INTELLINETICS, INC.

2018 EXECUTIVE INCENTIVE COMPENSATION PLAN
Adopted February 13, 2018

 

SECTION 1

Purpose

 

The purpose of Intellinetics, Inc. 2018 Executive Incentive Compensation Plan is
to increase stockholder value and to enhance the ability of the Company to
attract, retain and motivate high quality and high performing executives by
providing those executives with incentives and awards for making significant
contributions to the financial success of the Company based on the achievement
of financial and other Performance Goals.

 

SECTION 2

Definitions

 

The following terms as used in the Plan shall have the meanings set forth below:

 

(a) “Award” means, as to any Performance Period, a cash payment made under the
Plan to a Participant for such Performance Period.

 

(b) “Board” means the Board of Directors of the Company.

 

(c) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules, regulations and interpretations promulgated
thereunder, and any successor provisions, rules, regulations and
interpretations.

 

(d) “Committee” means the Compensation Committee of the Board, or any successor
committee appointed by the Board to administer the Plan, or a subcommittee
thereof.

 

(e) “Company” means Intellinetics, Inc. or any successor thereto, together with
its Subsidiaries.

 

(f) “Effective Date” of the Plan means January 1, 2018.

 

(g) “Executive” means an officer or other key employee of the Company or a
Subsidiary.

 

(h) “Fiscal Quarter” means the fiscal quarter of the Company, which as of the
Effective Date is the period commencing on January 1 and ending on March 31, and
each successive three month period.

 

(i) “Fiscal Year” means the fiscal year of the Company, which as of the
Effective Date is the period commencing on January 1 and ending on December 31
of each calendar year.

 

(j) “Participant” means, as to any Performance Period, any Executive who has
been selected by the Committee for participation in the Plan for such
Performance Period.

 

(k) “Payout Formula” means, as to any Performance Period, the formula or payout
matrix established by the Committee in order to determine the Awards (if any) to
be paid to the Participants. The formula or matrix may differ from Participant
to Participant.

 

(l) “Performance Goals” means the goals or other standards of measurement of
Company performance and individual performance applicable to a Participant for a
Performance Period as established by the Committee.

 

(m) “Performance Period” means a Fiscal Quarter, a Fiscal Year, or any other
period of time selected by the Committee, to which an Award relates.

 

(n) “Person” means any individual, corporation, partnership, limited liability
company, association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.

 

(o) “Plan” means the Intellinetics, Inc. 2018 Executive Incentive Compensation
Plan, as amended from time to time in accordance with the provisions hereof.

 

(p) “Subsidiary” means any corporation, partnership, limited liability company,
trust or other entity (whether now or hereafter existing) which, on the date of
determination, qualifies as a subsidiary corporation of the Company under
Section 425(f) of the Code, and any successor thereto.

 

   

 

 

(q) “Target Award” means the target Award payable under the Plan to a
Participant for a Performance Period, expressed as a percentage of the
Participant’s Base Salary or as a specific dollar amount, as determined by the
Committee hereunder.

 

SECTION 3

Administration

 

(a) Administration by the Committee. The Plan shall be administered by the
Committee.

 

(b) Authority of the Committee. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law and subject to such
resolutions, not inconsistent with the Plan, as may be adopted by the Board, and
in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority to: (i)
designate the Participants; (ii) grant Awards under the Plan to Participants;
(iii) determine the type or types of Performance Goals and the Performance
Period with respect to each Award; (iv) determine the size of Awards and
establish any other terms and conditions of any Award; (v) construe, interpret
and administer the Plan and any instrument or agreement relating to, or Award
made under, the Plan; (vi) adopt, amend, suspend, waive or rescind such rules
and regulations and appoint such agents as it shall deem necessary or desirable
for the administration of the Plan; (vii) correct any defect or supply any
omission or reconcile any inconsistency, and to construe and interpret the Plan,
the rules and regulations, any agreement evidencing an Award or other instrument
entered into or Award made under the Plan; and (viii) make any other
determinations and decisions and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.

 

(c) Exercise of Authority. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all Persons, including the Company, its Subsidiaries, Executives,
Participants and their legal representatives and beneficiaries and stockholders.
The express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Company or any Subsidiary, or committees thereof, the authority, subject
to such terms as the Committee shall determine, to perform such functions,
including administrative functions, as the Committee may determine. The
Committee may appoint agents to assist it in administering the Plan.

 

(d) Committee Proceedings. The Committee shall hold its meetings at such times
and places as it shall deem advisable. A majority of the members of the
Committee shall constitute a quorum and all determinations shall be made by a
majority of such quorum. Any determination reduced to writing and signed by all
of the members of the Committee shall be fully as effective as if it had been
made by a majority vote at a meeting of the Committee duly called and held.

 

(e) Limitation of Liability. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any executive officer, other officer or employee of
the Company or a Subsidiary, the Company’s independent auditors, legal counsel,
other consultants or any other agents assisting in the administration of the
Plan. Members of the Committee, and any officer or employee of the Company or a
Subsidiary acting at the direction or on behalf of the Committee, shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by Intellinetics, Inc. with respect to any such action
or determination.

 

SECTION 4

Eligibility

 

Executives shall be eligible to be selected by the Committee to be Participants
in the Plan and to be granted Awards under the Plan.

 

   

 

 

SECTION 5

Awards

 

(a) General. Subject to the provisions of the Plan, Awards may be granted as set
forth in this Section 5. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to the terms
of Section 7 hereof), such additional terms and conditions, not inconsistent
with the provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of employment
by the Participant and terms permitting a Participant to make elections
pertaining to his Award. Subject to the provisions of the Plan, the Committee
shall have the right, in its sole and absolute discretion, to accelerate the
vesting or exercising of any Award granted under the Plan. Except as required by
applicable law, Awards shall be granted for no consideration other than prior
and future services.

 

(b) Selection of Participants. The Committee, in its sole discretion, shall
select the Executives who shall be Participants in the Plan for any Performance
Period. Participation in the Plan is on a Performance Period by Performance
Period basis, so no Executive who is a Participant for any given Performance
Period is entitled to being selected as a Participant in any subsequent
Performance Period.

 

(c) Establishment of Performance Goals. At the commencement of each Performance
Period, the Committee shall establish for each Participant one or more
Performance Goals for such Performance Period, and the relative weight to be
given to each Performance Goal. The Performance Goals and the weighting thereof
may vary by Participant and may be different for different Performance Periods
and for different Awards. As determined by the Committee, the Performance Goals
for any Target Award applicable to a Participant may provide for a targeted
level or levels of achieving one or more Performance Goals. The Performance
Goals utilized by the Committee for each Participant may be based on individual
performance, corporate financial measures on either a consolidated or business
unit basis (including but not limited to revenues (including total revenues,
recurring revenues, or other category of revenues), operating income, pre-tax
income, net income, gross profit, costs, cash flow, cash position, EBITDA, any
of the preceding measures as a percent of sales, earnings per share (before or
after taxes), return on equity, return on investment, return on assets, return
on capital, total stockholder return and change in Company stock price), other
Company and business unit financial objectives, operational efficiency measures,
and other objectives tied to the Company’s success or such other goals and
criteria as the Committee shall determine in its discretion. Any criteria may be
measured, as applicable, (i) in absolute terms, (ii) in relative terms
(including, but not limited to, passage of time and/or against another company
or companies), (iii) on a per share basis, (iv) against the performance of the
Company as a whole or a segment or business unit of the Company, and/or (v) on a
pre-tax or after-tax basis. Prior to the end of any Performance Period, the
Committee shall determine whether any element or elements shall be included in
or excluded from the calculation of any Performance Goal with respect to any
Participants.

 

(d) Establishment of Target Awards. The Committee, in its sole discretion, shall
establish a Target Award for each Participant.

 

(e) Determination of Payout Formula or Formulae. For each Performance Period,
the Committee, in its sole discretion, shall establish a Payout Formula or
Formulae for purposes of determining the amount of the Award (if any) payable to
each Participant. Each Payout Formula (i) shall be based on a comparison of
actual performance to the Performance Goals, (ii) shall provide for the payment
of a Participant’s Target Award if the Performance Goals for the Performance
Period are achieved, and (iii) may provide for an Award greater than or less
than the Participant’s Target Award, depending upon the extent to which actual
performance exceeds or falls below the Performance Goals.

 

(f) Determination and Payment of Awards. As soon as practicable after the end of
a Performance Period, the Committee will determine the amount, if any, of the
Award earned by each Participant under the applicable Performance Goals. The
Award for each Participant shall be determined by applying the Payout Formula to
the level of actual performance. Awards will be payable promptly after the
determination of the Awards by the Committee. Awards under the Plan will be paid
to the Participants in cash, provided that the Committee may, in its discretion,
permit Participants to defer the payment of all or a portion of their Awards in
accordance with Section 409A of the Code, or if the Company has adopted a
deferred compensation plan and the Participant is also eligible to participate
therein, to defer the payment of all or a portion of their Awards in accordance
with the terms of such Plan.

 

(g) Form of Payment of Awards. Awards under the Plan shall be paid to the
Participants in cash (or its equivalent) in a single lump sum, provided that the
Committee may, in its discretion, permit Participants to defer the payment of
all or a portion of their Awards in accordance with Section 409A of the Code, or
if the Company has adopted a deferred compensation plan and the Participant is
also eligible to participate therein, to defer the payment of all or a portion
of their Awards in accordance with the terms of such Plan.

 

   

 

 

(h) Committee Discretion. Notwithstanding the attainment by the Company or any
Participant of one or more specified Performance Goals or any other provision of
the Plan to the contrary, the Committee shall have the discretion to increase,
eliminate or reduce the Award that which otherwise would be payable to a
Participant under the Payout Formula, based on such factors as deemed
appropriate by the Committee.

 

SECTION 6

Termination of Employment

 

(a) General Termination of Rights Hereunder. Except as may be otherwise
determined by the Committee, in the event a Participant’s employment with the
Company terminates for any reason, voluntarily or involuntarily, before the last
date of a Performance Period, then that Participant shall have no further rights
under the Plan and shall not be entitled to payment of any Award under the Plan,
except as provided in this Section 6.

 

(b) Termination by the Company for Cause. If a Participant’s employment is
terminated by the Company for “cause,” as defined and determined by the
Committee in its sole discretion (provided that if the Participant has an
employment agreement with the Company and the term “cause” or a like term is
defined therein, the definition in such employment agreement shall be used),
then, except as otherwise determined by the Committee, that Participant shall
have no further rights under the Plan and shall not be entitled to payment of
any Award under the Plan with respect to any prior or current Performance
Period.

 

(c) Termination by the Company without Cause or due to a Change in Control. If a
Participant’s employment is terminated by the Company without “cause” (as
defined in Section 6((b)) or upon or following a change in control of the
Company (as defined by the Committee), then, except as otherwise determined by
the Committee, that Participant shall be entitled to payment of any Award under
the Plan to which such Participant would have been entitled if such Participant
had remained employed with the Company throughout the Performance Period in
effect on the date of termination (the “Pro Forma Award”).

 

(d) Termination Due to Participant’s Death or Disability. In the event the
Participant’s termination of employment occurs due to the Participant’s death or
disability, then the Participant (or his estate or beneficiaries) shall be
entitled to receive a pro rata portion of the Award to which such Participant
would have been entitled if such Participant had remained employed with the
Company throughout the Performance Period in effect on the date of termination,
based on (i) a fraction, (A) the numerator of which is equal to the number of
months (including the month of termination) the Participant was employed during
such Performance Period, (B) and the divisor of which is equal to the number of
months in the Performance Period, multiplied by (ii) the amount of the Award
divided by twelve (12), (ii) multiplied by the Pro Forma Award.

 

(e) Termination Due to Voluntary Termination by the Participant. In the event
the Participant’s employment is voluntarily terminated by the Participant, then
the Committee may, in its sole and complete discretion, value and direct that
some portion of the Award be deemed earned and payable, taking into account the
duration of employment during the Performance Period, the Participant’s
performance, and such other matters as the Committee shall deem appropriate.

 

SECTION 7

Amendments to and Termination of the Plan and Awards

 

The Board may, in its sole discretion, from time to time amend, alter, suspend,
discontinue or terminate the Plan or the Committee’s authority to grant Awards
under the Plan without the consent of stockholders or Participants; provided,
however, that, without the consent of the Participant, no amendment, alteration,
suspension, discontinuation or termination of the Plan may materially and
adversely affect the rights of such Participant under any Award theretofor
granted to him. The Committee may waive any conditions or rights under, amend
any terms of, or amend, alter, suspend, discontinue or terminate, any Award
theretofore granted, prospectively or retrospectively; provided, however, that,
without the consent of the Participant, no amendment, alteration, suspension,
discontinuation or termination of any Award may materially and adversely affect
the rights of such Participant under any Award theretofore granted to him.

 

   

 

 

SECTION 8

 

General Provisions

 

(a) Compliance with Legal and Other Requirements. The Company may, to the extent
deemed necessary or advisable by the Board, postpone the issuance or delivery of
any benefits under any Award until completion of any required action under any
applicable federal, state or local law, rule, regulation, order, decree or other
requirement, or compliance with any other obligation of the Company, as the
Board may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the payment
of any Award in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations.

 

(b) No Transferability. No Award granted under the Plan, nor any other rights
acquired by a Participant under the Plan, shall be assignable or transferable by
a Participant, other than by a will or the laws of descent and distribution, and
no Award under the Plan shall be subject in any manner to anticipation, pledge,
encumbrance, charge, garnishment, execution or levy or lien of any kind, whether
voluntary or involuntary, and any attempt contrary thereto shall be void.
Following any permitted transfer, any transferee shall continue to be subject to
the same terms and conditions as were applicable immediately prior to transfer.

 

(c) Designation of Beneficiary. Subject to applicable law, each Participant
shall have the right to file with the Company a written designation of one or
more Persons as beneficiaries who shall be entitled to receive the amount, if
any, payable under the Plan pursuant to an award upon the Participant’s death. A
Participant may from time to time revoke or change the beneficiary by filing a
new designation with the Company. The last such designation received by the
Company shall be controlling; provided, however, that no designation, change or
evocation thereof shall be effective until received by the Company prior to the
Participant’s death, and in no event shall it be effective as of a date prior to
receipt. If no such beneficiary designation is in effect at the time of a
Participant’s death, or if no designated beneficiary survives the Participant,
or if such designation conflicts with law, the payment of the amount, if any,
payable pursuant to an Award under the Plan upon the Participant’s death shall
be made to the Participant’s estate by the Committee. If the Committee is in
doubt as to the right of any Person to receive any amount, then the Committee
may retain such amount, without liability for any interest thereon, until the
rights thereto are determined, or the Committee may pay such amount into any
court of appropriate jurisdiction or to the estate of the Participant, in which
event the Company and the Committee shall have no further liability to any
Person with respect to such an amount.

 

(d) No Rights to Awards. Nothing in the Plan shall be construed as giving any
Participant, Executive or other Person any right to claim to be granted any
Award under the Plan, or to be treated uniformly with other Participants and
Executives.

 

(e) Tax Withholding. The Company or any Subsidiary is authorized to withhold
from any Award granted or any payment due under the Plan amounts of withholding
and other taxes due with respect to an Award and to take such other action as
the Committee may deem necessary or advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Awards.

 

(f) No Right to Employment. Nothing contained in the Plan shall, and no grant of
any Award shall be construed to, (i) confer, upon any Participant or any
Executive, any right to continue in the employ or service of the Company or any
Subsidiary or (ii) interfere in any way with the right of the Company or any
Subsidiary to (A) terminate any Participant’s or Executive’s employment or
service at any time or (B) increase or decrease the compensation of any
Participant or Executive from the rate in existence at the time of granting of
an Award, except as may be expressly provided in any Award or other compensation
arrangement.

 

(g) Unfunded Status of Awards. Each Award payable under the Plan shall be paid
solely from the general assets of the Company. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation, and the
Company shall not have any obligation to establish any trust or other special or
separate fund or to make any other segregation of assets to assure the payment
of any Award under the Plan. With respect to any payments not yet made to
Participant pursuant to an Award, nothing contained in the Plan or any Award
shall give any such Participant any rights that are greater than those of a
general unsecured creditor of the Company; provided, however, that the Board, in
its sole and absolute discretion, may authorize the creation of trusts or make
other arrangements to meet the Company’s obligations under the Plan to deliver
cash pursuant to any Award, which trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Board otherwise
determines.

 

   

 

 

(h) No Limitation on Other Compensatory Arrangements. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other or additional compensation arrangements (which may include, without
limitation, employment agreements with executives and arrangements which relate
to Awards under the Plan), and such arrangements may be either generally
applicable or only in specific cases.

 

(i) Governing Law. The validity, interpretation, construction and effect of the
Plan, any rules and regulations relating to the Plan and any Award thereunder
shall be governed by the laws of the State of Ohio (without regard to provisions
governing conflicts of laws) and applicable federal law.

 

(j) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any
Person or Award, or would disqualify the Plan or any Award under any law deemed
amended to conform to applicable laws or, if it cannot be construed or deemed
amended without, in the determination of the Board, materially altering the
intent of the Plan, it shall be deleted and the remainder of the Plan shall
remain in full force and effect; provided, however, that, unless otherwise
determined by the Board, the provision shall not be construed or deemed amended
or deleted with respect to any Participant whose rights and obligations under
the Plan are not subject to the law of such jurisdiction or the law deemed
applicable by the Board.

 

(k) Headings. Headings are given to the sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

 

(l) Indemnification. Each Person who is or shall have been a member of the
Committee, or the Board, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit or proceeding to which he may be made a party or in which he may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him in settlement thereof, with the
Company’s approval, or paid by him in satisfaction of any judgment in any such
action, suit or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive and shall be independent of any other
rights of indemnification to which such Persons may be entitled under the
Company’s Certificate of Incorporation or By-laws, by contract, as a matter of
law, or otherwise.

 

(m) Construction. For purposes of the Plan, the following rules of construction
shall apply: (i) the word “or” is disjunctive but not necessarily exclusive;
(ii) words in the singular include the plural; words in the plural include the
singular; and words in the neuter gender include the masculine and feminine
genders; and (iii) words in the masculine or feminine gender include the other
and neuter genders.

 

(n) Costs and Expenses. The costs and expenses of administering the Plan shall
be borne solely by the Company.

 

(o) Requirements of Law. The Plan and all Awards under the Plan shall be subject
to tall applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

SECTION 9

Effective Date and Termination

 

(a) Effective Date. The Plan shall commence and become effective as of the
Effective Date.

 

(b) Termination. The Plan shall continue in effect on and after the Effective
Date until December 31, 2027 unless earlier terminated by the Board. No Awards
shall be made under the Plan after the termination of the Plan.