of the proxy holders,
Scott W. Koller or Darin P. McAreavey, or his nominee(s) or
substitute(s), will have the discretion to vote your shares on
any additional matters that are properly presented for a vote at
the meeting. If a nominee is not available as a candidate for
director, the persons named as proxy holders may vote your proxy
for another candidate nominated by our board of directors.
Who is
paying for this proxy solicitation?
We will pay the expenses incurred in connection with the
solicitation of proxies. We are soliciting proxies principally
by mail. In addition, our directors, officers and other
employees may solicit proxies personally, by telephone, by
facsimile or by
e-mail, for
which they will receive no consideration other than their
regular compensation. We will also request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting
material to the beneficial owners of shares held as of the
record date and will reimburse such persons for their reasonable
expenses so incurred.
4
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
Six persons have been nominated for election as directors at the
annual meeting, all of whom currently serve as directors. Our
directors are elected annually, by a plurality of the votes
cast, to serve until the next annual meeting of shareholders and
until their respective successors are elected and duly
qualified. There are no familial relationships between any
director or officer.
Vote
Required
The six nominees receiving the highest number of affirmative
votes of the shares entitled to vote at the annual meeting shall
be elected to the board of directors. Set forth below is certain
information concerning the nominees for the board of directors.
The board of directors recommends that shareholders vote
FOR the nominees listed below.
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Position with
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Director
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Age
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Principal Occupation
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Company
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Since
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Stephen F. Birke
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57
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Founder and President of
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Chairman of the
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2008
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Birch Tree International,
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Board
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LLC
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Gregory T. Barnum
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Vice President of Finance
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Director
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2006
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and Chief Financial Officer of Datalink Corporation
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Scott W. Koller
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President, Chief
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President, Chief
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2011
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Executive Officer and
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Executive Officer
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Director of Wireless
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and Director
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Ronin Technologies, Inc.
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Thomas J. Moudry
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Chief Executive Officer
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Director
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2006
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and Chief Creative Officer of Martin Williams Advertising, Inc.
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Geoffrey J. Obeney
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Private Investor
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Director
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2008
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Brett A. Shockley
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Senior Vice President of
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Director
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2006
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Strategy and Corporate Development of Avaya Inc.
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Business
Experience
Stephen F. Birke became our Chairman of the Board in
January 2011. Mr. Birke joined our board of directors in
July 2008 and served as our Interim Chief Executive Officer from
September 2008 to December 2008. Mr. Birke served for
38 years at Target Corporation in various roles, most
recently as Vice President and General Merchandise Manager until
his retirement from Target in May 2008. From October 2009 to
September 2010, Mr. Birke served as President and Chief
Executive Officer of Lawrence Merchandising, a provider of
visual merchandising services. Mr. Birke is also the
founder and President of Birch Tree International, LLC, a
retail/wholesale consulting company, which was organized in
August 2008. Mr. Birke brings retail experience to our
board, which is one of our key vertical market segments.
Gregory T. Barnum joined our board of directors in
February 2006, served as our Lead Director from December 2007 to
September 2008, and served as our Chairman from September 2008
to December 2010. Since February 2006, Mr. Barnum has been
Vice President of Finance and Chief Financial Officer for
Datalink Corporation, which designs, installs and supports data
storage systems. From July 1997 to June 2005, Mr. Barnum
was Chief Financial Officer and Secretary of CNT Corporation, an
information technology services company. Prior to employment
with CNT Corporation, he served as Senior Vice President of
Finance and Administration, Chief Financial Officer and
Secretary of Tricord Systems, Inc. and held similar senior
5
financial positions with Cray Computer Corporation and Cray
Research, Inc. Mr. Barnum is a member of the board of
directors of Lime Energy Co. and serves as a member of its audit
and compensation committees. Mr. Barnum brings public
company chief financial officer experience to our board.
Scott W. Koller became our President and Chief Executive
Officer in January 2011 and was elected to our board in March
2011. Mr. Koller served as our President and Chief
Operating Officer from May 2010 to December 2010 and as our
Executive Vice President and Chief Operating Officer from March
2009 until May 2010. Mr. Koller joined our company in
November 2004. He served as our Senior Vice President of Sales
and Marketing from November 2004 through January 2007, our
Executive Vice President of Sales and Marketing from February
2007 through October 2008, and our Executive Vice President of
Sales and Project Management from October 2008 through March
2009. From December 2003 to November 2004, Mr. Koller
served as Vice President of Sales and Marketing for Rollouts
Incorporated, a provider of field services for large-scale
implementations. From August 1998 to November 2003,
Mr. Koller served in various roles with Walchem
Corporation, a manufacturer of metering pumps and analytical
controllers, including the last three years as Vice President of
Sales and Marketing. Mr. Koller served in the
U.S. Naval Nuclear Power Program from 1985 to 1992. As our
President and Chief Executive Officer, Mr. Koller brings
managements perspective to our board.
Thomas J. Moudry joined our board of directors in March
2006. Since December 2005, Mr. Moudry has been Chief
Executive Officer and Chief Creative Officer of Martin Williams
Advertising, Inc., a subsidiary of Omnicom Group, Inc., an
advertising and marketing company. Prior to his current position
at Martin Williams, Mr. Moudry served as such
companys President and Executive Creative Director from
June 2005 to December 2005 and such companys Executive
Vice President and Creative Director from July 2003 to June
2005. From April 2000 to May 2003, Mr. Moudry was Executive
Vice President and Executive Creative Officer of Omnicom Group,
Inc. Mr. Moudry brings advertising industry experience to
our board.
Geoffrey J. Obeney joined our board of directors in March
2008. Mr. Obeney served as Vice President of Information
Technology for Terra Industries, Inc., a supplier of nitrogen
products to agricultural, industrial and environmental
industries, from February 2008 to April 2010. From November 2005
to January 2008, he was the Interim Chief Executive Officer of
Spirit Computing, Ltd., a supplier of information technology
solutions. From October 2004 to October 2005, he served as the
Chief Information Officer of SEI LLC, a
start-up
company. From July 2003 to October 2004, he was Vice President,
Technology Infrastructure Services for W.W. Grainger, Inc.
Mr. Obeney held various information technology positions
with Gateway, Inc. from 1990 to 2003, including serving as Vice
President Technology Infrastructure for Gateway, Inc. from March
1999 to July 2003. Mr. Obeney brings experience in
information technology to our board.
Brett A. Shockley joined our board of directors in March
2006. Mr. Shockley has served as Senior Vice President of
Strategy and Corporate Development at Avaya Inc., a privately
held telecommunications company which specializes in enterprise
telephone and call center technology, since April 2011. From
July 2009 to April 2011, Mr. Shockley was Vice President of
Emerging Products and Technology for Avaya. Mr. Shockley
continues to lead Avayas global professional services team
for Contact Center and Unified Communications, a role he has
held since October 2008. From January 2002 to October 2008,
Mr. Shockley was Chairman, Chief Executive Officer and
President of Spanlink Communications, Inc., a provider of
unified communications and contact center solutions. From August
2000 to December 2001, Mr. Shockley was Vice
President-General Manager of the Customer Contact Business Unit
of Cisco Systems. Mr. Shockley brings technology and
telecommunications experience to our board.
OUR BOARD
OF DIRECTORS AND COMMITTEES
Board of
Directors
Our board of directors represents the interests of our
shareholders as a whole and is responsible for directing the
management of our business and affairs, as provided by Minnesota
law. The board of directors held six meetings during the year
ended December 31, 2010. In addition to meetings of the
full board, directors also attended committee meetings. Each
director attended at least 75 percent of all of the
meetings of the board and of those committees on which he served.
6
The board is comprised of a majority of independent directors as
defined in Rule 5605(a)(2) of the Marketplace Rules of the
NASDAQ Stock Market. In this regard, the board has affirmatively
determined that Messrs. Birke, Barnum, Moudry, Obeney and
Shockley are independent directors under that rule. Scott W.
Koller, our President and Chief Executive Officer, is not an
independent director. William F. Schnell, who served on our
board during 2010, was an independent director. James C. (Jim)
Granger, a former director who served as our Chief Executive
Officer during 2010, was not an independent director.
The independent members of the board have regularly scheduled
meetings at which only independent directors are present, known
as executive sessions.
We have adopted a Code of Business Conduct and Ethics that
applies to all of our employees, officers (including our
principal executive officer, principal financial officer,
principal accounting officer or controller, and persons
performing similar functions) and directors. Our Code of
Business Conduct and Ethics satisfies the requirements of
Item 406(b) of
Regulation S-K
and applicable NASDAQ Marketplace Rules. Our Code of Business
Conduct and Ethics is posted on our Internet website at
www.wirelessronin.com and is available, free of charge, upon
written request to our Corporate Secretary at Baker Technology
Plaza, 5929 Baker Road, Suite 475, Minnetonka, Minnesota
55345. We intend to disclose any amendment to or waiver from a
provision of our Code of Business Conduct and Ethics that
requires disclosure on our website at www.wirelessronin.com.
Leadership
Structure
Our board of directors has determined that having an independent
director serve as Chairman of the Board is in the best interest
of shareholders at this time. We separate the roles of CEO and
Chairman of the Board in recognition of the differences between
the two roles. The CEO is responsible for setting the strategic
direction for the company and the day to day leadership and
performance of the company, while the Chairman provides guidance
to the CEO, sets the agenda for board meetings and presides over
meetings of the full board. The structure ensures a greater role
for the independent directors in setting agendas and
establishing priorities and procedures for the work of the board.
Our board believes that its leadership structure is appropriate
for administration of its risk oversight function. Our board has
the primary responsibility for overseeing risk management of our
company, and our management provides it with regular reports
highlighting risk assessments and recommendations. Our board
delegates its primary responsibility for overseeing risk
management within the categories of financial risks,
compensation and corporate governance to its key committees. In
particular, our audit committee focuses on oversight of
financial risks relating to our company; our compensation
committee focuses primarily on risks relating to remuneration of
our officers and other employees; and our corporate governance
and nominating committee focuses on reputational and corporate
governance risks relating to our company. In addition, the audit
committee and the board regularly hold discussions with our
officers regarding the risks that may affect our company.
Committee
Overview
The board of directors has an audit committee, a compensation
committee, a corporate governance and nominating committee, and
an executive committee. With the exception of our executive
committee, each committee consists solely of members who are
independent as defined in Rule 5605(a)(2) of the
Marketplace Rules of the NASDAQ Stock Market. Further
information regarding the independence of our directors for
7
service on our boards committees appears in the committee
discussions below. The following table shows the current
membership of the committees and identifies our independent
directors:
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Corporate
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Governance
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Independent
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Name
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Audit
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Compensation
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and Nominating
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Executive
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Directors
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Stephen F. Birke
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X
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*
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X
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X
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X
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Gregory T. Barnum
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X*
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X
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X
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Scott W. Koller
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X
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*
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Thomas J. Moudry
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X
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X
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X
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Geoffrey J. Obeney
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X
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X
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X
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Brett A. Shockley
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X
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X
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*
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X
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* |
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Denotes committee chairperson. |
Each of the audit, compensation, and corporate governance and
nominating committees has adopted and operates under a written
charter. Each such committee regularly reviews and makes
recommendations to the board about changes to its charter.
Current copies of the committee charters may be found on our
website at www.wirelessronin.com and are available in print upon
written request to our Corporate Secretary at Wireless Ronin
Technologies, Inc., Baker Technology Plaza, 5929 Baker Road,
Suite 475, Minnetonka, Minnesota 55345.
The audit committee meets throughout the year, with regularly
scheduled meetings. Additional meetings, either by phone or in
person, are called when deemed necessary or desirable. The
compensation committee, the corporate governance and nominating
committee and the executive committee meet as needed. The
chairperson of each committee, with the advice and consultation
of management and the committees outside advisors, if any,
sets the agenda for each meeting. The committees receive
materials related to the topics on the agenda prior to each
meeting, and keep minutes of each meeting.
Audit
Committee
Our audit committee was established in accordance with
Section 3(a)(58)(A) of the Exchange Act. Each member of our
audit committee is independent as defined in
Rule 5605(a)(2) of the Marketplace Rules of the NASDAQ
Stock Market and Exchange Act
Rule 10A-3.
Further, no member of our audit committee participated in the
preparation of the financial statements of our company or any
current subsidiary of our company at any time during the past
three years.
Pursuant to our listing agreement with the NASDAQ Stock Market,
each member of the audit committee is able to read and
understand fundamental financial statements, including an
issuers balance sheet, income statement, and cash flow
statement, and at least one member of the committee has past
employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable
experience or background which results in the individuals
financial sophistication. In addition, our board of directors
has determined that Gregory T. Barnum is an audit committee
financial expert as such term is defined by Item 407(d)(5)
of
Regulation S-K.
The functions of the audit committee include oversight of the
integrity of our financial statements, our compliance with legal
and regulatory requirements, and the performance, qualifications
and independence of our independent auditors. Our audit
committee is directly responsible for the appointment,
retention, compensation, evaluation, termination and oversight
of the work of any independent auditor engaged for the purpose
of preparing or issuing an audit report or related work. The
audit committee met four times and did not take action by
written consent during the year ended December 31, 2010.
Audit
Committee Report
Our audit committee has:
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reviewed and discussed with management the audited financial
statements with respect to the fiscal year ended
December 31, 2010;
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discussed with Baker Tilly Virchow Krause, LLP the matters
required to be discussed by Statement on Auditing Standards
No. 61, as amended (AICPA, Professional Standards,
Vol. 1. AU section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T; and
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received the written disclosures and the letter from Baker Tilly
Virchow Krause, LLP required by applicable requirements of the
Public Company Accounting Oversight Board regarding the
independent accountants communication with the audit
committee concerning independence, and discussed with Baker
Tilly Virchow Krause, LLP its independence.
|
Based on the above-referenced review and discussions, the audit
committee recommended to the board of directors that the audited
financial statements be included in our Annual Report on
Form 10-K
for the year ended December 31, 2010, for filing with the
SEC.
/s/ Gregory
T. Barnum, Chairman
The Audit Committee
Compensation
Committee
Our compensation committee is responsible for discharging the
boards responsibilities relating to compensation of the
companys executives. Our compensation committee is also
responsible for overseeing and advising the board on the
adoption of policies that govern our compensation programs,
including stock and benefit plans. Our compensation committee
met three times and took action by written consent seven times
during the year ended December 31, 2010.
Each member of our compensation committee meets the independence
requirements established by our board and applicable laws,
regulations and the Marketplace Rules of the NASDAQ Stock
Market. In addition, each member is a non-employee director as
defined in Exchange Act
Rule 16b-3
and an outside director as defined under Section 162(m) of
the Internal Revenue Code (the Code). Our board
appoints the members of the compensation committee and its
chairperson. Our board may remove any member from the
compensation committee at any time with or without cause.
Our compensation committee has the resources and authority
necessary to discharge its duties and responsibilities. Our
compensation committee has sole authority to retain and
terminate, and approve fees and other retention terms for, its
outside counsel, compensation consultants, and other experts or
consultants as it deems appropriate.
Our compensation committee looks to certain executive officers,
including our named executive officers, for assistance with the
design and assessment of our executive compensation program and
other personnel issues. For example, our named executive
officers assist in the development of corporate succession plans
for our Chief Executive Officer and other senior corporate
officers, and provide periodic reports on matters relating to
the companys personnel appointments and practices. The
committee reviews the performance of the Chief Executive
Officer, whereas our Chief Executive Officer assists the
committee with its annual review of the performance of the other
executive officers. Named executive officers also assist the
committee by providing insight on our companys business
goals and results, defining objectives for individual
executives, and assessing the effect on our culture and
personnel of suggested changes to our compensation programs. No
executive officer is involved in assessing or setting his or her
own compensation.
In April 2009, our compensation committee engaged Financial
Concepts, Inc. as its outside compensation consultant. Financial
Concepts was selected based on its ability to meet the
committees needs at the most effective cost. In May 2009,
Financial Concepts presented to the committee a compensation
analysis along with its recommendations, which included a market
review involving base salary, non-equity incentive awards and
equity incentive awards for the companys executives. The
committee gave consideration to the consultants analysis
and recommendations when establishing the companys
executive compensation program.
9
The committee expects to continue to utilize an outside
compensation consultant when it deems appropriate for purposes
of evaluating and analyzing the compensation provided to the
companys executives.
Corporate
Governance and Nominating Committee
Each member of our corporate governance and nominating committee
is independent as defined in Rule 5605(a)(2) of the
Marketplace Rules of the NASDAQ Stock Market.
The functions of the corporate governance and nominating
committee include identifying individuals qualified to become
members of our board, overseeing our corporate governance
principles, and completing an annual evaluation of our board.
The corporate governance and nominating committee met once
during the year ended December 31, 2010.
Corporate
Governance and Nominating Committee Procedures
The corporate governance and nominating committee identifies,
reviews and evaluates candidates for election as director who
meet the standards set forth in our companys corporate
governance guidelines. The committee does not evaluate proposed
nominees differently depending upon who has made the
recommendation; however, the committee may consider, as one of
the factors in its evaluation of shareholder recommended
nominees, the size and duration of the interest of the
recommending shareholder or shareholder group in the equity of
our company.
The corporate governance and nominating committee may consider
nominees suggested by directors, management and shareholders. It
is the committees view that the continuing service of
qualified incumbents promotes stability and continuity in the
boardroom. However, prior to nominating an existing director for
re-election to the board, the committee will consider and review
an existing directors qualifications and performance.
Where there is no qualified and available incumbent, or where
there is a vacancy or a desire to increase the size of the
board, the committee will identify and evaluate new candidates.
The committee will solicit recommendations for nominees from
persons that it believes are likely to be familiar with
qualified candidates. These persons may include members of the
board and management. The committee may also determine to engage
a third-party search firm; however, the committee has not to
date paid any third party a fee to assist in identifying or
evaluating potential nominees to the board. Based upon all
available information, the committee recommends to the board
candidates who, in the view of the committee, are most suited
for board membership.
In making its selections, the corporate governance and
nominating committee will also evaluate candidates proposed by
shareholders. The committee may choose not to consider an
unsolicited recommendation if no vacancy exists on the board and
the committee does not perceive a need to increase the size of
the board. The committee will consider only those director
candidates recommended in accordance with the procedures set
forth below.
Shareholder
Nomination Procedures
To submit a recommendation of a director candidate to the
corporate governance and nominating committee, a shareholder
must submit the following information in writing, addressed to
the Chairman of the corporate governance and nominating
committee, care of the Corporate Secretary, at the principal
executive office of Wireless Ronin Technologies, Inc.:
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(1)
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The name and address of the person recommended as a director
candidate;
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(2)
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All information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
pursuant to Exchange Act Regulation 14A;
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(3)
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The written consent of the person being recommended as a
director candidate to being named in the proxy statement as a
nominee and to serving as a director if elected;
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(4)
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As to the shareholder making the recommendation, the name and
address, as they appear on the books of Wireless Ronin
Technologies, Inc., of such shareholder; provided, however, that
if the
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shareholder is not a registered holder of common stock, the
shareholder must submit his or her name and address along with a
current written statement from the record holder of the shares
that reflects ownership of the common stock and a representation
that the shareholder intends to appear in person or by proxy to
make the nomination; and
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(5)
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A statement disclosing whether such shareholder is acting with
or on behalf of any other person and, if applicable, the
identity of such person, and a description of all arrangements
and understandings between the shareholder, the person
recommended as a director candidate and any other person(s)
pursuant to which the recommendation is being made.
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In order for a director candidate to be considered for
nomination at the annual meeting of shareholders, the
recommendation must be received by the corporate governance and
nominating committee as provided under Shareholder
Proposals for 2012 Annual Meeting.
Minimum
Qualifications
The corporate governance and nominating committee believes that
members of the board must possess certain basic personal and
professional qualities in order to properly discharge their
fiduciary duties to shareholders, provide effective oversight of
management, and monitor adherence to principles of sound
corporate governance. It is therefore the policy of the
committee that all persons nominated to serve as a director of
our company should possess the following minimum qualifications:
personal integrity and ethical character; absence of conflicts
of interest; fair and equal representation of our companys
constituencies; demonstrated achievement in one or more fields;
ability to function effectively in an oversight role; business
understanding; and availability.
In approving candidates, the corporate governance and nominating
committee will also assure that: at least a majority of the
directors are independent; as many as possible of the directors
satisfy the financial literacy requirements for service on the
audit committee; at least one of the directors qualifies as an
audit committee financial expert; at least some of the
independent directors have experience as senior executives of a
public or substantial private company; and at least some of the
independent directors have general familiarity with our
companys industry.
Although we have no specific policy regarding diversity, the
corporate governance and nominating committee will seek to
promote through the nomination process an appropriate diversity
on the board of professional background, experience, expertise,
perspective, gender, ethnicity and country of citizenship.
Executive
Committee
Our executive committee consists of two independent directors as
defined in Rule 5605(a)(2) of the Marketplace Rules of the
NASDAQ Stock Market and our President and Chief Executive
Officer, who is not an independent director. Pursuant to our
Bylaws, the executive committee may exercise all of the powers
of the board of directors in the management of our business and
affairs when the board is not in session. The executive
committee did not meet or take action by written consent during
the year ended December 31, 2010.
Communications
with Board Members
Our board of directors has provided the following process for
shareholders and interested parties to send communications to
our board
and/or
individual directors. All communications should be addressed to
Wireless Ronin Technologies, Inc., Baker Technology Plaza, 5929
Baker Road, Suite 475, Minnetonka, Minnesota 55345,
Attention: Corporate Secretary. Communications to individual
directors may also be made to such director at our
companys address. All communications sent to a member of
the audit committee or to any individual director will be
received directly by such individuals and will not be screened
or reviewed by any company personnel. Any communications sent to
the board in the care of the Corporate Secretary will be
reviewed by the Corporate Secretary to ensure that such
communications relate to the business of the company before
being reviewed by the board.
11
Board
Member Attendance at Annual Meeting of Shareholders
We encourage all of our directors to attend the annual meeting
of shareholders. We generally hold a board meeting earlier in
the afternoon preceding the annual shareholders meeting to
minimize director travel obligations and facilitate their
attendance at the shareholders meeting. All of our
directors then in office attended the 2010 annual meeting of
shareholders.
NON-EMPLOYEE
DIRECTOR COMPENSATION
Standard
Compensation Arrangements
Our compensation committee periodically reviews and makes
recommendations to our board regarding the components and amount
of non-employee director compensation. Directors who are
employees of our company receive no fees for their services as
director.
During 2010, non-employee members of our board of directors
received the following cash compensation:
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$5,000 in annual compensation for the Chairman; and
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Board and committee meeting fees as follows: full board meetings
($1,000) and committee meetings ($750). For the purposes of
earning cash compensation for meeting attendance,
attendance did not include attending a meeting that
lasted for 15 minutes or less. Attendance at meetings on a
telephonic basis and not in person with other members of the
board or committee resulted in one-half the stated rate of
compensation.
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Effective January 1, 2011, non-employee members of our
board of directors receive the following cash compensation:
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$45,000 in annual compensation for the Chairman of the Board;
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$3,500 in annual compensation for the chairmen of our audit
committee, compensation committee, and corporate governance and
nominating committee; and
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Board and committee meeting fees as follows: full board meetings
($1,500) and committee meetings ($1,000). For the purposes of
earning cash compensation for meeting attendance,
attendance does not include attending a meeting that
lasts for 15 minutes or less. Attendance at meetings on a
telephonic basis and not in person with other members of the
board or committee results in one-half the stated rate of
compensation.
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Non-employee members of our board also receive equity-based
compensation. Upon election to the board, non-employee directors
automatically receive a five-year option for the purchase of
40,000 shares of common stock under our 2006 Non-Employee
Director Stock Option Plan. Such options become exercisable to
the extent of 25 percent of the shares purchasable
thereunder on the date of grant with additional increments of
25 percent becoming exercisable upon such directors
annual reelection to the board thereafter. This form of
non-employee director compensation is subject to the plan
amendment set forth in Proposal No. 3, which would
replace automatic grants with discretionary grants.
In addition, in March 2010, our board of directors awarded each
non-employee director a ten-year option for the purchase of
20,000 shares of common stock under our Amended and
Restated 2006 Equity Incentive Plan. Such options become
exercisable to the extent of 25 percent of the shares
purchasable thereunder on the first anniversary of the date of
grant with additional increments of 25 percent becoming
exercisable annually thereafter. In accordance with the terms of
the Amended and Restated 2006 Equity Incentive Plan, the
exercise price of each option is $2.45 per share, representing
the closing price of our common stock on the NASDAQ Stock Market
on March 17, 2010.
12
Director
Compensation Table
Compensation of our non-employee directors during 2010 appears
in the following table. Because Mr. Granger also served as
our Chief Executive Officer in 2010, his compensation is instead
presented in the Summary Compensation Table.
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Fees Earned or
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Option
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Paid in Cash ($)
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Awards ($)(a)
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Total ($)
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Stephen F. Birke
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9,750
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33,308
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43,058
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Gregory T. Barnum
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13,625
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33,308
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46,933
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Thomas J. Moudry
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4,875
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33,308
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38,183
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Geoffrey J. Obeney
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7,250
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33,308
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40,558
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William F. Schnell(b)
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7,500
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33,308
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40,808
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Brett A. Shockley
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7,375
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33,308
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40,683
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(a) |
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Represents the aggregate grant date fair value computed in
accordance with FASB ASC Topic 718. The assumptions made in the
valuation are those set forth in Note 8 to the consolidated
financial statements in our Annual Report on
Form 10-K
for the year ended December 31, 2010. The company used a
0 percent forfeiture rate assumption in 2010. |
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Dr. Schnell resigned from our board in March 2011. |
Our non-employee directors held the following unexercised stock
options at December 31, 2010:
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Option Awards
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Number of
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Number of
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Securities
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Securities
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Underlying
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Underlying
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Unexercised
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Unexercised
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Option
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Option
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Options (#)
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Options (#)
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Exercise
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Expiration
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Name
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Exercisable
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Unexercisable
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Price ($)
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Date
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Stephen F. Birke
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10,000
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(a)
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0
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|
4.89
|
|
|
|
07/30/2013
|
|
|
|
|
52,500
|
(b)
|
|
|
17,500
|
(b)
|
|
|
1.61
|
|
|
|
10/17/2013
|
|
|
|
|
20,000
|
(c)
|
|
|
20,000
|
(c)
|
|
|
1.19
|
|
|
|
02/02/2019
|
|
|
|
|
0
|
|
|
|
20,000
|
(d)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
Gregory T. Barnum
|
|
|
40,000
|
(e)
|
|
|
0
|
|
|
|
4.00
|
|
|
|
02/27/2011
|
|
|
|
|
5,000
|
(f)
|
|
|
5,000
|
(f)
|
|
|
2.82
|
|
|
|
12/28/2012
|
|
|
|
|
15,000
|
(b)
|
|
|
5,000
|
(b)
|
|
|
1.61
|
|
|
|
10/17/2013
|
|
|
|
|
0
|
|
|
|
20,000
|
(d)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
Thomas J. Moudry
|
|
|
40,000
|
(e)
|
|
|
0
|
|
|
|
4.00
|
|
|
|
02/27/2011
|
|
|
|
|
5,000
|
(f)
|
|
|
5,000
|
(f)
|
|
|
2.82
|
|
|
|
12/28/2012
|
|
|
|
|
15,000
|
(b)
|
|
|
5,000
|
(b)
|
|
|
1.61
|
|
|
|
10/17/2013
|
|
|
|
|
0
|
|
|
|
20,000
|
(d)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
Geoffrey J. Obeney
|
|
|
30,000
|
(e)
|
|
|
10,000
|
(e)
|
|
|
4.00
|
|
|
|
03/31/2013
|
|
|
|
|
15,000
|
(b)
|
|
|
5,000
|
(b)
|
|
|
1.61
|
|
|
|
10/17/2013
|
|
|
|
|
0
|
|
|
|
20,000
|
(d)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
William F. Schnell(g)
|
|
|
40,000
|
(e)
|
|
|
0
|
|
|
|
4.00
|
|
|
|
02/27/2011
|
|
|
|
|
5,000
|
(f)
|
|
|
5,000
|
(f)
|
|
|
2.82
|
|
|
|
12/28/2012
|
|
|
|
|
15,000
|
(b)
|
|
|
5,000
|
(b)
|
|
|
1.61
|
|
|
|
10/17/2013
|
|
|
|
|
0
|
|
|
|
20,000
|
(d)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
Brett A. Shockley
|
|
|
40,000
|
(e)
|
|
|
0
|
(e)
|
|
|
4.00
|
|
|
|
02/27/2011
|
|
|
|
|
5,000
|
(f)
|
|
|
5,000
|
(f)
|
|
|
2.82
|
|
|
|
12/28/2012
|
|
|
|
|
15,000
|
(b)
|
|
|
5,000
|
(b)
|
|
|
1.61
|
|
|
|
10/17/2013
|
|
|
|
|
0
|
|
|
|
20,000
|
(d)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
13
|
|
|
(a) |
|
This stock option vested to the extent of 10,000 shares on
July 30, 2008. |
|
(b) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
October 17, 2008, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(c) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
February 2, 2009, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(d) |
|
This stock option becomes exercisable to the extent of
25 percent of the shares purchasable thereunder on
March 17, 2011, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(e) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on the date
of grant with additional increments of 25 percent becoming
exercisable upon the directors annual reelection to the
board. |
|
(f) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
January 1, 2009, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(g) |
|
Dr. Schnell resigned from our board in March 2011. In March
2011, the compensation committee accelerated the vesting of each
of Dr. Schnells unvested options in connection with
his resignation from the board. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us
regarding beneficial ownership of our common stock as of
April 15, 2011, by (1) each person who is known to us
to own beneficially more than five percent of our common stock,
(2) each director, (3) each executive officer named in
the Summary Compensation Table below, and (4) all current
executive officers and directors as a group. The percentage of
beneficial ownership is based on 19,288,293 shares
outstanding as of April 15, 2011. As indicated in the
footnotes, shares issuable pursuant to warrants and options are
deemed outstanding for computing the percentage of the person
holding such warrants or options but are not deemed outstanding
for computing the percentage of any other person. Except as
otherwise noted below or pursuant to applicable community
property laws, each person identified below has sole voting and
investment power with respect to the listed shares and none of
the listed shares has been pledged as security. Except as
otherwise noted below, we know of no agreements among our
shareholders that relate to voting or investment power with
respect to our common stock. Unless otherwise indicated, the
address for each listed shareholder is
c/o Wireless
Ronin Technologies, Inc., Baker Technology Plaza, 5929 Baker
Road, Suite 475, Minnetonka, Minnesota 55345.
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
|
|
|
|
Beneficial
|
|
|
Percent of
|
|
Name and Address of Beneficial Owner(a)
|
|
Ownership(a)
|
|
|
Class(a)
|
|
|
Perkins Capital Management, Inc.
|
|
|
2,932,410
|
(b)
|
|
|
14.9
|
%
|
Kopp Investment Advisors, LLC
|
|
|
987,838
|
(c)
|
|
|
5.1
|
%
|
Kopp Holding Company, LLC
|
|
|
987,838
|
(c)
|
|
|
5.1
|
%
|
LeRoy C. Kopp
|
|
|
987,838
|
(c)
|
|
|
5.1
|
%
|
Scott W. Koller
|
|
|
352,951
|
(d)
|
|
|
1.8
|
%
|
James C. Granger
|
|
|
315,000
|
(e)
|
|
|
1.6
|
%
|
Darin P. McAreavey
|
|
|
104,200
|
(f)
|
|
|
*
|
|
Stephen F. Birke
|
|
|
103,990
|
(g)
|
|
|
*
|
|
Geoffrey J. Obeney
|
|
|
50,000
|
(h)
|
|
|
*
|
|
Gregory T. Barnum
|
|
|
37,500
|
(i)
|
|
|
*
|
|
Brett A. Shockley
|
|
|
27,500
|
(h)
|
|
|
*
|
|
Thomas J. Moudry
|
|
|
47,500
|
(i)
|
|
|
*
|
|
All current executive officers and directors as a group
(7 persons)
|
|
|
723,641
|
(j)
|
|
|
3.6
|
%
|
|
|
|
* |
|
Represents less than one percent. |
14
|
|
|
(a) |
|
Beneficial ownership is determined in accordance with the rules
of the SEC and includes voting or investment power with respect
to securities. Securities beneficially owned by a
person may include securities owned by or for, among others, the
spouse, children, or certain other relatives of such person as
well as other securities as to which the person has or shares
voting or investment power or has the option or right to acquire
within 60 days of April 15, 2011. |
|
(b) |
|
As set forth in the Schedule 13G filed on February 7,
2011, by Perkins Capital Management, Inc. (PCM). The
Schedule 13G reports that PCM is an investment adviser. The
Schedule 13G reports that these shares represent
1,030,618 shares over which PCM has sole voting power and
2,932,410 shares over which PCM has sole dispositive power
(including warrants to purchase 395,000 shares of common
stock). The address of this shareholder is 730 East Lake Street,
Wayzata, MN 55391. |
|
|
|
(c) |
|
As set forth in the Schedule 13G filed on January 7,
2011, by Kopp Investment Advisors, LLC (KIA), Kopp
Holding Company, LLC (KHC) and LeRoy C. Kopp. The
Schedule 13G reports that KIA is an investment adviser that
is wholly-owned by KHC, which is controlled by Mr. Kopp.
The Schedule 13G reports that KIA, KHC and Mr. Kopp
have shared power to vote or to direct the vote of
869,328 shares and shared power to dispose or to direct the
disposition of 987,838 shares. The Schedule 13G also
reports that, with respect to shares held in a fiduciary or
representative capacity, persons other than the reporting
persons have the right to receive, or the power to direct the
receipt of, dividends from, or the proceeds from the sale of,
such shares. The address of these shareholders is 8400
Normandale Lake Boulevard, Suite 1450, Bloomington, MN
55437. |
|
|
|
(d) |
|
Includes 10,000 shares under a restricted stock award which
vests in three equal annual installments commencing on
March 17, 2013, and 297,500 shares purchasable upon
the exercise of options. |
|
(e) |
|
Represents 15,000 shares held in trust and
300,000 shares purchasable upon the exercise of options. |
|
(f) |
|
Represents 10,000 shares under a restricted stock award
which vests in three equal annual installments commencing on
March 17, 2013, and 87,500 shares purchasable upon the
exercise of options. |
|
(g) |
|
Includes 97,500 shares purchasable upon the exercise of
options. |
|
(h) |
|
Represents shares purchasable upon the exercise of options. |
|
(i) |
|
Includes 27,500 shares purchasable upon the exercise of
options. |
|
(j) |
|
Includes 615,000 shares purchasable upon the exercise of
options and 20,000 shares over which there is sole voting
power but no investment power. |
SECTION 16(a)
BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers,
directors and persons who own more than 10 percent of a
registered class of our equity securities to file reports of
ownership and changes in ownership with the SEC. Such officers,
directors and shareholders are required by the SEC to furnish us
with copies of all such reports. To our knowledge, based solely
on a review of copies of reports filed with the SEC during 2010
and written representations from such persons that no other
reports were required, all applicable Section 16(a) filing
requirements were met.
15
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth information concerning the
compensation of our named executive officers for 2009 and 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position(a)
|
|
Year
|
|
|
($)(b)
|
|
|
($)
|
|
|
($)(c)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
($)
|
|
|
Scott W. Koller
|
|
|
2010
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
24,500
|
|
|
|
124,904
|
|
|
|
0
|
|
|
|
460
|
|
|
|
399,864
|
|
President, Chief Executive
|
|
|
2009
|
|
|
|
245,866
|
|
|
|
0
|
|
|
|
66,000
|
|
|
|
240,212
|
|
|
|
0
|
|
|
|
762
|
|
|
|
552,840
|
|
Officer and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James C. Granger
|
|
|
2010
|
|
|
|
125,770
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
249
|
|
|
|
126,019
|
|
Former President, Chief
|
|
|
2009
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
689
|
|
|
|
250,689
|
|
Executive Officer and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Darin P. McAreavey
|
|
|
2010
|
|
|
|
192,500
|
|
|
|
0
|
|
|
|
24,500
|
|
|
|
83,269
|
|
|
|
0
|
|
|
|
443
|
|
|
|
300,712
|
|
Senior Vice President and Chief
|
|
|
2009
|
|
|
|
150,914
|
|
|
|
0
|
|
|
|
0
|
|
|
|
70,715
|
|
|
|
0
|
|
|
|
471
|
|
|
|
222,100
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Mr. Koller became our President and Chief Executive Officer
in January 2011 and was elected to our board in March 2011. He
served as our President and Chief Operating Officer from May
2010 until December 2010, our Executive Vice President and Chief
Operating Officer from March 2009 until May 2010, and our
Executive Vice President of Sales and Project Management from
October 2008 until March 2009. He joined our company in November
2004. Mr. Granger, who joined our company in December 2008,
served as our President and Chief Executive Officer from
December 2008 until December 2010. Mr. McAreavey, who
joined our company in March 2009, became Senior Vice President
and Chief Financial Officer on January 1, 2011. He served
as our Vice President and Chief Financial Officer from March
2009 until December 2010. |
|
(b) |
|
Effective January 1, 2011, the annual base salaries of
Messrs. Koller and McAreavey were set at $265,000 and
$215,000, respectively. |
|
(c) |
|
Represents the aggregate grant date fair value computed in
accordance with FASB ASC Topic 718. The assumptions made in the
valuation are those set forth in Note 8 to the consolidated
financial statements in our Annual Report on
Form 10-K
for the year ended December 31, 2010. |
|
(d) |
|
Based on the companys performance in 2010, no non-equity
incentive awards were paid to our named executive officers under
our Senior Management Bonus Plan for that year. |
|
(e) |
|
Represents premiums we paid for long-term disability insurance. |
The material terms of employment agreements and payments to be
made upon a change in control are discussed in the narrative
following Potential Payments upon Termination or Change in
Control.
Our named executive officers are eligible for retirement
benefits on the same terms as non-executives under the
companys defined contribution 401(k) retirement plan.
Employees may contribute up to 15% of their pretax compensation
to the plan. There is currently no plan for an employer
contribution match.
16
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth certain information concerning
outstanding stock options and restricted stock awards
(RSAs) held by our named executive officers as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(a)
|
|
|
Stock Awards
|
|
|
|
Number of Securities
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
|
|
Market value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Number of shares or
|
|
|
shares or units of
|
|
|
|
Unexercised Options
|
|
|
Unexercised Options
|
|
|
Exercise
|
|
|
Option
|
|
|
units of stock that
|
|
|
stock that have not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
have not vested
|
|
|
vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
Scott W. Koller
|
|
|
1,851
|
(b)
|
|
|
0
|
|
|
|
9.00
|
|
|
|
02/06/2011
|
|
|
|
10,000
|
(j)
|
|
|
14,500
|
(k)
|
|
|
|
71,250
|
(c)
|
|
|
23,750
|
(c)
|
|
|
5.65
|
|
|
|
12/27/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
11,111
|
(b)
|
|
|
0
|
|
|
|
9.00
|
|
|
|
03/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(d)
|
|
|
12,500
|
(d)
|
|
|
2.80
|
|
|
|
12/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
(e)
|
|
|
12,500
|
(e)
|
|
|
1.61
|
|
|
|
10/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
85,000
|
(f)
|
|
|
85,000
|
(f)
|
|
|
2.20
|
|
|
|
04/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
75,000
|
(g)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
|
|
|
|
|
|
|
|
James C. Granger
|
|
|
300,000
|
(h)
|
|
|
0
|
|
|
|
0.67
|
|
|
|
1/14/2012
|
|
|
|
0
|
|
|
|
0
|
|
Darin P. McAreavey
|
|
|
50,000
|
(i)
|
|
|
50,000
|
(i)
|
|
|
1.1201
|
|
|
|
03/09/2019
|
|
|
|
10,000
|
(j)
|
|
|
14,500
|
(k)
|
|
|
|
0
|
|
|
|
50,000
|
(g)
|
|
|
2.45
|
|
|
|
03/17/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Unless otherwise indicated, represents shares issuable upon the
exercise of stock options granted under our Amended and Restated
2006 Equity Incentive Plan. |
|
(b) |
|
Represents shares purchasable upon the exercise of warrants. |
|
(c) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
January 1, 2008, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(d) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
January 1, 2009, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
|
|
(e) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
October 17, 2008, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(f) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
April 27, 2009, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(g) |
|
This stock option becomes exercisable to the extent of
25 percent of the shares purchasable thereunder on
March 17, 2011, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(h) |
|
This stock option had vested to the extent of
300,000 shares as of December 31, 2010, the date
Mr. Granger ceased to serve as an officer and director of
our Company. This stock option expires on January 14, 2012. |
|
(i) |
|
This stock option became exercisable to the extent of
25 percent of the shares purchasable thereunder on
March 9, 2009, with additional increments of
25 percent becoming exercisable annually thereafter. |
|
(j) |
|
This restricted stock award vests in three equal annual
installments commencing on March 17, 2013, assuming
continued employment. |
|
(k) |
|
Determined by multiplying the number of shares subject to the
restricted stock award by the per share closing price of our
common stock on December 31, 2010. |
Potential
Payments upon Termination or Change in Control
Upon the termination of a named executive officer or change in
control of the company, a named executive officer may be
entitled to payments or the provision of other benefits,
depending on the triggering event.
17
Named
Executive Officers Currently Employed by Our Company
The potential payments for each named executive officer who is
currently employed with our company were determined as part of
the negotiation of each of their employment agreements, and the
compensation committee believes that the potential payments for
the triggering events are in line with current compensation
trends. The events that would trigger a current named executive
officers entitlement to payments or other benefits upon
termination or a change in control, and the value of the
estimated payments and benefits, based on annual base salaries
in effect as of January 1, 2011, are described in the
following table, assuming a termination date and, where
applicable, a change in control date of December 31, 2010,
and a stock price of $1.45 per share, which was the closing
price of one share of our common stock on December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott W.
|
|
|
Darin P.
|
|
|
|
Benefits
|
|
Koller
|
|
|
McAreavey
|
|
|
Involuntary Termination without
Cause, or Voluntary Resignation
for Good Reason, not upon a
Change in Control
|
|
|
Severance
|
|
$
|
265,000
|
|
|
$
|
107,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of equity awards
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA continuation payments
|
|
$
|
8,801
|
|
|
$
|
4,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
273,801
|
|
|
$
|
111,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without
Cause or Voluntary Resignation
for Good Reason, within 12 months
of Change in Control(a)
|
|
|
Severance
|
|
$
|
265,000
|
|
|
$
|
215,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of equity awards
|
|
$
|
24,500
|
|
|
$
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA continuation payments
|
|
$
|
8,801
|
|
|
$
|
8,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
298,301
|
|
|
$
|
264,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary Resignation following
Change in Control(a)
|
|
|
Severance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of equity awards
|
|
$
|
24,500
|
|
|
$
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COBRA continuation payments
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
24,500
|
|
|
$
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Our Amended and Restated 2006 Equity Incentive Plan provides
that, unless otherwise provided by our compensation committee in
an award agreement, any options outstanding as of the date of a
change in control which are not then exercisable and vested
shall become fully exercisable and vested, and the restrictions
and deferral limitations applicable to any restricted stock or
restricted stock units shall lapse and the restricted stock or
restricted stock units shall become free of all restrictions and
become fully vested. |
18
Named
Executive Officers Formerly Employed by Our Company
The amounts actually paid or payable to Mr. Granger, the
named executive officer who retired from his executive officer
and director positions with our company on December 31,
2010, are set forth in the following table.
|
|
|
|
|
|
|
|
|
|
|
James C.
|
|
|
|
Benefits
|
|
Granger
|
|
|
Voluntary
Resignation
|
|
Severance
|
|
$
|
0
|
|
|
Acceleration of options
|
|
$
|
0
|
|
|
|
|
|
|
|
|
COBRA continuation payments
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
0
|
|
|
|
|
|
|
|
|
Employment
Agreements with Named Executive Officers Currently Employed by
Our Company
We have an amended and restated executive employment agreement
with Scott W. Koller pursuant to which he became our President
and Chief Executive Officer, effective January 1, 2011. We
also have an executive employment agreement, as amended, with
Darin P. McAreavey pursuant to which he began serving as our
Senior Vice President and Chief Financial Officer, effective
January 1, 2011.
These agreements have terms ending December 31, 2011;
however, they will be automatically extended for successive
one-year periods unless either our company or the executive
elects not to extend employment. Mr. Kollers
agreement provides for an annual base salary of $265,000 and
Mr. McAreaveys agreement provides for an annual base
salary of $215,000. Under the agreements, the executives are
eligible to participate in performance-based cash bonus or
equity award plans for our senior executives. In general, the
annual base salaries payable under these agreements may be
increased, but not decreased, in the sole discretion of our
board. Pursuant to these agreements, each executive participates
in our employee benefit plans, policies, programs, perquisites
and arrangements to the extent he meets eligibility and other
requirements. Each executive is entitled to 22 business days of
paid time off per year. We retained the right under
Mr. Kollers agreement to reassign Mr. Koller to
the position of President and Chief Operating Officer on or
before December 31, 2011, without such reassignment
constituting a termination, providing Mr. Koller with good
reason (as defined) to terminate his employment, or creating any
liability to our company. Upon any termination of employment,
each executive will receive base salary for services performed,
accrued and unpaid paid time off, and any interest he may have
as a terminated employee in our 401(k) plan or other plans in
which he participated. Upon a termination of employment for good
reason (as defined), without cause (as defined), or within
12 months following a change in control (as defined) other
than by death, disability or for cause, then, in addition to the
foregoing amounts, Mr. Koller will be entitled to receive a
severance payment equal to one year of base salary. With respect
to Mr. McAreavey, in addition to the amounts set forth
above, upon a termination of employment for good reason (as
defined) or without cause (as defined), then, he will be
entitled to receive a severance payment equal to six months of
base salary, or upon a termination of employment within
12 months following a change in control (as defined) other
than by death, disability or for cause, then, he will be
entitled to receive a severance payment equal to one year of
base salary. These amounts would generally be paid in equal
monthly installments over the non-competition period specified
below. In addition, in a termination without cause or for good
reason, Mr. McAreavey is entitled to a payment equal to the
non-equity incentive plan award paid in the prior year, if any,
subject to certain limitations. Furthermore, if the executive is
eligible for and elects COBRA coverage, and continues to pay his
portion of the monthly medical insurance premiums, we will
continue to pay our companys portion of the monthly
medical insurance premiums for COBRA coverage for the executive
and his eligible dependents for a period ending on the earlier
of one year after termination of employment or until such
officer is eligible to be covered by another plan providing
medical benefits. Messrs. Koller and McAreavey have agreed
to certain non-disparagement and non-competition provisions
during the term of employment and for two years thereafter,
certain non-disclosure and inventions provisions during the term
of employment and thereafter, and certain non-interference and
non-
19
recruitment provisions during the term of employment and for a
certain period of time thereafter (two years for Mr. Koller
and one year for Mr. McAreavey). Pursuant to his agreement,
Mr. Koller released, waived and gave up any claims against
our company and related persons, including, without limitation,
any rights to severance or other payments pursuant to
Mr. Kollers executive employment agreement, dated
April 1, 2006, which was amended and restated in its
entirety by the amended and restated executive employment
agreement, dated December 28, 2010.
Employment
Agreement with the Named Executive Officer Formerly Employed by
Our Company
James C. Granger served as our President and Chief Executive
Officer through December 31, 2010, at which time he retired
from his executive officer and director positions at our company.
Pursuant to his amended and restated executive employment
agreement, dated April 21, 2010, Mr. Granger received
an annual base salary of $60,000 and was eligible to participate
in any performance-based cash bonus or equity award plan for our
senior executives. Mr. Granger participated in our employee
benefit plans, policies, programs, perquisites and arrangements
to the extent he met eligibility and other requirements. After
the sale of his Minnesota residence, we reimbursed
Mr. Granger for 50% of the cost of no more than two
coach-class round-trip tickets between Minnesota and Texas per
month. Mr. Granger was entitled to six business days of
vacation per year and agreed that any accrued but unused
personal time off from service prior to May 7, 2010 would
not be used, except in the case of sickness or disability. Upon
his termination of employment, Mr. Granger received base
salary for services performed, accrued and unpaid vacation, and
any interest he may have as a terminated employee in our 401(k)
plan or other plans in which he participated. All such pay and
benefits were conditioned on Mr. Granger signing a release
of claims. Mr. Granger agreed to certain non-disparagement
and non-competition provisions during the term of his employment
and for two years thereafter, certain non-disclosure and
inventions provisions during the term of his employment and
thereafter, and certain non-interference and non-recruitment
provisions during the term of his employment and for one year
thereafter. Pursuant to the agreement, Mr. Granger
released, waived and gave up any claims against our company and
related persons, including, without limitation, any rights to
severance or other payments pursuant to Mr. Grangers
executive employment agreement, dated December 17, 2008,
which was amended and restated in its entirety by the amended
and restated executive employment agreement, dated
April 21, 2010.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Review
and Approval of Transactions with Related Persons
In February 2009, our board of directors adopted a written
policy for the review and approval of related person
transactions requiring disclosure under Rule 404(a) of
Regulation S-K.
This policy states that the audit committee is responsible for
reviewing and approving or disapproving all interested
transactions, which are defined as any transaction, arrangement
or relationship in which (a) the amount involved may be
expected to exceed $120,000 in any fiscal year, (b) our
company will be a participant, and (c) a related person has
a direct or indirect material interest. A related person is
defined as an executive officer, director or nominee for
director, or a greater than five percent beneficial owner of our
companys common stock, or an immediate family member of
the foregoing. The policy deems certain interested transactions
to be pre-approved, including the employment and compensation of
executive officers.
Employment
Agreements
The terms of the employment agreements between our company and
our current executive officers are set forth in the Executive
Compensation section of this proxy statement under the caption
Potential Payments upon Termination or Change in
Control.
20
PROPOSAL NO. 2
AMENDMENT TO AMENDED AND RESTATED 2006 EQUITY INCENTIVE
PLAN
Overview
The board of directors and our shareholders previously approved
the Amended and Restated 2006 Equity Incentive Plan. The board
initially reserved 1,000,000 shares of common stock for
issuance under the plan. Our shareholders subsequently approved
amendments that increased the total number of shares available
for issuance under the plan to 2,400,000. As of April 15,
2011, we had outstanding restricted stock awards for
99,477 shares under the plan, outstanding option awards for
the purchase of 2,199,359 shares under the plan with a
weighted average exercise price of $1.89 per share, including
options for the purchase of 82,251 shares the grant of
which is subject to shareholder approval of this proposal, and
no shares remaining available for future issuance under the
plan. Because there are no shares currently available for future
issuance under the plan, the board has determined it is
insufficient to meet the anticipated needs of our company.
Restricted stock awards (RSAs), options and other
possible forms of awards under the plan are expected to be an
important incentive to attract, retain and motivate eligible
participants in order to achieve our growth and profitability
objectives.
The following summary of the plan does not purport to be a
complete description and is qualified in its entirety by the
specific language of the plan, a copy of which is attached to
this proxy statement as Appendix A.
Plan
Summary
Purpose. The purpose of the plan is to permit
the board to develop and implement a variety of stock-based
programs based on the changing needs of the company. The board
and senior management of the company believe it is in the best
interests of the companys shareholders for officers,
employees and certain other persons to own stock in the company
and that such ownership enhances the companys ability to
attract highly qualified personnel, strengthens its retention
capabilities, and enhances the long-term performance of the
company to vest in participants a proprietary interest in the
success of the company and to provide certain
performance-based compensation within the meaning of
Section 162(m)(4)(C) of the Code.
Shares Subject to the Plan. The maximum
number of shares of common stock issuable pursuant to the plan
is currently 2,400,000. This is also the maximum number of
shares of common stock that may be issued in the form of
restricted stock, stock bonuses or restricted stock units
(RSUs). If any award lapses, expires or otherwise
terminates for any reason without having been exercised or
settled in full, or if shares subject to forfeiture or
repurchase are forfeited or repurchased by us, any such shares
will again become available for issuance under the plan. Shares
will not be treated as having been issued under the plan, and
therefore will not reduce the number of shares available for
grant, to the extent an award is settled in cash or shares are
withheld in satisfaction of tax withholding obligations.
Appropriate adjustments will be made to the shares reserved
under the plan, to the other numerical limits on awards under
the plan and to outstanding awards in the event of any change in
our common stock through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock
dividend, stock split, reverse stock split,
split-up,
split-off, spin-off, combination of shares, exchange of shares
or similar change in our capital structure, or if we make a
distribution in a form other than common stock (excluding normal
cash dividends) that has a material effect on the fair market
value of our common stock.
Administration. The plan is administered by
the compensation committee of our board of directors. Awards to
participants are granted by the committee which consists of at
least three directors, each of whom is both a non-employee
director within the meaning of Exchange Act
Rule 16b-3
and an outside director for purposes of Section 162(m) of
the Code. Subject to the provisions of the plan, the committee
determines in its discretion the persons to whom and the times
at which awards are granted, the types and sizes of such awards,
and all of their terms and conditions. The committee may,
subject to certain limitations required by Section 162(m)
of the Code and the express language in the plan that prohibits
amending, modifying, extending, canceling or renewing any award,
waive any restrictions or conditions applicable to any award,
and
21
accelerate, continue, extend or defer the vesting of any award.
The committee may establish rules and policies for
administration of the plan and adopt one or more forms of
agreement to evidence awards made under the plan. The committee
interprets the plan and any agreement used under the plan, and
all determinations of the committee are final and binding on all
persons having an interest in the plan or any award issued under
the plan.
Eligibility. Under the plan, the committee may
grant awards to any employee, officer, non-employee director or
any individual consultant or independent contractor providing
services to our company or other affiliated entity. While the
committee may grant incentive stock options (ISOs)
only to employees, the committee may grant non-qualified stock
options (Non-ISOs), warrants, restricted stock,
RSUs, stock appreciation rights (SARs), stock awards
and performance awards to any eligible participant. As of
April 15, 2011, we had 66 employees (including two
executive officers) and five non-employee directors who were
eligible to participate in the plan. During 2010 and 2011, the
committee granted stock option awards to 4 individual
consultants who serve as independent contractors.
Individual Limit. Under the existing plan, no
more than 500,000 shares may be issued to any participant
in any calendar year.
Stock Options. The committee may grant
Non-ISOs and ISOs within the meaning of Section 422 of the
Code, or any combination of these. Each option granted under the
plan must be evidenced by a written agreement between us and the
optionee specifying the number of shares subject to the option
and the other terms and conditions of the option, consistent
with the requirements of the plan. The exercise price of each
option may not be less than the fair market value of a share of
our common stock on the date of grant. However, any ISO granted
to a person who at the time of grant owns stock possessing more
than ten percent of the total combined voting power of all
classes of our stock or of any parent or subsidiary corporation
must have an exercise price equal to at least 110 percent
of the fair market value of a share of our common stock on the
date of grant and any such options must not be exercised after
the expiration of five years from the date of grant. On
April 15, 2011, the closing price of our common stock on
the NASDAQ Capital Market was $1.25 per share.
The plan provides that the option exercise price may be paid in
cash, by check, or in cash equivalent; by tender of shares of
common stock owned by the optionee having a fair market value
not less than the exercise price; by such other lawful
consideration as approved by the committee; or by any
combination of these. Nevertheless, the committee may restrict
the forms of payment permitted in connection with any option
grant. No option may be exercised unless the optionee has made
adequate provision for federal, state, local and foreign taxes,
if any, relating to the exercise of the option, including, if
permitted or required by us, through the optionees
surrender of a portion of the option shares to our company.
Options become vested and exercisable at such times or upon such
events and subject to such terms, conditions, performance
criteria or restrictions as specified by the committee. The
maximum term of any option granted under the plan is ten years,
provided, as noted above, that an ISO granted to a ten percent
shareholder must have a term not exceeding five years. Subject
to the term of an award, an option generally will remain
exercisable for three months following the optionees
termination of service, except that if service terminates as a
result of the optionees death or disability, the option
generally will remain exercisable for twelve months. However, if
service is terminated for cause, the option will terminate
immediately.
Warrants. The committee may grant warrants
pursuant to the plan. Each warrant granted under the plan must
be evidenced by a written agreement in such form and including
such terms as the committee shall from time to time approve. The
exercise price per share of any warrant may not be less than the
fair market value of a share of our common stock on the date of
grant, except as permitted in connection with the issuance of
warrants in a transaction to which Section 424(a) of the
Code applies, and any such warrant must not be exercised after
the expiration of ten years from the date of grant.
Stock Appreciation Rights. The committee may
grant SARs. The exercise price of each SAR may not be less than
the fair market value of a share of our common stock on the date
of grant. Upon the exercise of any SAR, the participant is
entitled to receive an amount equal to the excess of the fair
market value of the
22
underlying shares of common stock as to which the right is
exercised over the aggregate exercise price for such shares. At
the committees discretion, it may make payment of a SAR in
cash or in shares of common stock whose fair market value on the
exercise date equals the payment amount. The committee may make
payment in a lump sum or it may defer payment in accordance with
the terms of the participants award agreement. The maximum
term of any SAR granted under the plan is ten years.
Restricted Stock and Restricted Stock
Units. Shares of restricted stock and RSUs are
subject to restrictions as the committee may impose, which may
lapse separately or in combination at such time or times, in
installments or otherwise as the committee may deem appropriate.
The grant or vesting of restricted stock and RSUs may be
performance-based, time-based or both. Restricted stock and RSUs
may be qualified performance-based awards as
recognized under Code Section 162(m), in which event the
grant or vesting or both, as applicable, of such restricted
stock or RSUs will be conditioned upon the attainment of
performance goals. Except as otherwise determined by the
committee, upon a participants termination of employment
(as determined under criteria established by the committee)
during the restriction period, all shares of restricted stock
and RSUs subject to restriction will be forfeited and reacquired
by us, except that the committee may waive in whole or in part
any or all remaining restrictions with respect to shares of
restricted stock or RSUs. The minimum restriction period for
restricted stock and RSUs is three years, or one year in the
case of performance-based awards.
An award may, but need not be, a qualified
performance-based award, which is intended to qualify as
performance-based compensation under Section 162(m) of the
Code. The performance measures which may apply to an award
include, but are not limited to:
|
|
|
|
|
|
|
|
|
revenue
|
|
|
|
operating margin or profit margin
|
|
|
cash flow
|
|
|
|
return on operating revenue
|
|
|
earnings per share
|
|
|
|
return on invested capital
|
|
|
income before taxes, or earnings before interest, taxes,
depreciation and amortization
|
|
|
|
market segment share
|
|
|
return on equity
|
|
|
|
product release schedules
|
|
|
total shareholder return
|
|
|
|
new product innovation
|
|
|
share price performance
|
|
|
|
product cost reduction through advanced technology
|
|
|
return on capital
|
|
|
|
brand recognition/acceptance
|
|
|
return on assets or net assets
|
|
|
|
product ship or sales targets
|
|
|
income or net income
|
|
|
|
customer segmentation or satisfaction
|
|
|
operating income or net operating income
|
|
|
|
customer account profitability
|
|
|
operating profit or net operating profit
|
|
|
|
economic value added (or equivalent metric)
|
These performance measures may be established on a company-wide
basis or with respect to one or more business units, divisions
or subsidiaries, can be on an absolute or relative basis and can
be measured either annually or cumulatively over a time period
specified in the award agreement. A qualified
performance-based award includes a grant of restricted
stock or RSUs designated as such by the committee at the time of
grant based upon a determination that: (1) the recipient is
or may be a covered employee within the meaning of
Section 162(m)(3) of the Code in the year in which we would
expect to be able to claim a tax deduction with respect to such
restricted stock or RSU award and (2) the committee wishes
such grant to qualify for the exemption from the limitation on
deductibility of compensation with respect to any covered
employee imposed by Section 162(m) of the Code. The
committee specifies the performance goals to which any
qualified performance-based award is subject.
The provisions of restricted stock and RSUs, including any
applicable performance goals, need not be the same with respect
to each participant. During the restriction period, the
committee may require that any stock certificates evidencing
restricted shares be noncertificated or be held by us. Other
than these restrictions on transfer and any other restrictions
the committee may impose, the participant will have all the
rights of a holder of stock holding the class or series of stock
that is the subject of the restricted stock or RSU award.
23
Except as may be provided by the committee, in the event of a
participants termination of employment or relationship
with the company prior to all of his restricted stock becoming
vested, or in the event any conditions to the vesting of
restricted stock have not been satisfied prior to the deadline
for the satisfaction of such conditions as set forth in the
award, the shares of restricted stock which have not vested
shall be forfeited, and the committee may provide that any
purchase price paid by the participant be returned to the
participant, or a cash payment equal to the restricted
stocks fair market value on the date of forfeiture, if
lower, be paid to the participant.
Performance Awards. The committee may grant
performance awards to eligible individuals subject to the terms
of the plan. A performance award (1) may take the form of
any of the award types available under the plan, (2) may be
denominated or payable in cash, shares, other securities, other
awards or other property, and (3) will provide the holder
with the right to receive payments, in whole or in part, upon
the achievement of performance goals established by the
committee. Prior to or at the time of grant, the committee may
designate such awards as qualified performance-based
awards, as described above under Restricted Stock
and Restricted Stock Units, intended to qualify under
Section 162(m) of the Code. The vesting or settlement of
such awards will be conditioned upon the attainment of one or
more of the performance measures described above.
Stock Bonuses, Dividend Equivalents and Other Stock-Based
Awards. Stock bonuses and other awards that are
valued by reference to, or otherwise based upon, our common
stock, including without limitation dividend equivalents, may
also be granted under the plan, either alone or in conjunction
with other awards.
Cash Bonuses. Cash bonuses may be awarded in
connection with an award of restricted stock, RSUs or a stock
bonus as performance-based compensation, and, if awarded, are
distributed at the time the recipient recognizes taxable income
in connection with the awards.
Transferability of Awards. Awards are
non-transferable other than by will or the laws of descent and
distribution. However, in the discretion of the committee,
Non-ISOs, warrants and SARs may be transferred to members of the
holders immediate family. The transfer may be made
directly or indirectly or by means of a trust, partnership or
otherwise. ISOs may be exercised only by the initial holder, a
guardian if state law permits, and upon death of the optionee by
his legal representative or beneficiary.
Change in Control. In the event of a change in
control of our company, and provided that an award agreement
does not include contrary provisions, awards will become
exercisable and nonforfeitable, as follows: any stock options
and SARs outstanding as of the date of such change in control
which are not then exercisable and vested, will become fully
exercisable and vested; the restrictions and deferral
limitations applicable to any restricted stock and RSUs will
lapse, and such restricted stock and RSUs will become free of
all restrictions and become fully vested; all performance awards
will be considered to be earned and payable in full; and any
deferral or other restriction will lapse and such performance
awards will be settled in cash or shares, as determined by the
committee. All restrictions on other awards will similarly lapse
and such awards will become free of all restrictions and fully
vested. Upon a change in control, the committee may determine
that some or all recipients holding outstanding awards will
receive, with respect to some or all of such awards, as of the
effective date of the change in control, cash in an amount equal
to the excess of the fair market value of such awards
immediately prior to the effective date of the change in control
over the exercise price per share of such awards.
Forfeiture for Financial Reporting
Misconduct. If the company is required to prepare
an accounting restatement due to the material noncompliance of
the company, as a result of misconduct, with any financial
reporting requirement under the securities laws, if the
participant knowingly or grossly negligently engaged in the
misconduct, or the participant is subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, the participant shall reimburse the company the amount of
any payment in settlement of an award, and the income realized
by a participant in connection with any other stock based award,
earned or accrued during the twelve-month period following the
first public issuance or filing with the SEC (whichever just
occurred) of the financial document embodying such financial
reporting requirement.
24
Compliance with Section 409A of the
Code. Notwithstanding any other provisions to the
contrary, any award that is deferred compensation within the
meaning of Code Section 409A shall be automatically
modified and limited to the extent that the committee determines
necessary to avoid the imposition of the additional tax under
Code Section 409A(9)(1)(B) on a participant holding such
award.
Amendments and Termination. Our board of
directors may amend, alter, suspend, discontinue or terminate
the plan at any time and from time to time, but without the
approval of our shareholders, no amendment, alteration,
suspension, discontinuation or termination may be made that
would (i) increase the number of shares that may be issued
under the plan; (ii) permit granting of options at less
than the market price of our stock; (iii) permit the
repricing of outstanding options; (iv) amend the maximum
shares set forth that may be granted as options, SARs,
restricted stock, RSUs, stock bonus or other awards;
(v) extend the term of the plan; (vi) change the class
of persons eligible to participate in the plan; or
(vii) otherwise implement any amendment required to be
approved by shareholders under the rules of any applicable stock
exchange or NASDAQ Marketplace Rules.
Term of the Plan. The plan will terminate on
February 2, 2017, or on any earlier date of discontinuation
or termination as determined by our board of directors.
Proposed
Plan Amendment
The board has approved, subject to shareholder approval, an
amendment to the plan that would increase the total number of
shares of common stock which may be awarded under the plan by
1,200,000 shares from 2,400,000 to 3,600,000. In connection
with this amendment, the maximum number of shares of common
stock that may be issued in the form of restricted stock, stock
bonuses or RSUs would also increase by 1,200,000 shares
from 2,400,000 to 3,600,000.
The board believes that this amendment will advance the
interests of our company and our shareholders by continuing to
provide incentive to eligible participants and facilitating an
increase in the proprietary interests of such persons in our
company. The board further believes that the increase in the
total number of shares for which awards may be granted will be
sufficient to permit awards to be made under the plan for the
next two to three years.
The text of the plan, including the proposed amended language,
which is bold and underlined, is attached as
Appendix A to this proxy statement.
Certain
Federal Income Tax Consequences
The following discussion is only a brief summary of the material
federal income tax consequences of the plan. The discussion is
general in nature and does not address issues relating to the
income tax circumstances of any individual participant. The
discussion is based on the Code as in effect on the date of this
proxy statement and is, therefore, subject to future changes in
the law, possibly with retroactive effect. The discussion does
not address the consequences of applicable state, local or
foreign tax laws.
Incentive Stock Options. Under present law, an
optionee who is granted an ISO does not recognize taxable income
at the time the option is granted or upon its exercise, although
the exercise is an adjustment item for alternative minimum tax
purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after
grant of the option and one year after exercise of the option,
any gain or loss is treated as long-term capital gain or loss.
If the above holding periods are not satisfied, the optionee
recognizes ordinary income at the time of disposition equal to
the difference between the fair market value of the stock when
the option was exercised and the exercise price. Any gain or
loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income is treated as
long-term or short-term capital gain or loss, depending on the
holding period. Any recognized ordinary income or gain will not
be subject to tax withholding by our company. Unless limited by
Section 162(m) of the Code, our company is entitled to a
deduction in the same amount as and at the time the optionee
recognizes ordinary income.
25
Non-qualified Stock Options. An optionee does
not recognize any taxable income at the time he or she is
granted a Non-ISO. Upon exercise, the optionee recognizes
taxable income generally measured by the excess of the then fair
market value of the shares over the exercise price. Any taxable
income recognized in connection with an option exercise by an
employee of our company is subject to tax withholding by our
company. Unless limited by Section 162(m) of the Code, our
company is entitled to a deduction in the same amount as and at
the time the optionee recognizes ordinary income. Upon a
disposition of such shares by the optionee, any difference
between the sale price and the optionees exercise price,
to the extent not recognized as taxable income as provided
above, is treated as a long-term or short-term capital gain or
loss, depending on the holding period.
Restricted Stock and RSUs. Restricted stock
awards and RSUs are generally taxed on the later of grant or the
expiration of a substantial risk of forfeiture. Such awards are
subject to a substantial risk of forfeiture within
the meaning of Section 83 of the Code to the extent the
award will be forfeited in the event that the recipient ceases
to provide services to our company. Because restricted stock and
RSU grants are subject to a substantial risk of forfeiture, the
recipient will not recognize ordinary income at the time the
award is granted. Instead the recipient will recognize ordinary
income on the earlier of (a) the date the award is no
longer subject to a substantial risk of forfeiture or
(b) when the restricted stock or RSU becomes transferable.
The amount of ordinary income to be recognized is equal to the
difference between the amount paid for the award and the fair
market value of the award on the date the award is no longer
subject to a substantial risk of forfeiture. The ordinary income
recognized by the recipient who is an employee will be subject
to tax withholding by our company. Unless limited by
Section 162(m) of the Code, our company is entitled to a
tax deduction in the same amount and at the same time as the
recipient recognizes ordinary income.
Dividend Equivalents and Other Awards. Other
types of awards granted under the plan, whether distributed in
stock or cash, will be treated as ordinary income at the time
and to the extent the awards vest and restrictions on them
lapse. At such time, the recipient will be subject to income tax
on such awards at ordinary income rates, as described above,
unless the recipient has made an election under
Section 83(b) of the Code at the time of the grant to
include in his or her gross income the difference between the
amount paid for the award, if any, and the fair market value of
the award at the time the award is granted. In the year the
award is taxable to the participant, our company will take a
deduction for the amount reported as ordinary income.
Deductibility Limit on Compensation in Excess of $1
Million. Section 162(m) of the Code
generally limits the deductible amount of annual compensation
paid (including, unless an exception applies, compensation
otherwise deductible in connection with awards granted under the
plan) by a public company to a covered employee
(i.e., the Chief Executive Officer and the other executive
officers who are most highly compensated) to no more than
$1 million.
The foregoing is only a summary of the general effect of
U.S. federal income taxation upon the optionee or award
recipient and our company with respect to the grant and exercise
of options and other awards under the plan. This summary does
not purport to be complete and does not discuss the tax
consequences arising in the context of the optionees or
award recipients death or the income tax laws of any
municipality, state or foreign country in which the
optionees or award recipients income or gain may be
taxable.
26
New Plan
Benefits
The following table shows the awards that have been granted
under the plan, subject to shareholder approval of the
amendment, as of April 15, 2011.
Amended
and Restated 2006 Equity Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
Dollar
|
|
Number of
|
Name and Position
|
|
Value
|
|
Shares
|
|
Scott W. Koller
|
|
$
|
25,176
|
|
|
|
32,900
|
|
President, Chief Executive Officer and Director
|
|
|
|
|
|
|
|
|
James C. Granger
|
|
$
|
0
|
|
|
|
0
|
|
Former President, Chief Executive Officer and Director
|
|
|
|
|
|
|
|
|
Darin P. McAreavey
|
|
$
|
12,588
|
|
|
|
16,450
|
|
Chief Financial Officer and Senior Vice President
|
|
|
|
|
|
|
|
|
Executive Group
|
|
$
|
37,764
|
|
|
|
49,350
|
|
Non-Executive Director Group
|
|
$
|
0
|
|
|
|
0
|
|
Non-Executive Officer Employee Group
|
|
$
|
25,177
|
|
|
|
32,901
|
|
The options set forth in this table reflect awards granted under
the plan, subject to shareholder approval of the amendment, as
of April 15, 2011. In particular, these entries reflect the
award of
10-year
options for the purchase of an aggregate of 82,251 shares
of common stock at $1.17 per share granted to executive and
non-executive employees on March 23, 2011. These options
vest 25% on the first anniversary of the date of grant and 25%
each year thereafter. Dollar values in the table above represent
the grant date fair value of the stock option awards, as
computed in accordance with FASB ASC Topic 718. Future awards
under the plan are indeterminable.
Vote
Required
The affirmative vote of the greater of (i) a majority of
the outstanding shares of our common stock present in person or
by proxy and entitled to vote on this proposal at the meeting
and (ii) a majority of the minimum number of shares
entitled to vote that would constitute a quorum for the
transaction of business at the meeting, is required to approve
the amendment. Abstentions will be considered shares entitled to
vote in the tabulation of votes cast on the proposal and will
have the same effect as negative votes. Broker non-votes are
counted towards a quorum, but are not counted for any purpose in
determining whether this proposal has been approved. The
board of directors considers approval of the amendment to be in
the best interests of our company and our shareholders and
recommends that you vote FOR approval of the
amendment.
27
PROPOSAL NO. 3
AMENDMENT TO 2006 NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN
Overview
The board of directors and our shareholders previously approved
the 2006 Non-Employee Director Stock Option. A total of
510,000 shares of common stock has been reserved for
issuance under the plan. As of April 15, 2011, we had
outstanding option awards for the purchase of
170,000 shares under the plan with a weighted average
exercise price of $4.18 per share, including options for the
purchase of 120,000 shares the grant of which is subject to
shareholder approval of this proposal, and 340,000 shares
remaining available for future issuance under the plan. Under
the current plan, non-employee members of the board of directors
are automatically awarded non-statutory options to purchase
shares of common stock. The board of directors has determined
that discretionary awards would better meet the anticipated
needs of our company than automatic grants.
The following summary of the plan does not purport to be a
complete description and is qualified in its entirety by the
specific language of the plan, a copy of which is attached to
this proxy statement as Appendix B.
Plan
Summary
Purpose. The purpose of the plan is to attract
and retain the best available individuals to serve as our
directors, to provide additional incentive to our non-employee
directors to serve as directors and to encourage continued
service by such persons on the board.
Term. The plan became effective on
April 15, 2006. It will continue in effect until
April 14, 2016; however, the board may determine to
terminate the plan at an earlier time.
Administration. The plan is administered by
the compensation committee of the board of directors. This
committee has complete discretion to interpret the plan and to
make all other decisions relating to the operation of the plan.
This committee also has the authority to accelerate the vesting
of, or extend the duration of, any option granted under the plan.
Eligibility. Individuals who serve as our
non-employee directors or who subsequently become non-employee
directors are eligible to participate in the plan. As of
April 15, 2011, we had five non-employee directors.
Exercise Price. The exercise price for an
option granted under the plan may not be less than 100% of the
fair market value of the common stock on the option grant date.
Upon exercise, the consideration to be paid for the shares to be
issued may be paid in cash or in such other form of
consideration as the board or compensation committee may
determine to be appropriate. On April 15, 2011, the closing
price of our common stock on the NASDAQ Capital Market was $1.25
per share.
Change in Control. Upon a change in control
(as defined in the plan), an award will become fully exercisable
as to all shares subject to such award. Upon a change in
control, the committee may determine that some or all optionees
holding outstanding options will receive, with respect to some
or all of such options, as of the effective date of the change
in control, cash in an amount equal to the excess of the fair
market value of such shares immediately prior to the effective
date of the change in control over the exercise price per share
of such options.
Amendment. In general, the board may suspend,
amend or terminate the plan, or any part thereof, at any time;
provided, however, that no suspension, amendment or termination
may adversely affect any outstanding award without the consent
of the optionee. If any amendment to the plan requires
shareholder approval for the continued applicability of
Rule 16b-3
under the Exchange Act, or for initial or continued listing of
our companys securities upon any exchange or NASDAQ, then
such amendment must also be approved by the shareholders.
28
Anti-Dilution Provisions. The board of
directors will equitably adjust the maximum number of shares of
common stock reserved for issuance under the plan in the event
of stock splits or consolidations, stock dividends or other
transactions in which our company receives no consideration.
Automatic Option Grants. Each person who is a
non-employee director or who subsequently becomes a non-employee
director, whether by election by the shareholders or election by
the board to fill a vacancy on the board, is currently entitled
to a one-time grant of an option to purchase 40,000 shares
of common stock. The option is exercisable as to
10,000 shares on the date of grant and exercisable as to an
additional 10,000 shares, if the optionee is then a
director, on each subsequent date of reelection to the board by
the shareholders of the company.
Proposed
Plan Amendment
The board has approved, subject to shareholder approval, an
amendment to the plan that would replace automatic grants with
discretionary grants.
The board believes that the plan provides incentive to
non-employee directors to serve on our board and facilitates an
increase in the proprietary interests of non-employee directors
in our company. The board believes that this amendment will
advance the interests of our company and its shareholders by
enabling our board or its compensation committee to make
discretionary grants under the plan. The board believes that
discretionary grants are better suited to our company given the
historical continuity of service of our directors and the
historical volatility of the price of our common stock, which
combination has, to date, prevented certain awards issued under
the plan from incentivizing our non-employee directors.
The text of the plan, including the proposed amended language,
which is bold and underlined, is attached as
Appendix B to the proxy statement.
Certain
Federal Income Tax Consequences
The following discussion is only a brief summary of the material
federal income tax consequences of the plan. The discussion is
general in nature and does not address issues relating to the
income tax circumstances of any individual participant. The
discussion is based on the Code as in effect on the date of this
proxy statement and is, therefore, subject to future changes in
the law, possibly with retroactive effect. The discussion does
not address the consequences of applicable state, local or
foreign tax laws.
The grant of an option under the plan is not expected to result
in any taxable income for the recipient. Upon exercising a
non-qualified stock option, the optionee must recognize ordinary
income equal to the excess of the fair market value of the
shares of common stock acquired on the date of exercise over the
exercise price, and our company will be entitled at that time to
a tax deduction in the same amount. The tax consequences to an
optionee upon a disposition of shares acquired through the
exercise of an option will depend on how long the shares have
been held. Generally, there will be no tax consequences to our
company in connection with dispositions of shares acquired under
an option.
The foregoing is only a summary of the general effect of
U.S. federal income taxation upon the optionee and our
company with respect to the grant and exercise of options under
the plan. This summary does not purport to be complete and does
not discuss the tax consequences arising in the context of the
optionees death or the income tax laws of any
municipality, state or foreign country in which the
optionees income or gain may be taxable.
29
New Plan
Benefits
The following table shows the awards that have been granted
under the plan, subject to shareholder approval of the
amendment, as of April 15, 2011.
2006
Non-Employee Director Stock Option Plan
|
|
|
|
|
|
|
|
|
|
|
Dollar
|
|
Number of
|
Name and Position
|
|
Value
|
|
Shares
|
|
Scott W. Koller
|
|
$
|
0
|
|
|
|
0
|
|
President, Chief Executive Officer and Director
|
|
|
|
|
|
|
|
|
James C. Granger
|
|
$
|
0
|
|
|
|
0
|
|
Former President, Chief Executive Officer and Director
|
|
|
|
|
|
|
|
|
Darin P. McAreavey
|
|
$
|
0
|
|
|
|
0
|
|
Chief Financial Officer and Senior Vice President
|
|
|
|
|
|
|
|
|
Executive Group
|
|
$
|
0
|
|
|
|
0
|
|
Non-Executive Director Group
|
|
$
|
91,828
|
|
|
|
120,000
|
|
Non-Executive Officer Employee Group
|
|
$
|
0
|
|
|
|
0
|
|
The options set forth in this table reflect awards granted under
the plan, subject to shareholder approval of the amendment, as
of April 15, 2011. In particular, these entries reflect the
award of
10-year
options for the purchase of 20,000 shares of common stock
at $1.17 per share granted on March 23, 2011 to each of our
non-employee directors as of such date (Messrs. Birke,
Barnum, Moudry, Obeney, and Shockley and Dr. Schnell).
These options vest 25% on the first anniversary of the date of
grant and 25% each year thereafter, except for
Dr. Schnells award, which was fully vested on
March 31, 2011 by the compensation committee in connection
with his resignation. Dollar values in the table above represent
the grant date fair value of the stock option awards, as
computed in accordance with FASB ASC Topic 718. Future awards
under the plan are indeterminable.
Vote
Required
The affirmative vote of the greater of (i) a majority of
the outstanding shares of our common stock present in person or
by proxy and entitled to vote on this proposal at the meeting
and (ii) a majority of the minimum number of shares
entitled to vote that would constitute a quorum for the
transaction of business at the meeting, is required to approve
the amendment. Abstentions will be considered shares entitled to
vote in the tabulation of votes cast on the proposal and will
have the same effect as negative votes. Broker non-votes are
counted towards a quorum, but are not counted for any purpose in
determining whether this proposal has been approved. The
board of directors considers approval of the amendment to be in
the best interests of our company and our shareholders and
recommends that you vote FOR approval of the
amendment.
30
PROPOSAL NO. 4
AMENDMENT TO AMENDED AND RESTATED 2007 ASSOCIATE
STOCK PURCHASE PLAN
Overview
The board of directors and our shareholders previously approved
the Amended and Restated 2007 Associate Stock Purchase Plan. The
board initially reserved 300,000 shares of common stock for
issuance under the plan. Our shareholders subsequently approved
an amendment that increased the total number of shares available
for issuance under the plan to 400,000. As of April 15,
2011, we had issued 293,288 shares under the plan. As a
result, 106,712 shares remained available for future
issuance under the plan. The number of shares currently
available for future issuance under the plan has been determined
by the board to be insufficient to meet the anticipated needs of
our company based on historical participation levels by our
associates (we refer to our employees as associates). The plan
is designed to encourage ownership in our common stock and
thereby encourage our associates to act in our
shareholders interest and share in the companys
success. The plan is intended to qualify under Section 423
of the Code. The plan permits eligible associates to purchase
common stock through payroll deductions, not exceeding 10% of an
associates compensation, at a purchase price equal to 85%
of the lower of the fair market value of the common stock on the
first day of the Offering Period (as defined below) or the last
day of the payroll deduction period.
The following summary of the plan does not purport to be a
complete description and is qualified in its entirety by the
specific language of the plan, a copy of which is attached to
this proxy statement as Appendix C.
Purchase
Plan Summary
Purpose. The purpose of the plan is to provide
associates with an opportunity to purchase our common stock
through accumulated payroll deductions pursuant to a plan that
qualifies for beneficial tax treatment under Section 423 of
the Code as an employee stock purchase plan.
Stock Subject to the Plan. An aggregate of
400,000 of our authorized but unissued or reacquired shares of
common stock are currently authorized for issuance under the
plan. Appropriate adjustments will be made to the number of
shares authorized under the plan and to outstanding purchase
rights in the event of any stock dividend, stock split, reverse
stock split, recapitalization, combination, reclassification, or
similar change in our capital structure, or in the event of any
merger, sale of our assets or other reorganization. If any
purchase right expires or terminates, the shares subject to the
unexercised portion of such purchase right will again be
available for issuance under the plan.
Administration. The plan is administered by
the compensation committee of our board of directors. Subject to
the provisions of the plan, the compensation committee
determines the terms and conditions of the purchase rights
granted. The compensation committee also interprets the plan and
purchase rights, with all determinations final and binding on
all persons having an interest in the plan or any purchase right.
Eligibility. Any common law employee (who has
completed 90 consecutive days of employment) of our company or
any subsidiary corporation designated for inclusion in the plan
is eligible to participate in the plan. However, no associate
who owns or holds options to purchase, or who, as a result of
participation in the plan, would own or hold options to
purchase, five percent or more of the total combined voting
power or value of all classes of our stock or of any parent or
subsidiary corporation is eligible to participate in the plan.
As of April 15, 2011, 66 associates, including two
executive officers, were eligible to participate in the plan.
Offering Periods and Purchase Periods. The
plan is implemented through offerings of successive six-month
periods (Offering Periods). A new Offering Period
begins on the first trading day on or after January 1 and July 1
of each year and ending on the last trading day in the six-month
period. We collect authorized payroll deductions from
participants for a particular purchase during successive
six-month periods beginning January 1 and July 1. On the
first day of each Offering Period, a participant receives an
option to purchase a number of shares of common stock with funds
withheld during the payroll deduction period. The number of
31
shares is determined at the end of the payroll deduction period
as follows: the number of shares delivered equals the amount
withheld during the payroll deduction period divided by the
lesser of 85% of the fair market value of a share of common
stock on the first day of the Offering Period or the last day of
the payroll deduction period.
Participation in an offering under the plan is limited to
eligible associates who authorize payroll deductions prior to
the first day of an Offering Period (the Offering
Date). Payroll deductions are at the rate of 1% to 10% of
an associates compensation for any payroll deduction
period. An associate who participates in the plan automatically
participates in the next offering beginning immediately after
the last day of the Offering Period in which he or she is a
participant until the associate withdraws from the plan, becomes
ineligible to participate, or terminates employment. A
participant may not alter the rate of payroll deductions during
an Offering Period with the exception of withdrawing from the
plan. Upon withdrawal, we refund without interest the
participants accumulated payroll deductions not previously
applied to the purchase of shares. Once a participant withdraws
from an offering, that participant may not again participate in
the same offering. No participant may accrue a right to purchase
shares of common stock under the plan having a fair market value
exceeding $25,000 (measured as the fair market value of our
common stock on the first day of the offering in which the
shares are purchased) for each calendar year in which the
purchase right is outstanding at any time.
On the last day of each Offering Period (a Purchase
Date), we issue to each participant in the offering the
number of shares of our common stock determined by dividing the
amount of payroll deductions accumulated for the participant
during the offering by the purchase price, limited in any case
by the number of shares subject to the participants
purchase right for that offering. The price at which shares are
sold under the plan may not be less than 85% of the lesser of
the fair market value per share of common stock on the Offering
Date or on the Purchase Date. The fair market value of the
common stock on any relevant date is the average of the highest
and lowest quoted sales prices for our common stock as reported
on the NASDAQ Capital Market. On April 15, 2011, the
closing price of our common stock on the NASDAQ Capital Market
was $1.25 per share.
Effect of Termination. Associates who
terminate their employment for any reason prior to the last
trading day of an Offering Period are not allowed to acquire
shares under the plan for that Offering Period. Upon termination
of employment, we pay the balance in the associates
account to the associate, or to his or her estate, without
interest.
Transferability. Neither payroll deductions
credited to an associates account under the plan nor any
rights with regard to the purchase of shares under the plan may
be assigned, transferred, pledged or otherwise disposed of in
any way by the associate, other than by will or the laws of
descent and distribution. However, a participant in the plan may
designate a beneficiary to receive any shares or cash remaining
in such associates account at the time of his or her death
by providing written notice of such designation to us.
Change in Control. The plan generally defines
a Change in Control as the occurrence of any of the
following events:
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an acquisition of 50% or more of the companys outstanding
stock,
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the complete or substantially complete dissolution or
liquidation of the company,
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a change in the majority of the board without the approval of
the incumbent board, or
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any sale of all or substantially all of the assets of the
company, or merger, consolidation or reorganization.
|
If a Change in Control occurs, each option outstanding under the
plan will be assumed or an equivalent option will be substituted
by the successor corporation or a parent or subsidiary of such
successor corporation. In the event that the successor
corporation refuses to assume or substitute equivalent options
for options outstanding under the plan, each Offering Period
then in progress will be shortened and a new Purchase Date will
be set (the New Purchase Date), as of which date any
Offering Period then in progress will terminate. The New
Purchase Date will be on or before the date of consummation of
the Change in Control.
32
Termination or Amendment. The Plan originally
became effective upon its approval by the shareholders in
November 2007. It will continue in effect for a term of
20 years from the later of the date the plan or any
amendment to add shares to the plan is approved by the
shareholders, unless terminated earlier by the board in
accordance with the provisions of the plan. The board may at any
time amend, suspend or terminate the plan, subject to applicable
law and listing requirements, except that any amendment that
(1) increases the number of securities that may be issued
under the plan, or (2) materially modifies the eligibility
requirements for participation in the plan, must be approved by
our shareholders to take effect.
Proposed
Purchase Plan Amendment
The board has approved, subject to shareholder approval, an
amendment to the plan that would increase the total number of
shares of common stock available for issuance under the plan by
200,000 shares from 400,000 to 600,000.
The board believes that this amendment will advance the
interests of our company and our shareholders by continuing to
encourage ownership in our common stock and thereby encouraging
our associates to act in our shareholders interest and
share in the companys success.
The text of the plan, including the proposed amended language,
which is bold and underlined, is attached as
Appendix C to this proxy statement.
Certain
Federal Income Tax Consequences
The following discussion is only a brief summary of the material
federal income tax consequences to us and the participating
associates in the United States in connection with the plan. The
discussion is general in nature and does not address issues
relating to the income tax circumstances of any individual
associate. The discussion is based on the Code as in effect on
the date of this proxy statement and is, therefore, subject to
future changes in the law, possibly with retroactive effect. The
discussion does not address the consequences of applicable
state, local or foreign tax laws.
The plan was designed to qualify as an employee stock
purchase plan under Section 423 of the Code. Under
the Code, we are deemed to grant associate participants in the
plan an option on the first day of each Offering
Period to purchase as many shares of our common stock as the
associate will be able to purchase with the payroll deductions
credited to his or her account during the Offering Period. On
the last day of each Offering Period, the purchase price is
determined and the associate is deemed to have exercised the
option and purchased the number of shares of common
stock his or her accumulated payroll deductions will purchase at
the purchase price.
The amounts deducted from a participating associates pay
pursuant to the plan will be included in the associates
compensation and be subject to federal income and employment
tax. Generally, no additional income will be recognized by the
associate either at the beginning of the Offering Period, when
the option is granted, or at the time the associate
purchases shares of common stock pursuant to the plan.
The required holding period for favorable federal income tax
treatment upon disposition of common stock acquired under the
plan is the later of (1) two years after the deemed
option is granted (the first day of an Offering
Period), or (2) one year after the deemed
option is exercised and the common stock is
purchased (the last day of an Offering Period). When the common
stock is disposed of after this period, or after the
associates death if the associate dies while holding the
common stock (a qualifying disposition), the
associate (or in the case of death the associates estate)
realizes ordinary income to the extent of the lesser of
(a) the amount by which the fair market value of the common
stock at the time the deemed option was granted
exceeded the option price, or (b) the amount by
which the fair market value of the common stock at the time of
the disposition exceeded the option price. The
option price is equal to 85% of the lesser of the
fair market value of the common stock on the first day of the
Offering Period or the last day of the payroll deduction period.
Thus, the maximum amount of gain taxable as ordinary income is
the amount of the 15% discount measured as of the last day of an
Offering Period. Any further gain recognized on a qualifying
33
disposition will be long-term capital gain. If the sale price is
less than the option price, there is no ordinary income and any
loss recognized generally will be a long-term capital loss.
When an associate sells or disposes of the common stock
(including by way of most gifts) before the expiration of the
required holding period (a disqualifying
disposition), the associate recognizes ordinary income to
the extent of the difference between the price actually paid for
the common stock and the fair market value of the common stock
at the date the option was exercised (the last day of an
Offering Period), regardless of the price at which the common
stock is sold. Any additional gain recognized upon the
disqualifying disposition will be capital gain. The capital gain
will be long-term if the associate held the shares more than
12 months. If the sale price is less than the fair market
value of the common stock at the date of exercise, then the
associate will have a capital loss equal to such difference.
Even though an associate must treat part of his or her gain on a
qualifying disposition of the common stock as ordinary income,
we may not take a business deduction for such amount. However,
if an associate makes a disqualifying disposition, the amount of
income that the associate must report as ordinary income
qualifies as a business deduction for us for the year of such
disposition.
The foregoing is only a summary of the general effect of
U.S. federal income taxation upon the participating
associates and our company with respect to the plan. This
summary does not purport to be complete and does not discuss the
income tax laws of any municipality, state or foreign country in
which the participating associates income or gain may be
taxable.
New
Purchase Plan Benefits
Participation in the plan is entirely within the discretion of
the eligible associates. Because we cannot predict the
participation levels by associates, the rate of associate
contributions or the eventual purchase price under the plan, it
is not possible to determine the number of shares that will be
purchased or the value of benefits that may be obtained by our
associates, including our executive officers, under the plan.
Vote
Required
The affirmative vote of the greater of (i) a majority of
the outstanding shares of our common stock present in person or
by proxy and entitled to vote on this proposal at the meeting
and (ii) a majority of the minimum number of shares
entitled to vote that would constitute a quorum for the
transaction of business at the meeting, is required to approve
the amendment. Abstentions will be considered shares entitled to
vote in the tabulation of votes cast on the proposal and will
have the same effect as negative votes. Broker non-votes are
counted towards a quorum, but are not counted for any purpose in
determining whether this proposal has been approved. The
board of directors considers approval of the amendment to be in
the best interests of our company and our shareholders and
recommends that you vote FOR approval of the
amendment.
34
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2010 with respect to compensation plans under which our equity
securities are authorized for issuance.
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Number of
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Securities
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Remaining
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Available
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Number of
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for Future
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Securities
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Weighted-
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Issuance
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to be Issued
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Average
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Under Equity
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Upon
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Exercise Price
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Compensation
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|
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Exercise of
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of
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Plans
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Outstanding
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|
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Outstanding
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(Excluding
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Options,
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Options,
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Securities
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Warrants and
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Warrants
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Reflected in
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Rights
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and Rights
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Column(a))
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Plan Category
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders
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2,530,150
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(a)
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$
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2.51
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558,259
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(b)
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Equity compensation plans not approved by security holders
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6,591
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(c)
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$
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9.00
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0
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Total
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2,536,741
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$
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2.52
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558,259
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(a) |
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Represents 250,000 shares of common stock issuable upon
exercise of outstanding stock options under the 2006
Non-Employee Director Stock Option Plan, 2,031,610 shares
of common stock issuable upon exercise of outstanding stock
options under the Amended and Restated 2006 Equity Incentive
Plan, 152,429 shares of common stock issuable upon vesting
of restricted stock awards under the Amended and Restated 2006
Equity Incentive Plan, and 96,111 shares of common stock
issuable upon exercise of outstanding warrants. |
|
(b) |
|
Represents 260,000 shares of common stock available for
issuance under the 2006 Non-Employee Director Stock Option Plan,
153,107 shares of common stock available for issuance under
the Amended and Restated 2006 Equity Incentive Plan, and
145,152 shares of common stock available for issuance under
the 2007 Associate Stock Purchase Plan. |
|
(c) |
|
Represents: (a) 296 shares of common stock underlying
a five-year warrant exercisable at $9.00 per share issued to a
non-executive officer employee, which warrant expires on
January 6, 2011; (b) 2,222 shares of common stock
underlying a five-year warrant exercisable at $9.00 per share
issued to a non-executive officer employee, which warrant
expires on January 19, 2011; (c) 2,222 shares of
common stock underlying a five-year warrant exercisable at $9.00
per share issued to a non-executive officer employee, which
warrant expires on January 30, 2011; and
(d) 1,851 shares of common stock underlying a
five-year warrant exercisable at $9.00 per share issued to an
executive officer, which warrant expires on February 6,
2011. |
35
PROPOSAL NO. 5
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee has appointed Baker Tilly Virchow Krause,
LLP as our independent registered public accounting firm for the
year ending December 31, 2011. A proposal to ratify that
appointment will be presented to shareholders at the annual
meeting. If the shareholders do not ratify such appointment, the
audit committee will consider selecting another firm of
independent public accountants. Representatives of Baker Tilly
Virchow Krause, LLP are expected to be present at the meeting,
will have an opportunity to make a statement if they desire to
do so, and will be available to respond to appropriate questions
from shareholders in attendance.
Principal
Accountant Fees and Services
The following table presents fees for audit and other services
provided by Baker Tilly Virchow Krause, LLP for 2010 and 2009.
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Year Ended
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Year Ended
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|
December 31,
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December 31,
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2010
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2009
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Audit Fees(a)
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$
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99,661
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$
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160,045
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Tax Fees(b)
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14,740
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19,640
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Total Fees
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$
|
114,401
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|
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$
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179,685
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(a) |
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Audit fees consisted of fees for services provided in connection
with the audit of our financial statements, reviews of our
quarterly financial statements, and for professional services in
connection with our registered direct offerings. |
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(b) |
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Tax fees consisted of the aggregate fees billed for tax
compliance, tax advice, and tax planning. |
Our audit committee reviewed the audit and non-audit services
rendered by Baker Tilly Virchow Krause, LLP during the period
set forth above and concluded that such services were compatible
with maintaining the auditors independence.
Pre-Approval
Policies and Procedures of Audit Committee
All services provided by our independent registered public
accounting firm, Baker Tilly Virchow Krause, LLP, are subject to
pre-approval by our audit committee. The audit committee has
authorized each of its members to approve services by our
independent registered public accounting firm in the event there
is a need for such approval prior to the next full audit
committee meeting. Any interim approval given by an audit
committee member must be reported to the audit committee no
later than its next scheduled meeting. Before granting any
approval, the audit committee (or a committee member if
applicable) gives due consideration to whether approval of the
proposed service will have a detrimental impact on the
independence of our independent registered public accounting
firm. The audit committee pre-approved all services provided by
Baker Tilly Virchow Krause, LLP in our last fiscal year.
The audit committee recommends a vote for the ratification of
the appointment of Baker Tilly Virchow Krause, LLP as our
independent registered public accounting firm for the year
ending December 31, 2011.
ANNUAL
REPORT ON
FORM 10-K
A copy of our annual report on
Form 10-K
for the year ended December 31, 2010, as filed with the
SEC, including the financial statements thereto, accompanies the
notice of annual meeting, this proxy statement and the related
proxy card. We will furnish to any person whose proxy is being
solicited any exhibit described in the exhibit index
accompanying the
Form 10-K,
upon the payment, in advance, of fees based on our
36
reasonable expenses in furnishing such exhibit. Requests for
copies of exhibits should be directed to Scott N. Ross, Senior
Vice President, General Counsel and Secretary, at our principal
address.
SHAREHOLDER
PROPOSALS FOR
2012 ANNUAL MEETING
If a shareholder wishes to present a proposal for consideration
for inclusion in the proxy materials for the 2012 annual meeting
of shareholders, the proposal must be sent by certified mail,
return receipt requested, and must be received at the executive
offices of Wireless Ronin Technologies, Inc., Baker Technology
Plaza, 5929 Baker Road, Suite 475, Minnetonka,
Minnesota 55345, Attention: Scott N. Ross, Senior Vice
President, General Counsel and Secretary, no later than
December 28, 2011. All proposals must conform to the rules
and regulations of the SEC. Under SEC rules, if a shareholder
notifies us of his or her intent to present a proposal for
consideration at the 2012 annual meeting of shareholders after
March 12, 2012, we, acting through the persons named as
proxies in the proxy materials for such meeting, may exercise
discretionary authority with respect to such proposal without
including information regarding such proposal in our proxy
materials.
Our bylaws provide that for a shareholder to nominate a
candidate for election as a director at an annual meeting of
shareholders, the shareholder must generally notify us in
writing at our principal address not later than 90 days in
advance of such meeting. A copy of our bylaws may be obtained
from Scott N. Ross, Senior Vice President, General Counsel and
Secretary, by written request to our principal address. Please
refer to Our Board of Directors and Committees
Corporate Governance and Nominating Committee for the
procedures for nominating directors.
OTHER
MATTERS
The board of directors does not know of any other matter that
will be presented at the annual meeting other than the proposals
discussed in this proxy statement. However, if any other matter
properly comes before the meeting, your proxies will act on such
matter in their discretion.
Sincerely,
WIRELESS RONIN TECHNOLOGIES, INC.
Scott W. Koller
President, Chief Executive Officer and Director
Minnetonka, Minnesota
April 26, 2011
37
APPENDIX A
WIRELESS
RONIN TECHNOLOGIES, INC.
AMENDED AND RESTATED 2006 EQUITY INCENTIVE PLAN
(As amended and restated by the Board of Directors on
March 23, 2011)
The purpose of the Wireless Ronin Technologies, Inc. Amended and
Restated 2006 Equity Incentive Plan is to permit the Board of
Directors to develop and implement a variety of stock-based
programs based on the changing needs of the Company. The Board
of Directors and senior management of Wireless Ronin
Technologies, Inc. believe it is in the best interest of its
shareholders for officers, employees and certain other persons
to own stock in the Company and that such ownership will enhance
the Companys ability to attract highly qualified
personnel, strengthen its retention capabilities, enhance the
long-term performance of the Company to vest in Participants a
proprietary interest in the success of the Company and to
provide certain performance-based compensation
within the meaning of Section l62(m)(4)(C) of the Code.
As used in the Plan, the following definitions apply to the
terms indicated below:
(a) Affiliate shall mean an entity
(whether or not incorporated), controlling, controlled by or
under common control with the Company.
(b) Award shall mean an Option, SAR,
Restricted Stock or Restricted Stock Units, Stock Bonus, Cash
Bonus, Performance Awards, Warrant, Dividend Equivalent or other
equity-based award granted pursuant to the terms of the Plan.
(c) Award Agreement shall mean an
agreement, in such form and including such terms as the
Committee in its sole discretion shall determine, evidencing an
Award.
(d) Beneficiary shall mean upon the
employees death, the employees successors, heirs,
executors and administrators, as the case may be.
(e) Board of Directors or
Board shall mean the Board of Directors of Wireless
Ronin Technologies, Inc.
(f) Cash Bonus shall mean an award of a
bonus payable in cash pursuant to Section 11 hereof.
(g) Cause shall mean: (i) the
Participants conviction of any crime (whether or not
involving the Company) constituting a felony in the jurisdiction
involved; (ii) conduct of the Participant related to the
Participants employment for which either criminal or civil
penalties against the Participant or the Company may be sought;
(iii) a violation of law, rule, or regulation, act of
embezzlement, fraud, dishonesty, breach of fiduciary duty
resulting in loss, damage or injury to the Company;
(iv) material violation of the Companys policies,
including, but not limited to those relating to sexual
harassment, the disclosure or misuse of confidential
information, or those set forth in Company manuals or statements
of policy; (v) serious neglect or misconduct in the
performance of the Participants duties for the Company or
willful or repeated failure or refusal to perform such duties.
(h) Change in Control shall mean the
occurrence of any one of the following events:
(1) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a Person) of beneficial ownership
(within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either
(1) the then outstanding shares of common stock of the
Company (the Outstanding Company Common Stock) or
(2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the Outstanding Company Voting
Securities); excluding, however, the following:
(i) any acquisition directly from the Company, other than
an acquisition by
A-1
virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from
the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
entity controlled by the Company, or (iv) any acquisition
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (3) of this
Section 2(h); or
(2) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board
(such Board shall be hereinafter referred to as the
Incumbent Board) cease for any reason to constitute
at least a majority of the Board; provided, however, for
purposes of this Section 2(h), that any individual who
becomes a member of the Board subsequent to the Effective Date,
whose election, or nomination for election by the Companys
shareholders, was approved by a vote of at least a majority of
those individuals who were members of the Board and who were
also members of the Incumbent Board (or became such pursuant to
this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, provided, further, that
any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
(3) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (Corporate
Transaction); excluding, however, such a Corporate
Transaction pursuant to which (i) all or substantially all
of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 50% of, respectively, the outstanding
shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all
of the Companys assets either directly or through one or
more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Corporation
Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(ii) no Person (other than the Company, any employee
benefit plan (or related trust) of the Company or such
corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 50% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of
such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior
to the Corporate Transaction, and (iii) individuals who
were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(4) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(i) Code shall mean the Internal Revenue
Code of 1986, as amended.
(j) Committee shall mean the
Compensation Committee of the Board of Directors;
provided, however, that the Committee shall at all
times consist of two or more persons, all of whom are
non-employee directors within the meaning of
Rule 16b-3
under the Exchange Act and outside directors within
the meaning of Section 162(m) of the Code. Each member of
the Committee shall be an independent director as
determined in the NASDAQ Marketplace Rules or the rules or
regulations of any exchange on which Company Stock is traded, or
any other applicable law or regulation.
(k) Company shall mean Wireless Ronin
Technologies, Inc. or any successor thereto. References to the
Company also shall include the Companys Affiliates unless
the context clearly indicates otherwise.
A-2
(l) Company Stock or
Stock shall mean the common stock of the
Company.
(m) Disability shall mean the existence
of a physical or mental condition that qualifies for a benefit
under the long-term disability plan sponsored by the Company
which applies to the Participant. The existence of a Disability
shall be determined by the Committee.
(n) Dividend Equivalents means any right
granted under Section 13.
(o) Eligible Person shall mean any
employee, officer, non-employee director or an individual
consultant or independent contractor providing services to the
Company whom the Committee determines to be an Eligible Person.
(p) Exchange Act shall mean the
Securities Exchange Act of 1934, as amended from time to time.
(q) Fair Market Value shall mean, with
respect to a share of Company Stock on an applicable date:
(1) If the principal market for the Company Stock (the
Market) is a national securities exchange or the
NASDAQ Stock Market, the closing sale price reported on the date
of the Award or, if no reported sales take place on the
applicable date, the average of the high bid and low asked price
of Company Stock as reported for such Market on such date or, if
no such quotations are made on such date, then on the next
preceding day on which there were quotations, provided that such
quotations shall have been made within the ten
(10) business or trading days preceding the applicable
date; or
(2) In the event that paragraph (1) above does not
apply, the Fair Market Value of a share of Company Stock on any
day shall be determined in good faith by the Committee in a
manner consistently applied.
(r) Immediate Family Members shall mean
a Participants spouse, child(ren) and grandchild(ren).
(s) Incentive Stock Option shall mean an
Option that is an incentive stock option within the
meaning of Section 422 of the Code and that is identified
as an Incentive Stock Option in the agreement by which it is
evidenced.
(t) Non-Qualified Stock Option shall
mean an Option that is not an Incentive Stock Option within the
meaning of Section 422 of the Code.
(u) Option shall mean an Incentive Stock
Option or a Non-Qualified Stock Option that is granted by the
Committee pursuant to Section 6 hereof.
(v) Participant shall mean an Eligible
Person who receives or is designated to be granted one or more
Awards under the Plan.
(w) Performance Award shall mean a right
granted to an Eligible Person pursuant to Section 12 of the
Plan to receive a payment from the Company, in the form of
stock, cash or a combination of both, upon the achievement of
established employment, service, performance or other goals
(each a Performance Measure). A Performance Award
shall be evidenced by an agreement, the Performance Award
Agreement, executed by the Participant and the Committee.
(x) Performance Measures shall mean any
one or more of the following performance measures or criteria,
either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit
or Subsidiary, either individually, alternatively or in any
combination, and measured either annually or cumulatively over a
period of years, on an absolute basis or relative to a
pre-established target, to previous years results or to a
designated comparison group, in each case as specified by the
Committee in the Award within the time period prescribed by
Section 162(m) of the Code and related regulations:
(i) revenue; (ii) cash flow, (iii) earnings per
share, (iv) income before taxes, or earnings before
interest, taxes, depreciation and amortization, (v) return
on equity, (vi) total shareholder return, (vii) share
price performance, (viii) return on capital,
(ix) return on assets or net assets, (x) income or net
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income, (xi) operating income or net operating income,
(xii) operating profit or net operating profit,
(xiii) operating margin or profit margin, (xiv) return
on operating revenue, (xv) return on invested capital,
(xvi) market segment share, (xvii) product release
schedules, (xviii) new product innovation,
(xix) product cost reduction through advanced technology,
(xx) brand recognition/acceptance, (xxi) product ship
or sales targets, (xxii) customer segmentation or
satisfaction; (xxiii) customer account profitability; or
(xxiv) economic value added (or equivalent metric).
(y) Person shall mean a
person, as such term is used in Sections 13(d)
and 14(d) of the Exchange Act.
(z) Plan shall mean this Wireless Ronin
Technologies, Inc. 2006 Amended and Restated Incentive Plan, as
it may be amended from time to time.
(aa) Restricted Stock shall mean an
award of Company Stock, the grant, issuance, retention
and/or
vesting of which is subject to such restrictions, conditions and
terms as are provided in an Award Agreement.
(bb) Restricted Stock Award shall mean
an award of Stock granted to an Eligible Person pursuant to
Section 9 of the Plan that is subject to the restrictions
on transferability and the risk of forfeiture imposed by the
provisions of such Section 9.
(cc) Restricted Stock Unit shall mean
any award of the right to received Restricted Stock or a cash
payment equal to the fair market value of such Company Stock
upon the occurrence of some future event, such as the
termination of employment, under the terms set forth in an Award
Agreement.
(dd) SAR or Stock Appreciation
Right shall mean the right to receive in whole or in
part in cash or whole shares of common stock, the Fair Market
Value of a share of Company Stock, which right is granted
pursuant to Section 7 hereof and subject to the terms and
conditions contained therein.
(ee) Securities Act shall mean the
Securities Act of 1933, as amended from time to time.
(ff) Stock Bonus shall mean a grant of a
bonus payable in shares of Company Stock pursuant to
Section 10 hereof.
(gg) Subsidiary shall mean a company
(whether a company, partnership, joint venture or other form of
entity) in which the Company, or a company in which the Company
owns a majority of the shares of capital stock directly or
indirectly, owns an equity interest of fifty percent (50%) or
more, and shall have the same meaning as the term
Subsidiary Company as defined in Section 424(f)
of the Code.
(hh) Vesting Date shall mean the date
established by the Committee on which a Participant has the
ability to acquire all or a portion of a grant of a Stock Option
or other Award, or the date upon which the restriction on a
Restricted Stock or Restricted Stock Units grant shall lapse.
(ii) Warrant shall mean any right
granted under Section 8 of the Plan.
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3.
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Stock
Subject to the Plan
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(a) Plan Limit.
Subject to adjustment as provided in Section 15 hereof, the
Committee may grant Awards hereunder with respect to shares of
Company Stock that in the aggregate do not exceed
3,600,000 shares. The grant of an Award shall not
reduce the number of shares of Company Stock with respect to
which Awards may be granted pursuant to the Plan, except to the
extent shares of common stock are issuable pursuant thereto.
Shares subject to Awards granted under the Plan shall count
against the foregoing limits at the time they are granted but
shall again become available for grant under the Plan as follows:
(1) To the extent that any Options, together with any
related rights granted under the Plan, terminate, expire or are
cancelled without having exercised the shares covered by such
Options, such shares shall again be available for grant under
the Plan;
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(2) To the extent that any Warrants, together with any
related rights granted under the Plan, terminate, expire or are
cancelled without having exercised the shares covered by such
Warrants, such shares shall again be available for grant under
the Plan;
(3) To the extent any shares of Restricted Stock or
Restricted Stock Units or any shares of Company Stock granted as
a Stock Bonus are forfeited or cancelled for any reason, such
shares shall again be available for grant under the
Plan; and
(4) To the extent any shares are issued upon the exercise
of an Award by the surrender or tender of Previously Acquired
Shares, surrendered or tendered shares shall be available for
grant under the Plan.
Shares of Company Stock issued under the Plan may be either
newly issued shares or reacquired shares, at the discretion of
the Committee.
The maximum number of shares of Company Stock that may be issued
in the form of Restricted Stock, Stock Bonuses or Restricted
Stock Units, is an aggregate of 3,600,000 shares.
(b) Individual Limit.
Subject to adjustment as provided in Section 15 hereof, the
Committee shall not in any calendar year grant Awards hereunder
to any individual Participant with respect to more than
500,000 shares of Company Stock, which limit shall include
any shares represented by an Award that has been cancelled. Such
Awards may be made up entirely of any one type of Award or any
combination of types of Awards available under the Plan, in the
Committees sole discretion.
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4.
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Administration
of the Plan
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(a) The Plan shall be administered by the Committee.
Subject to the express provisions and limitations set forth in
the Plan, the Committee shall be authorized and empowered to do
all things necessary or desirable, in its sole discretion, in
connection with the administration of the Plan, including,
without limitation, the following:
(1) to prescribe, amend and rescind rules and regulations
relating to the Plan and to define terms not otherwise defined
herein;
(2) to determine which persons are Participants, to which
of such Participants, if any, Awards shall be granted hereunder
and the timing of any such Awards;
(3) to grant Awards to Participants and determine the terms
and conditions thereof, including the number of shares subject
to Awards and the exercise or purchase price of such shares and
the circumstances under which Awards become exercisable or
vested or are forfeited or expire, which terms may but need not
be conditioned upon the passage of time, continued employment,
the satisfaction of performance criteria, the occurrence of
certain events, or other factors;
(4) to establish or verify the extent of satisfaction of
any Performance Measures or other conditions applicable to the
grant, issuance, exercisability, vesting
and/or
ability to retain any Award;
(5) to prescribe and amend the terms of agreements or other
documents evidencing Awards made under the Plan (which need not
be identical);
(6) to determine whether, and the extent to which,
adjustments are required pursuant to Section 15;
(7) to interpret and construe the Plan, any rules and
regulations under the Plan and the terms and conditions of any
Award granted hereunder, and to make exceptions to any such
provisions in good faith and for the benefit of the Company;
(8) without amending the Plan, to grant Awards to Eligible
Persons who are foreign nationals performing services for the
Company outside of the United States, if any, on such terms and
conditions different from those specified in the Plan as may in
the judgment of the Committee be necessary to foster and promote
achievement of the purposes of the Plan and, in furtherance of
such purposes, the Committee
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may adopt, ratify or make such modifications, amendments,
procedures, subplans and the like as may be necessary or
advisable to comply with provisions of laws in other countries
or jurisdictions in which the Company or its subsidiaries
operates or has employees; and
(9) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
The Company intends that the most substantial number of Awards
granted under the Plan to Eligible Persons whom the Committee
believes will be covered employees under
Section 162(m)(3) of the Code will constitute
qualified performance-based compensation within the
meaning of Section 162(m) of the Code.
(b) The Committees determinations under the Plan may,
but need not, be uniform and may be made on a
Participant-by-Participant
basis (whether or not two or more Participants are similarly
situated).
(c) All decisions, determinations and interpretations by
the Committee regarding the Plan shall be final and binding on
all Participants. The Committee shall consider such factors as
it deems relevant to making such decisions, determinations and
interpretations including, without limitation, the
recommendations or advice of any director, officer or employee
of the Company and such attorneys, consultants and accountants
as it may select.
(d) The Committee may, without amendment to the Plan,
(i) accelerate the date on which any Option, SAR,
Performance Award, Warrant or Stock Bonus granted under the Plan
becomes exercisable, or otherwise adjust any of the terms of an
Award (except that no such adjustment shall, without the consent
of a Participant, reduce the Participants rights under any
previously granted and outstanding Award unless the Committee
determines that such adjustment is necessary or appropriate to
prevent such Award from constituting applicable employee
remuneration within the meaning of Section 162(m) of
the Code), (ii) subject to Section 14, waive any
condition of an Award, or otherwise adjust any of the terms of
such Award; provided, however, that (A) other than in
connection with a change in the Companys capitalization as
described in Section 15, the exercise price of any Option,
SAR or other form of Award may not be reduced without approval
of the Companys shareholders; and (B) the amount
payable to a covered employee with respect to a qualified
performance-based Award may not be adjusted upwards and the
Committee may not waive or alter Performance Measures associated
with an Award in a manner that would violate Section 162(m)
of the Code; or (iii) as to any Award not intended to
constitute performance-based compensation under
Section 162(m) of the Code, at any time prior to the end of
a performance period, the Committee may revise the Performance
Measures and the computation of payment if unforeseen events
occur which have a substantial effect on the performance of the
Company, any subsidiary, division, Affiliate or joint venture of
the Company and which, in the judgment of the Committee, make
the application of the Performance Measures unfair to the
Company or a Participant unless a revision is made.
Notwithstanding the forgoing provisions of this
Section 4(d), neither the Committee nor the Board may,
except for adjustments pursuant to Section 15, or as a
result of a Change in Control, materially amend a Restricted
Stock or Restricted Stock Unit Award, including an acceleration
or waiver of a restriction thereof.
(e) The Committee may determine whether an authorized leave
of absence, change in status, or absence in military or
government service, shall constitute termination of employment,
subject to applicable law.
(f) No member of the Committee shall be liable for any
action, omission, or determination relating to the Plan, and the
Company shall indemnify and hold harmless each member of the
Committee and each other director or employee of the Company to
whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost
or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the
Committee) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company.
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The persons who shall be eligible to receive Awards pursuant to
the Plan shall be those Eligible Persons defined in
Section 2(o) who are designated by the Committee.
The Committee may grant Options pursuant to the Plan. Each
Option shall be evidenced by an Award Agreement in such form and
including such terms as the Committee shall from time to time
approve. Except as otherwise provided in the Plan, Options shall
comply with and be subject to the following terms and conditions:
(a) Identification of Options.
Each Option granted under the Plan shall be clearly identified
in the applicable Award Agreement as either an Incentive Stock
Option or as a Non-Qualified Stock Option. In the absence of
such identification, an Option shall be deemed to be a
Non-Qualified Stock Option.
(b) Exercise Price.
The exercise
price-per-share
of any Option granted under the Plan shall be such price as the
Committee shall determine which shall not be less than 100% of
the Fair Market Value of a share of Company Stock on the date on
which such Option is granted, except as permitted in connection
with the issuance of Options in a transaction to which
Section 424(a) of the Code applies.
(c) Term and Exercise of Options.
(1) Except as provided in the Plan or in an Award
Agreement, each Option shall remain exercisable until the
expiration of ten (10) years from the date such Option was
granted; provided, however, that each Stock Option
shall be subject to earlier termination, expiration or
cancellation as otherwise provided in the Plan.
(2) Each Option shall be exercisable in whole or in part;
provided, however, that no partial exercise of an
Option shall be for an aggregate exercise price of less than
$1,000 unless such partial exercise represents the entire
unexercised portion of the Option or the entire portion of the
Option that is then exercisable. The partial exercise of an
Option shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial
exercise of an Option, the Award Agreement evidencing such
Option shall be returned to the Participant exercising such
Option together with the delivery of the certificates described
in Section 6(c)(4) hereof.
(3) An Option shall be exercised by delivering notice to
the Companys principal office, to the attention of its
Secretary, no less than five business days in advance of the
effective date of the proposed exercise, and by paying the
Company the full purchase price of the shares to be acquired
upon exercise of the Option in the manner provided in Section
14(j). Such notice shall be accompanied by the Award Agreement
or Agreements evidencing the Option, shall specify the number of
shares of Company Stock with respect to which the Option is
being exercised and the effective date of the proposed exercise
and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of business
on the business day immediately preceding the effective date of
the proposed exercise, in which case such Award Agreement or
Agreements shall be returned to him.
(4) Certificates for shares of Company Stock purchased upon
the exercise of an Option shall be issued in the name of the
Participant or his or her Beneficiary (or permitted transferee),
as the case may be, and delivered to the Participant or his or
her Beneficiary (or permitted transferee), as the case may be,
as soon as practicable following the effective date on which the
Option is exercised.
(5) The Committee may at its sole discretion on a case by
case basis, in any applicable agreement evidencing an Option
(other than, to the extent inconsistent with the requirements of
Section 422 of the Code, an Incentive Stock Option), permit
a Participant to transfer all or some of the Options to
(A) the Participants Immediate Family Members, or
(B) a trust or trusts for the exclusive benefit of such
A-7
Immediate Family Members. Following any such transfer, any
transferred Options shall continue to be subject to the same
terms and conditions as were applicable immediately prior to the
transfer.
(d) Limitations on Grant of Incentive Stock
Options.
(1) To the extent that the aggregate Fair Market Value
(determined as of the time the option is granted) of any stock
with respect to which Incentive Stock Options granted under the
Plan and all other plans of the Company (and any plans of any
Subsidiary Company or Parent Company of
the Company within the meaning of Section 424 of the Code)
are first exercisable by any employee during any calendar year
shall exceed the maximum limit, if any, imposed from time to
time under Section 422 of the Code, such Options in excess
of such limit shall be treated as Non-Qualified Stock Options.
In such an event, the determination of which Options shall
remain Incentive Stock Options and which shall be treated as
Non-Qualified Stock Options shall be based on the order in which
such Options were granted. All other terms and provisions of
such Options that are deemed to be Non-Qualified Stock Options
shall remain unchanged.
(2) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed grant, such
individual owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the
Company or any of its Subsidiary Companies (within
the meaning of Section 424 of the Code), unless
(A) the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of
a share of Company Stock at the time such Incentive Stock Option
is granted and (B) such Incentive Stock Option is not
exercisable after the expiration of five years from the date
such Incentive Stock Option is granted.
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7.
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Stock
Appreciation Rights (SARs)
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The Committee may grant SARs pursuant to the Plan, which SARs
shall be evidenced by Award Agreements in such form as the
Committee shall from time to time approve. SARs shall comply
with and be subject to the following terms and conditions:
(a) Exercise Price.
The exercise price of any SAR granted under the Plan shall be
determined by the Committee at the time of the grant of such
SAR, which shall not be less than 100% of the Fair Market Value
of a share of Company Stock on the date on which such SAR is
granted.
(b) Benefit Upon Exercise.
(1) The exercise of a SAR with respect to any number of
shares of Company Stock shall entitle a Participant to a
payment, for each such share, equal to the excess of
(A) the Fair Market Value of a share of Company Stock on
the exercise date over (B) the exercise price of the SAR.
Payment may be made in whole or in part in cash, whole shares of
the Companys common stock, or a combination of cash and
stock.
(2) All payments under this Section 7(b) shall be made
as soon as practicable, but in no event later than five business
days, after the effective date of the exercise of the SAR.
(c) Term and Exercise of SARs.
(1) Each SAR shall be exercisable on such date or dates,
during such period and for such number of shares of Company
Stock as shall be determined by the Committee and set forth in
the agreement evidencing such SAR; provided,
however, that no SAR shall be exercisable after the
expiration of ten (10) years from the date such SAR was
granted; and, provided, further, that each SAR
shall be subject to earlier termination, expiration or
cancellation as provided in the Plan.
(2) Each SAR, may be exercised in whole or in part;
provided, however, that no partial exercise of a
SAR shall be for an aggregate exercise price of less than
$1,000. The partial exercise of a SAR shall not cause the
expiration, termination or cancellation of the remaining portion
thereof. Upon the partial exercise of a SAR, the Award Agreement
evidencing such SAR, marked with such notations as the
A-8
Committee may deem appropriate to evidence such partial
exercise, shall be returned to the Participant exercising such
SAR, together with the payment described in Section 7(b)
hereof.
(3) A SAR shall be exercised by delivering notice to the
Companys principal office, to the attention of its
Secretary, no less than five business days in advance of the
effective date of the proposed exercise. Such notice shall be
accompanied by the applicable Award Agreement evidencing the
SAR, shall specify the number of shares of Company Stock with
respect to which the SAR is being exercised and the effective
date of the proposed exercise, and shall be signed by the
Participant. The Participant may withdraw such notice at any
time prior to the close of business on the business day
immediately preceding the effective date of the proposed
exercise, in which case the Award Agreement evidencing the SAR
shall be returned to him.
(4) Except as otherwise provided in an applicable Award
Agreement, during the lifetime of a Participant, each SAR
granted to a Participant shall be exercisable only by the
Participant and no SAR shall be assignable or transferable
otherwise than by will or by the laws of descent and
distribution. The Committee may, in any applicable Award
Agreement evidencing a SAR, permit a Participant to transfer all
or some of the SAR to (A) the Participants Immediate
Family Members, or (B) a trust or trusts for the exclusive
benefit of such Immediate Family Members. Following any such
transfer, any transferred SARs shall continue to be subject to
the same terms and conditions as were applicable immediately
prior to the transfer.
The Committee may grant Warrants pursuant to the Plan. Each
Warrant shall be evidenced by an Award Agreement in such form
and including such terms as the Committee shall from time to
time approve. Except as otherwise provided in the Plan, Warrants
shall comply with and be subject to the following terms and
conditions:
(a) Identification of Warrants.
Each Warrant granted under the Plan shall be identified as such
in the applicable Award Agreement.
(b) Exercise Price.
The exercise
price-per-share
of any Warrant granted under the Plan shall be such price as the
Committee shall determine which shall not be less than 100% of
the Fair Market Value of a share of Company Stock on the date on
which such Warrant is granted, except as permitted in connection
with the issuance of Warrants in a transaction to which Section
424(a) of the Code applies.
(c) Term and Exercise of Warrants.
(1) Except as provided in the Plan or in an Award
Agreement, each Warrant shall remain exercisable until the
expiration of ten (10) years from the date such Warrant was
granted; provided, however, that each Warrant
shall be subject to earlier termination, expiration or
cancellation as otherwise provided in the Plan.
(2) Each Warrant shall be exercisable in whole or in part;
provided, however, that no partial exercise of an
Warrant shall be for an aggregate exercise price of less than
$1,000 unless such partial exercise represents the entire
unexercised portion of the Warrant or the entire portion of the
Warrant that is then exercisable. The partial exercise of a
Warrant shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial
exercise of a Warrant, the Award Agreement evidencing such
Warrant shall be returned to the Participant exercising such
Warrant together with the delivery of the certificates described
in Section 8(c)(4) hereof.
(3) A Warrant shall be exercised by delivering notice to
the Companys principal office, to the attention of its
Secretary, no less than five business days in advance of the
effective date of the proposed exercise, and by paying the
Company the full purchase price of the shares to be acquired
upon exercise of the Warrant in the manner provided in Section
14(j). Such notice shall be accompanied by the Award
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Agreement or Agreements evidencing the Warrant and shall specify
the number of shares of Company Stock with respect to which the
Warrant is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the
close of business on the business day immediately preceding the
effective date of the proposed exercise, in which case such
Award Agreement or Agreements shall be returned to him.
(4) Certificates for shares of Company Stock purchased upon
the exercise of a Warrant shall be issued in the name of the
Participant or his or her Beneficiary (or permitted transferee),
as the case may be, and delivered to the Participant or his or
her Beneficiary (or permitted transferee), as the case may be,
as soon as practicable following the effective date on which the
Warrant is exercised.
(5) The Committee may at its sole discretion on a
case-by-case
basis, in any applicable agreement evidencing a Warrant, permit
a Participant to transfer all or some of the Warrants to
(A) the Participants Immediate Family Members, or
(B) a trust or trusts for the exclusive benefit of such
Immediate Family Members. Following any such transfer, any
transferred Warrants shall continue to be subject to the same
terms and conditions as were applicable immediately prior to the
transfer.
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9.
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Restricted
Stock or Restricted Stock Units
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The Committee may grant shares of Restricted Stock or Restricted
Stock Units pursuant to the Plan, and may provide that a portion
of a Participants compensation may be granted in the form
of Restricted Stock or Restricted Stock Units. Each grant of
shares of Restricted Stock or Restricted Stock Units shall be
evidenced by an Award Agreement in such form and containing such
terms and conditions and subject to such agreements or
understandings as the Committee shall from time to time approve.
Each grant of shares of Restricted Stock or Restricted Stock
Units shall comply with and be subject to the following terms
and conditions:
(a) Issue Date and Vesting Date; Minimum Restriction
Period.
At the time of the grant of Restricted Stock or Restricted Stock
Units, the Committee shall establish the date of issuance and
vesting with respect to such shares or Awards. In the case of
Restricted Stock Units, no shares of Company Stock shall be
issued when the Award is granted, but rather upon the lapse of
restrictions and the restricted period, at which time, shares of
Company Stock or other cash or property shall be issued to the
Participant holding the Restricted Stock Units. The restriction
period for an Award of Restricted Stock and Restricted Stock
Units shall not be less than three (3) years, except that a
restriction period of at least one (1) year is permitted if
the Award is performance based.
(b) Conditions to Vesting.
At the time of the grant of Restricted Stock or Restricted Stock
Units, the Committee may impose such restrictions and
conditions, not inconsistent with the provisions hereof, to the
vesting of such shares or units, as it, in its absolute
discretion, deems appropriate. By way of example and not by way
of limitation, the Committee may require, as a condition to the
vesting of any class or classes of Restricted Stock or
Restricted Stock Units, that the Participant or the Company
achieve such Performance Measures including, but not limited to
the period of active service as the Committee may specify at the
time of the grant.
(c) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of Restricted Stock or Restricted Stock
Units, no transfer of a Participants rights with respect
to such shares or units, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such shares or
units, but immediately upon any attempt to transfer such rights,
such shares or units, and all of the rights related thereto,
shall be forfeited by the Participant and the transfer shall be
of no force or effect.
(d) Certificates.
Restricted Stock issued prior to the Vesting Date may be
certificated or uncertificated, as determined by the Committee.
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(1) Except as otherwise provided in this Section 9
hereof, reasonably promptly after the date identified in the
Award Agreement for issuance of certificated shares of
Restricted Stock, the Company shall cause to be issued a stock
certificate, registered in the name of the Participant to whom
such shares were granted, evidencing such shares;
provided, that the Company shall not cause to be issued
such a stock certificate unless it has received a stock power
duly endorsed in blank with respect to such shares. Each such
stock certificate shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions
against transfer) contained in the Wireless Ronin Technologies,
Inc. Amended and Restated 2006 Equity Incentive Plan and an
Award Agreement entered into between the registered owner of
such shares and Wireless Ronin Technologies, Inc. A copy of the
Plan and Award Agreement is on file in the office of the
Secretary of Wireless Ronin Technologies, Inc., Baker Technology
Plaza, 5929 Baker Road, Suite 475, Minnetonka, MN 55345.
Such legend shall not be removed from the certificate evidencing
such shares until such shares vest pursuant to the terms of the
Award Agreement.
(2) Each certificate issued pursuant to
Section 9(d)(1) hereof, together with the stock powers
relating to the shares of Restricted Stock evidenced by such
certificate, shall be deposited by the Company with a custodian
designated by the Company (which custodian may be the Company).
The Company shall cause such custodian to issue to the
Participant a receipt evidencing the certificates held by it
which are registered in the name of the Participant.
(e) Consequences Upon Vesting.
Upon the vesting of a share of Restricted Stock pursuant to the
terms hereof, the restrictions of Section 9(c) hereof shall
cease to apply to such share. Reasonably promptly after a share
of Restricted Stock vests pursuant to the terms hereof, the
Company shall cause to be issued and delivered to the
Participant to whom such shares (whether certificated or
uncertificated) were granted, a certificate evidencing such
share, free of the legend set forth in Section 9(d)(1)
hereof, together with any other property of the Participant held
by the custodian pursuant to Section 9(d) hereof.
(f) Failure to Vest.
Except as may be provided by the Committee, in the event of a
Participants termination of employment or relationship
with the Company prior to all of his Restricted Stock becoming
vested, or in the event any conditions to the vesting of
Restricted Stock have not been satisfied prior to the deadline
for the satisfaction of such conditions as set forth in the
Award, the shares of Restricted Stock which have not vested
shall be forfeited, and the Committee may provide that
(i) any purchase price paid by the Participant be returned
to the Participant or (ii) a cash payment equal to the
Restricted Stocks Fair Market Value on the date of
forfeiture, if lower be paid to the Participant.
(g) Voting Rights and Dividends.
The Participant shall have the right to vote all shares of
Restricted Stock during the period the restriction is enforced.
Whenever such voting rights are to be exercised, the Company
shall provide the Participant with the same notices and other
materials as are provided to other holders of the Stock, and the
Participant shall be provided adequate opportunity to review the
notices and material and vote the Restricted Stock allocated to
him or her. Any dividends authorized by the Company to be paid
to the Participant during the period the restriction is
enforced, will be subject to the same restrictions as the
underlying shares upon which the dividend is declared.
The Committee may grant Stock Bonuses in such amounts as it
shall determine from time to time, subject to the limit set
forth in Section 3 hereof. A Stock Bonus shall be in lieu
of all or a portion of a Participants salary or bonus and
shall be paid at such time (including a future date selected by
the Committee at the time
A-11
of grant) and subject to such conditions as the Committee shall
determine at the time of the grant of such Stock Bonus. By way
of example and not by way of limitation, the Committee may
require, as a condition to the payment of a Stock Bonus, that
the Participant or the Company achieve such Performance Measures
as the Committee may specify at the time of the grant.
Certificates for shares of Company Stock granted as a Stock
Bonus shall be issued in the name of the Participant to whom
such grant was made and delivered to such Participant as soon as
practicable after the date on which such Stock Bonus is required
to be paid. Prior to the date on which a Stock Bonus awarded
hereunder is required to be paid, such Award shall constitute an
unfunded, unsecured promise by the Company to distribute Company
Stock in the future.
The Committee may, in its absolute discretion, in connection
with any grant of Restricted Stock, Restricted Stock Units,
Stock Bonus, Warrants or Non-Qualified Stock Options or at any
time thereafter, grant a Cash Bonus, payable promptly after the
date on which the Participant is required to recognize income
for federal income tax purposes in connection with such grant of
Restricted Stock, Restricted Stock Units, Non-Qualified Stock
Options, Warrants or Stock Bonuses, in such amounts as the
Committee shall determine from time to time; provided,
however, that in no event shall the amount of a Cash
Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Restricted Stock Units or Stock Bonus on
such date or the limits set forth in Section 3(b). A Cash
Bonus shall be subject to such conditions as the Committee shall
determine at the time of the grant of such Cash Bonus.
Notwithstanding anything contained herein to the contrary, a
Cash Bonus is intended to be qualified performance-based
compensation under Section 162(m) and the rules and
regulations thereunder, and no payment shall be made under any
such Cash Bonus until the Committee certifies in writing that
the Performance Measures for the performance period have in fact
been achieved.
The Committee may grant Performance Awards which may be earned
based upon achievement of Performance Measures. With respect to
each such award, the Committee shall establish a performance
period over which achievement of Performance Measures shall be
determined and performance measures to be met or exceeded. Such
standards shall be established at the time of such award and set
forth in the Award Agreement.
(a) Performance Awards.
Each Performance Award shall have a maximum value established by
the Committee at the time of such award.
(b) Performance Measures.
Performance Awards shall be awarded to an Eligible Person
contingent upon future performance of the Company
and/or the
Companys subsidiary, division or department in which such
person is employed over the performance period. The Committee
shall establish the Performance Measures applicable to such
performance.
(c) Award Criteria.
In determining the value of Performance Awards, the Committee
shall take into account an eligible persons responsibility
level, performance, potential, cash compensation level,
unexercised Options, other incentive awards and such other
considerations as it deems appropriate. Notwithstanding the
preceding sentence, to the extent necessary for a Performance
Award payable in cash to be qualified performance-based
compensation under Section 162(m) of the Code and the rules
and regulations thereunder, the maximum amount that may be paid
under all such Performance Awards to any one person during any
calendar year shall be $1,500,000.
(d) Payment.
Following the end of each performance period, the Participant
holding each Performance Award shall be entitled to receive
payment of an amount, not exceeding the maximum value of the
Performance Award, based
A-12
on the achievement of the Performance Measures for such
performance period, as determined by the Committee. Payment of
Performance Awards may be made wholly in cash, wholly in shares
of common stock or a combination thereof, all at the discretion
of the Committee. Payment shall be made in a lump sum or in
installments, and shall be subject to such vesting and other
terms and conditions as may be prescribed by the Committee for
such purpose in the Award Agreement. Notwithstanding anything
contained herein to the contrary, in the case of a Performance
Award intended to be qualified performance-based compensation
under Section 162(m) and the rules and regulations
thereunder, no payment shall be made under any such Performance
Award until the Committee certifies in writing that the
Performance Measures for the performance period have in fact
been achieved.
(e) Other Terms and Conditions.
When a Performance Award is payable in installments in common
stock, if determined by the Committee, one or more stock
certificates or book-entry credits registered in the name of the
Participant representing shares of common stock which would have
been issuable to the Participant if such payment had been made
in full on the day following the end of the applicable
performance period may be registered in the name of such
Participant, and during the period until such installment
becomes due such Participant shall have the right to receive
dividends (or the cash equivalent thereof) and shall also have
the right to vote such common stock and all other shareholder
rights (in each case unless otherwise provided in the agreement
evidencing the Performance Award), with the exception that
(i) the Participant shall not be entitled to delivery of
any stock certificate until the installment payable in shares
becomes due, (ii) the Company shall retain custody of any
stock certificates until such time and (iii) the
Participant may not sell, transfer, pledge, exchange,
hypothecate or dispose of such common stock until such time. A
distribution with respect to shares of common stock payable in
installments which has not become due, other than a distribution
in cash, shall be subject to the same restrictions as the shares
of common stock with respect to which such distribution was
made, unless otherwise determined by the Committee.
(f) Performance Award Agreements.
Each Performance Award shall be evidenced by an agreement in
such form and containing such provisions not inconsistent with
the provisions of the Plan as the Committee from time to time
shall approve.
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13.
|
Dividend
Equivalents and Other Equity-Based Awards
|
The Committee is hereby authorized to grant Dividend Equivalents
to Eligible Persons under which the Participant shall be
entitled to receive payments (in cash, shares, other securities,
other Awards or other property as determined in the discretion
of the Committee) equivalent to the amount of cash dividends
paid by the Company to holders of shares with respect to a
number of shares determined by the Committee. Subject to the
terms of the Plan, such Dividend Equivalents may have such terms
and conditions as the Committee shall determine. The Committee
may grant other types of equity-based Awards in such amounts and
subject to such terms and conditions, as the Committee shall in
its sole discretion may determine, subject to the provisions of
the Plan. Stock Awards may entail the transfer of actual shares
of Company Stock to Participants, or payment in cash or
otherwise of amounts based on the value of shares of Company
Stock.
14. Other
Provisions Applicable to
Awards.
(a) Change in Control.
(1) Acceleration of vesting.
Notwithstanding any other provision of the Plan to the contrary,
unless otherwise provided by the Committee in any Award
Agreement, in the event of a Change in Control:
(i) Any Options, Stock Appreciation Rights and Warrants
outstanding as of the date of such Change in Control, and which
are not then exercisable and vested, shall become fully
exercisable and vested.
A-13
(ii) The restrictions and deferral limitations applicable
to any Restricted Stock or Restricted Stock Units shall lapse,
and such Restricted Stock or Restricted Stock Units shall become
free of all restrictions and become fully vested.
(iii) All Performance Awards shall be considered to be
earned and payable in full, and any deferral or other
restriction shall lapse and such Performance Awards shall be
settled in cash or shares, as determined by the Committee, as
promptly as is practicable.
(iv) All restrictions on other Awards shall lapse and such
Awards shall become free of all restrictions and become fully
vested.
(2) Cash Payment for Options.
If a Change in Control of the Company occurs, then the
Committee, if approved by the Committee in its sole discretion
either in an Award Agreement issued at the time of the grant or
at any time after the grant of an Award, and without the consent
of any Participant affected thereby, may determine that:
(i) some or all Participants holding outstanding Awards
will receive, with respect to some or all of the shares of
Company Stock subject to such Awards, as of the effective date
of any such Change in Control of the Company, cash in an amount
equal to the excess of the Fair Market Value of such shares
immediately prior to the effective date of such Change in
Control of the Company over the exercise price per share of such
Awards; and
(ii) with respect to any granted and outstanding Award, the
Fair Market Value of the shares of Company Stock underlying such
Award is less than or equal to the exercise price per share of
such Award as of the effective date of the applicable Change in
Control and the Award, therefore, shall terminate as of the
effective date of the applicable Change in Control.
If the Committee makes a determination as set forth in
subparagraph (i) of this subsection (2), then as of the
effective date of any such Change in Control of the Company such
Awards will terminate as to such shares and the Participants
formerly holding such Awards will only have the right to receive
such cash payment(s). If the Committee makes a determination as
set forth in subparagraph (ii) of this subsection (2), then
as of the effective date of any such Change in Control of the
Company such Awards will terminate, become void and expire as to
all unexercised shares of Common Stock subject to such Awards on
such date, and the Participants formerly holding such Awards
will have no further rights with respect to such Awards.
(3) Limitation on Change in Control Payments.
Any limitations on payments made due to a Change in Control
shall be set forth in the Award Agreement.
(b) Suspension or Cancellation for Cause.
If the Committee reasonably believes that a Participant has
committed an act of misconduct which the Committee determines
may constitute Cause, it may suspend the Participants
right to exercise any rights under an Award pending a
determination by the Committee. If the employment of a
Participant is terminated by the Company for Cause, then the
Committee shall have the right to cancel any Awards granted to
the Participant, whether or not vested, under the Plan. Any
rights the Company may have hereunder in respect of the events
giving rise to Cause shall be in addition to the rights the
Company may have under any other agreement with a Participant or
at law or in equity. Any determination of whether a
Participants employment is (or is deemed to have been)
terminated for Cause shall be made by the Committee in its sole
discretion, which determination shall be final and binding on
all parties. If, subsequent to a Participants termination
of employment (whether voluntary or involuntary) without Cause,
it is discovered that the Participants employment could
have been terminated for Cause, such Participants
employment shall be deemed to have been terminated for Cause. A
Participants termination of employment for Cause shall be
effective as of the date of the occurrence of the event giving
rise to Cause, regardless of when the determination of Cause is
made.
A-14
(c) Right of Recapture.
If at any time within one year after the date on which a
Participant exercises rights under an Award, or if income is
realized by a Participant in connection with any other
stock-based award (each of which events shall be a
realization event), if the Committee determines in
its discretion that the Company has been materially harmed by
the Participant, whether such harm (i) results in the
Participants termination or deemed termination of
employment for Cause or (ii) results from any activity of
the Participant determined by the Committee to be in competition
with any activity of the Company, or otherwise prejudicial,
contrary or harmful to the interests of the Company (including,
but not limited to, accepting employment with or serving as a
consultant, adviser or in any other capacity to an entity that
is in competition with or acting against the interest of the
Company), then any gain realized by the Participant from the
realization event shall be paid by the Participant to the
Company upon notice from the Company. Such gain shall be
determined as of the date of the realization event, without
regard to any subsequent change in the Fair Market Value of a
share of Company Stock. The Company shall have the right to
offset such gain against any amounts otherwise owed to the
Participant by the Company (whether as wages, vacation pay, or
pursuant to any benefit plan or other compensatory arrangement).
(d) Forfeiture for Financial Reporting
Misconduct.
If the Company is required to prepare an accounting restatement
due to the material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the
securities laws, if the Participant knowingly or grossly
negligently engaged in the misconduct, or if the Participant is
subject to automatic forfeiture under Section 304 of the
Sarbanes Oxley Act of 2002, the Participant shall
reimburse the Company the amount of any payment in settlement of
an Award, and the income realized by a Participant in connection
with any other stock based award, earned or accrued during the
twelve (12) month period following the first public
issuance or filing with the Securities and Exchange Commission
(which ever just occurred) of the financial document embodying
such financial reporting requirement.
(e) Consideration of Awards.
Awards may be granted for no cash consideration or for any cash
or other consideration as may be determined by the Committee or
required by applicable law.
(f) Awards May Be Granted Separately or
Together.
Awards may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with or in
substitution for any other Award or any award granted under any
plan of the Company other than the Plan. Awards granted in
addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the
Company may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(g) No Limit on Other Compensation
Arrangements.
Nothing contained in the Plan shall prevent the Company from
adopting or continuing in effect other or additional
compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
(h) No Right to Employment, etc.
The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the
Company. In addition, the Company may at any time dismiss a
Participant from employment, free from any liability or any
claim under the Plan, unless otherwise provided in the Plan or
in any Award Agreement.
(i) No Fractional Shares.
No fractional shares shall be issued or delivered pursuant to
the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of a fractional share, or whether
fractional rights shall be cancelled or otherwise eliminated.
A-15
(j) Forms of Payment Under Awards.
Subject to the terms of the Plan, payments or transfers to be
made by the Company upon the grant, exercise or settlement of an
Award may be made in such form or forms as the Committee shall
determine (including, without limitation, cash, shares, other
securities, other Awards or other property or any combination
thereof), and may be made in a single payment or transfer, in
installments, in each case in accordance with rules of the
Committee.
Except as provided herein, the purchase price of each share of
Stock purchased by an Eligible Person or transferee upon the
exercise of any Option or other Award requiring payment shall be
paid: (i) in United States Dollars in cash or by check,
bank draft or money order payable to the order of the Company;
(ii) at the discretion of the Committee, through the
delivery of shares of Stock, having initially or as a result of
successive exchanges of shares, an aggregate fair market value
(as determined in the manner provided under this Plan) equal to
the aggregate purchase price for the Stock as to which the
Option is being exercised; (iii) at the discretion of the
Committee, by a combination of both (i) and
(ii) above; or (iv) by such other method as may be
permitted in the written stock option agreement between the
Company and the Optionee.
(k) Limits on Transfer of Awards.
Subject to Sections 6(c), 7(c) and 8(c), no Award and no
right under any such Award shall be transferable by a
Participant otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined by the Code or Title I of the Employee
Retirement Income Security Act or the rules promulgated
thereunder; provided, however, that, if so determined by
the Committee, a Participant may, designate a beneficiary or
beneficiaries to exercise the rights of the Participant and
receive any property distributable with respect to any Award
upon the death of the Participant. Except as otherwise provided
in Sections 6(c), 7(c) or 8(c), or any applicable Award
Agreement or amendment thereto, each Award or right under any
Award shall be exercisable during the Participants
lifetime only by the Participant or, if permissible under
applicable law, by the Participants guardian or legal
representative. Any Award which is transferred pursuant to a
qualified domestic relations order or as otherwise permitted by
the Plan and the applicable Award Agreement shall remain subject
to the terms and conditions set forth in the Award Agreement and
the Plan. Except as otherwise provided in any applicable Award
Agreement or amendment thereto, no Award or right under any such
Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the
Company.
(l) Term of Awards.
The term of each Award shall be for such periods as may be
determined by the Committee at the time of grant but in no event
shall any Award have a term of more than 10 years.
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15.
|
Adjustment
Upon Changes in Company Stock
|
(a) Adjustments.
In the event that any dividend or other distribution (whether in
the form of cash, shares, other securities or other property),
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase or exchange of shares or other
securities of the Company or other similar corporate transaction
or event affecting shares of the Company will result in the
diminution or enlargement of any of the benefits or potential
benefits intended to be made available under the Plan or under
an Award (including, without limitation, the benefits or
potential benefits of provisions relating to the term, vesting
or exercisability of any Option, Warrant or the availability of
any Stock Appreciation Rights, if any, contained in any Award,
and any Change in Control or similar provisions of any Award),
the Committee shall adjust any or all of (i) the number and
type of shares (or other securities or other property) which
thereafter may be made the subject of Awards under the Plan,
(ii) the number and type of shares (or other securities or
other property) subject to outstanding Awards and (iii) the
purchase or exercise price with respect to any Award.
A-16
(b) Outstanding Restricted Stock.
Unless the Committee in its absolute discretion otherwise
determines, any securities or other property (including
dividends paid in cash) received by a Participant with respect
to a share of Restricted Stock, which has passed its issuance
date but has not vested as of the date of such event, as a
result of any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange
of shares or otherwise, not involving a Change in Control, shall
not vest until such share of Restricted Stock vests in
accordance with a Participants Award Agreement, and shall
be promptly deposited with the custodian designated pursuant to
Paragraph 9(d)(2) hereof.
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16.
|
Rights as
a Shareholder
|
No person shall have any rights as a shareholder with respect to
any shares of Company Stock covered by or relating to any
Option, Warrant or Restricted Stock Unit granted pursuant to the
Plan until the date that the Participant becomes the registered
owner of such shares. Except as otherwise expressly provided in
Section 15 hereof, no adjustment to any Option Warrant or
Restricted Stock Unit shall be made for dividends or other
rights for which the record date occurs prior to the date such
stock certificate is issued.
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17.
|
No
Special Employment Rights; No Right to Award
|
(a) Nothing contained in the Plan or any Award shall confer
upon any Participant any right with respect to the continuation
of his or her employment by the Company or interfere in any way
with the right of the Company, subject to the terms of any
separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the
compensation of the Participant from the rate in existence at
the time of the grant of an Award.
(b) No person shall have any claim or right to receive an
Award hereunder. The Committees granting of an Award to a
Participant at any time shall neither require the Committee to
grant an Award to such Participant or any other Participant or
other person at any time nor preclude the Committee from making
subsequent grants to such Participant or any other Participant
or other person.
(a) The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any interests in
the Plan or any shares of Company Stock to be issued hereunder
or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company
shall not be obligated to cause to be issued or delivered any
certificates evidencing shares of Company Stock pursuant to the
Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange or market on
which shares of Company Stock are traded. The Committee may
require, as a condition of the issuance and delivery of
certificates evidencing shares of Company Stock pursuant to the
terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that such
certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall be
effective only at such time as counsel to the Company shall have
determined that the issuance and delivery of shares of Company
Stock pursuant to such exercise is in compliance with all
applicable laws, regulations of governmental authority and the
requirements of any securities exchange or market on which
shares of Company Stock are traded.
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19.
|
Compliance
with
Rule 16b-3
|
It is intended that the Plan be applied and administered in
compliance with Rule
l6b-3. If
any provision of the Plan would be in violation of
Rule 16b-3
if applied as written, such provision shall not have effect as
written and shall be given effect so as to comply with Rule
l6b-3, as
determined by the Committee. The Committee is authorized to
amend the Plan and to make any such modifications to Award
Agreements to
A-17
comply with Rule
l6b-3, as it
may be amended from time to time, and to make any other such
amendments or modifications deemed necessary or appropriate to
better accomplish the purposes of the Plan in light of any
amendments made to
Rule 16b-3.
(a) Withholding. To the extent
required by applicable federal, state, local or foreign law, the
Committee may
and/or a
Participant shall make arrangements satisfactory to the Company
for the satisfaction of any withholding tax obligations that
arise with respect to any issuance, exercise or vesting of an
Award, or any disposition of shares of Company Stock. The
Company shall not be required to issue shares or to recognize
the disposition of such shares until such obligations are
satisfied. To the extent permitted or required by the Committee,
these obligations may or shall be satisfied by having the
Company withhold a portion of the shares of stock that otherwise
would be issued to a Participant under such Award or by
tendering a Participants Previously Acquired Shares.
(b) Required Consent to and Notification of Code
Section 83(b) Election. No election
under Section 83(b) of the Code (to include in gross income
in the year of transfer the amounts specified in Code
Section 83(b)) or under a similar provision of the laws of
a jurisdiction outside the United States may be made unless
expressly permitted by the terms of the Award Agreement or by
action of the Committee in writing prior to the making of such
election. In any case in which a Participant is permitted to
make such an election in connection with an Award, the
Participant shall notify the Company of such election within ten
(10) days of filing notice of the election with the
Internal Revenue Service or other governmental authority, in
addition to any filing and notification required pursuant to
regulations issued under Code Section 83(b) or other
applicable provision.
(c) Requirement of Notification Upon Disqualifying
Disposition Under Code
Section 421(b). If any Participant shall
make any disposition of shares of stock delivered pursuant to
the exercise of an ISO under the circumstances described in Code
Section 421(b) (i.e., a disqualifying disposition), such
Participant shall notify the Company of such disposition within
ten (10) days thereof.
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in the Plan:
(a) Amendments to the Plan.
The Board of Directors of the Company may amend, alter, suspend,
discontinue or terminate the Plan at any time and from time to
time; provided, however, that, notwithstanding any other
provision of the Plan or any Award Agreement, without the
approval of the shareholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be
made that, absent such approval, would (i) increase the
number of shares that may be issued under the Plan;
(ii) permit granting of Options at less than the market
price of Company Stock; (iii) permit the repricing of
outstanding Options; (iv) amend the maximum shares set
forth that may be granted as Options, Stock Appreciation Rights,
Warrants, Restricted Stock or Restricted Stock Units or Stock
Bonus to any Participant; (v) extend the term of the Plan;
(vi) change the class of persons eligible to participate in
the Plan; or (vii) otherwise implement any amendment
required to be approved by shareholders under the rules of any
applicable stock exchange or NASDAQ Marketplace Rules.
(b) Correction of Defects, Omissions and
Inconsistencies.
The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem desirable to carry the
Plan into effect.
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22.
|
No
Obligation to Exercise
|
The grant to a Participant of an Option, Warrant, SAR,
Performance Award or other equity-based Awards shall impose no
obligation upon such Participant to exercise such Award.
A-18
No transfer by will or the laws of descent and distribution of
any Stock Award, or the right to exercise any Stock Award, shall
be effective to bind the Company unless the Committee shall have
been furnished with (a) written notice thereof and with a
copy of the will
and/or such
evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the
transferee to comply with all the terms and conditions of the
Stock Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the
Participant in connection with the grant of the Stock Award.
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24.
|
Expenses
and Receipts
|
The expenses related to administering the Plan shall be paid by
the Company. Any proceeds received by the Company in connection
with any Stock Award will be used for general corporate purposes.
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25.
|
Limitations
Imposed By Section 162(m)
|
Notwithstanding any other provision hereunder, prior to a Change
in Control, if and to the extent that the Committee determines
the Companys federal tax deduction in respect of a Stock
Award may be limited as a result of Section 162(m) of the
Code, the Committee may take the following actions:
(a) With respect to Options, SARs, Warrants or Restricted
Stock Units, the Committee may delay the payment in respect to
such Options, SARs, Warrants or Restricted Stock Units until a
date that is within 30 days after the earlier to occur of
(i) the date that compensation paid to the Participant no
longer is subject to the deduction limitation under
Section 162(m) of the Code and (ii) the occurrence of
a Change in Control. In the event that a Participant exercises
an Option, Warrants or SAR at a time when the Participant is a
covered employee, and the Committee determines to
delay the payment in respect of such any Stock Award, the
Committee shall credit cash or, in the case of an amount payable
in Company Stock, the Fair Market Value of the Company Stock,
payable to the Participant to a book-entry account established
in the Participants name in the financial records of the
Company. The Participant shall have no rights in respect of such
account and the amount credited thereto shall not be
transferable by the Participant other than by will or laws of
descent and distribution. The Committee may credit additional
amounts to such account as it may determine in its sole
discretion. Any account created hereunder shall represent only
an unfunded unsecured promise by the Company to pay the amount
credited thereto to the Participant in the future.
(b) With respect to Restricted Stock or Restricted Stock
Units and Stock Bonuses, the Committee may require the
Participant to surrender to the Committee any certificates with
respect to Restricted Stock and Stock Bonuses in order to cancel
the Awards of such Restricted Stock or Restricted Stock Units
and Stock Bonuses (and any related Cash Bonuses). In exchange
for such cancellation, the Committee shall credit to a
book-entry account established in the Participants name in
the financial records of the Company a cash amount equal to the
Fair Market Value of the shares of Company Stock subject to such
awards. The amount credited to such account shall be paid to the
Participant within 30 days after the earlier to occur of
(i) the date that compensation paid to the Participant no
longer is subject to the deduction limitation under
Section 162(m) of the Code and (ii) the occurrence of
a Change in Control. The Participant shall have no rights in
respect of such account and the amount credited thereto shall
not be transferable by the Participant other than by will or
laws of descent and distribution. The Committee may credit
additional amounts to such account as it may determine in its
sole discretion. Any account created hereunder shall represent
only an unfunded unsecured promise by the Company to pay the
amount credited thereto to the Participant in the future.
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26.
|
Compliance
with Section 409A of the Code
|
Notwithstanding anything herein to the contrary, any Award that
is deferred compensation within the meaning of Code
Section 409A shall be automatically modified and limited to
the extent that the Committee determines necessary to avoid the
imposition of the additional tax under Code
Section 409A(9)(1)(B) on a Participant holding such Award.
A-19
In addition to the remedies of the Company elsewhere provided
for herein, a failure by a Participant (or beneficiary or
permitted transferee) to comply with any of the terms and
conditions of the Plan or Agreement, unless such failure is
remedied by such Participant (or a beneficiary or permitted
transferee) within ten (10) days after having been notified
of such failure by the Committee, shall be grounds for the
cancellation and forfeiture of such Award, in whole or in part,
as the Committee, in its absolute discretion, may determine. No
Participant will have rights under an Award granted to such
Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.
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28.
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Effective
Date of Plan
|
The Plan, as initially adopted, became effective on
February 2, 2007 (the Effective Date), and the
Plan, as amended and restated, shall be effective subject to
approval by the shareholders of the Company.
The Plan and the right to grant Awards under the Plan will
terminate on the tenth (10th) anniversary of the effective date
unless terminated earlier.
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30.
|
Severability
of Provisions
|
If any provision of the Plan is held to be invalid or
unenforceable, the other provisions of the Plan shall not be
affected but shall be applied as if the invalid or unenforceable
provision had not been included in the Plan.
Except to the extent preempted by any applicable law, the Plan
will be construed and administered in accordance with the laws
of the State of Minnesota, without reference to the principles
of conflicts of law.
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32.
|
No Trust
or Fund Created
|
Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other
Person. To the extent that any Person acquires a right to
receive payments from the Company pursuant to an Award, such
right shall be no greater than the right of any unsecured
general creditor of the Company.
A-20
APPENDIX B
WIRELESS
RONIN TECHNOLOGIES, INC.
AMENDED AND RESTATED 2006 NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN
(As amended and restated by the Board of Directors on
March 23, 2011)
The purpose of the Wireless Ronin Technologies, Inc. Amended and
Restated 2006 Non-Employee Director Stock Option Plan (the
Plan) is to attract and retain the best
available individuals to serve as Non-Employee Directors of the
Company, to provide additional incentive to the Non-Employee
Directors of the Company to serve as directors and to encourage
continued service by such persons on the Board. The Company
intends that the options granted hereunder shall not constitute
incentive stock options within the meaning of Section 422
of the Code, as amended.
As used herein, the following definitions shall apply:
a. Act means the Securities Act
of 1933, as amended.
b. Award Agreement shall mean an
agreement, in such form and including such terms as the
Committee in its sole discretion shall determine, evidencing the
Option.
c. Board means the Board of
Directors of the Company.
d. Code means the Internal
Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
e. Committee means the Committee
of the Board appointed by the Board to administer the Plan
pursuant to Section 6.
f. Common Stock means the Common
Stock, $.01 par value per share, of the Company.
g. Company means Wireless Ronin
Technologies, Inc. or any successor thereto.
h. Continuous Service as a Non-Employee
Director means the absence of any interruption or
termination of service as a Non-Employee Director. Continuous
Service as a Non-Employee Director shall not be considered
interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Board or Committee.
i. Employee means any person
employed by the Company or any Parent or Subsidiary of the
Company. The payment of fees to a Non-Employee Director shall
not be sufficient in and of itself to constitute
employment by the Company.
j. Exchange Act means the
Securities Exchange Act of 1934, as amended.
k. Non-Employee Director means a
member of the Board who is not an employee of the Company or any
of its subsidiaries.
l. Option means a stock option
granted pursuant to the Plan.
m. Optioned Stock means the
Common Stock subject to an Option.
n. Optionee means a Non-Employee
Director who receives an option.
o. Parent means a parent
corporation, whether now or hereafter existing, as defined
in Section 424(e) of the Code.
p. Plan means this Amended and
Restated 2006 Non-Employee Director Stock Option Plan.
q. Rule 16b-3
means
Rule 16b-3
promulgated under the Exchange Act.
B-1
r. Share means a share of Common
Stock, as adjusted in accordance with Section 12 of the
Plan.
s. Subsidiary means a
subsidiary corporation, whether now or hereafter
existing, as defined in Section 424(f) of the Code.
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3.
|
SHARES SUBJECT
TO THE PLAN
|
Subject to the provisions of Section 12 of the Plan, the
maximum aggregate number of Shares which may be optioned and
sold under the Plan is 510,000. The Shares may be authorized,
but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable for any reason
without having been exercised in full, the unexercised Shares
which were subject thereto shall, unless the Plan has been
terminated, become available for future grant under the Plan. If
Shares which were acquired upon exercise of an Option are
subsequently repurchased by the Company, such Shares shall not
become available for future grant under the Plan.
4. GRANTS OF OPTIONS
The Committee acting in its absolute discretion (subject
to Section 5) shall have the right to grant Options to
Non-Employee Directors under this Plan from time to time, but
the Committee shall not (subject to Section 12) take
any action, whether through amendment, cancellation, replacement
grants, or any other means, to reduce the exercise price of any
outstanding Options absent the approval of the Companys
shareholders.
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5.
|
OPTION
TERMS AND CONDITIONS
|
The terms and conditions of an Option granted hereunder shall be
as follows:
a. The term of each Option shall be for no more than ten
(10) years, subject to Sections 12, 13 and 14 hereof.
b. Unless otherwise provided in the Award Agreement, if an
Optionee ceases to serve as a Non-Employee Director, the
remainder of an Option not then exercisable shall lapse and be
forfeited.
c. The Option, once exercisable, shall be exercisable only
while the Non-Employee Director serves as a Non-Employee
Director of the Company, and for a period of twelve
(12) months after ceasing to be a Non-Employee Director
pursuant to Section 10(b) hereof.
d. The exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Option, as
determined in accordance with Section 9(a) hereof.
a. Administration. Except as
otherwise required herein, the Plan shall be administered by the
Board or a Committee of the Board.
b. Powers of the Board or
Committee. Subject to the provisions and
restrictions of the Plan, the Board or Committee shall have the
authority, in its discretion: (i) to determine, upon review
of relevant information and in accordance with Section 9(a)
hereof, the fair market value of the Common Stock; (ii) to
interpret the Plan; (iii) to prescribe, amend and rescind
rules and regulations relating to the Plan; (iv) to
authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option
hereunder; and (v) to make all other determinations deemed
necessary or advisable for the administration of the Plan. On a
case-by-case
basis, the Board or Committee, in its sole discretion, may:
(i) accelerate the schedule of the time or times when an
Option granted under the Plan may be exercised; and
(ii) extend the duration of any Option granted under the
Plan, subject to Section 5(a).
c. Effect of Board or Committee
Decision. All decisions, determinations and
interpretations of the Board or Committee shall be final and
binding on all Optionees and any other holders of any Options
granted under the Plan.
B-2
d. Suspension or Termination of
Option. If the Board or Committee reasonably
believes that an Optionee has committed an act of misconduct, it
may suspend the Optionees right to exercise any Option
pending a determination by the Board or Committee (excluding the
Non-Employee Director accused of such misconduct). If the Board
or Committee (excluding the Non-Employee Director accused of
such misconduct) determines that an Optionee has committed an
act of embezzlement, fraud, dishonesty, nonpayment of an
obligation owed to the Company, breach of fiduciary duty or
deliberate disregard of the Companys rules resulting in
loss, damage or injury to the Company, or if an Optionee makes
an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting
unfair competition with respect to the Company, or induces any
party to breach a contract with the Company, neither the
Optionee nor the Optionees estate shall be entitled to
exercise any Option whatsoever. In making such determination,
the Board or Committee (excluding the Non-Employee Director
accused of such misconduct) shall act fairly and shall give the
Optionee an opportunity to appear and present evidence on the
Optionees behalf at a hearing before the Board or
Committee.
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7.
|
ELIGIBLE
NON-EMPLOYEE DIRECTORS
|
Options may be granted only to Non-Employee Directors.
All options shall be automatically granted in accordance
with the terms set forth in Section 4 hereof. The
Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Non-Employee Director or
nomination to serve as a Non-Employee Director, nor shall it
interfere in any way with any rights which a Non-Employee
Director or the Company may have to terminate such persons
service on the Board at any time.
This Plan was originally adopted by the Board effective
April 15, 2006 and shall continue in effect until
April 14, 2016.
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9.
|
FAIR
MARKET VALUE AND FORM OF CONSIDERATION
|
a. Fair Market
Value. Fair Market Value
shall mean, with respect to a share of Common Stock on an
applicable date:
i. If the principal market for the Common Stock (the
Market) is a national securities exchange or
the NASDAQ Stock Market, the closing sale price reported on the
date of grant or, if no reported sales take place on such date,
the average of the high bid and low asked price of Common Stock
as reported for such Market on such date or, if no such
quotations are made on such date, then on the next preceding day
on which there were quotations, provided that such quotations
shall have been made within the ten (10) business or
trading days preceding such date; or
ii. In the event that paragraph (i) above does not
apply, the Fair Market Value of a share of Common Stock on any
day shall be determined in good faith by the Committee or Board
in a manner consistently applied.
b. Form of Consideration. The
consideration to be paid for the Shares to be issued upon
exercise of an Option shall consist entirely of cash or such
other form of consideration as the Board or Committee may
determine, in its sole discretion, to be appropriate for
payment, including but not limited to other shares of Common
Stock having a fair market value on the date of surrender equal
to the aggregate exercise price of the Shares as to which the
Option is exercised, or any combination of such methods of
payment, or any cashless exercise procedures that are, from time
to time, approved by the Committee or Board.
a. Procedure for Exercise; Rights as a
Shareholder. Any Option granted hereunder
shall be exercisable at such times as are set forth in the Award
Agreement. An Option may not be exercised for a fraction of a
Share.
B-3
i. An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in
accordance with the terms of the Award Agreement by the person
entitled to exercise the Option and full payment for the Shares
with respect to which the Option is being exercised has been
received by the Company. Full payment may consist of any
consideration and method of payment allowable under
Section 9(b) hereof. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of
the Option. A certificate for the number of Shares so acquired
shall be issued to the Optionee as soon as practicable after
exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to
the date the certificate is issued, except as provided in
Section 12 hereof.
ii. Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option was
exercised.
b. Termination of Status as a Non-Employee
Director. If an Optionee ceases to serve as
a Non-Employee Director, the Optionee may, but only within
twelve (12) months after the date the Optionee ceases to be
a Non-Employee Director of the Company, exercise his or her
Option to the extent the Optionee was entitled to exercise it at
the date of such termination. To the extent that the Optionee
was not entitled to exercise an Option at the date of such
termination, or if the Optionee does not exercise such Option
within the time specified herein, the Option shall terminate.
c. Death of Optionee. In the event
of the death of an Optionee occurring:
i. during the term of the Option, and provided that the
Optionee was at the time of death a Non-Employee Director of the
Company and had been in Continuous Service as a Non-Employee
Director since the date of grant of the Option, the Option may
be exercised, at any time within twelve (12) months
following the date of death, by the Optionees estate or by
a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Optionee continued
living and remained in Continuous Service a Non-Employee
Director for twelve (12) months after the date of
death; or
ii. within thirty (30) days after the termination of
Continuous Service as a Non-Employee Director, the Option may be
exercised, at any time within six (6) months following the
date of death, by the Optionees estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise
that had accrued at the date of termination of Continuous
Service as a Non-Employee Director.
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11.
|
TRANSFERABILITY
OF OPTIONS
|
The Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or
by the laws of descent and distribution or pursuant to a
qualified domestic relations order and may be exercised, during
the lifetime of the Optionee, only by the Optionee.
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12.
|
ADJUSTMENTS
UPON CHANGES IN CAPITALIZATION
|
In the event that any dividend or other distribution (whether in
the form of cash, shares, other securities or other property),
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase or exchange of shares or other
securities of the Company or other similar corporate transaction
or event affecting shares of the Company will result in the
diminution or enlargement of any of the benefits or potential
benefits intended to be made available under the Plan or under
an Option (including, without limitation, the benefits or
potential benefits of provisions relating to the term, vesting
or exercisability of any Option, if any, contained in any Award
Agreement, and any Change in Control or similar provisions of
any Award Agreement), the Committee shall adjust any or all of
(i) the number and type of shares (or other securities or
other property) which thereafter may be made the subject of
Options
B-4
under the Plan, (ii) the number and type of shares (or
other securities or other property) subject to outstanding
Options, and (iii) the purchase or exercise price with
respect to any Option.
Any adjustments to an Option under this Section 12 shall be
accomplished in a manner that permits the Option to be exempt
from Code Section 409A.
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13.
|
CHANGE IN
CONTROL PROVISIONS
|
a. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control, any Options
outstanding as of the date such Change in Control is determined
to have occurred and not then exercisable and vested shall
become fully exercisable and vested in the fullest extent of the
original grant.
b. For purposes of the Plan, a Change in
Control means the happening of any of the following
events:
i. An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a Person) of beneficial
ownership (within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either
(1) the then outstanding shares of common stock of the
Company (the Outstanding Company Common
Stock) or (2) the combined voting power of the
then outstanding voting securities of the company entitled to
vote generally in the election of directors (the
Outstanding Company Voting Securities);
excluding, however, the following: (i) any acquisition
directly from the Company, other than an acquisition by virtue
of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the
Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
entity controlled by the Company, or (iv) any acquisition
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subparagraph (i) of this
subsection (b); or
ii. A change in the composition of the Board such that the
individuals who, as of the effective date, constitute the Board
(such Board shall be hereinafter referred to as the
Incumbent Board) cease for any reason to
constitute at least a majority of the Board; provided, however,
for purposes of this Section 13(b), that any individual who
becomes a member of the Board subsequent to the effective date,
whose election, or nomination for election by the Companys
shareholders, was approved by a vote of at least a majority of
those individuals who were members of the Board and who were
also members of the Incumbent Board (or became such pursuant to
this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, provided, further, that
any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
iii. Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company
(Corporate Transaction); excluding, however,
such a Corporate Transaction pursuant to which (i) all or
substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Voting Securities immediately prior
to such Corporate Transaction will beneficially own, directly or
indirectly, more than 50% of, respectively, the outstanding
shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all
of the Companys assets either directly or through one or
more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(ii) no Person (other than the Company, any employee
benefit plan (or related trust) of the Company or such
corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 50% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of
such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior
to the
B-5
Corporate Transaction, and (iii) individuals who were
members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
iv. The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
c. If a Change in Control of the Company occurs, then the
Committee, if approved by the Committee in its sole discretion
either in an Award Agreement issued at the time of the grant or
at any time after the grant of an Option, and without the
consent of any Optionee affected thereby, may determine that:
i. some or all Optionees holding outstanding Options will
receive, with respect to some or all of the Shares subject to
such Options, as of the effective date of any such Change in
Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the
effective date of such Change in Control of the Company over the
exercise price per share of such Options; and
ii. with respect to any granted and outstanding Option, the
Fair Market Value of the Shares underlying such Option is less
than or equal to the exercise price per share of such Option as
of the effective date of the applicable Change in Control and
the Option, therefore, shall terminate as of the effective date
of the applicable Change in Control.
If the Committee makes a determination as set forth in
subparagraph (i) of this subsection (c), then as of the
effective date of any such Change in Control of the Company such
Options will terminate as to such shares and the Optionees
formerly holding such Options will only have the right to
receive such cash payment(s). If the Committee makes a
determination as set forth in subparagraph (ii) of this
subsection (c), then as of the effective date of any such Change
in Control of the Company such Options will terminate, become
void and expire as to all unexercised Shares subject to such
Options on such date, and the Optionees formerly holding such
Options will have no further rights with respect to such Options.
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14.
|
AMENDMENT
AND TERMINATION OF THE PLAN
|
a. The Board may suspend or terminate the Plan or any
portion thereof at any time, and may amend the Plan from time to
time in such respects as the Board may deem advisable in order
that any Award Agreements under the Plan will conform to any
change in applicable laws or regulations or in any other respect
the Board may deem to be in the best interests of the Company;
provided, however, that no amendments to the Plan will be
effective without approval of the shareholders of the Company if
shareholder approval of the amendment is then required pursuant
to the rules of any stock exchange or NASDAQ or similar
regulatory body to which the Company is then subject at the time
of the amendment and the Board determines that continued
satisfaction of such requirements is necessary or desirable. No
termination, suspension or amendment of the Plan may adversely
affect any outstanding Award Agreement without the consent of
the affected Optionee; provided, however, that this sentence
will not impair the right of the Committee to take whatever
action it deems appropriate under Sections 6(b), 12 and 13
of the Plan.
b. If any amendment to the Plan requires approval by the
shareholders of the Company for continued applicability of
Rule 16b-3
promulgated under the Exchange Act, or for initial or continued
listing of the Common Stock or other securities of the Company
upon any stock exchange or NASDAQ, then such amendment shall be
approved by the holders of a majority of the Companys
common stock present in person or represented by proxy at the
meeting during which shareholder approval of the amendment is
sought.
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15.
|
CONDITIONS
UPON ISSUANCE OF SHARES
|
a. Shares shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation,
the Act, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of
NASDAQ or any stock exchange upon which the Shares may
B-6
then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
b. Notwithstanding any other provision of the Plan or any
agreements entered into pursuant to the Plan, the Company will
not be required to issue any shares of Common Stock under this
Plan, and a Optionee may not sell, assign, transfer or otherwise
dispose of shares of Common Stock issued pursuant to Award
Agreements granted under the Plan, unless (a) there is in
effect with respect to such shares a registration statement
under the Act and any applicable state or foreign securities
laws or an exemption from such registration under the Act and
applicable state or foreign securities laws; and (b) there
has been obtained any other consent, approval or permit from any
other regulatory body which the Board or Committee, in its sole
discretion, deems necessary or advisable. The Company may
condition such issuance, sale or transfer upon the receipt of
any representations or agreements from the parties involved, and
the placement of any legends on certificates representing shares
of Common Stock, as may be deemed necessary or advisable by the
Company in order to comply with such securities law or other
restrictions.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the
Companys counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been
obtained.
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16.
|
RESERVATION
OF SHARES
|
The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Options shall be evidenced by written Award Agreements in such
form as the Board or Committee shall approve.
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18.
|
INFORMATION
TO OPTIONEES
|
The Company shall provide to each Optionee, during the period
for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are
provided to all shareholders of the Company.
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19.
|
RIGHTS AS
A SHAREHOLDER
|
No person shall have any rights as a shareholder with respect to
any shares of Common Stock covered by or relating to any Option
granted pursuant to the Plan until the date that the
Non-Employee Director becomes the registered owner of Common
Stock. Except as otherwise expressly provided in Section 12
hereof, no adjustment to any Option shall be made for dividends
or other rights for which the record date occurs prior to the
date such stock certificate is issued.
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20.
|
NO
SPECIAL RIGHTS; NO RIGHT TO OPTION
|
a. Nothing contained in the Plan or any Award Agreement
shall confer upon any Non-Employee Director any right with
respect to the continuation of his or her service as a
Non-Employee Director or interfere in any way with the right of
the Company at any time to terminate such service or to increase
or decrease the compensation of the Non-Employee Director from
the rate in existence at the time of the grant of an Option.
b. No person shall have any claim or right to receive an
Option hereunder. The Committees granting of an Option to
a Non-Employee Director at any time shall neither require the
Committee to grant an Option to such Non-Employee Director or
any other Non-Employee Director or other person at any time nor
preclude the Committee from making subsequent grants to such
Non-Employee Director or any other Non-Employee Director.
B-7
a. The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any interests in
the Plan or any shares of Common Stock to be issued hereunder or
to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company
shall not be obligated to cause to be issued or delivered any
certificates evidencing shares of Common Stock pursuant to the
Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange or market on
which shares of Common Stock are traded. The Committee may
require, as a condition of the issuance and delivery of
certificates evidencing shares of Common Stock pursuant to the
terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that such
certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
b. The exercise of any Option granted hereunder shall be
effective only at such time as counsel to the Company shall have
determined that the issuance and delivery of shares of Common
Stock pursuant to such exercise is in compliance with all
applicable laws, regulations of governmental authority and the
requirements of any securities exchange or market on which
shares of Common Stock are traded.
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22.
|
COMPLIANCE
WITH
RULE 16B-3
|
It is intended that the Plan be applied and administered in
compliance with Rule
l6b-3. If
any provision of the Plan would be in violation of
Rule 16b-3
if applied as written, such provision shall not have effect as
written and shall be given effect so as to comply with Rule
l6b-3, as
determined by the Committee. The Committee is authorized to
amend the Plan and to make any such modifications to Award
Agreements to comply with Rule
l6b-3, as it
may be amended from time to time, and to make any other such
amendments or modifications deemed necessary or appropriate to
better accomplish the purposes of the Plan in light of any
amendments made to
Rule 16b-3.
To the extent required by applicable federal, state, local or
foreign law, the Committee may
and/or a
Non-Employee Director shall make arrangements satisfactory to
the Company for the satisfaction of any withholding tax
obligations that arise with respect to any issuance, exercise or
vesting of an Option, or any disposition of shares of Common
Stock. The Company shall not be required to issue shares or to
recognize the disposition of such shares until such obligations
are satisfied. To the extent permitted or required by the
Committee, these obligations may or shall be satisfied by having
the Company withhold a portion of the shares of stock that
otherwise would be issued to a Non-Employee Director under such
Option or by tendering a Non-Employee Directors previously
acquired shares.
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24.
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NO
OBLIGATION TO EXERCISE
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The grant to a Non-Employee Director of an Option shall impose
no obligation upon such Non-Employee Director to exercise such
Option.
No transfer by will or the laws of descent and distribution of
any Option, or the right to exercise any Option, shall be
effective to bind the Company unless the Committee shall have
been furnished with (a) written notice thereof and with a
copy of the will
and/or such
evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the
transferee to comply with all the terms and conditions of the
Option that are or would have been applicable to the
Non-Employee Director and to be bound by the acknowledgments
made by the Non-Employee Director in connection with the grant
of the Option.
B-8
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26.
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EXPENSES
AND RECEIPTS
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The expenses related to administering the Plan shall be paid by
the Company. Any proceeds received by the Company in connection
with any Option will be used for general corporate purposes.
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27.
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COMPLIANCE
WITH SECTION 409A OF THE CODE
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Notwithstanding anything herein to the contrary, any Option that
is deferred compensation within the meaning of Code
Section 409A shall be automatically modified and limited to
the extent that the Committee determines necessary to avoid the
imposition of the additional tax under Code
Section 409A(9)(1)(B) on a Non-Employee Director holding
such Option.
In addition to the remedies of the Company elsewhere provided
for herein, a failure by a Non-Employee Director (or beneficiary
or permitted transferee) to comply with any of the terms and
conditions of the Plan or Award Agreement, unless such failure
is remedied by such Non-Employee Director (or a beneficiary or
permitted transferee) within ten (10) days after having
been notified of such failure by the Committee, shall be grounds
for the cancellation and forfeiture of such Option, in whole or
in part, as the Committee, in its absolute discretion, may
determine. No Non-Employee Director will have rights under an
Option granted to such Non-Employee Director unless and until an
Award Agreement shall have been duly executed on behalf of the
Company.
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29.
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SEVERABILITY
OF PROVISIONS
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If any provision of the Plan is held to be invalid or
unenforceable, the other provisions of the Plan shall not be
affected but shall be applied as if the invalid or unenforceable
provision had not been included in the Plan.
Except to the extent preempted by any applicable law, the Plan
will be construed and administered in accordance with the laws
of the State of Minnesota, without reference to the principles
of conflicts of law.
B-9
APPENDIX C
WIRELESS
RONIN TECHNOLOGIES, INC.
AMENDED AND RESTATED 2007 ASSOCIATE STOCK PURCHASE PLAN
(As amended and restated by the Board of Directors on
March 23, 2011)
ARTICLE I
GENERAL PLAN ADMINISTRATION
The purpose of this Plan is to encourage ownership in Wireless
Ronin Technologies, Inc., a Minnesota corporation (the
Company), and, thereby encourage Associates to act
in the shareholders interest and share in the
Companys success. The Plan is intended to comply with the
requirement of Section 423(b) of the Code.
As used herein, the following definitions shall apply:
(a) Administrator means the Board, any
Committees or such delegates as shall be administering the Plan
in accordance with Article I, Section 4 of the Plan.
(b) Applicable Laws means the
requirements relating to the administration of employee stock
purchase plans under U.S. federal and state laws, any stock
exchange or quotation system on which the Company has listed or
submitted for quotation the Common Stock to the extent provided
under the terms of the Companys agreement with such
exchange or quotation system.
(c) Associate means any full-time
employee of the Company, or a Designated Subsidiary.
(d) Board means the Board of Directors
of the Company.
(e) Change in Control means any of the
following:
(1) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a Person) of beneficial ownership
(within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either:
(1) the then outstanding shares of common stock of the
Company (the Outstanding Company Common Stock) or
(2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the Outstanding Company Voting
Securities); excluding, however, the following:
(i) any acquisition directly from the Company, other than
an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself
acquired directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company
or any entity controlled by the Company, or (iv) any
acquisition pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of
this subsection 2(e);
(2) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board
(such Board shall be hereinafter referred to as the
Incumbent Board) cease for any reason to constitute
at least a majority of the Board; provided, however, for
purposes of this subsection 2(e), that any individual who
becomes a member of the Board subsequent to the Effective Date,
whose election, or nomination for election by the Companys
shareholders, was approved by a vote of at least a majority of
those individuals who were members of the Board and who were
also members of the Incumbent Board (or became such pursuant to
this proviso) shall be considered as though such individual were
a member of the Incumbent Board; but, provided, further, that
any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with
respect to the election or removal of Directors or other actual
or
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threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board shall not be so considered as a
member of the Incumbent Board;
(3) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the company (Corporate
Transaction); excluding, however, such a Corporate
Transaction pursuant to which (i) all or substantially all
of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 50% of, respectively, the outstanding
shares of common stock, and the combined voting power of the
then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the company
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction
owns the company or all or substantially all of the
companys assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person
(other than the Company, any employee benefit plan (or related
trust) of the company or such corporation resulting from such
Corporate Transaction) will beneficially own, directly or
indirectly, 50% or more of, respectively, the outstanding shares
of common stock of the company resulting from such Corporate
Transaction or the combined voting power of the outstanding
voting securities of such company entitled to vote generally in
the election of Directors except to the extent that such
ownership existed prior to the Corporate Transaction, and
(iii) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the Board
of the company resulting from such Corporate Transaction; or
(4) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(f) Code means the United States
Internal Revenue Code of 1986, as amended.
(g) Committee means the Compensation
Committee of the Board or a committee of Directors appointed by
the Board in accordance with Article I, Section 4 of
the Plan.
(h) Common Stock means the common stock
of the Company.
(i) Company means Wireless Ronin
Technologies, Inc., a Minnesota corporation, or its successor.
(j) Compensation means all earnings
reported as wages on
Form W-2,
including straight time pay, payments for overtime, shift
premiums, incentive compensation, incentive payments, bonuses,
commissions and other compensation, but excluding any
compensation recognized in connection with any Company equity
awards.
(k) Contributions means all amounts
credited to the account of a Participant pursuant to
Article II of the Plan.
(l) Designated Subsidiaries means the
Subsidiaries, if any, which have been designated by the Board,
if any, from time to time in its sole discretion as a Subsidiary
whose Associates are eligible to participate in Article II
of the Plan. The term Subsidiary as used in the Plan
shall mean any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain,
and such term shall also include any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company if each of the corporations other than the Company owns
stock possessing 50% or more of the combined voting power of all
classes of stock in one of the other corporations in such chain.
(m) Director means a member of the Board.
(n) Eligible Associate means any person
who is treated as an Associate of the Company or a Designated
Subsidiary, who has completed ninety days of continuous
employment. An Eligible Associate
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will be eligible to become a Participant in the Plan on the
first day of the second calendar quarter following the Eligible
Associates date of hire. Leased Associates and independent
contractors and individuals not paid through the regular payroll
of the Company or one of its Designated Subsidiaries shall not
be considered an Associate eligible to participate in the Plan.
(o) ASPP Option means an option to
purchase on each Purchase Date within an Offering Period a
number of Shares of the Companys Common Stock determined
by dividing an Eligible Associates Contributions
accumulated prior to such Purchase Date and retained in the
Participants account as of the Purchase Date by the
applicable Purchase Price granted in accordance with the terms
of Article II of the Plan.
(p) Exchange Act means the
U.S. Securities Exchange Act of 1934, as amended.
(q) Fair Market Value means, unless the
Administrator determines otherwise, as of any date, the average
of the highest and lowest quoted sales prices for such Common
Stock as of such date (or if no sales were reported on such
date, the average on the last preceding day on which a sale was
made), as reported in such source as the Administrator shall
determine.
(r) NASDAQ means the NASDAQ Stock Market.
(s) Offering Date means the first
Trading Day of each Offering Period under Article II of the
Plan.
(t) Offering Period means a period,
established for purposes of Article II of the Plan, of six
(6) months duration. The duration and timing of
Offering Periods may be changed pursuant to Article I,
Section 7 and Article II, Section 2 of the Plan.
The first Offering Period shall commence on January 1, 2008
and end on June 30, 2008.
(u) Participant means any Eligible
Associate to whom an ASPP Option has been granted under
Article II of the Plan.
(v) Plan means this Amended and Restated
2007 Associate Stock Purchase Plan.
(w) Purchase Date means the last Trading
Day of each Offering Period under Article II of the Plan.
(x) Purchase Price means, with respect
to an Offering Period, an amount equal to 85% (unless such
percentage is changed pursuant to Article I,
Section 7) of the Fair Market Value of a Share of
Common Stock on the applicable Offering Date or on the Purchase
Date, whichever is lower; provided, however, that in the event
(i) of any increase in the number of Shares available for
issuance under Article II of the Plan as a result of a
shareholder-approved amendment to the Plan, (ii) all or a
portion of such additional Shares are to be issued with respect
to one or more Offering Periods that are underway at the time of
such increase (Additional Shares), and
(iii) the Fair Market Value of a Share of Common Stock on
the date of such increase (the Approval Date Fair Market
Value) is higher than the Fair Market Value on the
Offering Date for any such Offering Period, then in such
instance the Purchase Price with respect to Additional Shares
shall be 85% (unless such percentage is changed pursuant to
Article I, Section 7) of the Approval Date Fair
Market Value or the Fair Market Value of a Share of Common Stock
on the Purchase Date, whichever is lower.
(y) Share means a share of the Common
Stock, as adjusted in accordance with Article I,
Section 6 of the Plan.
(z) Subscription Agreement means an
agreement entered into between a Participant and the Company
under Article II, Section 4 of the Plan.
(aa) Trading Day means a day on which
the U.S. national stock exchanges and NASDAQ are open for
trading.
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3.
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Stock
Subject to the Plan.
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Subject to the provisions of Article I, Section 6 of
the Plan, the aggregate number of Shares that may be issued
pursuant to ASPP Options granted under Article II of the
Plan is 600,000 Shares (the ASPP
Pool). Shares subject to ASPP Options that are cancelled,
expire or are forfeited shall be available for re-grant under
the Plan.
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4.
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Administration
of the Plan.
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(a) Procedures; Administrative
Bodies. The Plan shall be administered by the
Board, a Committee
and/or their
delegates. In addition, the Plan will be administered in a
manner that complies with any applicable NASDAQ or stock
exchange listing requirements. Except to the extent prohibited
by Applicable Law, the Administrator may delegate to one or more
individuals the
day-to-day
administration of the Plan and any of the functions assigned to
it in this Plan. Such delegation may be revoked at any time.
(b) Powers of the Administrator. Subject
to the provisions of the Plan and, in the case of a Committee or
delegates acting as the Administrator, subject to the specific
duties delegated to such Committee or delegates, the
Administrator shall have the authority, in its discretion:
(1) to correct administrative errors;
(2) to construe and interpret the terms of the Plan and
ASPP Options granted pursuant to the Plan;
(3) to adopt rules and procedures relating to the operation
and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the
generality of the foregoing, the Administrator is specifically
authorized to adopt the rules and procedures regarding
withholding procedures and handling of stock certificates which
vary with local requirements;
(4) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(5) to impose such restrictions, conditions or limitations
as it determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by the
Participant of any Shares issued as a result of or under an ASPP
Option, including without limitation, restrictions under an
insider trading policy and restrictions as to the use of a
specified brokerage firm for such resales or other
transfers; and
(6) to extend participation to Eligible Associates of any
Designated Subsidiaries;
(7) to make all other determinations deemed necessary or
advisable for administering the Plan and any ASPP Option granted
hereunder.
(c) Effect of Administrators
Decision. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any
rules and regulations under the Plan and the terms and
conditions of any ASPP Option granted hereunder, shall be final
and binding on all Participants and on all other persons. The
Administrator shall consider such factors as it deems relevant,
in its sole and absolute discretion, to making such decisions,
determinations and interpretations including, without
limitation, the recommendations or advice of any officer or
other Associate of the Company and such attorneys, consultants
and accountants as it may select.
The Plan shall become effective upon its approval by
shareholders of the Company. It shall continue in effect for a
term of twenty (20) years from the later of the date the
Plan or any amendment to add shares to the Plan is approved by
shareholders of the Company unless terminated earlier under
Article I, Section 7 of the Plan.
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6.
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Adjustments
upon Changes in Capitalization.
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(a) Subject to any required action by the shareholders of
the Company, (i) the number and kind of Shares covered by
each ASPP Option, (ii) the price per Share subject to each
such ASPP Option and (iii) the Share limitation set forth
in Article II, Section 5(c) of the Plan (including any
amendment by the Administrator to the limitation set forth in
Section 5(c) of the Plan), shall be proportionately adjusted for
any increase or decrease in the number or kind of issued shares
resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been
effected without receipt of consideration. Such
adjustment shall be made by the Administrator, whose
determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an ASPP
Option.
(b) In the event of a dissolution or liquidation of the
Company, any Offering Period then in progress will terminate
immediately prior to the consummation of such action, unless
otherwise provided by the Administrator. In the event of a
Change in Control, each ASPP Option outstanding under the Plan
shall be assumed or an equivalent option shall be substituted by
the successor corporation or a parent or subsidiary of such
successor corporation. In the event that the successor
corporation refuses to assume or substitute equivalent options
for ASPP Options outstanding under the Plan, each Offering
Period then in progress shall be shortened and a new Purchase
Date shall be set (the New Purchase Date), as of
which date any Offering Period then in progress will terminate.
The New Purchase Date shall be on or before the date of
consummation of the Change in Control and the Administrator
shall notify each Participant in writing, at least ten
(10) days prior to the New Purchase Date, that the Purchase
Date for his or her ASPP Option has been changed to the New
Purchase Date and that his or her ASPP Option will be exercised
automatically on the New Purchase Date, unless prior to such
date he or she has withdrawn from the Offering Period as
provided in Article II, Section 9.
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7.
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Amendment
and Termination of the Plan.
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(a) Amendment and Termination. The
Administrator may amend, alter or discontinue the Plan or any
Subscription Agreement, but to the extent required by Applicable
Law, any such amendment shall be subject to approval of the
shareholders of the Company in the manner required by Applicable
Law. In addition, without limiting the foregoing, unless
approved by the shareholders of the Company, no such amendment
shall be made that would:
(1) increase the maximum number of Shares for which ASPP
Options may be granted under the Plan, other than an increase
pursuant to Article I, Section 6; and
(2) except as permitted in Article I,
Section 4(b)(6), change the class of persons eligible to
receive ASPP Options under the Plan.
(b) Effect of Amendment or
Termination. No amendment, suspension or
termination of the Plan shall impair the rights of any ASPP
Option, unless mutually agreed otherwise between the
Participant, as applicable, and the Administrator, which
agreement must be in writing and signed by the Participant, as
applicable, and the Company and must comply with Code
Section 423; provided however that notwithstanding anything
to the contrary in this Section 7, the Administrator shall
be permitted to terminate, amend and change the rights provided
under Article II including to outstanding ASPP Options
pursuant to subsection (c) below.
(c) Administrative Authority to Amend or Terminate the
Plan. An Offering Period or the Plan may be
terminated by the Administrator on a Purchase Date or by the
Administrators setting a new Purchase Date with respect to
an Offering Period then in progress. Without shareholder consent
and without regard to whether any Participant rights may be
considered to have been adversely affected, the Administrator or
a committee shall be entitled to change the Offering Periods
(including the duration and timing of Offering
C-5
Periods), limit the frequency
and/or
number of changes in the amount of Contributions withheld from a
Participants Compensation during an Offering Period,
permit payroll withholding in excess of the amount designated by
a Participant in order to adjust for delays or mistakes in the
Companys processing of properly completed withholding
elections, with respect to future Offering Periods decrease the
amount of the discount from the Fair Market Value of a Share for
purposes of establishing the Purchase Price for an Offering
Period, establish reasonable waiting and adjustment periods
and/or
accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each Participant
properly correspond with amounts withheld from the
Participants Compensation, and establish such other
limitations or procedures as the Administrator determines in its
sole discretion are advisable.
(d) Effect of the Plan on Other
Arrangements. Neither the adoption of the Plan by
the Board or a Committee nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or any
Committee to adopt such other incentive arrangements as it or
they may deem desirable, including without limitation, the
granting of restricted stock or stock options otherwise than
under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases. The value of
ASPP Options granted pursuant to the Plan will not be included
as compensation, earnings, salaries or other similar terms used
when calculating a Participants benefits under any
Associate benefit plan sponsored by the Company or any
Subsidiary except as such plan otherwise expressly provides.
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8.
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Designation
of Beneficiary.
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(a) A Participant may file a written designation of a
beneficiary who is to receive any Shares and cash, if any, from
the Participants account under Article II of the Plan
in the event of such Participants death subsequent to the
end of a Purchase Period but prior to delivery to him or her of
such Shares and cash. To the extent that a Participant has
completed a designation of beneficiary while employed with the
Company, such beneficiary designation shall remain in effect
with respect to any ASPP Option hereunder until changed by the
Participant to the extent enforceable under Applicable Law.
(b) Such designation of beneficiary may be changed by the
Participant at any time by written notice, in accordance with
the procedures established by the Administrator. In the event of
the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of
such Participants death, the Company shall allow the
executor or administrator of the estate of the Participant to
exercise the ASPP Option or the Company shall deliver such
Shares
and/or cash
to the executor or the estate of the Participant.
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9.
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No Right
to Employment.
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No person shall have any claim or right to be granted an ASPP
Option and the grant of any ASPP Option shall not be construed
as giving a Participant the right to continue in the employ of
the Company or its affiliates. Further, the Company and its
affiliates expressly reserve the right, at any time, to dismiss
any Eligible Associate or Participant at any time without
liability or any claim under the Plan, except as provided herein
or in any Subscription Agreement entered into hereunder.
Shares shall not be issued pursuant to the Plan unless such
issuance and the delivery of such Shares shall comply with
Applicable Laws and such compliance shall be further subject to
the approval of counsel for the Company with respect to such
compliance.
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11.
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Inability
to Obtain Authority.
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To the extent the Company is unable to or the Administrator
deems it infeasible to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the
Companys counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, the Company shall be relieved
of any liability with
C-6
respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
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12.
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Reservation
of Shares.
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The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Any written notice to the Company required by any provisions of
this Plan shall be addressed to the Secretary of the Company,
Wireless Ronin Technologies, Inc., Baker Technology Plaza, 5929
Baker Road, Suite 475, Minnetonka, MN 55345, and shall be
effective when received.
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14.
|
Governing
Law; Interpretation of Plan and ASPP Options.
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(a) This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the substantive laws, but
not the choice of law rules, of the state of Minnesota.
(b) In the event that any provision of the Plan or ASPP
Option granted under the Plan is declared to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction,
such provision shall be reformed, if possible, to the extent
necessary to render it legal, valid and enforceable, or
otherwise deleted, and the remainder of the terms of the Plan
and/or ASPP
Option shall not be affected except to the extent necessary to
reform or delete such illegal, invalid or unenforceable
provision.
(c) The section headings used in this Plan are solely for
convenience of reference, do not constitute a part of the Plan,
and shall not shall affect its meaning, construction or effect.
(d) The terms of the Plan and any ASPP Option shall inure
to the benefit of and be binding upon the parties hereto and
their respective permitted heirs, beneficiaries, successors and
assigns.
(e) All questions arising under the Plan or any ASPP Option
shall be decided by the Administrator in its total and absolute
discretion. In the event the Participant believes that a
decision by the Administrator with respect to such person was
arbitrary or capricious, the Participant may request arbitration
with respect to such decision as provided in this
Section 14(e) and Article I, Section 14(f). The
review by the arbitrator shall be limited to determining whether
the Administrators decision was arbitrary or capricious.
This arbitration shall be the sole and exclusive review
permitted of the Administrators decision, and the
Participant shall as a condition to the receipt of an ASPP
Option be deemed to explicitly waive any right to judicial
review.
(f) Notice of demand for arbitration shall be made in
writing to the Administrator within thirty (30) days after
the applicable decision by the Administrator. The arbitrator
shall be selected from amongst those members of the Board who
are neither Administrators nor Eligible Associates. If there are
no such members of the Board, the arbitrator shall be an
individual who is an attorney licensed to practice law in the
state of Minnesota selected by the board. Such arbitrator shall
be neutral within the meaning of the Commercial Rules of Dispute
Resolution of the American Arbitration Association; provided,
however, that the arbitration shall not be administered by the
American Arbitration Association. Any challenge to the
neutrality of the arbitrator shall be resolved by the arbitrator
whose decision shall be final and conclusive. The arbitration
shall be administered and conducted by the arbitrator pursuant
to the Commercial Rules of Dispute Resolution of the American
Arbitration Association. The decision of the arbitrator on the
issue(s) presented for arbitration shall be final and conclusive
and may be enforced in any court of competent jurisdiction.
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15.
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Limitation
on Liability.
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The Company and any affiliate that is in existence or hereafter
comes into existence shall not be liable to an Eligible
Associate or any other persons as to:
(a) The Non-Issuance of Shares. The
non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction
the authority deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any shares
hereunder; and
(b) Tax Consequences. Any tax consequence
realized by any Eligible Associate or other person due to the
receipt, exercise or settlement of any ASPP Option.
Insofar as it provides for ASPP Options, the Plan shall be
unfunded. Any liability of the Company to any Participant with
respect to an ASPP Option shall be based solely upon any
contractual obligations that may be created by the Plan; no such
obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company.
Neither the Company nor the Administrator shall be required to
give any security or bond for the performance of any obligation
that may be created by this Plan.
ARTICLE II
ASPP OPTIONS
This Article II provides Eligible Associates with the right
to purchase Shares, through payroll deductions, in a manner
designed to comply with Code Section 423.
Article II of the Plan shall be implemented by a series of
Offering Periods of approximately six (6) months
duration, with new Offering Periods commencing on or about
January 1 and July 1 of each year and ending, respectively, on
the next following June 30 and December 31 (or at such other
time or times as may be determined by the Administrator);
provided however that the first Offering Period under the Plan
shall commence on January 1, 2008 following shareholder
approval of the Plan and shall end on June 30, 2008.
Offering Periods shall occur on a continuing, successive basis
until the Plan or an Offering Period is terminated in accordance
with Article I, Sections 5 or 7, as applicable.
Notwithstanding the above, the Administrator shall have the
power to change the timing, duration
and/or the
frequency of Offering Periods with respect to future Offering
Periods.
Any Eligible Associate is eligible to become a Participant as of
the first applicable Offering Date and shall be eligible to
participate in such Offering Period, subject to the requirements
of Article II, Section 4 and to the other limitations
imposed by the Plan and Code Section 423(b).
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4.
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Participation;
Subscription Agreement.
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(a) Offering Periods. An Eligible
Associate who is eligible to participate in the Plan under
Article II, Section 3 above may become a Participant
by (i) submitting to the Administrator (or its designee),
on or before a date prescribed by the Administrator prior to an
applicable Offering Date, a properly completed Subscription
Agreement authorizing payroll deductions in the form provided by
the Administrator for such purpose, or (ii) following an
electronic or other enrollment procedure prescribed by the
Administrator.
(b) Requirements as to Subscription Agreement and
Participation.
(1) A Participants Subscription Agreement shall set
forth the percentage of the Participants Compensation to
be paid as Contributions pursuant to the Plan, which percentage
shall be a whole
C-8
percentage and shall be not less than one percent (1%) and not
more than ten percent (10%) (or such other maximum percentage as
the Administrator may establish from time to time before an
Offering Period) of such Participants Compensation on each
payday during the Offering Period.
(2) A Participants Subscription Agreement shall be
effective for the Offering Period with respect to which it is
filed, and also shall be automatically effective for each
successive Offering Period that commences after the end of the
Offering Period, unless the Participant changes his or her
Contribution rate for the next Offering Period by following the
procedures set forth in Article II, Section 4(b)(3)
below, withdraws from the Plan in accordance with
Article II, Section 9, or is otherwise ineligible to
participate in the next Offering Period.
(3) A Participant may decrease his or her rate of
Contributions to zero percent (0%) during an ongoing Offering
Period (and remain at that rate through the Purchase Date for
the Offering Period, unless he or she otherwise withdraws in the
manner specified in Section 9 below) but otherwise may not
increase or decrease his or her rate of Contributions during an
Offering Period. In addition, a Participant may discontinue his
or her participation in the Plan as provided in Article II,
Section 9 at any time prior to a Purchase Date. In
addition, a Participant may change his or her rate of
Contributions under the Plan with respect to the next Offering
Period by filing a new Subscription Agreement with the Company
by following the procedure designated by the Administrator. Such
change in Contribution rate will be effective as of the first
payroll period following commencement of the next Offering
Period. All funds recorded in payroll deduction accounts may be
used by the Company and its subsidiaries for any corporate
purpose, subject to the right of a Participant to withdraw at
any time an amount equal to the balance accumulated in his or
her payroll deduction account as described in Section 9
below. Funds recorded in payroll deduction accounts shall not be
required to be segregated from any funds of the Company or any
of its subsidiaries.
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5.
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Grant of
Option; Limitations.
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(a) Grant of Option. Subject to the
limitations in subsections (c), (d) and (e) of this
Section 5 and Section 10 of Article II, on the
Offering Date of each Offering Period, each Eligible Associate
participating in such Offering Period shall be granted an ASPP
Option.
(b) Acceptance of ASPP Option Grant. An
Eligible Associate may accept the grant of such ASPP Option by
electing to participate in the Plan in accordance with the
requirements of Article II, Section 4(a). Exercise of
the ASPP Option shall occur as provided in Article II,
Section 7 below.
(c) Limit on Number of
Shares Purchased. Notwithstanding the above,
the maximum number of Shares an Eligible Associate may purchase
during each Offering Period shall be 5,000 Shares, subject
to adjustment pursuant to Article I, Section 6. In
addition to the limits on an Eligible Associates
participation in the Plan set forth herein, the Administrator in
its sole discretion may establish new or change existing limits
on the number of Shares an Eligible Associate may elect to
purchase with respect to any Offering Period.
(d) Limit on Value of
Shares Purchased. Any provisions of the Plan
to the contrary notwithstanding, no Participant shall be granted
an ASPP Option under the Plan if such ASPP Option would permit
his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of
the Company and its Subsidiaries to accrue at a rate which
exceeds twenty-five thousand dollars ($25,000) of the Fair
Market Value of such stock (determined at the time such ASPP
Option is granted) for each calendar year in which such ASPP
Option is outstanding at any time.
(e) 5% Owner Limit. Any provisions of the
Plan to the contrary notwithstanding, no Participant shall be
granted an ASPP Option under the Plan if, immediately after the
grant, such Participant (or any other person whose stock would
be attributed to such Participant pursuant to
Section 424(d) of the Code) would own capital stock of the
Company
and/or hold
outstanding options to purchase stock possessing five percent
(5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary.
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6.
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Method of
Payment for Purchase of Shares.
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Article II of this Plan shall be operated as a payroll
deduction plan. All payroll deductions made by a Participant
shall be credited to his or her account under Article II of
the Plan. A Participant may not make any additional payments
into such account other than through the payroll deduction
feature of Article II the Plan.
(a) Limitation on Payroll
Deductions. Notwithstanding the foregoing, to the
extent necessary to comply with Section 423(b)(8) of the
Code and the limitations of Article II, Section 5, a
Participants payroll deductions may be decreased by the
Company to zero percent (0%) at any time during an Offering
Period. Payroll deductions shall re-commence at the rate
provided in such Participants Subscription Agreement at
the beginning of the next Offering Period or, in the case of the
limitation of Article II, Section 5(d), the first
Offering Period which is scheduled to end in the following
calendar year, unless the Participant withdraws in accordance
with Article II, Section 9, or is otherwise ineligible
to participate in such Offering Period.
(b) Tax Withholding. At the time an ASPP
Option is exercised, in whole or in part, or at the time some or
all of the Companys Common Stock issued under
Article II of the Plan is disposed of, the Participant must
make adequate provision for the Companys federal, state,
or other tax withholding obligations, if any, which arise upon
the exercise of the ASPP Option or the disposition of the Common
Stock. At any time, the Company may, but shall not be obligated
to, withhold from the Participants compensation the amount
necessary for the Company to meet applicable withholding
obligations, including any withholding required to make
available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by the
Participant.
(c) Interest. No interest shall accrue on
the Contributions of a Participant in the Plan.
(a) During his or her lifetime, a Participants ASPP
Option to purchase Shares hereunder is exercisable only by him
or her.
(b) Unless a Participant withdraws from the Plan as
provided in Article II, Section 9, his or her ASPP
Option for the purchase of Shares will be exercised
automatically on the Purchase Date of an Offering Period, and
unless otherwise limited by Section 5 or Section 10 of
Article II, the maximum number of full Shares subject to
the ASPP Option will be purchased at the applicable Purchase
Price with the accumulated Contributions in the
Participants account.
(c) No fractional Shares shall be purchased. Any payroll
deductions accumulated in a Participants account that are
not sufficient to purchase a full Share shall be retained in the
Participants account for the subsequent Offering Period.
The Shares purchased upon exercise of an ASPP Option hereunder
shall be deemed to be transferred to the Participant as soon as
administratively practicable on or following the Purchase Date.
As promptly as administratively practicable after each Purchase
Date of each Offering Period, the Company shall arrange to
deliver to each Participant, as appropriate, a certificate
representing the Shares purchased upon exercise of his or her
ASPP Option. Notwithstanding the foregoing, the Administrator
may require that all Shares purchased under Article II of
the Plan be held in an account (the Participants
ASPP Stock Account) established in the name of the
Participant (or in the name of the Participant and his or her
spouse, as designated by the Participant on his or her
Subscription Agreement), subject to such rules as determined by
the Administrator and uniformly applied to all Participants,
including designation of a brokerage or other financial services
firm (an ASPP Broker) to hold such Shares for the
Participants ASPP Stock Account with registration of such
Shares in the name of such ASPP Broker for the benefit of the
Participant (or for the benefit of the Participant and his or
her spouse, as designated by the Participant on his or her
Subscription Agreement).
C-10
(a) Withdrawal not in connection with Interruption or
Termination of Continuous Service Status.
(1) A Participant may withdraw all but not less than all
the Contributions credited to his or her account under the Plan
at any time prior to a Purchase Date by giving written notice to
the Company. All of the Participants Contributions
credited to his or her account will be paid to him or her
promptly after receipt of his or her notice of withdrawal and
his or her ASPP Option for the current period will be
automatically terminated, and no further Contributions for the
purchase of Shares will be made during the Offering Period.
(2) A Participants withdrawal from an Offering Period
will not have any effect upon his or her eligibility to
participate in a succeeding Offering Period.
(b) Withdrawal in connection with Interruption or
Termination of Continuous Service Status. In the event a
Participant terminates employment during the Offering Period in
which he or she is participating, he or she will be deemed to
have elected to withdraw from the Plan and any ASPP Option he or
she holds to purchase Shares under the Plan is terminated. Upon
termination of a Participants employment prior to the
Purchase Date of an Offering Period for any reason, including
death or retirement, the Contributions credited to his or her
account will be returned to him or her or, in the case of his or
her death, to the person or persons entitled thereto under
Article I, Section 8.
If the Administrator determines that, on a given Purchase Date,
the number of Shares with respect to which ASPP Options are to
be exercised may exceed (i) the number of Shares that were
available for sale under the Plan on the Offering Date of the
applicable Offering Period, or (ii) the number of Shares
available for sale under the Plan on such Purchase Date, the
Administrator may in its sole discretion provide (x) that
the Company shall make a pro rata allocation of the Shares
available for purchase on such Offering Date or Purchase Date,
as applicable, in as uniform a manner as shall be practicable
and as it shall determine in its sole discretion to be equitable
among all Participants exercising ASPP Options to purchase
Common Stock on such Purchase Date, and continue all Offering
Periods then in effect, or (y) that the Company shall make
a pro rata allocation of the Shares available for purchase on
such Offering Date or Purchase Date, as applicable, in as
uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all
Participants exercising ASPP Options to purchase Common Stock on
such Purchase Date, and terminate any or all Offering Periods
then in effect pursuant to Article I, Section 7.
The Company may make pro rata allocation of the Shares available
on the Offering Date of any applicable Offering Period pursuant
to the preceding sentence, notwithstanding any authorization of
additional Shares for issuance under the Plan by the
Companys shareholders subsequent to such Offering Date.
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11.
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Effective
Date of Plan
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The Plan is adopted by the Board of the Company on
September 28, 2007, subject to approval by the shareholders
of the Company. The Plan shall be effective (Effective
Date) as of the date of such shareholder approval.
C-11
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x
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PLEASE MARK VOTES
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REVOCABLE PROXY |
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AS IN THIS EXAMPLE
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WIRELESS RONIN TECHNOLOGIES, INC. |
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ANNUAL MEETING OF SHAREHOLDERS
JUNE 9, 2011, 3:30 P.M.
The undersigned shareholder of Wireless Ronin Technologies, Inc., a Minnesota corporation,
hereby acknowledges receipt of the notice of annual meeting of shareholders and proxy statement,
each dated April 26, 2011, and hereby appoints Scott W. Koller and Darin P. McAreavey, or either of
them, proxies and attorneys-in-fact, with full power to each of substitution and revocation, on
behalf and in the name of the undersigned, to represent the undersigned at the annual meeting of
shareholders of Wireless Ronin Technologies, Inc. to be held at our headquarters at 5929 Baker
Road, Suite 475, Minnetonka, Minnesota, on June 9, 2011, at 3:30 p.m. central time, or at any
adjournment or postponement thereof, and to vote, as designated below, all shares of common stock
of Wireless Ronin Technologies, Inc. which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth below.
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Please be sure to
date and sign this proxy card in the box below
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Date |
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Shareholder sign above |
Co-holder (if any) sign above |
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For
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Withhold
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For All Except |
1.
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To elect six directors for the ensuing year and until their
successors shall be elected and duly
qualified.
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01 02 03 |
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Stephen F. Birke
04 Geoffrey J. Obeney
Gregory T. Barnum 05 Brett A. Shockley
Scott W. Koller 06 Thomas J. Moudry
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(Instructions: To withhold
authority to vote for any indicated nominee, write the number(s) of
the nominee(s) in the space provided below.)
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For
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Against
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Abstain |
2.
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To approve the amendment to our
Amended and Restated 2006 Equity
Incentive Plan.
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o
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For
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Against
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Abstain |
3.
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To approve the amendment to
our 2006 Non-Employee Director Stock
Option Plan.
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o
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For
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Against
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Abstain |
4.
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To approve the amendment to
our Amended and Restated 2007
Associate Stock Purchase Plan.
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o
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For
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Against
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Abstain |
5.
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To ratify the appointment of
Baker Tilly Virchow Krause, LLP as
our independent auditors for the year
ending December 31, 2011.
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6.
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In their discretion, the proxies are authorized to vote upon such other business as
may properly come before the annual meeting or any adjournment or postponement thereof.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE PROXY BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 THROUGH
5. ABSTENTIONS WILL BE COUNTED TOWARDS THE EXISTENCE OF A QUORUM. THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS.
5 Detach above card, mark, sign, date and mail in postage-paid envelope provided. 5
WIRELESS
RONIN TECHNOLOGIES, INC.
Baker Technology Plaza, 5929 Baker Road, Suite 475, Minnetonka, MN 55345
Please sign exactly as name appears on this proxy. When shares are
held by joint tenants, both should sign. If signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such and, if not previously furnished, a certificate or other evidence of
appointment should be furnished. If a corporation, please sign in full
corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.