SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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¨ Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
Alere Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
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, 2014
Dear Fellow Stockholder:
You are cordially invited to attend Alere Inc.s Annual Meeting of Stockholders on Thursday, August 21, 2014 at 10:00 a.m., local time, at the offices of Foley Hoag LLP located at 155 Seaport Boulevard, Boston, Massachusetts 02210.
In addition to the matters described in the attached proxy statement, after the Annual Meeting we will report on our activities for our fiscal year ended December 31, 2013. You will have an opportunity to ask questions and to meet your directors and executives.
We are pleased to be able to offer to our stockholders the option to access our proxy materials on the Internet. We believe this option will be preferred by many of our stockholders, as it allows us to provide our stockholders the information they need in a convenient and efficient format.
Whether or not you plan to attend the meeting in person, it is important that your shares be represented and voted. Accordingly, please review our proxy materials and request a proxy card to sign, date and return or submit your proxy or voting instruction card, as applicable, by telephone or through the Internet. Instructions for voting are included in the Notice of Internet Availability of Proxy Materials that you received and on the proxy card. If you attend the meeting and prefer to vote at that time, you may do so.
Thank you for your continued support of Alere. For those of you who plan to visit with us in person at the Annual Meeting, we look forward to seeing you.
Cordially,
Ron Zwanziger
Chief Executive Officer and President
This proxy statement and the form of proxy are first being sent or given to stockholders on or about , 2014 pursuant to rules adopted by the Securities and Exchange Commission.
ALERE INC.
51 Sawyer Road, Suite 200
Waltham, Massachusetts 02453
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: | Thursday, August 21, 2014 | |
Time: | 10:00 a.m., local time | |
Place: | Foley Hoag LLP Seaport West 155 Seaport Boulevard Boston, Massachusetts 02210 |
Purpose:
We are holding this meeting to:
1. | Vote upon the election of nine directors; |
2. | Approve an increase to the number of shares of common stock available for issuance under the Alere Inc. 2010 Stock Option and Incentive Plan by 2,000,000, from 7,153,663 to 9,153,663; |
3. | Approve an increase to the number of shares of common stock available for issuance under the Alere Inc. 2001 Employee Stock Purchase Plan by 1,000,000, from 4,000,000 to 5,000,000; |
4. | Approve an amendment to Alere Inc.s Amended and Restated Certificate of Incorporation, as amended, to permit stockholders holding 25% or more of Alere Inc.s outstanding common stock to call a special meeting of stockholders; |
5. | Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2014; |
6. | Hold an advisory vote on executive compensation; and |
7. | Conduct such other business as may properly come before the Annual Meeting and at any adjournment or postponement thereof. |
The Company cordially invites all stockholders to attend the Annual Meeting in person. You may vote at the Annual Meeting and at any adjournment or postponement thereof if you were a stockholder of record at the close of business on June 30, 2014. We will begin mailing the Notice of Internet Availability of Proxy Materials on or before July 11, 2014. Our proxy materials, including this proxy statement and our 2013 Annual Report, which includes financial statements for the year ended December 31, 2013, will also be available on or before July 11, 2014 via the Internet on the Investor Relations page of our corporate website, www.alere.com, under the heading Annual Meetings & Reports.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE PROPOSALS PRESENTED TO YOU IN THIS PROXY STATEMENT.
YOUR VOTE IS IMPORTANT. Please promptly vote your shares, as soon as possible, by mail, telephone or over the Internet by following the instructions included in the Notice of Internet Availability of Proxy Materials and on your proxy card, regardless of whether you plan to personally attend the Annual Meeting.
Ellen Chiniara, Esq.
Secretary
, 2014
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting |
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Here are Your Companys Nominees for Re-election as Directors |
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Summary of the 2010 Stock Option and Incentive Plan, as Amended |
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, 2014
ALERE INC.
51 Sawyer Road, Suite 200
Waltham, Massachusetts 02453
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Alere Inc. for use at our 2014 Annual Meeting of Stockholders (the Annual Meeting) to be held on Thursday, August 21, 2014 at 10:00 p.m., local time, at the offices of Foley Hoag LLP located at 155 Seaport Boulevard, Boston, Massachusetts, 02210, and at any adjournments or postponements of the annual meeting. References in this proxy statement to us, we, our and Company refer to Alere Inc., except where otherwise indicated, such as in the Compensation Committee Report and the 2013 Audit Committee Report.
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Proposal 1:
Election of Directors
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Proposal 2:
Approval of an Increase in the Number of Shares Available for Issuance under the 2010 Stock Option and Incentive Plan
Proposal 3:
Approval of an Increase in the Number of Shares Available for Issuance under the 2001 Employee Stock Purchase Plan
Proposal 4:
Proposal to Amend our Certificate of Incorporation to Allow Stockholders to Call Special Meetings
Proposal 5:
Ratification of Selection of PricewaterhouseCoopers LLP as Our Independent Registered Public Accounting Firm
Proposal 6:
Advisory Vote on Executive Compensation
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Your Board of Directors Voting Recommendations
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Approval of an Increase in the Number of Shares of Common Stock Available for Issuance under the 2010 Stock Option and Incentive Plan
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Approval of an Increase in the Number of Shares of Common Stock Available for Issuance Under the 2001 Employee Stock Purchase Plan
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Approval of a Proposal to Amend our Certificate of Incorporation to Allow Certain Stockholders to Call a Special Meeting
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Ratification of Selection of Independent Registered Public Accounting Firm
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Advisory Vote on Executive Compensation
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Information Regarding Nominees, Other Directors and Executive Officers
The following biographical descriptions set forth certain information with respect to our incumbent, continuing directors who are not up for election at this annual meeting and our current executive officers who are not directors. For biographical information regarding our directors who have been nominated for re-election at the 2014 Annual Meeting, see Proposal 1 Election of Directors beginning on page 9 of this proxy statement. This information has been furnished by the respective individuals.
Name |
Age | Position | ||||
Ron Zwanziger |
60 | Director, Chief Executive Officer and President | ||||
David Scott, Ph.D. |
57 | Chief Scientific Officer | ||||
Jerry McAleer, Ph.D. |
59 | Director, Senior Vice President, Research and Development | ||||
Namal Nawana |
43 | Chief Operating Officer | ||||
David Teitel |
50 | Chief Financial Officer, Vice President and Treasurer | ||||
John Bridgen, Ph.D. |
67 | Senior Vice President, Business Development | ||||
Ellen Chiniara |
55 | Vice President, General Counsel, Chief Ethics and Compliance Officer and Secretary | ||||
Daniella Cramp |
40 | Global President, Cardiometabolic | ||||
Carla Flakne |
60 | Vice President, Chief Accounting Officer | ||||
Melissa Guerdan |
40 | Vice President, Global Quality and Regulatory Assurance | ||||
Robert Hargadon |
57 | Vice President, Global Human Resources | ||||
Craig Keyes, M.D. |
58 | Global President, Health Information Solutions | ||||
Nigel Lindner |
57 | Vice President, Research and Development | ||||
Sanjay Malkani |
44 | Global President, Toxicology | ||||
John ORourke |
52 | Chief Information Officer | ||||
Avi Pelossof |
51 | Global President, Infectious Disease | ||||
Gregg J. Powers |
51 | Chairman of the Board | ||||
Regina Benjamin, M.D. |
57 | Director | ||||
Håkan Björklund, Ph.D. |
58 | Director | ||||
Carol R. Goldberg |
83 | Director | ||||
John F. Levy |
67 | Director | ||||
Stephen P. MacMillan |
50 | Director | ||||
Brian A. Markison |
54 | Director | ||||
Thomas McKillop, Ph.D. |
71 | Director | ||||
John A. Quelch, C.B.E., D.B.A. |
62 | Director | ||||
James Roosevelt, Jr. |
68 | Director |
DirectorsTerm Expiring 2015
Ron Zwanziger has served as our Chief Executive Officer and President since our inception on May 11, 2001 and served as our Chairman from May 2001 until May 2014. Mr. Zwanziger served as Chairman, Chief Executive Officer and President of our predecessor company, Inverness Medical Technology, from its inception in 1992 through November 2001, when that company was acquired by Johnson & Johnson. From 1981 to 1991, he was Chairman and Chief Executive Officer of MediSense, a medical device company. Mr. Zwanziger served as a director of AMAG Pharmaceuticals, Inc. from November 2006 to December 2011. As the Chief Executive Officer of your Company, as well as the founder and chief executive officer of two other successful medical diagnostic companies, Mr. Zwanziger brings strategic vision, leadership, extensive business and operating experience and an immense knowledge of your Company and the industry to your Board.
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Carol R. Goldberg has served on your Board since May 30, 2001. Ms. Goldberg served as a director of our predecessor company, Inverness Medical Technology, from August 1992 through November 2001, when that company was acquired by Johnson & Johnson. Since December 1989, she has served as President of The AVCAR Group, Ltd., an investment and management consulting firm in Boston, Massachusetts. Ms. Goldberg is Chairperson of your Boards Compensation Committee. As the former President and Chief Operating Officer of Stop & Shop Companies, Inc., Ms. Goldberg brings a wealth of financial, marketing and consumer expertise to your Board.
James Roosevelt, Jr. joined your Board on February 6, 2009. Mr. Roosevelt has served as the Chief Executive Officer of Tufts Health Plan since 2005 and served as the President of Tufts Health Plan from 2005 until September 2013. From 1999 to 2005, Mr. Roosevelt was Senior Vice President and General Counsel of Tufts Health Plan. Mr. Roosevelt also serves as Co-Chair of the Rules and By-laws Committee of the Democratic National Committee, Co-Chair of the board of directors for the Tufts Health Care Institute, and a member of the board of directors of Americas Health Insurance Plans. Mr. Roosevelt is a member of your Boards Nominating and Corporate Governance Committee. Mr. Roosevelt brings to your Board extensive senior management, policy-making and financial experience within the health insurance industry, which includes important customers of your Company and is a driving force behind the demand for control of healthcare costs, which is reshaping the diagnostic and health management industries in which we operate.
Executive Officers Who Are Not Directors
David Scott, Ph.D. has served as our Chief Scientific Officer since our inception in May 2001. From July 2001 to August 2013, Dr. Scott served as a member of your Board. Dr. Scott served as Chairman of Inverness Medical Limited, a subsidiary of our predecessor company, Inverness Medical Technology, from July 1999 through November 2001, when that company was acquired by Johnson & Johnson, and as a managing director of Inverness Medical Limited from July 1995 to July 1999.
Namal Nawana joined us as Chief Operating Officer in December 2012. Before coming to Alere, Mr. Nawana spent 15 years at Johnson & Johnson in various leadership roles. Most recently, he served as the Worldwide President of DePuy Synthes Spine, a Johnson & Johnson company, where he managed global operations from February 2011 to November 2012. Prior to that, Mr. Nawana served as Area Vice President for Johnson & Johnson Medicals operations in Australia and New Zealand from January 2009 to February 2011, Chairman of the DePuy Asia Pacific Franchise Council, General Manager for DePuy Australia from 2007 to December 2008 and General Manager for DePuy Canada from 2004 to 2007. Mr. Nawana holds a Masters of Medical Science from the University of Adelaide and an MBA from the Henley Business School.
David Teitel has served as our Chief Financial Officer, Vice President and Treasurer since December 2006. Mr. Teitel has over 25 years of public and private company finance experience, including nine years of audit experience at Arthur Andersen and senior financial positions with Thermo Electron Corp., which is now Thermo Fisher Scientific Inc. and Deknatel Snowden Pencer, Inc., a manufacturer of specialty surgical instruments. Mr. Teitel joined your Company in December 2003 as Director of Finance Operations and assumed the title Vice President, Finance in December 2004.
John Bridgen, Ph.D. has served as Senior Vice President, Business Development since July 2010, after serving as your Vice President, Business Development from June 2006 to July 2010. He served as your Vice President, Strategy from September 2005 to June 2006. Dr. Bridgen joined your Company in September 2002, upon our acquisition of Wampole Laboratories, LLC. Dr. Bridgen served as President of Wampole from August 1984 until September 2005. Prior to joining Wampole, Dr. Bridgen had global sales and marketing responsibility for the hematology and immunology business units of Ortho Diagnostic Systems Inc., a Johnson & Johnson company.
Ellen Chiniara serves as Vice President, General Counsel, Chief Ethics and Compliance Officer and Secretary and is responsible for managing legal matters for your Company. Ms. Chiniara joined your Company in October 2006 as General Counsel, Professional Diagnostics and Assistant Secretary and became your Vice President and General Counsel in May 2007, Secretary in May 2010 and Chief Ethics and Compliance Officer in June 2014. From 2002 to 2006, Ms. Chiniara was Associate General Counsel, Neurology of Serono, Inc., a
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biopharmaceutical company. Previously, she served as General Counsel to a healthcare venture capital fund and a healthcare management services organization, where she also was Chief Operating Officer of its clinical trial site management division. From 1994 to 1997, Ms. Chiniara was Assistant General Counsel at Value Health, a specialty managed healthcare company where she focused on disease management and healthcare information technology. Prior to 1994, Ms. Chiniara was a partner with Hale and Dorr (now WilmerHale).
Daniella Cramp has served as Global President of our cardiometabolic business unit since January 2014. In this role she focuses on diagnostic products primarily marketed into hospitals and our cardiovascular and diabetes diagnostics and health management solutions. Previously, Ms. Cramp served as Global President of our chronic care business unit from March 2013 to January 2014 and as the Vice President of our cardiovascular business unit from September 2007 to March 2013. Ms. Cramp joined your Company in June 2007 upon our acquisition of Biosite Incorporated. Ms. Cramp served as the director of marketing for Biosite from 2004 to 2007. Prior to that, Ms. Cramp was the director of Biosites physician office segment where she initiated Biosites entry into the outpatient setting with its diagnostic platform, Triage. Ms. Cramp also served as the product director for the launch of the Triage BNP Test, the worlds first blood test for heart failure diagnosis. Prior to joining Biosite, Ms. Cramp worked in the pharmaceutical industry for Astra Merck and later AstraZeneca from 1994 to 2000 in various sales and marketing roles supporting cardiovascular and gastrointestinal pharmaceutical products.
Carla Flakne has served as Vice President, Chief Accounting Officer since August 2013 and is responsible for overseeing our accounting operations and financial reporting. Ms. Flakne joined your Company as Corporate Controller in November 2005 and became Vice President, Corporate Controller in December 2006. She has over 26 years of public and private company financial accounting experience, including six years of experience at a public accounting firm. Ms. Flakne was Corporate Controller for NaviSite, Inc. and Signal Technology Corporation prior to joining Alere and previously held various finance and accounting positions of increasing responsibility with PictureTel Corporation and AMP Incorporated. Ms. Flakne is a Certified Public Accountant.
Melissa Guerdan has served as Vice President, Global Quality and Regulatory since October 2013. She joined your Company in August 2012 as Vice President, Global Quality Assurance. Prior to coming to your Company, Ms. Guerdan was Vice President of Quality Operations for Covidiens Pharmaceuticals business from March 2008 to August 2012. In this capacity, she was responsible for leading quality and compliance across 11 global manufacturing facilities producing and distributing products ranging from urological imaging systems, contrast media/delivery systems, nuclear medicine products, and specialty generic pharmaceuticals. Prior to that, Ms. Guerdan served as Director of Quality for Baxters Renal and Medication Delivery businesses from 2004 to 2008. In addition to these key leadership roles, Ms. Guerdan also held various quality positions at Pfizer and Aventis Behring.
Robert Hargadon joined us as Vice President, Global Human Resources, formerly referred to as Global Culture and Performance, in October 2010. He has over 30 years of experience in human resources, leadership and organization development. Mr. Hargadon served as Vice President, Human Resources at drugstore.com, an online pharmacy, from November 2006 through October 2010. Prior to that, Mr. Hargadon was General Manager, Corporate Learning and Development at Microsoft from September 2005 to April 2006 and held various human resources leadership positions at Boston Scientific Corporation, a medical device manufacturer, from 1997 to 2005, including Vice President of International Human Resources and Vice President, Leadership Development from September 1997 to June 2005. Mr. Hargadon served as Vice President, Learning and Development at Fidelity Investments from 1993 to 1997. Mr. Hargadon also had 15 years of experience with the consulting firms Novations Group, Inc. and Harbridge House, which was acquired by PricewaterhouseCoopers LLP.
Craig Keyes, M.D. has served as Global President, Alere Health Information Solutions since August 2013. From October 2012 until August 2013 he served as President of Alere Health Management. Dr. Keyes joined your Company in March 2011 as Executive Vice President and Chief Medical Officer and served in these roles until October 2012. A lifelong advocate of health and well-being, in July 2008 Dr. Keyes founded SportXcel, a youth sports performance and adult fitness enterprise in Colorado, which provides both commercial and charitable research-based fitness, conditioning and injury-prevention programs for youth, adults, seniors and elite
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athletes. Dr. Keyes continued as Chief Executive Officer of SportXcel until March 2011. Prior to his tenure at SportXcel, Dr. Keyes held senior executive positions over a 10-year span with UnitedHealthcare from September 1998 to July 2008, including President and CEO-New York from 2001 to 2004, President and CEO-Colorado/New Mexico from 2004 to 2007, National SVP of Mid-Market Sales from 2007 to 2008, and Chief Medical Officer of the 16 markets in the North Division from 2002 to 2003. From 1996 to 2002, Dr. Keyes also served as a Physician Surveyor for the National Committee for Quality Assurance and from 1992 to 1994 as Medical Director for IPRO, a nationally recognized healthcare assessment and improvement organization. Dr. Keyes began his career in the practice of medicine serving under-insured and un-insured people with HIV/AIDS in New York City.
Nigel Lindner, Ph.D. has served as our Vice President, Research and Development since December 2011. From April 2009 to November 2011, Dr. Lindner served as Chief Executive Officer of SPD Swiss Precision Diagnostics GmbH, our 50/50 joint venture with Procter & Gamble. Dr. Lindner joined your Company in June 2007 as Global Strategic Business Unit Manager for our Women and Childrens Health business, a position he held until March 2009. Prior to joining your Company, Dr. Lindner had a long career with Unilever, a leading supplier of food, home and personal care products, where he held various senior research and development positions in their Foods and Chemicals businesses where he focused on strategic development and delivery of innovation from initial concept to full commercialization.
Sanjay Malkani has served as Global President, Toxicology since February 2013. Previously, he led our Global Toxicology unit as Vice President and has been directly responsible for that units primary US and European operations since January 2011. Mr. Malkani joined your Company as Vice President of the Toxicology Strategic Business Unit in February 2008, with responsibility for the Global Toxicology growth strategy and direct management of the US Toxicology operations. Mr. Malkani joined us from Roche Diagnostics, Inc., where he served as Vice President of Marketing for US Point-of-Care Diagnostics during 2006 to 2007, Vice President of Marketing for US Diabetes Care Hospital in 2005, and held various successive sales and marketing roles in the U.S. Diabetes Care business between 2001 and 2005. Prior to 2001, Mr. Malkani held various commercial positions at The Cambridge Group, Inc. and several start-up technology companies. Prior to completing his MBA at the Kellogg Graduate School of Management, Mr. Malkani held several sales positions at The Dow Chemical Company, Inc., where he started his career in 1991.
John ORourke joined your Company as Chief Information Officer in February 2013. An entrepreneur, Mr. ORourke has over 24 years running his own businesses, specializing in international information technology and business performance transformation. From April 2001 until February 2010, Mr. ORourke was founder and Chief Executive Officer of Catalise PLC and led a variety of significant international engagements with several businesses, including EDF Energy, HP and DPWN/DHL, where he led the creation of their European information technology shared services organization. During this time, Mr. ORourke also developed specialization in financial shared services, airline restructuring and pre-and-post-acquisition due diligence and integration for major corporations and for private equity. In March 2010, Mr. ORourke co-founded his next venture, Genysys Ltd, where he continued to provide M&A advisory services to private equity investors and provided strategic information technology and business advisory services to large corporations, such as DSM Life Sciences, Nokia and The Energy Saving Trust.
Avi Pelossof was appointed Global President of our infectious disease business unit in March 2013, after serving as Vice President of our infectious disease business unit from February 2008 to February 2013. Mr. Pelossof joined your Company as Vice President, Blood-Borne Pathogens in January 2007 and served in that role until January 2008. Mr. Pelossof has more than 20 years of experience in diagnostics, global health and international finance, including senior roles at Chembio Diagnostic Systems, Inc., a manufacturer of diagnostic tests for infectious diseases, and Citigroup.
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The following table furnishes information as to shares of our common stock beneficially owned by:
| each person or entity known by us to beneficially own more than five percent of our common stock; |
| each of our directors; |
| each of our named executive officers (as defined in Compensation Discussion and Analysis beginning on page 34); and |
| all of our current directors and executive officers as a group. |
Unless otherwise stated, beneficial ownership is calculated as of June 20, 2014. For the purpose of this table, a person, group or entity is deemed to have beneficial ownership of any shares that such person, group or entity has the right to acquire within 60 days after such date through the exercise of options or warrants.
Security Ownership of Certain Beneficial Owners and Management
Common Stock | ||||||||
Name and Address of Beneficial Owner(1) |
Amount and Nature of Beneficial Ownership(2) |
Percent of Class(3) |
||||||
EdgePoint Investment Group Inc. (4) |
7,319,009 | 8.84 | % | |||||
FMR LLC (5) |
6,438,292 | 7.78 | % | |||||
Invesco Ltd. (6) |
5,743,159 | 6.94 | % | |||||
Manning & Napier Advisors, LLC (7) |
4,824,992 | 5.83 | % | |||||
Ron Zwanziger (8) |
4,583,343 | 5.46 | % | |||||
The Vanguard Group (9) |
4,167,957 | 5.04 | % | |||||
David Scott, Ph.D. (10) |
923,489 | 1.11 | % | |||||
Jerry McAleer, Ph.D. (11) |
677,919 | * | ||||||
John F. Levy (12) |
275,457 | * | ||||||
Gregg J. Powers (13) |
198,080 | * | ||||||
Carol R. Goldberg (14) |
175,058 | * | ||||||
John A. Quelch, C.B.E., D.B.A.(15) |
119,078 | * | ||||||
David Teitel (16) |
101,387 | * | ||||||
James Roosevelt, Jr. (17) |
75,495 | * | ||||||
Namal Nawana (18) |
56,672 | * | ||||||
Regina Benjamin, M.D. (19) |
8,177 | * | ||||||
Håkan Björklund, Ph.D. (20) |
16,240 | * | ||||||
Stephen MacMillan (21) |
16,240 | * | ||||||
Brian Markison (22) |
16,240 | * | ||||||
Thomas McKillop, Ph.D. (23) |
16,240 | * | ||||||
All current executive officers and directors (26 persons)(24) |
7,971,424 | 9.27 | % |
* | Represents less than 1% |
(1) | The address of each director or executive officer (and any related persons or entities) is c/o the Company at its principal office. |
(2) | Unless otherwise indicated, the stockholders identified in this table have sole voting and dispositive power with respect to the shares beneficially owned by them. |
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(3) | The number of shares outstanding used in calculating the percentage for each person, group or entity listed includes the number of shares underlying options, warrants and convertible securities held by such person, group, or entity that were exercisable within 60 days after June 20, 2014, but excludes shares of stock underlying options, warrants and convertible securities held by any other person, group or entity. |
(4) | This information is based on information contained in a Schedule 13G/A filed with the SEC on January 28, 2014 by EdgePoint Investment Group Inc., Cymbria Corporation, EdgePoint Canadian Growth & Income Portfolio, EdgePoint Canadian Portfolio, EdgePoint Global Growth & Income Portfolio, EdgePoint Global Portfolio and St. Jamess Place Global Equity Unit Trust, which reported that they had shared voting and dispositive power with respect to 7,319,009, 716,339, 406,133, 396,195, 950,299, 2,897,111 and 1,952,932 shares, respectively. The address provided therein for these reporting persons is 150 Bloor Street West, Suite 500, Toronto, Ontario M5S 2X9, Canada. |
(5) | This information is based on information contained in a Schedule 13G/A filed with the SEC on February 14, 2014 by FMR LLC and Edward C. Johnson III. Each of FMR LLC and Mr. Johnson reported that it or he has (i) in the case of FMR LLC only, sole voting power with respect to 967,133 shares and (ii) sole dispositive power with respect to 6,438,292 shares. Of the shares reported, 2,388,910 shares of common stock are potentially issuable upon conversion of Series B convertible preferred stock and 704,866 shares of common stock are issuable upon conversion of $31,000,000 of principal amount of Alere Inc. 3.0% convertible notes. The address provided therein for FMR LCC and Mr. Johnson is 245 Summer Street, Boston, MA 02210. |
(6) | This information is based on information contained in a Schedule 13G/A filed with the SEC on February 4, 2014 by Invesco Ltd. Invesco Ltd. reported that it has (i) sole voting power with respect to 5,740,559 shares and (ii) sole dispositive power with respect to 5,743,159 shares. The address provided therein for Invesco Ltd. is 1555 Peachtree Street NE; Atlanta, GA 30309. |
(7) | This information is based on information contained in a Schedule 13G/A filed with the SEC on February 3, 2014 by Manning & Napier Advisors, LLC. Manning & Napier Advisors, LLC reported that it has (i) sole voting power with respect to 3,611,272 shares and (ii) sole dispositive power with respect to 4,824,992 shares. The address provided therein for Manning & Napier Advisors, LLC is 290 Woodcliff Drive, Fairport, NY 14450. |
(8) | Consists of 3,515,843 shares of common stock and 1,067,500 shares of common stock underlying options exercisable within 60 days from June 20, 2014. Of the shares attributed to Mr. Zwanziger, 224,276 shares of common stock are owned by Orit Goldstein as Trustee of the Zwanziger Family 2004 Irrevocable Trust, 472,193 shares owned by Zwanziger Family 2012 Irrevocable Trust, 122,186 shares owned by the Zwanziger Family 2009 Irrevocable Trust and 1,806,696 shares of common stock are owned by Zwanziger Family Ventures, LLC, a limited liability company managed by Mr. Zwanziger and his spouse. Of the other shares attributed to him, Mr. Zwanziger disclaims beneficial ownership of (i) 2,600 shares owned by his wife, Janet M. Zwanziger, (ii) 9,450 shares owned by the Zwanziger Goldstein Foundation, a charitable foundation for which Mr. Zwanziger and his spouse serve as directors, (iii) 580,201 shares owned by Ron Zwanziger as Trustee of the Zwanziger 2004 Revocable Trust and (iv) 191,830 shares owned by Orit Goldstein as the Trustee of the Zwanziger Family Trust. Does not include 36,380 shares of common stock potentially acquirable by the Zwanziger Family Trust upon conversion of 3% senior subordinated notes at a conversion price of $43.98 per share. |
(9) | This information is based on information contained in a Schedule 13G filed with the SEC on February 10, 2014 by The Vanguard Group. The Vanguard Group reported that it has (i) sole voting power with respect to 46,949 shares, (ii) sole dispositive power with respect to 4,124,608 shares and (iii) shared dispositive power with respect to 43,349 shares. The address provided therein for The Vanguard Group is 100 Vanguard Blvd, Malvern, PA 19355. |
(10) | Consists of 477,239 shares of common stock and 446,250 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(11) | Consists of 300,419 shares of common stock and 377,500 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
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(12) | Consists of 155,693 shares of common stock, and 119,764 shares of common stock underlying options exercisable within 60 days from June 20, 2014. Includes 1,007 shares of common stock owned by a charitable remainder unitrust of which Mr. Levy disclaims beneficial ownership. |
(13) | Consists of 46,000 shares of common stock owned directly by Mr. Powers, 140,050 shares of common stock owned by clients of Private Capital Management, L.P. (PCM), of which Mr. Powers is Chairman and Chief Executive Officer and has trading authority, and 12,030 shares of common stock underlying options exercisable within 60 days from June 20, 2014. Mr. Powers disclaims beneficial ownership of the common shares owned by the clients of PCM. |
(14) | Consists of 86,295 shares of common stock and 88,763 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(15) | Consists of 9,780 shares of common stock and 109,298 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(16) | Consists of 4,796 shares of common stock and 96,591 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(17) | Consists of 4,444 shares of common stock and 71,051 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(18) | Consists of 903 shares of common stock and 55,769 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(19) | Consists of 8,177 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(20) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(21) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(22) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(23) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
(24) | Consists of 4,778,009 shares of common stock and 3,193,415 shares of common stock underlying options exercisable within 60 days from June 20, 2014. |
In addition, as of June 20, 2014, the Zwanziger Family Trust, a trust for the benefit of Mr. Zwanzigers children and the trustee of which is Mr. Zwanzigers sister, owns 11,078 shares of our Series B preferred stock. The shares of Series B preferred stock owned by the Zwanziger Family Trust represents less than 1% of the outstanding shares of the Series B preferred stock. Mr. Zwanziger disclaims beneficial ownership of the Series B preferred stock owned by the Zwanziger Family Trust. As of June 20, 2014, Mr. Powers directly owns 18,608 shares of our Series B preferred stock. Additionally, as of June 20, 2014, clients of PCM, of which Mr. Powers is Chairman and Chief Executive Officer and has trading authority, owns 3,257 shares of our Series B preferred stock. Mr. Powers disclaims beneficial ownership of the Series B preferred stock owned by the clients of PCM. We are not aware that any of our directors or executive officers beneficially owns any other shares of Series B preferred stock.
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Compensation Discussion and Analysis
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Compensation of Executive Officers and Directors
Set forth below is information regarding the compensation of our named executive officers.
Summary Compensation Table. The following table sets forth information regarding the named executive officers compensation for the fiscal years 2013, 2012 and 2011. For our named executive officers, the amount of salary and bonus represented between 12% and 81% of the named executive officers total compensation for 2013.
Summary Compensation Table for 2013
Name and Principal Position |
Year | Salary ($ ) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($)(1) |
All Other Compensation ($)(2) |
Total ($) |
|||||||||||||||||||||
Ron Zwanziger |
2013 | $ | 954,808 | | | $ | 7,221,375 | $ | 540 | $ | 8,176,723 | |||||||||||||||||
Chief Executive Officer |
2012 | $ | 900,000 | | | $ | 2,940,000 | $ | 1,080 | $ | 3,841,080 | |||||||||||||||||
and President |
2011 | $ | 900,000 | | | | $ | 713 | $ | 900,713 | ||||||||||||||||||
David Teitel |
2013 | $ | 408,770 | | | $ | 123,819 | (3) | $ | 8,190 | $ | 540,779 | ||||||||||||||||
Chief Financial Officer, |
2012 | $ | 393,269 | | | $ | 73,353 | (3) | $ | 8,580 | $ | 475,202 | ||||||||||||||||
Vice President and Treasurer |
2011 | $ | 366,346 | | | $ | 102,200 | $ | 8,063 | $ | 476,609 | |||||||||||||||||
Namal Nawana(4) |
2013 | $ | 784,615 | $ | 275,000 | | $ | 247,637 | (3) | $ | 540 | $ | 1,307,792 | |||||||||||||||
Chief Operating Officer |
2012 | $ | 3,077 | | $ | 2,020,700 | (5) | $ | 1,468,530 | | $ | 3,492,307 | ||||||||||||||||
David Scott, Ph.D.(6) |
2013 | $ | 584,624 | | | $ | 2,579,063 | | $ | 3,163,687 | ||||||||||||||||||
Chief Scientific Officer |
2012 | $ | 557,510 | | | $ | 1,050,000 | | $ | 1,607,510 | ||||||||||||||||||
2011 | $ | 546,028 | | | | | $ | 546,028 | ||||||||||||||||||||
Jerry McAleer, Ph.D.(6) |
2013 | $ | 542,865 | | | $ | 2,210,625 | | $ | 2,753,490 | ||||||||||||||||||
Senior Vice President, |
2012 | $ | 517,687 | | | $ | 900,000 | | $ | 1,417,687 | ||||||||||||||||||
Research and Development |
2011 | $ | 523,740 | | | | | $ | 523,740 |
(1) | These amounts represent the aggregate grant date fair value of stock option awards made during 2013, 2012 and 2011, respectively, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation (FASB ASC Topic 718), excluding estimated forfeitures. See Note 14 of the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the relevant assumptions used in calculating these amounts. |
(2) | The amounts in this column include for 2013: (a) matching contributions we made to our defined contribution plans in the amounts of $7,650 on behalf of Mr. Teitel; and (b) life insurance premiums paid in the amounts of $540 on behalf of Mr. Zwanziger, Mr. Teitel and Mr. Nawana. |
(3) | The grant date fair value of these stock options is based on our assessment, as of the grant date, of the probable outcome of applicable performance conditions. Assuming the highest possible level of achievement of the performance conditions, the grant date fair value would have been $126,346 and $74,850 for Mr. Teitel in 2013 and 2012, respectively, and $252,691 for Mr. Nawana in 2013. |
(4) | Mr. Nawana was hired on December 30, 2012 and was not a named executive officer in 2011. |
(5) | This amount represents the aggregate grant date fair value of restricted stock units issued to Mr. Nawana in 2012, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation (FASB ASC Topic 718), excluding estimated forfeitures. Under FASB Topic 718, the grant date fair value of each restricted stock unit is equal to the closing price of our common stock on that date, or $18.37 per share. |
(6) | Salary and other cash compensation for these named executive officers were paid in British pounds. British pounds were converted to U.S. dollars at assumed exchange rates of £1:$1.56427, £1:$1.58496, £1:$1.60349 and, which were the average exchange rates for 2013, 2012 and 2011, respectively. |
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Grants of Plan-based Awards. The following table sets forth certain information with respect to the grant of plan-based awards to the named executive officers in 2013.
Grants of Plan-based Awards for 2013
Grant Date(1) |
Compensation Committee Approval Date(1) |
Estimated Possible Payouts Under Non-equity Incentive Plan Awards |
All
Other Option Awards: Number of Securities Underlying Options (#)(3) |
Exercise Or Base Price of Option Awards ($ /Sh) |
Grant Date Fair Value of Stock and Option Awards(4) |
|||||||||||||||||||||||
Name |
Shares Underlying Award (#)(2) |
Target ($)(2) | ||||||||||||||||||||||||||
Ron Zwanziger |
8/7/2013 | 6/6/2013 | | 490,000 | $ | 50.00 | (5) | $ | 7,221,375 | |||||||||||||||||||
David Teitel |
4/30/2013 | 4/29/2013 | 12,500 | | | | ||||||||||||||||||||||
4/30/2013 | 4/29/2013 | | 12,500 | (6) | $ | 25.68 | (7) | $ | 126,346 | |||||||||||||||||||
Namal Nawana |
4/30/2013 | 4/29/2013 | 25,000 | | | | ||||||||||||||||||||||
4/30/2013 | 4/29/2013 | | | 25,000 | (6) | $ | 25.68 | (7) | $ | 252,691 | ||||||||||||||||||
David Scott, Ph.D. |
8/7/2013 | 6/6/2013 | | 175,000 | $ | 50.00 | (5) | $ | 2,579,063 | |||||||||||||||||||
Jerry McAleer, Ph.D. |
8/7/2013 | 6/6/2013 | | 150,000 | $ | 50.00 | (5) | $ | 2,210,625 |
(1) | The grant dates of the options for the named executive officers are in accordance with our stock option granting policy. Under this policy, grants of options approved by the Compensation Committee for existing employees shall be effective as of the next applicable Grant Date (except that any grants subject to stockholder approval shall be effective as of the date of stockholder approval). Under this policy, Grant Date means the last day of the following months: February, April, June, August, October and December. In the case of grants to Mr. Zwanziger, Dr. McAleer and Dr. Scott, the date of grant is the date of the Annual Meeting of Stockholders of August 7, 2013, at which the grants of these options were approved by the Companys stockholders. |
(2) | Amounts in these columns represent Cash Awards under our Annual Incentive Process, which were subject to performance conditions set forth in related Stock Option Awards. Under the terms of the Process, the executives were eligible to receive, upon satisfaction of applicable performance conditions and certification by the Compensation Committee, a Cash Award with a maximum value equal to the appreciation in the price of one share of our common stock during 2013 times the number of shares set forth in the table. Any cash value is payable in two equal installments in May 2014 and May 2015, subject to the executives continued employment on the date of payment. On February 27, 2014, the Compensation Committee certified the degree to which the performance conditions for the related Stock Option Awards had been satisfied and determined that the Cash Awards for Messrs. Teitel and Nawana should be calculated on the basis of 11,288 and 23,077 shares, respectively, which had aggregate values of $196,772 and $402,278 respectively. For more information regarding our Annual Incentive Process, including the performance conditions, see Compensation Discussion and Analysis beginning on page 34 of this proxy statement. |
(3) | All stock option awards were made under our 2010 Stock Option and Incentive Plan. The terms of these options provide for vesting in four equal annual installments, commencing on the first anniversary of the date of grant and conditioned upon the recipients continued employment with the Company on the applicable vesting date. The options will expire on the tenth anniversary of the grant date or, if earlier, three months after the recipients employment terminates. |
(4) | These amounts represent the aggregate grant date fair value of stock option awards made during 2013, calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. See Note 14 of the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the relevant assumptions used in calculating these amounts. |
(5) | The exercise price of these stock option awards is equal to the greater of $50.00 and the fair market value of our common stock on the effective date of grant; the closing price of our common stock on the date of grant, August 7, 2013, was $33.00 and, accordingly, the exercise price per share of the options is $50.00. |
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(6) | These amounts represent stock option awards under our Annual Incentive Process, which were subject to performance conditions as well as the vesting conditions described in note (3). On February 27, 2014, the Compensation Committee certified the degree to which the performance conditions had been satisfied and determined that the stock option awards for Messrs. Teitel and Nawana would be eligible to vest as to 11,288 and 23,077 shares of our common stock, respectively. For more information regarding our Annual Incentive Process, including the performance conditions, see Compensation Discussion and Analysis beginning on page 34 of this proxy statement. |
(7) | The exercise price of these stock option awards is equal to the closing price of our common stock on the applicable Grant Date. |
Outstanding Equity Awards at Fiscal Year-End. The following table sets forth certain information with respect to outstanding options and stock awards held by the named executive officers at the end of 2013.
Outstanding Equity Awards at Fiscal Year-end for 2013
Option Awards | Stock Awards | |||||||||||||||||||||||
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#)(1) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date(2) |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market
Value of Shares or Units of Stock That Have Not Vested(3) ($) |
||||||||||||||||||
Ron Zwanziger |
300,000 | | $ | 39.72 | 5-17-2017 | | | |||||||||||||||||
150,000 | | $ | 61.49 | 7-23-2018 | | | ||||||||||||||||||
187,500 | 62,500 | $ | 61.49 | 2-28-2020 | | | ||||||||||||||||||
122,500 | 367,500 | $ | 50.00 | 7-11-2022 | | | ||||||||||||||||||
| 490,000 | $ | 50.00 | 8-7-2023 | | | ||||||||||||||||||
David Teitel |
10,000 | | $ | 24.25 | 12-17-2014 | | | |||||||||||||||||
5,000 | | $ | 34.40 | 10-04-2016 | | | ||||||||||||||||||
20,000 | | $ | 38.10 | 12-15-2016 | | | ||||||||||||||||||
20,000 | | $ | 48.14 | 8-31-2017 | | | ||||||||||||||||||
23,581 | | $ | 35.58 | 6-30-2019 | | | ||||||||||||||||||
10,000 | | $ | 38.01 | 10-30-2019 | | | ||||||||||||||||||
5,000 | 5,000 | $ | 26.06 | 10-31-2021 | | | ||||||||||||||||||
94 | 281 | $ | 25.43 | 2-28-2022 | | | ||||||||||||||||||
| 12,500 | (4) | $ | 25.68 | 4-30-2023 | | | |||||||||||||||||
Namal Nawana |
50,000 | 150,000 | $ | 18.50 | 12-31-2022 | | ||||||||||||||||||
| | | | 105,000 | (5) | | ||||||||||||||||||
| 25,000 | (4) | $ | 25.68 | 4-30-2023 | | | |||||||||||||||||
David Scott, Ph.D. |
150,000 | | $ | 39.72 | 5-17-2017 | | | |||||||||||||||||
75,000 | | $ | 61.49 | 7-23-2018 | | | ||||||||||||||||||
67,500 | 22,500 | $ | 61.49 | 2-28-2020 | | | ||||||||||||||||||
43,750 | 131,250 | $ | 50.00 | 7-11-2022 | | | ||||||||||||||||||
| 175,000 | $ | 50.00 | 8-7-2023 | | | ||||||||||||||||||
Jerry McAleer, Ph.D. |
125,000 | | $ | 39.72 | 5-17-2017 | | | |||||||||||||||||
65,000 | | $ | 61.49 | 7-23-2018 | | | ||||||||||||||||||
56,250 | 18,750 | $ | 61.49 | 2-28-2020 | | | ||||||||||||||||||
37,500 | 112,500 | $ | 50.00 | 7-11-2022 | | | ||||||||||||||||||
| 150,000 | $ | 50.00 | 8-7-2023 | | |
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(1) | Options become exercisable in four equal annual installments beginning on the first anniversary of the date of grant. |
(2) | Unless otherwise noted, the expiration date of each option occurs ten years after the date of grant of such option. |
(3) | The value attributable to the restricted stock units equals the closing price of our common stock as reported by the New York Stock Exchange on December 31, 2013, which was $36.20, multiplied by the number of unvested units underlying the award. |
(4) | The vesting of these awards is subject to satisfaction of performance conditions; options for which the performance conditions are satisfied will become exercisable in four equal annual installments beginning on the first anniversary date of grant, subject to the executives continued employment on the date of vesting. On February 27, 2014, the Compensation Committee certified the degree to which the performance conditions had been satisfied and determined that the stock option awards for Messrs. Teitel and Nawana would be eligible to vest as to 11,288 and 23.077 shares of our common stock, respectively. For more information regarding these awards, including the performance conditions, see Compensation and Discussion Analysis beginning on page 34 of this proxy statement. |
(5) | The award in this column represents a RSU granted on December 30, 2012 as an employment inducement award outside of our stockholder-approved stock option and incentive plans pursuant to NYSE Rule 303A.08. The vesting of the RSU is as follows: 5,000 RSUs vested one year after the grant date on December 30, 2013, 5,000 RSUs will vest two years after the grant date, and 100,000 RSUs will vest three years after the grant date. If Mr. Nawanas employment is involuntarily terminated without cause within three years of his hiring, his RSUs will accelerate and fully vest. The RSUs will also accelerate and fully vest if Mr. Nawana terminates his employment voluntarily after his first year of employment, other than in the presence of facts or circumstances which would constitute cause for termination by us. |
Option Exercises and Stock Vested. The following table sets forth certain information with respect to options exercised by the named executive officers and stock vested in 2013.
Option Exercises and Stock Vested for 2013
Option Awards | Stock Awards | |||||||||||||||
Name |
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($)(1) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(2) |
||||||||||||
Ron Zwanziger |
7,576 | $ | 88,109 | | | |||||||||||
David Teitel |
10,000 | $ | 103,700 | | | |||||||||||
Namal Nawana |
| | 5,000 | $ | 180,800 | |||||||||||
David Scott, Ph.D. |
5,252 | $ | 71,060 | | | |||||||||||
Jerry McAleer, Ph.D. |
4,656 | $ | 56,012 | | |
(1) | Represents the difference between the aggregate exercise price and the aggregate fair market value of the common stock on the respective dates of exercise. |
(2) | Represents the closing price of one share of our common stock on the date of vesting multiplied by the number of shares acquired on vesting. |
Non-qualified Deferred Compensation Plans. During 2013, our named executive officers did not participate in any non-qualified defined contribution or other non-qualified deferred compensation plans.
Pension Benefits. During 2013, our named executive officers did not participate in any plan that provides for specified retirement benefits, or payments and benefits that will be provided primarily following retirement, other than defined contribution plans, such as our 401(k) savings plan.
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Employment Agreement and Potential Payments upon Termination or Change-in-control. Effective December 30, 2012, we entered into a Restricted Stock Unit Agreement with Mr. Nawana in connection with his appointment as our Chief Operating Officer, pursuant to which we granted to Mr. Nawana 110,000 RSUs, which vest over a period of three years. Under the terms of the Restricted Stock Unit Agreement, if Mr. Nawanas employment is involuntarily terminated, without cause, within three years of the date of grant, or if Mr. Nawana terminates his employment voluntarily after one year, other than in the presence of facts or circumstances which would constitute cause for termination by us, his RSUs will accelerate and fully vest. The Restricted Stock Unit Agreement further provides that all of the RSUs will immediately vest upon a change of control of the Company, as that term is defined in the Restricted Stock Unit Agreement. Our named executive officers are employees-at-will and do not have employment or severance contracts with us. Other than provisions in our Option Plans that provide for all stock options to automatically become fully exercisable, RSUs to become fully vested and any stock awards to become vested and non-forfeitable in the event of a change of control as defined in the plans, there are no other contracts, agreements, plans or arrangements that provide for payments to our named executive officers at, following, or in connection with any termination of employment, change in control of the Company or a change in a named executive officers responsibilities. All of the outstanding stock options held by our named executive officers reported above under Outstanding Equity Awards at Fiscal Year-End were issued under our Option Plans and are subject to accelerated exercisability upon a change of control. The table below sets forth the value attributable to such an acceleration of exercisability of options and an acceleration of vesting of RSUs under the Restricted Stock Unit Agreement.
Name |
Value Attributable to Acceleration of Exercisability of Stock Options and Vesting of RSUs Upon a Change of Control(1) |
|||
Ron Zwanziger |
$ | | ||
David Teitel |
$ | 185,226 | ||
Namal Nawana |
$ | 6,719,000 | ||
David Scott, Ph.D. |
$ | | ||
Jerry McAleer, Ph.D. |
$ | |
(1) | Assumes the occurrence of a change of control of the Company on December 31, 2013. The value attributable to the acceleration of in-the-money stock options equals the difference between the applicable option exercise prices and the closing sale price of our common stock as reported by the New York Stock Exchange on December 31, 2013, which was $36.20, multiplied by the number of shares underlying the options. The value attributable to the acceleration of vesting of RSUs equals the closing sale price of our common stock as reported by the New York Stock Exchange on December 31, 2013, which was $36.20, multiplied by the number of units underlying the award. |
Risk Related to Compensation Policies
Our compensation policies and practices for our employees, including our executive compensation program described in our Compensation Discussion and Analysis, aim to provide a risk-balanced compensation package which is competitive in our market sectors and relevant to the individual executive. Pursuant to the Annual Incentive Process, we expect to continue to award to certain executives and managers, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, option and cash awards. Because both the option and cash awards contemplated under this process would vest over several years, we believe that the process discourages short-term risk taking and aligns the interest of our executives and managers with those of our stockholders. We do not believe that risks arising from these practices, or our compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on us.
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The following table sets forth information regarding the compensation of our directors for 2013.
Director Compensation for 2013
Name (1) |
Fees Earned or Paid in Cash ($)(2) |
Option Awards ($)(3)(4) |
Total ($) | |||||||||
Eli Adashi, M.D. |
$ | 49,685 | $ | 89,325 | (5) | $ | 139,010 | |||||
Carol R. Goldberg |
$ | 87,000 | $ | 552,994 | $ | 639,994 | ||||||
Robert P. Khederian |
$ | 57,329 | $ | 138,402 | (6) | $ | 195,731 | |||||
John F. Levy |
$ | 31,500 | $ | 746,531 | $ | 778,031 | ||||||
John A. Quelch, C.B.E., D.B.A. |
$ | 31,500 | $ | 746,531 | $ | 778,031 | ||||||
James Roosevelt, Jr. |
$ | 42,500 | $ | 552,994 | $ | 595,494 | ||||||
Peter Townsend |
$ | 52,233 | $ | 112,631 | (7) | $ | 164,864 | |||||
Regina Benjamin, M.D. |
$ | 2,812 | $ | 537,137 | $ | 539,949 | ||||||
Håkan Björklund, Ph.D. |
$ | 3,658 | $ | 713,128 | $ | 716,786 | ||||||
Stephen P. MacMillan |
$ | 5,486 | $ | 713,128 | $ | 718,614 | ||||||
Brian A. Markison |
$ | 3,658 | $ | 713,128 | $ | 716,786 | ||||||
Thomas F. McKillop, Ph.D. |
$ | 5,486 | $ | 713,128 | $ | 718,614 | ||||||
Gregg J. Powers |
$ | 29,261 | $ | 528,252 | $ | 557,513 |
(1) | Ron Zwanziger and Jerry McAleer are not included in this table as they are employees of the Company and receive no compensation for their services as directors. We show their compensation as employees of the Company in the Summary Compensation Table above. |
(2) | Dr. Adashi received cash payments of $19,500 each in April 2013 and July 2013 and a cash payment of $10,685 in October 2013. Ms. Goldberg received cash payments of $21,500 each in April 2013 and July 2013 and a cash payment of $22,000 in November 2013 and earned fees of $22,000 as of December 31, 2013, which amount was paid in January 2014. Mr. Khederian received cash payments of $22,500 each in April 2013 and July 2013 and a cash payment of $12,329 in October 2013. Mr. Levy received cash payments of $7,250 each in April 2013 and November 2013 and a cash payment of $8,500 in November 2013 and earned fees of $8,500 as of December 31, 2013, which amount was paid in January 2014. Dr. Quelch received cash payments of $11,250 each in April 2013 and July 2013 and a cash payment of 4,500 in November 2013 and earned fees of $4,500 as of December 31, 2013, which amount was paid in January 2014. Mr. Roosevelt received cash payments of $1,250 each in April 2013 and July 2013 and a cash payment of $20,000 in November 2013 and earned fees of $20,000 as of December 31, 2013, which amount was paid in January 2014. Mr. Townsend received cash payments of $20,500 each in April 2013 and July 2013 and a cash payment of $11,233 in October 2013. Dr. Benjamin earned fees of $2,812 as of December 31, 2013, which amount was paid in January 2014. Dr. Björklund received a cash payment of $1,158 in November 2013 and earned fees of $2,500 as of December 31, 2013, which amount was paid in January 2014. Mr. MacMillan received a cash payment of $1,736 in November 2013 and earned fees of $3,750 as of December 31, 2013, which amount was paid in January 2014. Mr. Markison received a cash payment of $1,158 in November 2013 and earned fees of $2,500 as of December 31, 2013, which amount was paid in January 2014. Dr. McKillop received a cash payment of $1,736 in November 2013 and earned fees of $3,750 as of December 31, 2013, which amount was paid in January 2014. Mr. Powers received a cash payment of $9,261 in November 2013 and earned fees of $20,000 as of December 31, 2013, which amount was paid in January 2014. The cash compensation paid to directors is described in more detail below. |
(3) | As of December 31, 2013, each director had the following number of options outstanding: Dr. Adashi: 41,515; Ms. Goldberg: 116,553; Mr. Khederian: 59,999; Mr. Levy: 157,280; Dr. Quelch: 146,814; Mr. Roosevelt: 98,841; Mr. Townsend: 16,353; Dr. Benjamin: 37,727; Dr. Björklund: 53,756; Mr. MacMillan: 53,756; Mr. Markison: 53,756; Dr. McKillop: 53,756; Mr. Powers: 39,820. |
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(4) | These amounts represent the aggregate grant date fair value of stock option awards or extensions made during 2013, calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. Except as otherwise noted, the amount for each director relates to a single stock option award. |
| For Messrs. Levy and Quelch, the amounts consisted of an aggregate grant date fair value of stock option awards granted of $552,993 each and the aggregate grant date fair value of stock option awards of $193,539 representing each directors election to receive base compensation as options in lieu of cash. |
| For Dr. Benjamin, the amount consisted of an aggregate grant date fair value of a stock option award granted of $493,955 and the aggregate grant date fair value of a stock option award of $43,182 representing her election to receive base compensation as options in lieu of cash. |
| For Messrs. Björklund, MacMillan, Markison and McKillop, the amounts consisted of an aggregate grant date fair value of stock option awards granted of $528,253 each and the aggregate grant date fair value of stock option awards of $184,875 representing each directors election to receive base compensation as options in lieu of cash. |
See Note 14 of the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the relevant assumptions used in calculating these amounts.
(5) | On September 18, 2013, the Compensation Committee of the Board of Directors extended the post- termination exercise period of stock options granted to Dr. Adashi on October 31, 2010 and April 30, 2009 through December 31, 2016. The incremental grant date fair value attributable to the extension was $71,034 for the stock option granted on October 31, 2010 and $18,291 for the stock option granted on April 20, 2009. |
(6) | On September 18, 2013, the Compensation Committee of the Board of Directors extended the post- termination exercise period of stock options granted to Mr. Khederian on October 31, 2010 and October 31, 2007 through December 31, 2016. The incremental grant date fair value attributable to the extension was $71,034 for the stock option granted on October 31, 2010 and $67,368 for the stock option granted on October 31, 2007. |
(7) | On September 18, 2013, the Compensation Committee of the Board of Directors extended the post- termination exercise period of stock options granted to Mr. Townsend on October 31, 2010 and October 31, 2007 through December 31, 2016. The incremental grant date fair value attributable to the extension was $71,034 for the stock option granted on October 31, 2010 and $41,597 for the stock option granted on October 31, 2007. |
In May 2013, Radford provided the Compensation Committee with an analysis of our non-employee director compensation. After reviewing Radfords analysis, the Compensation Committee determined that the non-employee directors of the Company should continue to receive cash compensation of $70,000 annually beginning October 31, 2013, plus additional cash compensation for committee service as described in the table below, payable quarterly in arrears and subject to their continued service on our Board and any applicable committees. Each director was afforded a one-time right to receive, in lieu of all or part of her or his cash compensation through June 30, 2016, stock options of equal value calculated as described below.
Committee Chair (Total Additional Cash Compensation) |
||||
Audit |
$ | 24,000 | ||
Compensation |
$ | 18,000 | ||
Nominating and Corporate Governance |
$ | 18,000 | ||
Committee Members other than Chair (Total Additional Cash Compensation) |
||||
Audit |
$ | 15,000 | ||
Compensation |
$ | 10,000 | ||
Nominating and Corporate Governance |
$ | 10,000 |
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In addition to the cash compensation described above, on October 31, 2013, each of the then-serving non-employee directors received stock options to purchase a number of shares of our common stock calculated using a Black- Scholes model based on (i) an assumed aggregate value on the grant date equal to the sum of (a) $600,000, or $200,000 annually for the period June 30, 2013 through June 30, 2016 (pro-rated for newly-appointed directors to their appointment date), and (b) the total amount of any cash compensation foregone for that period at the election of the director, as described above, (ii) the closing price of our common stock on the New York Stock Exchange on the date of grant and (iii) management estimates of other Black-Scholes variables, including estimated life and volatility. These options have an exercise price equal to $33.73 per share, expire ten years after the date of grant and vest in three equal annual installments, beginning June 30, 2014.
On December 31, 2013, Dr. Benjamin received stock options to purchase a number of shares of our common stock calculated using a Black- Scholes model based on (i) an assumed aggregate value on the grant date equal to the sum of (a) $510,662, equal to $200,000 annually for the period June 30, 2013 through June 30, 2016 (pro-rated to her appointment date of December 11, 2013), and (b) $44,643 of cash compensation foregone by Dr. Benjamin, (ii) $36.20, the closing price of our common stock on the New York Stock Exchange on the date of grant of the stock option, and (iii) management estimates of other Black-Scholes variables, including estimated life and volatility. These options have an exercise price equal to $36.20 per share, expire ten years after the date of grant and vest in three equal annual installments, beginning June 30, 2014.
Employee directors do not receive compensation for their services as directors.
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Equity Compensation Plan Information
The following table furnishes information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2013.
Plan Category |
Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) |
Weighted-average Exercise Price of Outstanding Options, Warrants and Rights |
Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)(2)) |
|||||||||
Equity compensation plans approved by security holders |
10,337,398 | $ | 37.28 | 2,561,041 | (3) | |||||||
Equity compensation plans not approved by security holders |
105,000 | (4) | $ | 0.00 | | |||||||
Total |
10,442,398 | $ | 36.91 | 2,561,041 | (3) |
(1) | This table excludes an aggregate of 1,103,133 shares issuable upon exercise of outstanding options assumed by the Company in connection with various acquisition transactions. The weighted average exercise price of the excluded acquired options is $41.22. |
(2) | In addition to being available for future issuance upon exercise of options that may be granted after December 31, 2013, 1,076,558 shares under the 2010 Stock Option and Incentive Plan may instead be issued in the form of restricted stock, unrestricted stock, performance share awards or other equity-based awards. |
(3) | Includes 1,484,483 shares issuable under the Companys 2001 Employee Stock Purchase Plan. |
(4) | Represents shares issuable upon vesting of an RSU award issued as an inducement grant in connection with the appointment of Namal Nawana as our new Chief Operating Officer, effective December 30, 2012. |
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Independent Registered Public Accounting Firm
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Certain Relationships and Related Transactions, and Director Independence
Section 16(a) Beneficial Ownership Reporting Compliance
52
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EXPLANATORY NOTE: This Appendix A contains a copy of the Alere Inc. 2010 Stock Option and Incentive Plan, as proposed to be amended, as described in the proxy statement to which this Appendix A is attached.
ALERE INC.
2010 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Alere Inc. 2010 Stock Option and Incentive Plan (the Plan). The purpose of the Plan is to encourage and enable the officers, employees, Independent Directors and other key persons (including consultants) of Alere Inc. (the Company) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Companys welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Companys behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
Act means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
Administrator is defined in Section 2(a).
Award or Awards, except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent Rights.
Board means the Board of Directors of the Company.
Change of Control is defined in Section 18.
Code means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
Committee means the Committee of the Board referred to in Section 2.
Covered Employee means an employee who is a Covered Employee within the meaning of Section 162(m) of the Code.
Dividend Equivalent Right means Awards granted pursuant to Section 12.
Effective Date means the date on which the Plan is approved by stockholders as set forth in Section 20.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
Fair Market Value means the closing price for the Stock on any given date during regular trading, or if not trading on that date, such price on the last preceding date on which the Stock was traded, unless determined otherwise by the Administrator using such methods or procedures as it may establish.
Incentive Stock Option means any Stock Option designated and qualified as an incentive stock option as defined in Section 422 of the Code.
Independent Director means a member of the Board who is not also an employee of the Company or any Subsidiary.
Non-Qualified Stock Option means any Stock Option that is not an Incentive Stock Option.
Option or Stock Option means any option to purchase shares of Stock granted pursuant to Section 5.
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Outside Director means a current member of the Board who is: (i) not a current employee of the Company, (ii) not a former employee of the Company who receives compensation from the Company for prior services (other than benefits under a qualified retirement plan) during the taxable year, (iii) has not been an officer of the Company, and (iv) does not receive remuneration from the Company, either directly or indirectly in exchange for goods or services, in any capacity other than as a director, all as set out in detail in Treasury Regulation 1.162-27(e)(3).
Performance Criteria means the criteria that the Administrator selects for purposes of establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle. The Performance Criteria (which shall be applicable to the organizational level specified by the Administrator, including, but not limited to, the Company or a unit, division, group, or Subsidiary of the Company) that will be used to establish Performance Goals are limited to the following: (i) earnings before interest, taxes, depreciation and amortization; (ii) net income (loss) (either before or after interest, taxes, depreciation and/or amortization); (iii) changes in the market price of the Stock; (iv) cash flow; (v) funds from operations or similar measure; (vi) sales or revenue; (vii) acquisitions or strategic transactions; (viii) operating income (loss); (ix) return on capital, assets, equity, or investment; (x) total stockholder returns or total returns to stockholders; (xi) gross or net profit levels; (xii) productivity; (xiii) expense; (xiv) margins; (xv) operating efficiency; (xvi) customer satisfaction; (xvii) working capital; (xviii) earnings per share of Stock; or (xix) lease up performance, net operating income performance or yield on development or redevelopment communities, any of which under the preceding clauses (i) through (xix) may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group.
Performance Cycle means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantees right to and the payment of a Restricted Stock Award, Restricted Stock Units, or Performance Share Award. Each such period shall not be less than 12 months.
Performance Goals means, for a Performance Cycle, the specific goals established in writing by the Administrator for a Performance Cycle based upon the Performance Criteria.
Performance Share Award means Awards granted pursuant to Section 10.
Restricted Stock Award means Awards granted pursuant to Section 7.
Restricted Stock Units means Awards granted pursuant to Section 8.
Section 409A means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
Stock means the Common Stock, par value $0.001 per share, of the Company, subject to adjustments pursuant to Section 3.
Stock Appreciation Right means an Award granted pursuant to Section 6.
Subsidiary means any corporation or other entity (other than the Company) in which the Company owns at least a 50% interest or controls, either directly or indirectly.
Unrestricted Stock Award means any Award granted pursuant to Section 9.
SECTION 2. | ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS |
(a) Committee. The Plan shall be administered by either the Board or a committee of not less than two Independent Directors (in either case, the Administrator), as determined by the Board from time to time; provided that, (i) for purposes of Awards to Directors or Section 16 officers of the Company, the Administrator shall be deemed to include only Directors who are Independent Directors and no director who is not an Independent Director shall be entitled to vote or take action in connection with any such proposed Award and (ii) for purposes of Performance Based Awards, the Administrator shall be a committee of the Board composed of two or more Outside Directors.
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(b) Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent Rights or any combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan and Section 2(b)(v) below, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the form of written instruments evidencing the Awards; except that repricing of Stock Options shall not be permitted without shareholder approval and further provided that, other than by reason of, or in connection with, any death, disability, retirement, employment termination (without cause), or Change of Control, the Administrator shall not accelerate or waive any restriction period applicable to any outstanding Restricted Stock Award or any Restricted Stock Unit beyond the minimum restriction periods set forth in Section 7 and Section 8, respectively, nor shall the Administrator accelerate or amend the aggregate period over which any Performance Share Award is measured to less than one (1) year;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award consistent with Section 2(b)(iv) and further provided that, other than by reason of, or in connection with, any death, disability, retirement, employment termination (without cause), or Change of Control, the Administrator shall not accelerate the exercisability or vesting of unvested Stock Options or Stock Appreciation Rights which in the aggregate, when combined with the aggregate number of shares of Stock issued pursuant to Section 9, exceed ten percent (10%) of the maximum number of shares of stock reserved and available for issuance under the Plan pursuant to Section 3(a), as amended;
(vi) subject to the provisions of Section 5(a)(ii), to extend at any time the period in which Stock Options may be exercised;
(vii) to determine at any time whether, to what extent, and under what circumstances distribution or the receipt of Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the grantee and whether and to what extent the Company shall pay or credit amounts constituting interest (at rates determined by the Administrator) or dividends or deemed dividends on such deferrals;
(viii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration and operation of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration and operation of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan; and
(ix) to make any adjustments or modifications to Awards granted to participants who are working outside the United States and adopt any sub-plans as may be deemed necessary or advisable for participation of such participants, to fulfill the purposes of the Plan and/or to comply with applicable laws.
All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.
(c) Delegation of Authority to Grant Awards. The Administrator, in its discretion, may delegate to the Chief Executive Officer of the Company all or part of the Administrators authority and duties with respect to the granting of Awards at Fair Market Value, to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act or Covered Employees. Any such delegation by the Administrator shall include a limitation as to the amount of Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price of any Stock Option, the conversion ratio or price
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of other Awards and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrators delegate or delegates that were consistent with the terms of the Plan.
(d) Indemnification. Neither the Board nor the Committee, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Committee (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors and officers liability insurance coverage which may be in effect from time to time.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 9,153,663 shares, subject to adjustment as provided in Section 3(b) (the Pool). For purposes of this limitation, in respect of any shares of Stock under any Award which shares are forfeited, canceled, satisfied without the issuance of Stock, otherwise terminated, or, for shares of Stock issued pursuant to any unvested full value Award, reacquired by the Company at not more than the grantees purchase price (other than by exercise) (Unissued Shares), the number of shares of Stock that were removed from the Pool for such Unissued Shares shall be added back to the Pool. Notwithstanding the foregoing, upon the exercise of any Award to the extent that the Award is exercised through tendering previously owned shares or through withholding shares that would otherwise be awarded and to the extent shares are withheld for tax withholding purposes, the Pool shall be reduced by the gross number of shares of Stock being exercised without giving effect to the number of shares tendered or withheld. Subject to such overall limitation, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, (i) Stock Options or Stock Appreciation Rights with respect to no more than 1,000,000 shares of Stock may be granted to any one individual grantee during any one calendar year period and (ii) each share subject to a full value award settled in stockother than an Award that is a stock option or other award that requires the grantee to purchase shares for their fair market value at the time of grantwill reduce the number of shares in the Pool available for grant by three (3). The shares available for issuance from the Pool may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company and held in its treasury.
(b) Changes in Stock. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Companys capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for a different number or kind of securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual grantee, (iii) the maximum number of shares that may be granted under a Performance-Based Award, (iv) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (v) the repurchase price per share subject to each outstanding Restricted Stock Award, and (vi) the price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options or Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.
The Administrator may also adjust the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration material changes in accounting practices or
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principles, extraordinary dividends, acquisitions or dispositions of stock or property or any other event if it is determined by the Administrator that such adjustment is appropriate to avoid distortion in the operation of the Plan, provided that no such adjustment shall be made in the case of an Incentive Stock Option, without the consent of the grantee, if it would constitute a modification, extension or renewal of the Option within the meaning of Section 424(h) of the Code.
(c) Mergers and Other Transactions. In the case of and subject to the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation in which the outstanding shares of Stock are converted into or exchanged for a different kind of securities of the successor entity and the holders of the Companys outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iv) the sale of all of the Stock of the Company to an unrelated person or entity (in each case, a Sale Event), upon the effective time of the Sale Event, the Plan and all outstanding Awards granted hereunder shall terminate, unless provision is made in connection with the Sale Event in the sole discretion of the parties thereto for the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree (after taking into account any acceleration hereunder). In the event of such termination, each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights held by such grantee, including those that will become exercisable upon the consummation of the Sale Event; provided, however, that the exercise of Options and Stock Appreciation Rights not exercisable prior to the Sale Event shall be subject to the consummation of the Sale Event.
Notwithstanding anything to the contrary in this Section 3(c), in the event of a Sale Event pursuant to which holders of the Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the Sale Event, the Company shall have the right, but not the obligation, to make or provide for a cash payment to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the value as determined by the Administrator of the consideration payable per share of Stock pursuant to the Sale Event (the Sale Price) times the number of shares of Stock subject to outstanding Option and Stock Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation Rights.
(d) Substitute Awards. The Administrator may grant Awards under the Plan in substitution for stock and stock-based awards held by employees, directors or other key persons of another corporation in connection with the merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. Any substitute Awards granted under the Plan shall not count against the share limitation set forth in Section 3(a).
SECTION 4. ELIGIBILITY
Grantees under the Plan will be such full or part-time officers and other employees, Independent Directors and key persons (including consultants and prospective employees) of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a subsidiary corporation within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
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No Incentive Stock Option shall be granted under the Plan after July 14, 2020.
(a) Stock Options. Stock Options granted pursuant to this Section 5(a) shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionees election, subject to such terms and conditions as the Administrator may establish.
(i) Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than 10 years after the date the Stock Option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option is granted to such employee, the term of such Stock Option shall be no more than five years from the date of grant.
(iii) Exercisability; Rights of a Stockholder. Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. Subject to Section 2(b)(v), the Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods to the extent provided in the Option Award agreement:
(A) In cash, by certified or bank check or other instrument acceptable to the Administrator;
(B) Through the delivery (or attestation to the ownership) of shares of Stock that are not then subject to restrictions under any company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date;
(C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; or
(D) With respect to Stock Options that are not Incentive Stock Options, by a net exercise arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.
(E) Any other method permitted by the Administrator.
Payment instruments will be received subject to collection. The delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Option Award agreement or applicable provisions of laws. In the event an optionee chooses to pay the purchase
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price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of shares attested to.
(v) Annual Limit on Incentive Stock Options. To the extent required for incentive stock option treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
(b) Non-transferability of Options. No Stock Option shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution and all Stock Options shall be exercisable, during the optionees lifetime, only by the optionee, or by the optionees legal representative or guardian in the event of the optionees incapacity. Notwithstanding the foregoing, the Administrator, in its sole discretion, may provide in the Award agreement regarding a given Option that the optionee may transfer his Non-Qualified Stock Options to members of his immediate family, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Option.
(c) Form of Settlement. Shares of Stock issued upon exercise of a Stock Option shall be free of all restrictions under the Plan, except as otherwise provided in the Plan.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an Award entitling the recipient to receive shares of Stock having a value on the date of exercise calculated as follows: (i) the grant date exercise price of a share of Stock is (ii) subtracted from the Fair Market Value of the Stock on the date of exercise and (iii) the difference is multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.
For example, if the grant date exercise price is $10.00 and the Fair Market Value on the date of exercise is $20.00, the difference is $10.00. If the grantee is exercising the Stock Appreciation Right as to 100 shares of Stock, he or she will receive shares with a value on the exercise date of $1,000.00 ($20.00 $10.00 = $10.00. $10.00 x 100 = $1,000.00.) The grantee will receive 50 shares of stock. ($1,000.00 ÷ $20.00 = 50 shares.)
(b) Exercise Price of Stock Appreciation Rights. The exercise price of a Stock Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant.
(c) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.
(d) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Administrator. The term of a Stock Appreciation Right may not exceed ten years.
SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. A Restricted Stock Award is an Award entitling the recipient to acquire, at such purchase price as determined by the Administrator, shares of Stock subject to such restrictions and conditions as the Administrator may determine at the time of grant (Restricted Stock). Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The grant of a Restricted Stock Award is contingent on the grantee executing the Restricted Stock Award agreement. The terms and conditions of each such agreement shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.
(b) Rights as a Stockholder. Upon execution of a written instrument setting forth the Restricted Stock Award and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Stock, subject to such conditions contained in the written instrument evidencing the Restricted Stock Award. Unless the Administrator shall otherwise determine, certificates evidencing the
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Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company a stock power endorsed in blank.
(c) Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award agreement. If a grantees employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, the Company shall have the right to repurchase Restricted Stock that has not vested at the time of termination at its original purchase price, from the grantee or the grantees legal representative.
(d) Vesting of Restricted Stock. The Administrator at the time of grant shall specify the date or dates and/ or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Companys right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed vested. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 16 below, in writing after the Award agreement is issued, a grantees rights in any shares of Restricted Stock that have not vested shall automatically terminate upon the grantees termination of employment (or other service relationship) with the Company and its Subsidiaries and such shares shall be subject to the Companys right of repurchase as provided in Section 7(c) above.
(e) Restriction Period. Restricted Stock subject to vesting upon the attainment of performance goals or objectives shall vest after the attainment of the stated performance goals or objectives but only after a restricted period of at least one (1) year. All other Restricted Stock shall vest after a restriction period of not less than three (3) years; provided, however, that any Restricted Stock with a time-based restriction may become vested incrementally over such three-year period.
(f) Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock Award agreement may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock.
SECTION 8. RESTRICTED STOCK UNITS
(a) Nature of Restricted Stock Units. A Restricted Stock Unit is a bookkeeping entry representing the equivalent of one share of Stock for each Restricted Stock Unit awarded to a grantee and represents an unfunded and unsecured obligation of the Company. The Administrator shall determine the restrictions and conditions applicable to each Restricted Stock Unit at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The terms and conditions of each such Award agreement shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. Notwithstanding the foregoing, in the event that any such Restricted Stock Units granted to employees shall have a performance-based goal, the restriction period with respect to such Award shall not be less than one year, and in the event any such Restricted Stock Units granted to employees shall have a time-based restriction only (without any prior performance condition to the grant or vesting thereof), the total restriction period with respect to such Award shall not be less than three years; provided, however, that any Restricted Stock Units with a time-based restriction may become vested incrementally over such three-year period. At the end of the vesting period, the Restricted Stock Units, to the extent vested, shall be settled in the form of shares of Stock. To the extent that an award of Restricted Stock Units is subject to Section 409A, it may contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order for such Award to comply with the requirements of Section 409A.
(b) Election to Receive Restricted Stock Units in Lieu of Compensation. The Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of future cash compensation otherwise due to such grantee in the form of an award of Restricted Stock Units. Any such election shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the Administrator. Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of Restricted Stock Units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the
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grantee if such payment had not been deferred as provided herein. The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate. Any Restricted Stock Units that are elected to be received in lieu of cash compensation shall be fully vested, unless otherwise provided in the Award.
(c) Rights as a Stockholder. A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement of Restricted Stock Units; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the phantom stock units underlying his Restricted Stock Units, subject to such terms and conditions as the Administrator may determine.
(d) Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 16 below, in writing after the Award is issued, a grantees right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantees termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED STOCK AWARDS
(a) Grant or Sale of Unrestricted Stock. The Administrator may, in its sole discretion, grant (or sell at a purchase price determined by the Administrator) an Unrestricted Stock Award to any grantee, pursuant to which such grantee may receive shares of Stock free of any restrictions (Unrestricted Stock) under the Plan. Unrestricted Stock Awards may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to such participant. The aggregate number of shares of Stock issuable pursuant to this Section 9, when combined with the number of shares of underlying unvested Stock Options accelerated pursuant to Section 2(b)(v) other than by reason of, or in connection with, any death, disability, retirement, employment termination, or Change of Control, is limited to ten percent (10%) of the maximum number of shares of Stock reserved and available for issuance under the Plan pursuant to Section 3(a), as amended.
(b) Elections to Receive Unrestricted Stock in Lieu of Compensation. Upon the request of a grantee and with the consent of the Administrator, each grantee may, pursuant to an advance written election delivered to the Company no later than the date specified by the Administrator, receive a portion of the cash compensation otherwise due to such grantee in the form of shares of Unrestricted Stock (valued at Fair Market Value on the date or dates the cash compensation would otherwise be paid) either currently or on a deferred basis.
(c) Restrictions on Transfers. The right to receive shares of Unrestricted Stock on a deferred basis may not be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution.
SECTION 10. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. A Performance Share Award is an Award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals. The Administrator may make Performance Share Awards independent of or in connection with the granting of any other Award under the Plan. The Administrator in its sole discretion shall determine whether and to whom Performance Share Awards shall be made, the performance goals, the periods during which performance is to be measured (which in the aggregate shall not be less than one (1) year), and all other limitations and conditions.
(b) Restrictions of Transfer. Performance Share Awards, and all rights with respect to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered.
(c) Rights as a Stockholder. A grantee receiving a Performance Share Award shall have the rights of a stockholder only as to shares actually received by the grantee under the Plan and not with respect to shares subject to the Award but not actually received by the grantee. A grantee shall be entitled to receive a stock certificate evidencing the acquisition of shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share Award agreement (or in a performance plan adopted by the Administrator).
(d) Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 16 below, in writing after the Award agreement is issued, a grantees rights in all
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Performance Share Awards shall automatically terminate upon the grantees termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 11. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES
(a) Performance-Based Awards. A Performance-Based Award means any Restricted Stock Award, Restricted Stock Units, or Performance Share Award granted to a Covered Employee that is intended to qualify as performance-based compensation under Section 162(m) of the Code and any regulations appurtenant thereto. Any employee or other key person providing services to the Company and who is selected by the Administrator may be granted one or more Performance-Based Awards in the form of a Restricted Stock Award, Restricted Stock Units or Performance Share Awards payable upon the attainment of Performance Goals that are established by the Administrator and related to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Administrator. The Administrator shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for any Performance Cycle. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall company performance or the performance of a division, business unit, or an individual. The Administrator, in its discretion, may adjust or modify the calculation of Performance Goals for such Performance Cycle in order to prevent the dilution or enlargement of the rights of an individual (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development, (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or (iii) in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions provided however, that the Administrator may not exercise such discretion in a manner that would increase the Performance-Based Award granted to a Covered Employee. Each Performance-Based Award shall comply with the provisions set forth below.
(b) Grant of Performance-Based Awards. With respect to each Performance-Based Award granted to a Covered Employee, the Administrator shall select, within the first 90 days of a Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the Performance Criteria for such grant, and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award). Each Performance- Based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets. The Performance Criteria established by the Administrator may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to different Covered Employees.
(c) Payment of Performance-Based Awards. Following the completion of a Performance Cycle, the Administrator shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-Based Awards earned for the Performance Cycle. The Administrator shall then determine the actual size of each Covered Employees Performance-Based Award, and, in doing so, may reduce or eliminate the amount of the Performance-Based Award for a Covered Employee if, in its sole judgment, such reduction or elimination is appropriate.
(d) Maximum Award Payable. The maximum Performance-Based Award payable to any one Covered Employee under the Plan for a Performance Cycle is 200,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof).
SECTION 12. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on cash dividends that would be paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares were held by the recipient. A Dividend Equivalent Right may be granted hereunder to any participant, as a component of another Award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the grant. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any
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such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other award. A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other award.
(b) Interest Equivalents. Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide in the grant for interest equivalents to be credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the grant.
SECTION 13. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes taxable, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Companys obligation to deliver stock certificates to any grantee is subject to and conditioned on tax obligations being satisfied by the grantee. The Companys obligation to deliver stock certificates to any grantee is subject to and is conditioned on tax obligations being satisfied by the grantee.
(b) Payment in Stock. If provided in the instrument evidencing an Award, the Company may elect to have the minimum required tax withholding obligation satisfied, in whole or in part, by (i) withholding from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) allowing a grantee to transfer to the Company shares of Stock owned by the grantee with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due.
SECTION 14. SECTION 409A AWARDS
To the extent that any Award is determined to constitute nonqualified deferred compensation within the meaning of Section 409A (a 409A Award), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A. In this regard, if any amount under a 409A Award is payable upon a separation from service (within the meaning of Section 409A) to a grantee who is then considered a specified employee
(within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantees separation from service, or (ii) the grantees death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any 409A Award may not be accelerated or postponed except to the extent permitted by Section 409A.
SECTION 15. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employees right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.
SECTION 16. AMENDMENTS AND TERMINATION
Subject to requirements of law or any stock exchange or similar rules which would require a vote of the Companys shareholders, the Board may, at any time, amend or discontinue the Plan and the Administrator may,
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at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holders consent. If and to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, if and to the extent intended to so qualify, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 16 shall limit the Administrators authority to take any action permitted pursuant to Section 3(c).
SECTION 17. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Companys obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.
SECTION 18. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section 18:
(a) Each outstanding Stock Option shall automatically become fully exercisable.
(b) Except as otherwise provided in the applicable Award Agreement, conditions and restrictions on each outstanding Restricted Stock Award, Restricted Stock Unit and Performance Share Award will be removed.
(c) Change of Control shall mean the occurrence of any one of the following events:
(i) any Person, as such term is used in Sections 13(d) and 14(d) of the Act (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all affiliates and associates (as such terms are defined in Rule 12b-2 under the Exchange Act) of such person, shall become the beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing in excess of 50% of either (A) the combined voting power of the Companys then outstanding securities having the right to vote in an election of the Companys Board of Directors (Voting Securities) or (B) the then outstanding shares of Stock of the Company (in either such case other than as a result of an acquisition of securities directly from the Company); or
(ii) persons who, as of the Effective Date, constitute the Companys Board of Directors (the Incumbent Directors) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the Effective Date shall be considered an Incumbent Director if such persons election was approved by or such person was nominated for election by either (A) a vote of at least a majority of the Incumbent Directors or (B) a vote of at least a majority of the Incumbent Directors who are members of a nominating committee comprised, in the majority, of Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or
(iii) the consummation of a consolidation, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a Corporate Transaction); excluding, however, a
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Corporate Transaction in which the stockholders of the Company immediately prior to the Corporate Transaction, would, immediately after the Corporate Transaction, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than 80% of the voting shares of the corporation issuing cash or securities in the Corporate Transaction (or of its ultimate parent corporation, if any); or
(iv) the approval by the stockholders of any plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Voting Securities beneficially owned by any person in excess of 50% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns in excess of 50% of the combined voting power of all then outstanding Voting Securities, then a Change of Control shall be deemed to have occurred for purposes of the foregoing clause (i).
SECTION 19. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements. The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange or similar requirements, whether located in the United States or a foreign jurisdiction, have been satisfied. The Administrator may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate.
No Award under the Plan shall be a nonqualified deferred compensation plan, as defined in Code Section 409A, unless such Award meets in form and in operation the requirements of Code Section 409A(a)(2),(3), and (4).
(b) Delivery of Stock Certificates. Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantees last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.
(d) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to such companys insider trading policy, as in effect from time to time.
(e) Forfeiture of Awards under Sarbanes-Oxley Act. 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, then, to the extent required by law, any grantee who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any Award received by such individual under the Plan during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission, as the case may be, of the financial document embodying such financial reporting requirement.
(f) Loans to Grantees. The Company shall have the authority to make loans to grantees of Awards hereunder (including to facilitate the purchase of shares) and shall further have the authority to issue shares for promissory notes hereunder.
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(g) Designation of Beneficiary. At the discretion of the Administrator the instrument evidencing an Award may permit the grantee to designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantees death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantees estate.
SECTION 20. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a majority of the shares of Stock of the Company present or represented and entitled to vote at a meeting of stockholders at which a quorum is present or by written consent of the stockholders. Subject to such approval by the stockholders, Stock Options and other Awards may be granted hereunder on and after adoption of this Plan by the Board.
SECTION 21. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.
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EXPLANATORY NOTE: This Appendix B contains a copy of the Alere Inc. 2001 Employee Stock Purchase Plan, as previously amended, and as proposed to be amended by Proposal 3 included in the proxy statement to which this Appendix B is attached.
ALERE INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
The purpose of the Alere Inc. 2001 Employee Stock Purchase Plan (the Plan) is to provide eligible employees of Alere Inc. (the Company) and certain of its subsidiaries with opportunities to purchase shares of the Companys common stock, par value $0.001 per share (the Common Stock). Five million (5,000,000) shares of Common Stock in the aggregate have been approved and reserved for this purpose. The Plan is intended to constitute an employee stock purchase plan within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended (the Code), and shall be interpreted in accordance with that intent.
1. Administration. The Plan will be administered by the person or persons (the Administrator) appointed by the Companys Board of Directors (the Board) for such purpose. The Administrator has authority to make rules and regulations for the administration of the Plan, and its interpretations and decisions with regard thereto shall be final and conclusive. No member of the Board or individual exercising administrative authority with respect to the Plan shall be liable for any action or determination made in good faith with respect to the Plan or any option granted hereunder.
2. Offerings. The Company will make one or more offerings to eligible employees to purchase Common Stock under the Plan (Offerings). Unless otherwise determined by the Administrator, the initial Offering will begin on January 1, 2002 and will end on the following June 30, 2002 (the Initial Offering). Thereafter, unless otherwise determined by the Administrator, an Offering will begin on the first business day occurring on or after each January 1 and July 1 and will end on the last business day occurring on or before the following June 30 and December 31, respectively. The Administrator may, in its discretion, designate a different period for any Offering, provided that no Offering shall exceed one year in duration. The Board may also commence a special Offering for employees of Designated Subsidiaries who are eligible to participate in the Plan that will begin on the date that an acquired company is acquired or becomes a Designated Subsidiary, and will end on the next June 30 or December 31, which ever shall occur first.
3. Eligibility. All employees of the Company (including employees who are also directors of the Company) and all employees of each Designated Subsidiary (as defined in Section 11) are eligible to participate in any one or more of the Offerings under the Plan, provided that as of the first day of the applicable Offering (the Offering Date) they are customarily employed by the Company or a Designated Subsidiary for more than 20 hours a week and have completed at least three (3) consecutive calendar months of employment with the Company or any Designated Subsidiary (including periods of employment with the Designated Subsidiary which pre-date such designation and/or the acquisition of the Designated Subsidiary by the Company or any subsidiary thereof). To the extent that a subsidiary of the Company was made a Designated Subsidiary subsequent to an acquisition pursuant to which a substantial amount of assets was acquired by such Designated Subsidiary, whether via a merger, asset acquisition or otherwise, employment with any legal predecessor entity or any entity transferring assets to the Designated Subsidiary as part of such acquisition shall be counted as employment with the Designated Subsidiary.
4. Participation. An employee eligible on any Offering Date, who is not, as of such date, participating in another Offering of the Company, may participate in such Offering by submitting an enrollment form to his appropriate payroll location at least 10 business days before the Offering Date (or by such other deadline as shall be established for the Offering). An employee who does not enroll in accordance with these procedures will be deemed to have waived his right to participate. Unless an employee files a new enrollment form or withdraws from the Plan, his deductions and purchases will continue at the same percentage of Compensation for future Offerings, provided he remains eligible. Notwithstanding the foregoing, participation in the Plan will neither be permitted nor be denied contrary to the requirements of the Code.
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5. Employee Contributions. Each eligible employee may authorize payroll deductions at a minimum of two percent (2%) up to a maximum of ten percent (10%) of his Compensation for each pay period. The Company will maintain book accounts showing the amount of payroll deductions made by each participating employee for each Offering. No interest will accrue or be paid on payroll deductions.
6. Deduction Changes. An employee may not increase his payroll deduction during any Offering. An employee generally may not decrease his payroll deduction during an Offering, but may terminate his payroll deduction for the remainder of the Offering, either with or without withdrawing from the Offering under Section 7. To terminate his payroll deduction without withdrawing from the Offering, an employee must submit written notice at least ten (10) business days (or such shorter period as shall be established) before the payroll date on which the change becomes effective. Subject to the requirements of Sections 4 and 5, an employee may either increase or decrease his payroll deduction with respect to the next Offering by filing a new enrollment form at least ten (10) business days before the next Offering Date (or by such other deadline as shall be established for the Offering). An employee who has terminated his payroll deduction during an Offering must submit a new enrollment form in order to participate in a subsequent Offering.
7. Withdrawal. An employee may withdraw from participation in an Offering by delivering a written notice of withdrawal to his appropriate payroll location no later than two (2) business days prior to the Exercise Date (as defined below) of such Offering. The employees withdrawal will be effective as of the next business day. Following an employees withdrawal, the Company will promptly refund to him his entire account balance under the Plan (after payment for any Common Stock purchased before the effective date of withdrawal). Partial withdrawals are not permitted. The employee may not begin participation again during the remainder of the Offering and is deemed to have withdrawn from the Plan. The employee may enroll in a subsequent Offering in accordance with Section 4.
8. Grant of Options. On each Offering Date, the Company will grant to each eligible employee who is then a participant in the Plan an option (Option) to purchase on the last day of such Offering (the Exercise Date), at the Option Price hereinafter provided for, (a) a number of shares of Common Stock, which number shall be the number of shares (rounded down to the nearest whole share) which is obtained by (i) multiplying $25,000 by the quotient obtained by dividing the number of months in the Offering by 12, and (ii) dividing that product by the Fair Market Value of the Common Stock on the Offering Date, or (b) such other lesser maximum number of shares as shall have been established by the Administrator in advance of the Offering; provided, however, that such Option shall be subject to the limitations set forth below. The purchase price for each share purchased under each Option (the Option Price) will be 85% of the Fair Market Value of the Common Stock on the Offering Date or the Exercise Date, whichever is less. Each employees Option shall be exercisable only to the extent of such employees accumulated payroll deductions on the relevant Exercise Date.
Notwithstanding the foregoing, no employee may be granted an option hereunder if such employee, immediately after the option was granted, would be treated as owning stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary (as defined in Section 11). For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of an employee, and all stock which the employee has a contractual right to purchase shall be treated as stock owned by the employee. In addition, no employee may be granted an Option which permits his rights to purchase stock under the Plan, and any other employee stock purchase plan of the Company and its Parents and Subsidiaries, to accrue at a rate which exceeds $25,000 of the fair market value of such stock (determined on the option grant date or dates) for each calendar year in which the Option is outstanding at any time. The purpose of the limitation in the preceding sentence is to comply with Section 423(b)(8) of the Code and shall be applied taking Options into account in the order in which they were granted.
9. Exercise of Option and Purchase of Shares. Each employee who continues to be a participant in the Plan on the Exercise Date shall be deemed to have exercised his Option on such date and shall acquire from the Company such number of whole shares of Common Stock reserved for the purpose of the Plan as his accumulated payroll deductions on such date will purchase at the Option Price, subject to any other limitations contained in the Plan. Any amount remaining in an employees account at the end of an Offering solely by reason of the inability to purchase a fractional share will be carried forward to the next Offering; any other balance remaining in an employees account at the end of an Offering will be refunded to the employee promptly.
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10. Issuance of Certificates. Certificates representing shares of Common Stock purchased under the Plan may be issued only in the name of the employee, in the name of the employee and another person of legal age as joint tenants with rights of survivorship, or in the name of a broker authorized by the employee to be his, or their, nominee for such purpose.
11. | Definitions. |
The term Compensation means the amount of gross base pay and commissions, prior to salary reduction pursuant to Sections 125, 132(f) or 401(k) of the Code, but excluding overtime, incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances or travel expenses, income or gains on the exercise of Company stock options, and similar items.
The term Designated Subsidiary means any present or future Subsidiary (as defined below) that has been designated by the Board to participate in the Plan. The Board may so designate any Subsidiary, or revoke any such designation, at any time and from time to time, either before or after the Plan is approved by the stockholders.
The term Fair Market Value of the Common Stock on any given date means the fair market value of the Common Stock determined in good faith by the Administrator; provided, however, that if the Common Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (NASDAQ) or national securities exchange, the determination shall be made by reference to market quotations. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations.
The term Parent means a parent corporation with respect to the Company, as defined in Section 424(e) of the Code.
The term Subsidiary means a subsidiary corporation with respect to the Company, as defined in Section 424(f) of the Code.
12. Rights on Termination of Employment. If a participating employees employment terminates for any reason before the Exercise Date for any Offering, no payroll deduction will be taken from any pay due and owing to the employee and the balance in his account will be paid to him or, in the case of his death, to his designated beneficiary as if he had withdrawn from the Plan under Section 7. An employee will be deemed to have terminated employment, for this purpose, if the corporation that employs him, having been a Designated Subsidiary, ceases to be a Subsidiary, or if the employee is transferred to any corporation other than the Company or a Designated Subsidiary. An employee will not be deemed to have terminated employment, for this purpose, if the employee is on an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employees right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise provides in writing.
13. Special Rules. Notwithstanding anything herein to the contrary, the Administrator may adopt special rules applicable to the employees of a particular Designated Subsidiary, whenever the Administrator determines that such rules are necessary or appropriate for the implementation of the Plan in a jurisdiction where such Designated Subsidiary has employees; provided that such rules are consistent with the requirements of Section 423(b) of the Code. Such special rules may include (by way of example, but not by way of limitation) the establishment of a method for employees of a given Designated Subsidiary to fund the purchase of shares other than by payroll deduction, if the payroll deduction method is prohibited by local law or is otherwise impracticable. Any special rules established pursuant to this Section 13 shall, to the extent possible, result in the employees subject to such rules having substantially the same rights as other participants in the Plan. The Administrator may also adopt sub-plans applicable to particular Designated Subsidiaries or locations, which sub- plans may be designed to be outside the scope of Section 423. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of the number of shares of Common Stock approved and reserved for use under the Plan, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.
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14. Optionees Not Stockholders. Neither the granting of an Option to an employee nor the deductions from his pay shall constitute such employee a holder of the shares of Common Stock covered by an Option under the Plan unless and until such shares have been purchased by and issued to him.
15. Rights Not Transferable. Rights under the Plan are not transferable by a participating employee other than by will or the laws of descent and distribution, and are exercisable during the employees lifetime only by the employee.
16. Application of Funds. All funds received or held by the Company under the Plan may be combined with other corporate funds and may be used for any corporate purpose.
17. Adjustment in Case of Changes Affecting Common Stock. In the event of a subdivision of outstanding shares of Common Stock, or the payment of a dividend in Common Stock, the number of shares approved for the Plan, and the share limitation set forth in Section 8, shall be increased proportionately, and such other adjustment shall be made as may be deemed equitable by the Administrator. In the event of any other change affecting the Common Stock, such adjustment shall be made as may be deemed equitable by the Administrator to give proper effect to such event.
18. Amendment of the Plan. The Board may at any time, and from time to time, amend the Plan in any respect, except that without the approval, within 12 months of such Board action, by the stockholders, no amendment shall be made increasing the number of shares approved for the Plan or making any other change that would require stockholder approval in order for the Plan, as amended, to qualify as an employee stock purchase plan under Section 423(b) of the Code.
19. Insufficient Shares. If the total number of shares of Common Stock that would otherwise be purchased on any Exercise Date plus the number of shares purchased under previous Offerings under the Plan exceeds the maximum number of shares issuable under the Plan, the shares then available shall be apportioned among participants in proportion to the amount of payroll deductions accumulated on behalf of each participant that would otherwise be available to be used to purchase Common Stock on such Exercise Date.
20. Termination of the Plan. The Plan may be terminated at any time by the Board. Upon termination of the Plan, all amounts in the accounts of participating employees shall be promptly refunded.
21. Governmental Regulations. The Companys obligation to sell and deliver Common Stock under the Plan is subject to obtaining all governmental approvals required in connection with the authorization, issuance, or sale of such stock.
The Plan shall be governed by Delaware law except to the extent that such law is preempted by federal law.
22. Issuance of Shares. Shares may be issued upon exercise of an Option from authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any other proper source.
23. Tax Withholding. Participation in the Plan is subject to any minimum required tax withholding on income of the participant in connection with the Plan. Each employee agrees, by entering the Plan, that the Company and its Subsidiaries shall have the right to deduct any such taxes from any payment of any kind otherwise due to the employee, including shares issuable under the Plan.
24. Notification Upon Sale of Shares. Each employee agrees, by entering the Plan, to give the Company prompt notice of any disposition of shares purchased under the Plan where such disposition occurs within two years after the date of grant of the Option pursuant to which such shares were purchased.
25. Effective Date and Approval of Shareholders. The Plan shall take effect on the later of the date it is adopted by the Board and the date it is approved by the holders of a majority of the votes cast at a meeting of stockholders at which a quorum is present or by written consent of the stockholders.
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FIFTH AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF ALERE INC.
PURSUANT TO SECTION 242
OF THE GENERAL CORPORATION LAW OF
THE STATE DELAWARE
Alere Inc., a corporation organized and existing under the laws of the State of Delaware (the Corporation), hereby certifies:
The Board of Directors of the Corporation, by vote of its members, duly adopted, pursuant to Section 242 of the Delaware General Corporation Law (the DGCL), an amendment to the Amended and Restated Certificate of Incorporation of the Corporation filed with the Delaware Secretary of State on November 19, 2001, as amended, and declared said amendment to be advisable. The amendment was duly adopted by the affirmative vote of the stockholders in accordance with the provisions of Section 242 of the DGCL. The amendment is as follows.
RESOLVED: That the second paragraph of Article V of the Amended and Restated Certificate of Incorporation of the Corporation be amended to read as follows:
Special Meetings. Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called by (i) the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office or (ii) stockholders holding in the aggregate not less than twenty five percent (25%) of the total voting power of the shares of stock of the Corporation, as calculated in accordance with the By-laws of the Corporation. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.
RESOLVED: That Section 4 of Article VI of the Amended and Restated Certificate of Incorporation be amended to read as follows:
4. Vacancies. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect Directors and to fill vacancies in the Board of Directors relating thereto, any and all vacancies in the Board of Directors, except for a vacancy caused by the removal of a director by the stockholders without cause, however occurring, including, without limitation, by reason of an increase in the size of the Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely and exclusively by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board of Directors, and not by the stockholders. Any vacancy occurring as a result of the removal of a director by the stockholders without cause shall be filled by the stockholders. Any Director appointed or elected in accordance with this section shall hold office for a term expiring at the next annual meeting of stockholders (or special meeting in lieu thereof) and until such Directors successor shall have been duly elected and qualified or until his or her earlier death, resignation, disqualification or removal. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, shall exercise the powers of the full Board of Directors until the vacancy is filled.
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IN WITNESS WHEREOF, the Corporation has caused this Fifth Amendment to the Amended and Restated Certificate of Incorporation to be executed on its behalf by its , , as of this day of , 2014.
Alere Inc.
By:
Name:
Title:
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ARTICLE I, SECTIONS 2-3
OF THE
AMENDED AND RESTATED BY-LAWS OF ALERE INC.
(to become effective only upon stockholder approval of the Special Meeting Proposal)
SECTION 2. Special Meetings.
(a) Except as otherwise required by statute or the Amended and Restated Certificate of Incorporation of the Corporation (as amended or restated from time to time, the Certificate) and subject to the rights, if any, of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called only (i) by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office or (ii) at the request of stockholders of the Corporation in accordance with Section 2(b).
(b) This Section 2(b) is the exclusive means by which one or more stockholders of the Corporation may request the calling of a special meeting of the stockholders of the Corporation. A special meeting of the stockholders of the Corporation shall be called by the Secretary of the Corporation upon the delivery to the Secretary of the Corporation at the principal executive offices of the Corporation of a written request of one or more stockholders who are stockholders of record at the time the request is delivered holding Net Long Shares (as defined and determined in accordance with this Section 2(b)) representing in the aggregate not less than twenty-five percent (25%) of the total voting power of the shares of common stock of the Corporation outstanding and entitled to vote on the matter or matters to be brought before the proposed special meeting (the Requisite Percentage), and who have held Net Long Shares constituting at least the Requisite Percentage continuously for a period of at least one (1) year prior to the date of delivery of such request (the One-Year Period). For purposes of this Section 2(b) and for determining the Requisite Percentage, the Net Long Shares with respect to each stockholder of record or beneficial owner, if any, on whose behalf the request is being made (each such record or beneficial owner, a Requesting Stockholder) shall be limited to the number of shares of common stock of the Corporation beneficially owned, directly or indirectly, by the Requesting Stockholder that constitute such Requesting Stockholders net long position as defined in Rule 14e-4 under the Securities Exchange Act of 1934, as amended (the Exchange Act), or any successor provision, provided that (x) for purposes of such definition, in determining such Requesting Stockholders short position, the reference in such Rule to (A) the date that a tender offer is first publicly announced or otherwise made known by the bidder to holders of the security to be acquired shall be the date on which the special meeting request is delivered to the Secretary of the Corporation, (B) the highest tender offer price or stated amount of the consideration offered for the subject security shall refer to the closing sale price of the Corporations common stock on the principal stock exchange on which such common stock is traded on such date (or, if such date is not a trading day, the next succeeding trading day), (C) the person whose securities are the subject of the offer shall refer to the Corporation and (D) the subject security shall refer to the common stock of the Corporation; and (y) to the extent not covered by such Rule, the net long position of such Requesting Stockholder shall be reduced by the number of shares as to which such Requesting Stockholder does not, or will not, have the right to vote or direct the vote at such special meeting or as to which such Requesting Stockholder has, at any time during the One-Year Period, entered into any derivative or other agreement, arrangement or understanding that hedges or transfers, in whole or in part, directly or indirectly, any of the economic consequences of ownership of such shares. In addition, to the extent any affiliate or affiliates of the Requesting Stockholder are acting in concert with the Requesting Stockholder with respect to the calling of the special meeting, the determination of Net Long Shares may include the effect of aggregating the Net Long Shares (including any negative number) of such affiliate or affiliates. The Net Long Shares of each Requesting Stockholder shall be determined in good faith by the Board of Directors, which determination shall be conclusive and binding on the Corporation and the stockholders. The date of delivery of the special meeting request shall be the first date on which valid special meeting requests constituting the Requisite Percentage have been delivered to the Secretary of the Corporation. A request to the Secretary of the Corporation for a special meeting of stockholders shall only be valid if signed and dated by each Requesting
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Stockholder, or a duly authorized agent of such Requesting Stockholder, and only if accompanied by (i) a notice in proper written form setting forth the information that would be required by paragraph (a) of Section 3 of this Article I in order to propose at an annual meeting the matters proposed to be brought before the special meeting; (ii) a representation by the Requesting Stockholders that within five (5) business days after the record date for any such special meeting they will provide such information as of the record date for such special meeting; (iii) documentary evidence that the Requesting Stockholders hold and have held Net Long Shares constituting the Requisite Percentage as of the date on which the request is delivered to the Secretary of the Corporation and continuously during the One-Year Period; provided, however, that if the stockholders of record requesting the special meeting are not the beneficial owners of the Net Long Shares representing the Requisite Percentage, the request must also include documentary evidence (or, if not simultaneously provided with the special meeting request, such documentary evidence must be delivered to the Corporation within ten (10) days after the date of delivery of the special meeting request to the Secretary of the Corporation) that the beneficial owners on whose behalf the request is being made beneficially own and have beneficially owned Net Long Shares constituting the Requisite Percentage as of the date on which the request is delivered to the Secretary of the Corporation and continuously during the One-Year Period; and (iv) an agreement by the Requesting Stockholders to notify the Corporation promptly and in reasonable detail of any decrease in the number of Net Long Shares held by the Requesting Stockholders (and, if any affiliate or affiliates of a Requesting Stockholder are acting in concert with any Requesting Stockholder with respect to the calling of the special meeting, any such affiliate or affiliates) following delivery of the special meeting request and an acknowledgment by the Requesting Stockholders that any such decrease prior to the special meeting shall be deemed a revocation of such request to the extent of such decrease. A special meeting requested by stockholders shall be held at such hour, date and place within or without the United States which is fixed by the Board of Directors; provided, however, that the date of any such special meeting shall not be more than ninety (90) days after the request to call the special meeting is received by the Secretary of the Corporation. Notwithstanding the foregoing, a special meeting requested by stockholders shall not be held if (i) the stated business to be brought before the special meeting is not a proper subject for action by stockholders under applicable law, (ii) the special meeting request was delivered during the period commencing ninety (90) days prior to the first anniversary of the preceding years Annual Meeting and ending on the earlier of (A) the date of the next Annual Meeting and (B) thirty (30) days after the first anniversary of the preceding years Annual Meeting, (iii) the Board of Directors has called or calls for a meeting of stockholders to be held within ninety (90) days after the Secretary of the Corporation receives the request for the special meeting and the Board of Directors determines in good faith that the business of such meeting includes (among any other matters properly brought before the meeting) substantially the same business specified in the request or (iv) an annual or special meeting that included substantially the same business specified in the request (as determined in good faith by the Board of Directors) was held not more than ninety (90) days before the request to call the special meeting was received by the Secretary of the Corporation. A stockholder may revoke a request for a special meeting at any time by written revocation delivered to the Secretary of the Corporation, and if, following any such revocation (or any deemed revocation), there are unrevoked requests from stockholders holding in the aggregate less than the Requisite Percentage, the Board of Directors, in its discretion, may cancel the special meeting. Business transacted at a special meeting requested by stockholders shall be limited to the purpose(s) stated in the request for meeting, provided, however, that the Board of Directors shall have the authority in its discretion to submit additional matters to the stockholders (including director nominations), and to cause other business to be transacted, at any special meeting requested by stockholders.
(c) Only those matters set forth in the Corporations notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.
SECTION 3. Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an Annual Meeting (a) pursuant to the Corporations notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for
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in this Section 3, who is entitled to vote at the meeting, who is present (in person or by proxy) at the meeting and who complies with the notice procedures set forth in this Section 3. In addition to the other requirements set forth in these By-laws, for any proposal of business to be considered at an Annual Meeting, it must be a proper subject for action by stockholders of the Corporation under applicable law.
(2) For nominations or other business to be properly brought before an Annual Meeting by a stockholder pursuant to clause (c) of paragraph (a)(1) of this Section 3, the stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholders notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding years Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is advanced by more than 30 days before or delayed by more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such Annual Meeting and not later than the close of business on the later of the 90th day prior to such Annual Meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. To be in proper written form, such stockholders notice shall set forth or include: (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, or any successor provision, (ii) such persons written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and (iii) a description of any agreement, arrangement or understanding relating to any direct or indirect compensation, reimbursement or indemnification in connection with such persons service or action as a director; (b) as to any other business that the stockholder proposes to bring before the meeting, (i) a brief description of the business desired to be brought before the meeting, (ii) the reasons for conducting such business at the meeting, (iii) the text of the proposal (including the exact text of any resolutions proposed for consideration and, if such business includes a proposal to amend the By-laws, the exact text of the proposed amendment) and (iv) any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and any affiliate or associate of each such person; (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporations books, and of such beneficial owner, (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner as of the date of the notice and a representation that the stockholder will notify the Corporation in writing within five (5) business days after the record date for such meeting of the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner as of the record date for the meeting, and (iii) a representation that the stockholder intends to be present in person or by proxy at the meeting to propose such nomination or other business; (d) as to the stockholder giving the notice or, if the notice is given on behalf of a beneficial owner on whose behalf the nomination or proposal is made, as to such beneficial owner, (i) a description of any agreement, arrangement or understanding (whether or not in writing) with respect to the nomination or other business between or among such stockholder or beneficial owner or any affiliate or associate of such person and any other person, including without limitation the names and addresses of such other person(s) and any agreements that would be required to be described or reported pursuant to Item 5 or Item 6 of Schedule 13D (or any successor provision, and regardless of whether the requirement to file a Schedule 13D is applicable to the stockholder or beneficial owner) and a representation that the stockholder will notify the Corporation in writing within five (5) business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting, (ii) a description of any agreement, arrangement or understanding (whether or not in writing, and including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares, regardless of whether settled in shares or cash) that has been entered into as of the date of the stockholders notice by, or on behalf of, such stockholder or beneficial owner, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class of the Corporations capital stock, or increase or decrease the voting power of the stockholder or beneficial owner with respect to
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shares of stock of the Corporation, including the notional number of shares that are the subject of such agreement, arrangement or understanding, and a representation that the stockholder will notify the Corporation in writing within five (5) business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting, (iii) a statement as to whether the stockholder or beneficial owner will engage in a solicitation with respect to such nomination or proposal and, if so, the name of each participant (as defined in Item 4 of Schedule 14A under the Exchange Act, or any successor provision) in such solicitation and whether such person or group intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporations outstanding capital stock required to elect a director to be nominated by the stockholder or approve or adopt the business to be proposed by the stockholder and (iv) all information relating to such stockholder or beneficial owner that is required to be disclosed in solicitations of proxies for the election of directors in an election contest and/or the proposal to be made, as the case may be, in each case pursuant to Regulation 14A under the Exchange Act or any successor provision; (v) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, such stockholders and beneficial owners written consent to the public disclosure of information provided to the Corporation in connection with such notice. A nomination or proposal shall be deemed not to be made on behalf of a beneficial owner if such beneficial owner (i) is not the stockholder making the nomination or proposal, (ii) is not a person that directed, requested or suggested that the nomination or proposal be made, (iii) is not a participant (as defined in Item 4 of Schedule 14A under the Exchange Act, or any successor provision) in the solicitation with respect to the nomination or proposal, (iv) is not an affiliate or associate of any of the foregoing persons, (v) is not acting in concert with any of the foregoing persons with respect to the nomination or proposal and (vi) does not have any agreement, arrangement or understanding (whether or not in writing) relating specifically, expressly or primarily to such nomination or proposal or the Corporation with any of the foregoing persons.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 3 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 85 days prior to the first anniversary of the preceding years Annual Meeting, a stockholders notice required by this Section 3 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.
(b) General Provisions Applicable to Annual or Special Meetings of Stockholders.
(1) Only such persons who are nominated in accordance with the provisions of these By-laws shall be eligible for election and to serve as directors and only such business shall be conducted at any annual or special meeting of stockholders as shall have been brought before the meeting in accordance with the provisions of these By-laws. The Board of Directors or a designated committee thereof shall have the power to determine whether a nomination or any business proposed to be brought before any annual or special meeting or a request for a special meeting of stockholders was made in accordance with the provisions of these By-laws (including the requirement to provide the information required to be provided to the Corporation under these By-laws within five business days following the record date for the meeting). If neither the Board of Directors nor such designated committee makes a determination as to whether any stockholder proposal or nomination or any request for a special meeting of stockholders was made in accordance with the provisions of these By-laws, the presiding officer of the annual or special meeting shall have the power and duty to determine whether the stockholder proposal or nomination or request for a special meeting of stockholders was made in accordance with the provisions of these By-laws. If the Board of Directors or a designated committee thereof or the presiding officer, as applicable, determines that any stockholder proposal or nomination or any request for a special meeting of stockholders was not made in accordance with the provisions of these By-laws, such proposal or nomination shall be disregarded and shall not be presented for action at the meeting, or such request shall be disregarded and such special meeting of stockholders shall not be held, in each case notwithstanding that proxies in respect of such matters may have been received.
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(2) Even if a stockholder shall have given timely and proper notice of a nomination or other business to be conducted at the Annual Meeting in accordance with the provisions of these By-laws, if the stockholder does not appear or send a qualified representative to make the nomination or propose such business at the Annual Meeting, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such matters may have been received.
(3) Even if stockholders shall have made a request for a special meeting of stockholders in accordance with the provisions of these By-laws, if none of the Requesting Stockholders appears or sends a qualified representative to present the business proposed to be conducted at the special meeting, the Corporation need not present such business for a vote at such meeting, notwithstanding that proxies in respect of such matters may have been received.
(4) To be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation prior to the making of such nomination or proposal at such meeting by such stockholder stating that such person is authorized to act for such stockholder as proxy at the meeting of stockholders.
(5) For purposes of these By-laws, public announcement shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act (or any successor provisions). For purposes of these By-laws, the term affiliate shall have the meaning set forth in Rule 12b-2 under the Exchange Act (or any successor provision), the term associate shall have the meaning set forth in Rule 14a-1(a) under the Exchange Act (or any successor provision) and shares shall be treated as beneficially owned by a person if the person (i) beneficially owns such shares, directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder (or any successor provisions), or (ii) has or shares pursuant to any agreement, arrangement or understanding (whether or not in writing) (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time or the fulfillment of a condition or both), (B) the right to vote such shares, alone or in concert with others, and/or (C) investment power with respect to such shares, including the power to dispose of, or to direct the disposition of, such shares.
(6) Notwithstanding the foregoing provisions of these By-laws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these By-laws. Nothing in this Section 3 shall be deemed to affect any rights of (i) stockholders to request inclusion of proposals in the Corporations proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of Preferred Stock to elect directors under specified circumstances.
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ALERE INC. 51 SAWYER ROAD, SUITE 200 WALTHAM, MA 02453 |
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ALERE INC. |
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The Board of Directors recommends a vote FOR ALL the nominees listed. |
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1. |
Election of Directors |
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Nominees: |
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To be elected for terms expiring at the next annual meeting: |
For | Against | Abstain | |||||||||||||||||||||||||||||||||
1a. Jerry McAleer, Ph.D. |
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The Board of Directors recommends a vote FOR the following:
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For | Against | Abstain | |||||||||||||||||||||||||||||
1b. Gregg J. Powers |
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2. | Approval of an increase in the number of shares of common stock available for issuance under the Alere Inc. 2010 Stock Option and Incentive Plan by 2,000,000, from 7,153,663 to 9,153,663.
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¨ | ¨ | ¨ | ||||||||||||||||||||||||||||
1c. Regina Benjamin, M.D. |
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3.
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Approval of an increase to the number of shares of common stock available for issuance under the Alere Inc. 2001 Employee Stock Purchase Plan by 1,000,000, from 4,000,000 to 5,000,000.
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1d. Håkan Björklund, Ph.D. |
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1e. John F. Levy |
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4. | Approval of an amendment to our Certificate of Incorporation to permit stockholders holding 25% or more of Aleres outstanding common stock to call a special meeting of stockholders.
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1f. Stephen P. MacMillan |
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5. | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2014.
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1g. Brian A. Markison |
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6. | Approval, by non-binding vote, of executive compensation. |
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1h. Sir Thomas Fulton Wilson McKillop, Ph.D. |
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1i. John A. Quelch, C.B.E., D.B.A. |
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NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | ||||||||||||||||||||||||||||||||||||
NOTE: Please sign as name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M76852-P54889 |
PROXY |
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALERE INC.
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The undersigned, revoking all prior proxies, hereby appoints Ron Zwanziger, Gregg J. Powers and Ellen Chiniara, and each of them, with power to act without the others and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Alere Inc. Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of Alere Inc. to be held August 21, 2014 or any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Meeting.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR EACH OF THE PROPOSALS LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
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(Continued and to be marked, dated and signed on the other side)
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