UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
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Proxy Statement Pursuant
to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
x
Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
x
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material under Rule 14a-12
Zedge, Inc.
(Name of Registrant as Specified In
Its Charter)
Payment of Filing Fee (Check the appropriate box):
x
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No fee required.
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Fee computed on table below per Exchange Act
Rule 14a-6(i)(1), and 0-11.
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(1)
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Title of each class of securities to which
transaction applies:
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Aggregate number of securities to which
transactions applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and state how it
was determined):
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(4)
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Proposed maximum aggregate value of
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Fee paid previously with preliminary
materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement
No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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ZEDGE, INC.
22 Cortlandt Street, 14
th
Floor
New York, NY 10007
(330) 577-3424
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TIME
AND DATE:
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10:30 a.m., local time, on Wednesday, January
18, 2017
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PLACE:
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Offices of Zedge, Inc., 22 Cortlandt Street,
14
th
Floor, New York, New York 10007
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ITEMS
OF BUSINESS:
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1. To elect five directors, each for a term of one
year.
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2. To approve an
amendment to the Zedge, Inc. 2016 Stock Option and Incentive Plan
that will, among other things (a) increase the number of shares of
the Company’s Class B Common Stock available for the grant of
awards thereunder by 500,000, (b) modify the non-employee
directors’ annual automatic grant to provide that, if the
Company’s market cap is below $40 million as calculated in
the Plan, a pro-rata portion will be paid in cash, and (c) change
the vesting of future grants of restricted stock to be
automatically awarded to non-employee directors under the Plan to
vest in full upon grant instead of two years after
grant.
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3. To approve the acceleration of the vesting
date of restricted stock that will be automatically awarded to the
Company’s non-employee directors on January 5, 2017 from
January 5, 2019 to January 18, 2017.
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4. To
conduct an advisory vote on executive compensation.
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5. To conduct an advisory vote on frequency of
future advisory votes on executive compensation.
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6. To ratify the appointment of BDO USA, LLP as
the Company’s independent registered public accounting firm
for the Fiscal Year ending July 31, 2017.
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7. To transact other business as may properly
come before the Annual Meeting and any adjournment or postponement
thereof.
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RECORD DATE:
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You can vote if you were a stockholder of record
as of the close of business on November 21, 2016.
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PROXY
VOTING:
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You can vote either in person at the Annual
Meeting or by proxy without attending the meeting.
See
details
under the heading “How do I Vote?”
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ANNUAL MEETING ADMISSION:
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If you are a stockholder of record, a form of
personal photo identification must be presented in order to be
admitted to the Annual Meeting. If your shares are held in the name
of a bank, broker or other holder of record, you must bring a
brokerage statement or other written proof of ownership as of
November 21, 2016 with you to the Annual Meeting, as well as a form
of personal photo identification.
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ANNUAL MEETING DIRECTIONS:
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You may request directions to the annual meeting
via email at
ir@zedge.net
or by calling Zedge Investor Relations at (330)
577-3424.
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IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ZEDGE, INC. STOCKHOLDERS MEETING TO BE HELD ON JANUARY 18,
2017
:
The Notice of Annual Meeting and Proxy Statement and the 2016
Annual Report are available at:
http://investor.zedge.net/
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BY ORDER OF THE BOARD OF DIRECTORS
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Joyce Mason
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Corporate Secretary
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New York, New York
November 23, 2016
ZEDGE, INC.
22 Cortlandt Street, 14
th
Floor
New York, NY 10007
(330) 577-3424
____________________
PROXY
STATEMENT
____________________
GENERAL
INFORMATION
Introduction
This Proxy Statement is furnished to the stockholders of record of
Zedge, Inc., a Delaware corporation (the “Company” or
“Zedge”), as of the close of business on November 21,
2016, in connection with the solicitation by the Company’s
Board of Directors (the “Board of Directors”) of
proxies for use in voting at the Company’s Annual Meeting of
Stockholders (the “Annual Meeting”). The Annual Meeting
will be held on Wednesday, January 18, 2017 at 10:30 a.m., local
time, at the Offices of Zedge, Inc., 22 Cortlandt Street,
14
th
Floor, New York, New York 10007. The shares of the Company’s
Class A common stock, par value $0.01 per share (“Class A
Common Stock”), and Class B common stock, par value $0.01 per
share (“Class B Common Stock”), present at the Annual
Meeting or represented by the proxies received by Internet or mail
(properly marked, dated and executed) and not revoked, will be
voted at the Annual Meeting. This Proxy Statement is being mailed
to the Company’s stockholders starting on approximately
December 8, 2016.
Solicitation and Voting
Procedures
This solicitation of proxies is being made by the Company. The
solicitation is being conducted by mail and by e-mail, and the
Company will bear all attendant costs. These costs will include the
expense of preparing and mailing proxy materials for the Annual
Meeting and any reimbursements paid to brokerage firms and others
for their expenses incurred in forwarding the solicitation
materials regarding the Annual Meeting to the beneficial owners of
Class A Common Stock and Class B Common Stock. The Company may
conduct further solicitations personally, by telephone or by
facsimile through its officers, directors and employees, none of
whom will receive additional compensation for assisting with the
solicitation.
The close of business on November 21, 2016 has been fixed as the
record date (the “Record Date”) for determining the
holders of shares of Class A Common Stock and Class B Common Stock
entitled to notice of, and to vote at, the Annual Meeting. As of
the close of business on the Record Date, the Company had 9,390,053
shares outstanding and entitled to vote at the Annual Meeting,
consisting of 524,775 shares of Class A Common Stock and 8,865,278
shares of Class B Common Stock.
Stockholders are entitled to three votes for each share of Class A
Common Stock held by them and one-tenth of one vote for each share
of Class B Common Stock held by them. The holders of Class A Common
Stock and Class B Common Stock will vote as a single body on all
matters presented to the stockholders. There are no
dissenters’ rights of appraisal in connection with any
proposal.
How do I
Vote?
You can vote either in person at the Annual Meeting or by proxy
without attending the meeting.
Beneficial holders of Class A Common Stock and Class B Common Stock
as of the close of business on Record Date whose stock is held of
record by another party should receive voting instructions from
their bank, broker or other holder of record. If a
stockholder’s shares are held through a nominee and the
stockholder wants to vote at the meeting, such stockholder must
obtain a proxy from the nominee record holder authorizing such
stockholder to vote at the Annual Meeting.
Stockholders of record should receive a paper copy of our proxy
materials and may vote by following the instructions on the proxy
card that is included with the proxy materials. As set forth on the
proxy card, there are two convenient methods for holders of record
to direct their vote by proxy without attending the Annual Meeting:
on the
1
Internet or by mail. To vote by Internet, visit
www.voteproxy.com
.
To vote by mail, mark, date and sign the enclosed proxy card and
return it in the postage-paid envelope provided. Holders of record
may also vote by attending the Annual Meeting and voting by
ballot.
All shares for which a proxy has been duly executed and delivered
(by Internet or mail) and not properly revoked prior to the meeting
will be voted at the Annual Meeting. If a stockholder of record
signs and returns a proxy card but does not give voting
instructions, the shares represented by that proxy will be voted as
recommended by the Board of Directors. If any other matters are
properly presented at the Annual Meeting for consideration and if
you have voted your shares by Internet or mail, the persons named
as proxies will have the discretion to vote on those matters for
you. On the date of filing this Proxy Statement with the SEC, the
Board of Directors did not know of any other matter to be raised at
the Annual Meeting.
How Can I Change My
Vote?
A stockholder of record can revoke his, her or its proxy at any
time before it is voted at the Annual Meeting by delivering to the
Company (to the attention of Joyce J. Mason, Esq., Corporate
Secretary) a written notice of revocation or by executing a
later-dated proxy by Internet or mail, or by attending the Annual
Meeting and voting in person.
If your shares are held in the name of a bank, broker, or other
nominee, you must obtain a proxy executed in your favor from the
holder of record (that is, your bank, broker, or nominee) to be
able to vote at the Annual Meeting.
Quorum and Vote
Required
The presence at the Annual Meeting of a majority of the voting
power of outstanding Class A Common Stock and Class B Common Stock
(voting together), either in person or by proxy, will constitute a
quorum for the transaction of business at the Annual Meeting.
Abstention votes and any broker non-votes (i.e., votes withheld by
brokers on non-routine proposals in the absence of instructions
from beneficial owners) will be counted as present or represented
at the Annual Meeting for purposes of determining whether a quorum
exists.
The affirmative vote of a majority of the voting power present (in
person or by proxy) at the Annual Meeting and casting a vote on the
relevant Proposal will be required for the approval of the election
of any director (Proposal
No.
1), the amendment to the Company’s 2016 Stock Option and
Incentive Plan (the “2016 Plan”) (Proposal No.
2),
the acceleration of the vesting date of restricted stock
that will be automatically awarded to the Company’s
non-employee directors on January 5, 2017 from January 5, 2019 to
January 18, 2017 (Proposal No. 3), the approval, on an advisory
basis, of the compensation of our Named Executive Officers
(Proposal No. 4), and the ratification of the appointment of the
Company’s independent registered public accounting firm
(Proposal No. 6). This means that the number of votes cast
“for” a director nominee or Proposal Nos. 2, 3, 4 and 6
must exceed the number of votes cast “against” that
nominee or Proposal Nos. 2, 3, 4 and 6. Abstentions are not counted
as votes “for” or “against” a nominee or
any of these proposals. Proposal No. 5 asks stockholders to express
a preference among three possible choices as to whether future
advisory votes on executive compensation should be held every year,
every two years, or every three years. Accordingly, abstentions
will not be counted as expressing any preference. If a plurality of
the votes cast on this matter at the Annual Meeting is cast in
favor of advisory votes on executive compensation every year, the
Company would adopt this approach.
If you are a beneficial owner whose shares are held of record by a
broker, you must instruct the broker how to vote your shares. If
you do not provide voting instructions, your shares will not be
voted on any proposal on which the broker does not have
discretionary authority to vote. This is called a “broker
non-vote.” In these cases, the broker can register your
shares as being present at the Annual Meeting for purposes of
determining the presence of a quorum but will not be able to vote
on those matters for which specific authorization is required under
the rules of the NYSE MKT. In the event of a broker non-vote or an
abstention with respect to any proposal coming before the Annual
Meeting, the shares represented by the relevant proxy will not be
deemed to be present and entitled to vote on those proposals for
the purpose of determining the total number of shares of which a
majority is required for adoption, having the practical effect of
reducing the number of affirmative votes required to achieve a
majority vote for such matters by reducing the total number of
shares from which a majority is calculated.
2
If you are a beneficial owner whose shares are held of record by a
broker, your broker has discretionary voting authority under NYSE
MKT rules to vote your shares on the ratification of the
Company’s independent registered public accounting firm
(Proposal No. 6), even if the broker does not receive voting
instructions from you. However, your broker does not have
discretionary authority to vote on the election of directors
(Proposal No. 1), the adoption of an amendment to the 2016 Plan
(Proposal No. 2), the acceleration of the vesting date of
restricted stock that will be automatically awarded to the
Company’s non-employee directors on January 5, 2017 from
January 5, 2019 to January 18, 2017 (Proposal No. 3), the approval,
on an advisory basis, of the compensation of our Named Executive
Officers (Proposal No. 4), the advisory vote on the frequency of
future advisory votes on executive compensation (Proposal No. 5),
or on any stockholder proposal or other matter raised at the Annual
Meeting without instructions from you, in which case a broker
non-vote will occur and your shares will not be voted on these
matters.
How Many Votes Are
Required to Approve Other Matters?
Unless otherwise required by law or the Company’s Bylaws, the
affirmative vote of a majority of the voting power represented at
the Annual Meeting and entitled to vote will be required for other
matters that may properly come before the meeting.
Stockholders Sharing the
Same Address
We are sending only one copy of the Annual Report and Proxy
Statement to stockholders of record who share the same last name
and address, unless they have notified the Company that they want
to continue to receive multiple copies. This practice, known as
“householding,” is designed to reduce duplicate
mailings and printings and postage costs. However, if any
stockholder residing at such address wishes to receive a separate
Annual Report or Proxy Statement in the future, he or she may
contact Joyce J. Mason, Esq., Corporate Secretary, Zedge, Inc., 22
Cortlandt Street, 14
th
Floor, New York, New York 10007, or by phone at (330) 577-3424, and
we will promptly forward to such stockholder a separate Annual
Report and/or Proxy Statement. The contact information above may
also be used by members of the same household currently receiving
multiple copies of the Annual Report and Proxy Statement in order
to request that only one set of materials be sent in the
future.
References to Fiscal
Years
The Company’s fiscal year ends on July 31 of each calendar
year. Each reference to a fiscal year refers to the fiscal year
ending in the calendar year indicated (e.g., Fiscal 2016 refers to
the fiscal year ended July 31, 2016).
3
CORPORATE
GOVERNANCE
Introduction
The Company has in place a comprehensive corporate governance
framework that reflects the corporate governance requirements and
the rules and regulations promulgated under the Securities Exchange
Act of 1934, as amended, and the corporate governance-related
listing requirements of the NYSE MKT. Consistent with the
Company’s commitment to strong corporate governance, the
Company does not rely on the exceptions from the NYSE MKT’s
corporate governance listing requirements available to it because
it is a “controlled company,” except as described below
with regard to (i) the composition of the Nominating Committee and
(ii) the Company not having a single Nominating/Corporate
Governance Committee.
In accordance with applicable sections of the NYSE MKT Company
Guide, the Company has adopted a set of Corporate Governance
Guidelines and a Code of Business Conduct and Ethics, the full
texts of which are available for your review in the Corporate
Governance section of our website at
http://investor.zedge.net/governance-documents
and which also are available in print to any stockholder upon
written request to the Corporate Secretary.
The Company qualifies as a “controlled company” as
defined by the NYSE MKT Company Guide, because, since October 25,
2016, more than 50% of the voting power of the outstanding capital
stock of the Company is controlled by one individual, Michael
Jonas, who serves as Chairman of our Board of Directors. Upon our
spin-off (the “Spin-Off”) from IDT Corporation
(“IDT”) which was effected on June 1, 2016 until
October 25, 2016, the Company was a “controlled
company” because Howard Jonas, who currently serves as
Vice-Chairman of our Board of Directors and is the father of
Michael Jonas, controlled more than 50% of the voting power of the
outstanding capital stock of the Company. Notwithstanding that
being a “controlled company” entitles the Company to
exempt itself from the requirement that a majority of its directors
be independent directors and that the Compensation Committee and
Corporate Governance Committee be comprised entirely of independent
directors, the Board of Directors has determined affirmatively that
a majority of the members of the Board of Directors and the
director nominees are independent in accordance with the NYSE MKT
Company Guide and that the Compensation Committee and the Corporate
Governance Committee are in fact comprised entirely of independent
directors. As a “controlled company,” the Company may,
and has chosen to, exempt itself from the NYSE MKT Company Guide
requirement that it have a single Nominating/Corporate Governance
Committee composed entirely of independent directors. As noted
above, and discussed in greater detail below, the Board of
Directors maintains a separate Corporate Governance Committee
comprised entirely of independent directors, and a Nominating
Committee comprised of the Vice-Chairman of the Board of Directors
and one independent director.
Director
Independence
The Corporate Governance
Guidelines adopted by the Board of Directors provide that a
majority of the members of the Board of Directors, and each member
of the Audit, Compensation and Corporate Governance Committees,
must meet the independence requirements set forth therein. The full
text of the Corporate Governance Guidelines, including the
independence requirements, is available for your review in the
Corporate Governance section of our website at
http://investor.zedge.net/governance-documents
.
For a director to be considered independent, the Board of Directors
must determine that a director meets the Independent Director
Qualification Standards set forth in the Corporate Governance
Guidelines, which comply with the NYSE MKT Company Guide
definitions of independent, and is free from any material
relationship with the Company and its executive officers. The Board
of Directors considers all relevant facts and circumstances known
to it in making an independence determination, and not merely from
the standpoint of the director, but also from that of persons or
organizations with which the director has an affiliation or
significant financial interest. In addition to considering all
relevant information available to it, the Board of Directors uses
the following categorical Independent Director Qualification
Standards in determining the “independence” of its
directors:
1.
During the past three years, the Company shall not have employed
the director, or, except in a non-officer capacity, any of the
director’s immediate family members;
2.
During the past three years, the director shall not have received,
and shall not have an immediate family member who has received,
during any twelve-month period within the last three years, more
than $120,000 in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service);
4
3.
(a)
The director shall not be a current partner or employee of a firm
that is the Company’s internal or external auditor, (b) the
director shall not have an immediate family member who is a current
partner of such firm, (c) the director shall not have an immediate
family member who is a current employee of such firm and personally
works on the Company’s audit, and (d) neither the director
nor any of his or her immediate family members shall have been,
within the last three years, a partner or employee of such firm and
personally worked on the Company’s audit within that
time;
4.
Neither the director, nor any of his or her immediate family
members, shall be, or shall have been within the last three years,
employed as an executive officer of another company where any of
the Company’s present executive officers at the same time
serves or served on that company’s compensation (or
equivalent) committee; and
5.
The director shall not be a
current employee and shall not have an immediate family member who
is a current executive officer of a company (excluding tax-exempt
organizations) that has made payments to, or received payments
from, the Company for property or services in an amount which, in
any of the last three Fiscal Years, exceeds the greater of (a)
$200,000 or (b) five percent of the consolidated gross revenues of
such other company. The Corporate Governance Committee will review
the materiality of such relationship to tax-exempt organizations to
determine if such director qualifies as independent.
In addition, all members of the Company’s Audit Committee
must meet the independence requirements of Section 2014.10A-3 of
the Securities Exchange Act of 1934, which are set forth in the
Audit Committee Charter.
Based on the review and recommendation of the Corporate Governance
Committee, the Board of Directors has determined that each of Marie
Therese (MT) Carney, Mark Ghermezian and Stephen Greenberg is
independent in accordance with the Corporate Governance Guidelines
and the Audit Committee Charter and, thus, that a majority of the
current Board of Directors, a majority of the director nominees,
and each member or nominee intended to become a member of the
Audit, Compensation and Corporate Governance Committees is
independent. As used herein, the term “non-employee
director” shall mean any director who is not an employee or
consultant of the Company, and who is deemed to be independent by
the Board of Directors. Therefore, neither Howard Jonas nor Michael
Jonas is a non-employee director. With the exception of $141,000
that the Company paid in Fiscal 2016 for services and software to
Appboy, Inc., of which Mark Ghermezian serves as the Chief
Executive Officer, one of six members of the board of directors,
and co-founder, none of the non-employee directors had any
relationships with the Company that the Corporate Governance
Committee was required to consider when reviewing independence. The
Corporate Governance Committee considered that Appboy is a
venture-backed company in which Mr. Ghermezian beneficially owns
only a partial interest, and that Mr. Ghermezian does not receive
any compensation for payments made by Zedge to Appboy. Based on the
foregoing, the Corporate Governance Committee and the Board of
Directors determined that the Zedge/Appboy relationship does not
preclude a finding of independence for Mr. Ghermezian.
Director Selection
Process
The Nominating Committee will consider director candidates
recommended by the Company’s stockholders. Stockholders may
recommend director candidates by contacting the Chairman of the
Board, whose contact information is provided below under the
heading “Director Communications.” The Nominating
Committee considers candidates suggested by its members, other
directors, senior management and stockholders in anticipation of
upcoming elections and actual or expected board vacancies. All
candidates, including those recommended by stockholders, are
evaluated on the same basis in light of the entirety of their
credentials and the needs of the Board of Directors and the
Company. Of particular importance is the candidate’s wisdom,
integrity, ability to make independent analytical inquiries,
understanding of the business environment in which the Company
operates, as well as his or her potential contribution to the
diversity of the Board of Directors and his or her willingness to
devote adequate time to fulfill duties as a director. Under
“Proposal No. 1 — Election of Directors” below,
we provide an overview of each nominee’s experience,
qualifications, attributes and skills that led the Nominating
Committee and the Board of Directors to determine that each nominee
should serve as a Director.
5
Director
Communications
Stockholders and other interested parties may communicate with (i)
the non-management directors by contacting the Lead Independent
Director, and (ii) the Audit, Compensation or Corporate Governance
Committees of the Board of Directors by contacting the Chairs of
such committees. All communications should be in writing, should
indicate in the address whether it is intended for the Lead
Independent Director, or a Committee Chair, and should be directed
care of Zedge, Inc.’s Corporate Secretary, Stockholder
Communications, Zedge, Inc., 22 Cortlandt Street, 14
th
Floor, New York, NY 10007.
The Corporate Secretary will relay correspondence (i) intended for
the non-management directors to the Lead Independent Director, and
(ii) intended for the Audit, Compensation, and Corporate Governance
Committees to the Chairs of such committees.
The Corporate Secretary may filter out and disregard (without
providing a copy to the directors or advising them of the
communication), or may otherwise handle at his or her discretion,
any director communication that is described by one of the
following categories:
•
Obscene materials
•
Unsolicited marketing or advertising material or mass mailings
•
Unsolicited newsletters, newspapers, magazines, books and
publications
•
Surveys and questionnaires
•
Resumes and other forms of job inquiries
•
Requests for business contacts or referrals
•
Material that is threatening or illegal
•
Any communications or materials that are not in writing
In addition, the Corporate Secretary may handle in his or her
discretion any director communication that can be described as an
“ordinary business matter.” Such matters include the
following:
•
Routine questions, service and product complaints and comments that
can be appropriately addressed by management; and
•
Routine invoices, bills, account statements and related
communications that can be appropriately addressed by
management
6
BOARD OF DIRECTORS AND
COMMITTEES
Board of
Directors
The current Board of Directors was appointed in connection with the
Spin-Off, and held one meeting in Fiscal 2016, which was, attended
by all of the directors. During Fiscal 2016 until May 23, 2016, the
Board of Directors consisted of (collectively, the “Prior
Directors”) Tom Arnoy, Jonathan Reich, Eric Cosentino, Shmuel
Jonas and Joyce Mason. On May 23, 2016, the Prior Directors were
removed from the Board of Directors, and the current directors were
elected.
Directors are encouraged to attend the Company’s annual
meeting of stockholders, and the Company has scheduled a meeting of
the Board of Directors on the same date and at the same place as
the 2017 Annual Meeting of Stockholders to encourage director
attendance.
Board of Directors
Leadership Structure and Risk Oversight Role
Our Chairman of the Board, Michael Jonas, provides overall
leadership to the Board of Directors. The Board recognizes that one
of its key responsibilities is to evaluate and determine its
optimal leadership structure so as to provide independent oversight
of management. The Board understands that there is no single,
generally accepted approach to providing Board leadership, and that
given the dynamic and competitive environment in which we operate,
the right Board leadership structure may vary as circumstances
warrant. The Board has determined that, given Michael Jonas’
leadership skills, relationships with the members of management and
other members of the Board, and prior positions where he acted as
leader and provided oversight over different bodies, that he is
well suited to be the Chairman of the Board at the present time.
Michael Jonas has been Chairman of the Board since November 14,
2016, with Howard Jonas being Chairman of the Board from June 2,
2016 until November 14, 2016.
The Board of Directors as a whole, and through its committees, has
responsibility for the oversight of risk management, including the
review of the policies with respect to risk management and risk
assessment. The risk management oversight roles of the Audit,
Compensation and Corporate Governance Committees (each of which is
comprised solely of independent directors), discussed below,
provide an appropriate and effective balance to the role of the
Chairman of the Board. With the oversight of the full Board of
Directors, the Company’s management is responsible for the
day-to-day management of the material risks the Company faces. The
Board of Directors is required to satisfy itself that the risk
management process implemented by management is adequate and
functioning as designed.
The NYSE MKT Company Guide requires that the non-employee directors
of the Company meet at least annually in executive session without
the presence of non-independent directors and management. These
executive sessions are held at every regularly scheduled meeting of
the Board of Directors.
Mr. Ghermezian, an independent director, has served as the
“Lead Independent Director” since June 2, 2016.
As stated above, each of the Audit, Compensation and Corporate
Governance Committees oversees certain aspects of risk management
and reports its respective findings to the full Board of Directors
on a quarterly basis, and as is otherwise needed. The Audit
Committee is responsible for overseeing risk management of
financial matters, financial reporting, the adequacy of the
risk-related internal controls, internal investigations, and
security risks. The Compensation Committee oversees risks related
to compensation policies and practices. The Corporate Governance
Committee oversees our Corporate Governance Guidelines and
governance-related risks, such as board independence, as well as
senior management and director succession planning.
Board
Committees
Upon the Spin-Off, the Board of Directors established an Audit
Committee, a Compensation Committee, a Corporate Governance
Committee and a Nominating Committee.
The Audit
Committee
The Audit Committee consists of Mr. Greenberg (Chairman), Ms.
Carney and Mr. Ghermezian. The Audit Committee operates under a
written Audit Committee charter adopted by the Board of Directors,
which can be found in the Corporate Governance section of our web
site,
http://investor.zedge.net/governance-documents
,
and is
7
also available in print to any stockholder upon request to the
Corporate Secretary. The principal duties of the Audit Committee
under its written charter include: (i) responsibilities associated
with our external and internal audit staffing and planning; (ii)
accounting and financial reporting issues associated with our
financial statements and filings with the SEC; (iii) financial and
accounting organization and internal controls; (iv) auditor
independence and approval of non-audit services; and (v)
“whistle-blower” procedures for reporting questionable
accounting and audit practices. The Audit Committee held two
meetings during Fiscal 2016.
The Board of Directors has determined that (i) all of the members
of the Audit Committee are independent within the meaning of the
applicable NYSE MKT listing standards and the Sarbanes-Oxley Act of
2002, and (ii) Mr. Greenberg qualifies as an “audit committee
financial expert,” as determined by the Board of Directors in
accordance with SEC rules.
The Compensation
Committee
The Compensation Committee
currently consists of Mr. Ghermezian (Chairman), Ms. Carney and Mr.
Greenberg. The Compensation Committee operates under a written
charter adopted by the Board of Directors, which can be found in
the Corporate Governance section of our web site,
http://investor.zedge.net/governance-documents
,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Compensation Committee is
responsible for, among other things, reviewing, evaluating and
approving all compensation arrangements for the executive officers
of the Company, evaluating the performance of executive officers,
administering the 2016 Plan and its predecessor, the
Company’s 2008 Stock Option and Incentive Plan, as amended
and restated, and recommending to the Board of Directors the nature
and amount of the compensation for Board members, such as
retainers, committee and other fees, stock option, restricted stock
and other stock awards, and other similar compensation as deemed
appropriate. The Compensation Committee confers with the
Company’s executive officers when making the above
determinations. The Compensation Committee held one meeting during
Fiscal 2016. The Board of Directors has determined that all of the
members of the Compensation Committee are independent within the
applicable NYSE MKT listing standards.
Compensation Committee
Interlocks and Insider Participation
None of the members of the Compensation Committee have (1) served
as an officer or employee of the Company or (2) any relationship
with the Company that is required to be disclosed under the heading
“Related Person Transactions” with the exception of
$141,000 that the Company paid in Fiscal 2016 for services and
software to Appboy, Inc., of which Mr. Ghermezian serves as the
Chief Executive Officer, one of six members of the board of
directors, and co-founder. No
executive officer of the Company served or serves on the
compensation committee or board of any company that employed or
employs any member of the Company’s Compensation Committee or
Board of Directors.
The Corporate Governance
Committee
The Corporate Governance Committee currently consists of Ms. Carney
(Chairman), Mr. Ghermezian and Mr. Greenberg. The Corporate
Governance Committee operates under a written charter adopted by
the Board of Directors, which can be found in the Corporate
Governance section of our web site,
http://investor.zedge.net/governance-documents
,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Corporate Governance
Committee is responsible for, among other things, reviewing and
reporting to the Board of Directors on matters involving
relationships among the Board of Directors, the stockholders and
senior management. The Corporate Governance Committee reviews (i)
the Corporate Governance Guidelines and other policies and
governing documents of the Company and recommends revisions as
appropriate, (ii) any potential conflicts of interest of
independent directors, (iii) related person transactions, and (iv)
and determines director independence, and makes recommendations to
the Board of Directors regarding director independence. The
Corporate Governance Committee held one meeting in Fiscal 2016. The
Board of Directors has determined that all of the members of the
Corporate Governance Committee are independent within the
applicable NYSE MKT listing standards.
8
The Nominating
Committee
The Nominating Committee currently consists of Mr. Howard Jonas and
Mr. Greenberg. The Nominating Committee operates under a written
charter adopted by the Board of Directors, which can be found in
the Corporate Governance section of our web site,
http://investor.zedge.net/governance-documents
,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Nominating Committee is
responsible for overseeing nominations to the Board of Directors,
including: (i) developing the criteria and qualifications for
membership on the Board of Directors; (ii) recommending candidates
to fill new or vacant positions on the Board of Directors; and
(iii) conducting appropriate inquiries into the backgrounds of
potential candidates. A summary of new director qualifications can
be found above under the heading “Director Selection
Process.” The Board of Directors has determined that Mr.
Greenberg is independent within the applicable NYSE MKT listing
standards. Howard Jonas is not independent. The Company, as a
“controlled company,” is exempt from the requirement to
maintain an independent nominating committee pursuant to the NYSE
MKT Company Guide. The Nominating Committee held one meeting in
Fiscal 2016.
9
FISCAL 2016 COMPENSATION
FOR NON-EMPLOYEE DIRECTORS
None of the Company’s directors who served on the Board
following the Spin-Off received compensation in Fiscal 2016 for
their service as directors.
Pursuant to the Company’s 2016 Stock Option and Incentive
Plan (the “2016 Plan”), each non-employee director of
the Company who is determined to be independent, will receive, on
each January 5
th
(or the following business day if January 5
th
is not a business day), total compensation of $50,000 if such
person served as a non-employee director during the entire prior
year. A non-employee director who became a non-employee director
during the prior year and who is determined to be independent will
instead receive pro-rata amount (based on quarter(s) of service
following the date the non-employee director was appointed as a
non-employee director) of the total compensation amount on their
first January 5
th
as a non-employee director. If the market value of our capital
stock is $40 million or higher based on a thirty-day average ending
on the relevant measurement period, all compensation will be in the
form of restricted shares of Class B Common Stock. If our market
cap is below $40 million using the same formulation, a pro-rata
portion of the compensation will be paid in cash. The cash portion
shall be pro rata based on the difference between $40 million and
our market cap. For example, if our market cap is $30 million, a
non-employee director who served as such during the entire prior
year would receive $12,500 in cash and the remaining in restricted
shares of Class B Common Stock. The measurement period for
determining the Company’s market cap is the average of the
closing prices during December of the year preceding the applicable
January 5
th
.
Shares will vest on the second anniversary of grant. If a director
voluntarily resigns from the Board, unvested shares will be
forfeited.
Payments of directors’ fees are made in January following
attendance of at least 75% of the regularly scheduled Board of
Directors meetings during the preceding year, and is pro-rated
based on the quarter that a director joins the Board of Directors
for non-employee directors who join the Board of Directors or
depart from the Board of Directors during the prior year, if such
director attended 75% of the applicable board meetings for such
partial year. The Company’s Chairman of the Board of
Directors may, in his or her discretion, waive the requirement of
75% attendance by a director to receive the annual retainer in the
case of mitigating circumstances. Directors are not entitled to
additional compensation for serving on committees of the Board of
Directors or per-meeting fees. Additional fees are not paid to the
Lead Independent Director (currently Mr. Ghermezian), chairs of the
committees or audit committee financial experts (currently Mr.
Greenberg).
See
Proposal
No. 2 and Proposal No. 3, below, for proposed changes to the
compensation for non-employee directors.
10
RELATED PERSON
TRANSACTIONS
Review of Related Person
Transactions
The Board of Directors has adopted a Statement of Policy with
respect to Related Person Transactions, which is administered by
the Corporate Governance Committee. This policy covers any
transaction or series of transactions in which the Company or a
subsidiary is a participant, the amount involved exceeds $120,000
and a Related Person has a direct or indirect material interest.
Related Persons include directors, director nominees, executive
officers, any beneficial holder of more than 5% of any class of the
Company’s voting securities, and any immediate family member
of any of the foregoing persons. The policy also covers
transactions which, despite not meeting all of the criteria set
forth above, would otherwise be considered material to investors
based on qualitative factors, as determined by the Corporate
Governance Committee with input from the Company’s management
and advisors. Transactions that fall within the definition are
considered by the Corporate Governance Committee for approval,
ratification or other action. Based on its consideration of all of
the relevant facts and circumstances, the Corporate Governance
Committee will decide whether or not to approve such transactions
and will approve only those transactions that are in the best
interests of the Company and its stockholders. If the Company
becomes aware of an existing Related Person Transaction that has
not been approved under this policy, the matter will be referred to
the Corporate Governance Committee. The Corporate Governance
Committee will evaluate all options available, including
ratification, revision or termination of such transaction.
Transactions with
Related Persons, Promoters and Certain Control Persons
The Company paid Appboy, Inc. $141,000 during Fiscal 2016 for
software and services. Mark Ghermezian, a member of the Board of
Directors, is the Chief Executive Officer and co-founder of Appboy,
which provides a customer relationship management and lifecycle
marketing platform for the Company.
The Company and IDT Corporation entered a Transition Services
Agreement (“TSA”), effective June 1, 2016. IDT is
controlled by Howard Jonas, and, until October 25, 2016, the
Company was controlled by Howard Jonas. Since October 25, 2016, the
Company has been controlled by Michael Jonas, the son of Howard
Jonas. Howard Jonas has been a member of our Board of Directors
since May 23, 2016, was Chairman of the Board from June 2, 2016
until November 14, 2016 and has been Vice-Chairman of the Board
since November 14, 2016. Michael Jonas has been a member of our
Board of Directors since May 23, 2016, was Vice-Chairman of the
Board from June 2, 2016 until November 14, 2016 and has been
Chairman of the Board since November 14, 2016. Pursuant to the TSA,
IDT provides certain services to the Company. The services include,
but are not limited to, services relating to human resources,
administrative, finance, accounting, tax, investor relations,
regulatory, consulting and legal. The Company paid IDT a total of
$39,290 for services provided by IDT pursuant to the TSA during
Fiscal 2016. As of July 31, 2016, the Company owed IDT $54,476.
11
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Class A Common Stock and Class B Common
Stock by (i) each person known by the Company to be the beneficial
owner of more than 5% of the outstanding shares of Class A Common
Stock or Class B Common Stock, (ii) each of the Company’s
directors, director nominees, and the Named Executive Officers (who
are listed under Executive Compensation below), and (iii) all
directors, Named Executive Officers and executive officers of the
Company as a group. Unless otherwise noted in the footnotes to the
table, to the best of the Company’s knowledge, the persons
named in the table have sole voting and investing power with
respect to all shares indicated as being beneficially owned by
them.
Unless otherwise noted, the security ownership information provided
below is given as of the close of business on November 21, 2016 and
all shares are owned directly. Percentage ownership information is
based on the following amount of outstanding shares: 524,775 shares
of Class A Common Stock and 8,865,278 shares of Class B Common
Stock. The ownership numbers reported for Michael Jonas assume the
conversion of all 524,775 currently outstanding shares of Class A
Common Stock (all of which are owned by Mr. Jonas) into an equal
number of shares of Class B Common Stock.
|
|
Number of
Shares of
Class B
Common
Stock
|
|
Percentage
of
Ownership
of Class B
Common
Stock
|
|
Percentage
of
Aggregate
Voting
Power
d
|
Michael Jonas
|
|
|
|
|
|
|
|
|
|
520 Broad Street
Newark, NJ 07102
|
|
1,803,205
|
(1)
|
|
19.2
|
%
|
|
69.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Tom Arnoy
|
|
487,961
|
(2)
|
|
5.4
|
%
|
|
1.0
|
%
|
Jonathan Reich
|
|
187,382
|
(3)
|
|
2.1
|
%
|
|
*
|
|
Howard Jonas
|
|
187,225
|
(4)
|
|
2.1
|
%
|
|
*
|
|
MT Carney
|
|
0
|
|
|
—
|
|
|
—
|
|
Mark Ghermezian
|
|
0
|
|
|
—
|
|
|
—
|
|
Stephen Greenberg
|
|
0
|
|
|
—
|
|
|
—
|
|
All directors, Named Executive Officers and
other executive officers as a group – 7 persons)
|
|
2,665,773
|
(5)
|
|
27.1
|
%
|
|
70.9
|
%
|
12
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company’s
directors, executive officers, and any persons holding more than
ten percent or more of a registered class of the Company’s
equity securities are required to file reports of ownership and
changes in ownership, on a timely basis, with the SEC. Based on
material provided to the Company, the Company believes that all
such required reports were filed on a timely basis in Fiscal 2016,
except for a Form 4 that was not filed on a timely basis on behalf
of Tom Arnoy, the Chief Executive Officer of the Company (with
respect to amendments of three outstanding options to extend the
option expiration dates of each such option, resulting in the
deemed cancellation of each such “old” option and the
grant of a replacement option for each such option).
13
EXECUTIVE
COMPENSATION
Summary Compensation
Table
The table below summarizes the total compensation paid or awarded
to both of our executive officers (the “Named Executive
Officers”) by IDT Corporation or the Company during Fiscal
2016. Prior to the Spin-Off, both of the Named Executive Officers
were employees of IDT and all compensation for periods prior to the
Spin-Off disclosed in the table below was paid by IDT for services
provided by the Named Executive Officers to our business segments
and, in the case of Mr. Reich, certain other business units of
IDT.
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
All
Other Compensation
($)
|
|
|
Tom Arnoy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
(2)
|
|
2016
|
|
270,333
|
|
325,000
|
|
—
|
|
—
|
(3)
|
|
876
|
(4)
|
|
596,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan Reich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Operating Officer
(5)
|
|
2016
|
|
342,500
|
|
50,000
|
|
—
|
|
—
|
|
|
2,000
|
(6)
|
|
394,500
|
Grants of Plan-Based
Awards
There were no stock options or restricted stock awarded to Named
Executive Officers in Fiscal 2016.
See
Footnote 3
to the Summary Compensation Table, above, for a description of the
extension on June 2, 2016 of the expiration dates of certain
options to purchase shares of Class B Common Stock held by Mr.
Arnoy.
14
Outstanding Equity
Awards at Fiscal Year-End
The following table sets forth all equity awards made to each of
the Named Executive Officers that were outstanding at the end of
Fiscal 2016.
|
|
|
|
|
|
|
Number of Securities Underlying Unexercised Options (#)
Exercisable
|
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
Option Exercise Price
($)
|
|
|
|
Number of Shares or Units of Stock That Have
Not Vested (#)
|
|
Market Value of Shares or Units of Stock That Have Not
Vested
($)
(1)
|
Tom Arnoy
|
|
7,605
|
|
—
|
|
0.16
|
|
05/31/2026
|
|
—
|
|
—
|
|
|
162,755
|
|
—
|
|
0.13
|
|
05/31/2026
|
|
|
|
|
|
|
82,929
|
|
—
|
|
1.73
|
|
05/31/2026
|
|
|
|
|
Jonathan Reich
|
|
181,616
|
|
—
|
|
1.73
|
|
10/31/2021
|
|
—
|
|
—
|
Option Exercises and
Stock Vested
There were no restricted shares of Class B Common Stock that vested
for Named Executive Officers in Fiscal 2016. There were no stock
options exercised by Named Executive Officers in Fiscal 2016.
POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE-IN-CONTROL
There are no payments due to either of the Named Executive Officers
upon their termination of employment with the Company or the change
of control of the Company, assuming such event occurred at the end
of Fiscal 2016.
15
PROPOSALS REQUIRING YOUR
VOTE
PROPOSAL NO.
1
ELECTION OF
DIRECTORS
Pursuant to the Company’s Certificate of Incorporation, the
authorized number of members of the Board of Directors will be set
by the Board of Directors from time to time. The Board of Directors
has set the number of directors on the Board of Directors at five.
There are currently five directors on the Board of Directors. The
current terms of all of the serving directors expire at the Annual
Meeting. All five of the directors are standing for re-election at
the Annual Meeting.
The nominees to the Board of Directors are Michael Jonas, Howard
Jonas, Marie Therese (MT) Carney, Mark Ghermezian and Stephen
Greenberg, each of whom has consented to be named in this Proxy
Statement and to serve if elected. Each of the nominees is
currently serving as a director of the Company. Brief biographical
information about the nominees for directors is furnished below.
The Company’s Amended and Restated By-Laws enable the
Chairman of the Board to appoint an ex-officio (non-voting)
director to serve on the Board. Howard Jonas, as Chairman of the
Board, appointed Tom Arnoy to serve in this capacity on June 2,
2016, and Michael Jonas affirmed this appointment on November 14,
2016 when he became the Chairman of the Board. The stockholders are
not being asked to vote on Mr. Arnoy’s appointment as an
ex-officio (non-voting) director.
Each of these director nominees is standing for election for a term
of one year until the 2018 Annual Meeting, or until his or her
successor is duly elected and qualified or until his earlier
resignation or removal. A majority of the votes cast at the Annual
Meeting shall elect each director. Stockholders may not vote for
more than five persons, which is the number of nominees identified
herein. The following pages contain biographical information and
other information about the nominees. Following each
nominee’s biographical information, we have provided
information concerning particular experience, qualifications,
attributes and/or skills that the Nominating Committee and the
Board of Directors considered when determining that each nominee
should serve as a director.
Marie Therese (MT)
Carney
has been the Chief Executive Officer and Founder of
Untitled Worldwide, LLC since 2013. At Untitled Worldwide, Ms.
Carney builds efficient marketing campaigns that help startups
using her extensive experience building and managing large teams of
creative people, designing shared goals and finding ways for groups
to work together. Prior to founding Untitled Worldwide, Ms. Carney
was Worldwide-President of Marketing at Walt Disney Studios from
2011 to 2012 where she was responsible for a complete overhaul of
the studios marketing organization creating a more efficient and
streamlined process that produced exciting, integrated, targeted
and cost efficient campaigns. Prior to Disney, Ms. Carney
co-founded Naked Communications in America, a company that created
a wave of change across the marketing community with its highly
prized intelligent strategic solutions. Ms. Carney’s previous
experiences include Worldwide Planning Director at Ogilvy and
Mather and Chief Strategy Officer at Universal McCann.
Key Attributes,
Experience and Skills:
Ms. Carney brings an insightful perspective to the Board based upon
her extensive background in marketing and entrepreneurship. She has
worked closely with start-ups and multinationals on developing
their business and marketing strategies both important areas for
us. Her skill and experience in managing creative personnel will
also serve to support management in their performance.
Mark Ghermezian
has been Chief Executive Officer and
Co-Founder of Appboy, Inc., an intelligent CRM for mobile
marketers, since 2011. Mr. Ghermezian has also been the Managing
Partner of T5 Capital Partners, an investment firm focused on early
stage technologies across verticals, since January 2011.
Additionally, Mr. Ghermezian regularly speaks, writes, and presents
about the future of mobile, investment strategy, and the startup
landscape.
Key Attributes,
Experience and Skills:
Mr. Ghermezian, a serial entrepreneur, is a well-recognized leader
in the world of marketing automation and he brings to the Board
extensive knowledge of the mobile apps eco-system. Besides his
industry-specific experience, his work on the investment side, both
as a fund manager and writer and speaker, will benefit Zedge, as it
charts its course as an independent public company.
16
Stephen Greenberg
has been managing member of Pilgrim Mediation Group since May 2012
and managing member of Bento Box Entertainment since January 2013.
Mr. Greenberg previously served as Chairman of the Board and Chief
Executive Officer of Net2Phone, Inc. and of IDT Spectrum, Inc. from
2002 to 2006. In April 2015, Mr. Greenberg was elected the
29
th
Chairman of the Board the Conference of Presidents of Major
American Jewish Organizations, the central coordinating body on
international and national concerns for 50 National Jewish
Organizations. Immediately prior to his election, Mr. Greenberg
served as Chairman of the National Coalition for Eurasian Jewry.
Mr. Greenberg has been a member of the board of American Friends of
Beit Hatfusot since 1995 and previously served as the
organization’s President and a member of the board of Tel
Aviv Foundation since 2005. Mr. Greenberg was also a member of the
board of International Hillel from 2006 to 2012. Mr. Greenberg
received a B.A. in English Cum Laude from Washington &
Jefferson College in 1965 and a J.D. with honors from George
Washington University in 1968.
Key Attributes,
Experience and Skills:
Mr. Greenberg is a seasoned professional and executive. He has
overseen and advised companies as CEO as well as an attorney.
Steve’s experience running Net2Phone will bring to the Board
the perspective of an executive of a developing company that was
newly public and dealing with the challenges of that position. His
problem-solving skills, proven through his experience as an
attorney, a mediator and a leader in public service, as well as his
broad contacts in numerous fields, will also serve the Company
well.
Michael Jonas
has
been the Chairman of our Board of Directors since November 14, 2016
and a member of our Board of Directors since May 23, 2016. He has
also served as Executive Vice President of Genie Energy since May
2014, and Director of Global Exploration and Business Development
since August 2014, Chief Executive Officer of Genie Oil Development
since May 2015. In such capacities, Michael Jonas is responsible
for government affairs, public relations, and business development
for Genie Oil & Gas and all of the Company’s business
development in Mongolia. From November 2005 through December 2011,
Michael Jonas served IDT in various positions such as analyst, vice
president and manager of international business. Michael Jonas is a
founding member of Mongolian Oil Shale Association. Michael Jonas
is the son of Howard Jonas, Vice-Chairman of our Board of
Directors.
Key Attributes,
Experience and Skills:
Michael Jonas has served as an executive officer of growing
businesses and has managed development efforts for larger
organizations. His experience in overseeing operations in growth
mode will bring hands-on experience to the Board and guidance to
management in executing our growth plan.
Howard Jonas
has
been the Vice-Chairman of our Board of Directors since November 14,
2016. He was our Chairman of the Board from June 2, 2016 until
November 14, 2016 and has been a member of our Board of Directors
since May 23, 2016. He has also served as Chairman of the Board of
Directors of Genie Energy Ltd. since January, 2011, when Genie was
spun off from IDT. In addition, he has served as Chief Executive
Officer of Genie since January 2014 and Co-Vice Chairman of Genie
Energy International Corporation since September 2009. He has been
a director of IDT Energy since June 2007 and a director of American
Shale Oil Corporation LLC since January 2008. Howard Jonas founded
IDT in August 1990, and has served as Chairman of its Board of
Directors since its inception. Howard Jonas served as Chief
Executive Officer of IDT from October 2009 through December 2013.
Howard Jonas also serves as the Chairman of the Board of IDW Media
Holdings, Inc., a former subsidiary of IDT that was spun off to
stockholders in September 2009. Howard. Jonas is also the founder
and has been President of Jonas Media Group (f/k/a Jonas
Publishing) since its inception in 1979. Howard Jonas has been a
director of Cornerstone Pharmaceuticals since April 2013 and was
appointed Chairman of the Board of Cornerstone in April 2016.
Howard Jonas received a B.A. in Economics from Harvard University.
Howard Jonas is the father of Michael Jonas, Chairman of our Board
of Directors.
17
Key Attributes,
Experience and Skills:
As Chairman of the Boards of IDT, Genie and IDW Media Holdings,
Inc., Howard Jonas brings to the Board extensive and detailed
knowledge of all aspects of our Company. He has extensive knowledge
of the industry in which the Company operates. In addition, having
Mr. Jonas on the Board and as Vice-Chairman provides our Company
with effective leadership.
The Board of Directors has no reason to believe that any of the
persons named above will be unable or unwilling to serve as a
director, if elected.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE.
18
Directors, Director
Nominees and Executive Officers
The executive officers, directors, director nominees and Named
Executive Officers of the Company are as follows:
|
|
|
|
|
Tom Arnoy
|
|
41
|
|
Chief Executive Officer, Named Executive Officer
and Ex-Officio (Non-Voting) Director
|
Jonathan Reich
|
|
50
|
|
Chief Financial Officer, Chief Operating Officer
and Named Executive Officer
|
Michael Jonas
|
|
33
|
|
Chairman of the Board, Director and Director
Nominee
|
Howard Jonas
|
|
60
|
|
Vice-Chairman of the Board, Director and
Director Nominee
|
Marie Therese (MT) Carney
|
|
47
|
|
Director and Director Nominee
|
Mark Ghermezian
|
|
34
|
|
Director and Director Nominee
|
Stephen Greenberg
|
|
72
|
|
Director and Director Nominee
|
Set forth below is biographical information with respect to the
Company’s current executive officers and Named Executive
Officers:
Tom Arnoy
is one
of our founders, has served as our Chief Executive Officer since
2011, and has served as an ex officio (non-voting) member of our
Board of Directors since June 2, 2016. From 2008 to 2011, Mr. Arnoy
served as our President. Prior to joining Zedge, Mr. Arnoy was
involved in several different mobile internet businesses including
Webway AS, a Norwegian based venture; IMC Labs, which Mr. Arnoy
founded in 2000 and which ultimately became a part of Mobile Forza
AS, a Norwegian mobile incubator and consulting company. At Mobile
Forza AS, Mr. Arnoy managed the product and technology teams in
Trondheim, Norway. In addition to these roles, Mr. Arnoy was a
project leader for MobileZone AS, a joint venture between Siemens
Mobile and Mobile Forza AS. Mr. Arnoy has served as a director of
Patchbox, AS, a private investment company, since 2015.
Jonathan Reich
has served as our Chief Financial Officer since March 2016 and our
Chief Operating Officer since 2011. From 2007 to 2014, Mr. Reich
served as President of Fabrix Systems, Inc. and, from 1999 to 2007,
he served in various positions at Net2Phone, Inc., culminating with
him serving as Chief Executive Officer of Net2Phone Global
Services. Mr. Reich has been a director at the non-profit
organization, Hand-in-Hand, since 2005. Mr. Reich received a B.S.
and M.S. in Operations Research from Columbia University’s
School of Engineering and Applied Science in 1989 and 1993
respectively.
Relationships among
Directors or Executive Officers
Howard Jonas and Michael Jonas are father and son. There are no
other familial relationships among any of the directors or
executive officers of the Company.
19
PROPOSAL NO.
2
APPROVAL OF AN AMENDMENT
TO THE COMPANY’S
2016 STOCK OPTION AND INCENTIVE PLAN
The Company’s stockholders are being asked to approve an
amendment to the Company’s 2016 Stock Option and Incentive
Plan (the “2016 Plan”) that will among other things (a)
increase the number of shares of Class B Common Stock available for
the grant of awards thereunder by 500,000, (b) modify the
non-employee directors’ annual automatic grant to provide
that, if the Company’s market cap is below $40 million as
calculated in the Plan, a pro rata portion will be paid in cash,
and (c) change the vesting of future grants of restricted stock to
be automatically awarded to non-employee directors under the Plan
to vest in full upon grant instead of two years after grant. The
Board of Directors adopted the proposed amendment to the 2016 Plan
on September 29, 2016, subject to stockholder approval at the
Annual Meeting.
The Board of Directors believes that the proposed amendment to
increase the number of shares of Class B Common Stock available for
the grant of awards thereunder by 500,000 is necessary in order to
provide the Company with a sufficient reserve of shares of Class B
Common Stock for future grants needed to attract and retain the
services of key employees, directors and consultants of the Company
essential to the Company’s long-term success. The Board of
Directors believes that the proposed amendments to (1) modify the
non-employee directors’ annual automatic grant to provide
that, if the Company’s market cap is below $40 million as
calculated in the Plan, a pro rata portion will be paid in cash,
and (2) change the vesting of future grants of restricted stock to
be automatically awarded to non-employee directors under the Plan
to vest in full upon grant instead of two years after grant, are
necessary to attract and retain the services of non-employee
directors of the Company essential to the Company’s long-term
success.
The proposed amendment has been approved by the Compensation
Committee and the Board of Directors, and is being submitted for a
stockholder vote in order to enable the Company to grant, among
other equity grants permitted pursuant to the 2016 Plan, options
which are incentive stock options (“ISOs”) within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”); and because such approval may be
required or advisable in connection with (i) the provisions set
forth in Section 162(m) of the Code relating to the deductibility
of certain compensation (ii) the provisions set forth in Rule 16b-3
promulgated under the Exchange Act and (iii) the rules and
regulations applicable to NYSE MKT-listed companies.
The following description of the 2016 Plan, as proposed to be
amended by this Proposal, is a summary, does not purport to be
complete and is qualified in its entirety by the full text of the
2016 Plan, as proposed to be amended. A copy of the 2016 Plan, as
proposed to be amended, is attached hereto as Exhibit A and has
been filed with the SEC with this Proxy Statement.
DESCRIPTION OF THE 2016
PLAN
Pursuant to the 2016 Plan, officers, employees, directors and
consultants of the Company and its subsidiaries are eligible to
receive awards of stock options, stock appreciation rights, limited
stock appreciation rights, restricted stock and deferred stock
units. There are approximately 60 employees and directors eligible
for grants under the 2016 Plan. Options granted under the 2016 Plan
may be ISOs or non-qualified stock options (“NQSOs”).
Stock appreciation rights (“SARs”) and limited stock
appreciation rights (“LSARs”) may be granted either
alone or simultaneously with the grant of an option. Restricted
stock and deferred stock units may be granted in addition to or in
lieu of any other award made under the 2016 Plan.
The maximum number of shares reserved for the grant of awards under
the 2016 Plan is 691,000 shares of Class B Common Stock (including
the 500,000 shares of Class B Common Stock reserved subject to
approval of the stockholders). Such share reserves are subject to
further adjustment in the event of specified changes to the capital
structure of the Company. The shares may be made available either
from the Company’s authorized but unissued capital stock or
from capital stock reacquired by the Company.
The Compensation Committee
administers the 2016 Plan. Subject to the provisions of the 2016
Plan, the Compensation Committee determines the type of awards,
when and to whom awards will be granted, the number and class of
shares covered by each award and the terms, provisions and kind of
consideration payable (if any), with respect to awards. The
Compensation Committee may interpret the 2016 Plan and may at any
time adopt such
20
rules and regulations for the
2016 Plan as it deems advisable, including the delegation of
certain of its authority. In determining the persons to whom awards
shall be granted and the number of shares covered by each award,
the Compensation Committee takes into account the duties of the
respective persons, their present and potential contributions to
the success of the Company and such other factors as the
Compensation Committee deems relevant.
An option may be granted on such terms and conditions as the
Compensation Committee may approve, and generally may be exercised
for a period of up to ten years from the date of grant. Generally,
ISOs will be granted with an exercise price equal to the
“Fair Market Value” (as defined in the 2016 Plan) on
the date of grant. In the case of ISOs, certain limitations will
apply with respect to the aggregate value of option shares which
can become exercisable for the first time during any one calendar
year, and certain additional limitations will apply to ISOs granted
to “Ten Percent Stockholders” of the Company (as
defined in the 2016 Plan). The Compensation Committee may provide
for the payment of the option price in cash, by delivery of Class B
Common Stock having a Fair Market Value equal to such option price,
by a combination thereof or by any other method. Options granted
under the 2016 Plan will become exercisable at such times and under
such conditions as the Compensation Committee shall determine,
subject to acceleration of the exercisability of options in the
event of, among other things, a “Change in Control,” a
“Corporate Transaction” or a “Related Entity
Disposition” (in each case, as defined in the 2016 Plan).
On each January 5
th
(or the next business day if January 5
th
is not a business day) each of the Company’s non-employee
directors (as defined in the 2016 Plan) who is determined to be
independent shall automatically be awarded restricted shares of
Class B Common Stock worth $50,000 based on the average closing
prices of the Class B Common Stock on the NYSE MKT for the December
preceding the date of grant; provided, however that the market
value of our capital stock is below $40 million based on the same
formulation, a pro rata portion (based on the difference between
$40 million and the Company’s market cap) will be paid in
cash. New non-employee directors who are determined to be
independent will receive a pro-rata amount (based on quarters of
service for such calendar year following their election to the
Board) of such annual grant on their first January 5
th
as a non-employee director. The vesting of such awards of
restricted shares of Class B Common Stock shall vest immediately
upon grant.
The 2016 Plan also provides for the granting of restricted stock
awards, which are awards of Class B Common Stock that may not be
disposed of, except by will or the laws of descent and
distribution, for such period as the Compensation Committee
determines (the “restricted period”). The Compensation
Committee may also impose such other conditions and restrictions,
if any, on the shares as it deems appropriate, including the
satisfaction of performance criteria. All restrictions affecting
the awarded shares lapse in the event of a Change in Control, a
Corporate Transaction or a Related Entity Disposition.
During the restricted period for a restricted stock award, the
grantee will be entitled to receive dividends with respect to, and
to vote, the shares of restricted stock awarded to him or her. If,
during the restricted period, the grantee’s service with the
Company terminates, any shares remaining subject to restrictions
will be forfeited. The Compensation Committee has the authority to
cancel any or all outstanding restrictions prior to the end of the
restricted period, including cancellation of restrictions in
connection with certain types of termination of service.
The 2016 Plan also permits the Compensation Committee to grant SARs
and/or LSARS. Generally, SARs may be exercised at such time or
times and only to the extent determined by the Compensation
Committee and LSARs may be exercised only (i) during the 90 days
immediately following a Change in Control or (ii) immediately prior
to the effective date of a Corporate Transaction (as defined in the
2016 Plan). LSARs will be exercisable at such time or times and
only to the extent determined by the Compensation Committee. An
LSAR granted in connection with an ISO is exercisable only if the
Fair Market Value per share of Class B Common Stock on the date of
grant exceeds the purchase price specified in the related ISO.
Upon exercise of an SAR, a
grantee will receive for each share for which an SAR is exercised,
an amount in cash or shares of Class B Common Stock, as determined
by the Compensation Committee, equal to the excess, if any, of (i)
the Fair Market Value of a share of Class B Common Stock on the
date the SAR is exercised, over (ii) the exercise or other base
price of the SAR or, if applicable, the exercise price per share of
the option to which the SAR relates.
Upon exercise of an LSAR, a grantee will receive for each share for
which an LSAR is exercised, an amount in cash equal to the excess,
if any, of (i) the greater of (x) the highest Fair Market Value of
a share of Class B Common Stock, during the 90-day period ending on
the date the LSAR is exercised, and (y) whichever of the following
is applicable: (1) the highest per share price paid in any tender
or exchange offer which is in effect at any time during
21
the 90 days ending on the date of exercise of the LSAR; (2) the
fixed or formula price for the acquisition of shares of Class B
Common Stock in a merger in which the Company will not continue as
the surviving corporation, or upon a consolidation, or a sale,
exchange or disposition of all or substantially all of the
Company’s assets, approved by the Company’s
stockholders (if such price is determinable on the date of
exercise); and (3) the highest price per share of Class B Common
Stock shown on Schedule 13D, or any amendment thereto, filed by the
holder of the specified percentage of Class B Common Stock, the
acquisition of which gives rise to the exercisability of the LSAR
over (ii) the exercise or other base price of the LSAR or, if
applicable, the exercise price per share of the option to which the
LSAR relates. In no event, however, may the holder of an LSAR
granted in connection with an ISO receive an amount in excess of
the maximum amount which will enable the option to continue to
qualify as an ISO.
When an SAR or LSAR is
exercised, the option to which it relates, if any, will cease to be
exercisable to the extent of the number of shares with respect to
which the SAR or LSAR is exercised, but will be deemed to have been
exercised for purposes of determining the number of shares
available for the future grant of awards under the 2016
Plan.
The 2016 Plan further provides for the granting of deferred stock
units, which are awards providing a right to receive shares of
Class B Common Stock on a deferred basis, subject to such
restrictions and a restricted period as the Compensation Committee
determines. The Compensation Committee may also impose such other
conditions and restrictions, if any, on the payment of shares as it
deems appropriate, including the satisfaction of performance
criteria. All deferred stock awards become fully vested in the
event of a Change in Control, a Corporate Transaction or a Related
Entity Disposition.
The grantee of a deferred stock unit will not be entitled to
receive dividends or vote the underlying shares until the
underlying shares are delivered to the grantee. The Compensation
Committee has the authority to cancel any or all outstanding
restrictions prior to the end of the restricted period, including
cancellation of restrictions in connection with certain types of
termination of service.
The Board of Directors may at any time and from time to time
suspend, amend, modify or terminate the 2016 Plan; provided,
however, that, to the extent required by any other law, regulation
or stock exchange rule, no such change shall be effective without
the requisite approval of the Company’s stockholders. In
addition, no such change may adversely affect an award previously
granted, except with the written consent of the grantee.
No awards may be granted under the 2016 Plan after May 23, 2026,
ten years from the Board’s adoption of the 2016 Plan.
ISOs (and any related SARs) are not assignable or transferable
except by the laws of descent and distribution. Non-qualified stock
options (and any SARs or LSARs related thereto) may be transferred
to the extent permitted by the Compensation Committee. Holders of
NQSOs (and any SARs or LSARs related thereto) are permitted to
transfer such NQSOs for no consideration to such holder’s
“family members” (as defined in Form S-8) with the
prior approval of the Compensation Committee.
The Company cannot now determine the number of options or other
awards to be granted in the future under the 2016 Plan to executive
officers, directors, employees and consultants.
Federal Income Tax
Consequences of Awards Granted under the 2016 Plan
The Company believes that, under present law, the following are the
U.S. federal income tax consequences generally arising with respect
to awards under the 2016 Plan:
Incentive Stock
Options.
ISOs granted under the 2016 Plan are intended
to meet the definitional requirements of Section 422(b) of the Code
for “incentive stock options.” A participant who
receives an ISO does not recognize any taxable income upon the
grant of such ISO. Similarly, the exercise of an ISO generally does
not give rise to federal taxable income to the participant,
provided that (i) the federal “alternative minimum
tax,” which depends on the participant’s particular tax
situation, does not apply and (ii) the participant is employed by
the Company from the date of grant of the option until three months
prior to the exercise thereof, except where such employment or
service terminates by reason of disability or death (where the
three month period is extended to one year).
Further, if after exercising an ISO, a participant disposes of
Class B Common Stock so acquired more than two years from the date
of grant and more than one year from the date of transfer of Class
B Common Stock pursuant to the exercise of such ISO (the
“applicable holding period”), the participant will
normally recognize a long-term
22
capital gain or loss equal to the difference, if any, between the
amount received for the shares and the exercise price. If, however,
the participant does not hold the shares so acquired for the
applicable holding period — thereby making a
“disqualifying disposition” — the participant
would realize ordinary income on the excess of the fair market
value of the shares at the time the ISO was exercised over the
exercise price, and the balance of income, if any, would be
long-term capital gain (provided the holding period for the shares
exceeded one year and the participant held such shares as a capital
asset at such time).
A participant who exercises an ISO by delivering Class B Common
Stock previously acquired pursuant to the exercise of another ISO
is treated as making a “disqualifying disposition” of
such Class B Common Stock if such shares are delivered before the
expiration of their applicable holding period. Upon the exercise of
an ISO with previously acquired shares as to which no disqualifying
disposition occurs, the participant would not recognize gain or
loss with respect to such previously acquired shares. The Company
will not be allowed a federal income tax deduction upon the grant
or exercise of an ISO or the disposition, after the applicable
holding period, of the Class B Common Stock acquired upon exercise
of an ISO. In the event of a disqualifying disposition, the Company
generally will be entitled to a deduction in an amount equal to the
ordinary income recognized by the participant, provided that such
amount constitutes an ordinary and necessary business expense to
the Company and is reasonable and the limitations of Sections 280G
and 162(m) of the Code (discussed below) do not apply.
Non-Qualified Stock
Options and Stock Appreciation Rights.
Non-qualified
stock options granted under the 2016 Plan are options that do not
qualify as ISOs. A participant who receives an NQSO or an SAR
(including an LSAR) will not recognize any taxable income upon the
grant of such NQSO or SAR. However, the participant generally will
recognize ordinary income upon exercise of an NQSO in an amount
equal to the excess of (i) the fair market value of the shares of
Class B Common Stock at the time of exercise over (ii) the exercise
price. Similarly, upon the receipt of cash or shares pursuant to
the exercise of an SAR, the individual generally will recognize
ordinary income in an amount equal to the sum of the cash and the
fair market value of the shares received.
The ordinary income recognized with respect to the receipt of
shares or cash upon exercise of a NQSO or an SAR will be subject to
both wage withholding and other employment taxes. In addition to
the customary methods of satisfying the withholding tax liabilities
that arise upon the exercise of an SAR for shares or upon the
exercise of a NQSO, the Company may satisfy the liability in whole
or in part by withholding shares of Class B Common Stock from those
that otherwise would be issuable to the participant or by the
participant tendering other shares owned by him or her, valued at
their fair market value as of the date that the tax withholding
obligation arises.
A federal income tax deduction generally will be allowed to the
Company in an amount equal to the ordinary income recognized by the
individual with respect to his or her NQSO or SAR, provided that
such amount constitutes an ordinary and necessary business expense
to the Company and is reasonable and the limitations of Sections
280G and 162(m) of the Code do not apply.
If a participant exercises an NQSO by delivering shares of Class B
Common Stock to the Company, other than shares previously acquired
pursuant to the exercise of an ISO which is treated as a
“disqualifying disposition” as described above, the
participant will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is
different from the participant’s tax basis. The participant,
however, will be taxed as described above with respect to the
exercise of the NQSO as if he or she had paid the exercise price in
cash, and the Company likewise generally will be entitled to an
equivalent tax deduction.
Other
Awards.
With respect to other awards under the 2016
Plan that are settled either in cash or in shares of Class B Common
Stock that are either transferable or not subject to a substantial
risk of forfeiture (as defined in the Code and the regulations
thereunder), participants generally will recognize ordinary income
equal to the amount of cash or the fair market value of Class B
Common Stock received. Participants also will not recognize income
upon the grant of a deferred stock unit, and will instead recognize
ordinary income when shares of Class B Common Stock are delivered
in satisfaction of such award.
With respect to restricted stock awards under the 2016 Plan that
are restricted to transferability and subject to a substantial risk
of forfeiture — absent a written election pursuant to Section
83(b) of the Code filed with the Internal Revenue Service within 30
days after the date of transfer of such shares pursuant to the
award (a “Section 83(b) election”) — a
participant will recognize ordinary income at the earlier of the
time at which (i) the shares become transferable or (ii) the
restrictions that impose a substantial risk of forfeiture of such
shares lapse, in an amount equal to the excess of the fair market
value (on such date) of such shares over the price paid for the
award, if any. If a
23
Section 83(b) election is made, the participant will recognize
ordinary income, as of the transfer date, in an amount equal to the
excess of the fair market value of Class B Common Stock as of that
date over the price paid for such award, if any.
The ordinary income
recognized with respect to the receipt of cash, shares of Class B
Common Stock or other property under the 2016 Plan will be subject
to both wage withholding and other employment taxes. In addition to
the customary methods of satisfying withholding tax liabilities
that arise with respect to the delivery of cash or property (or
vesting thereof), the Company may satisfy the liability in whole or
in part by withholding shares of Class B Common Stock from those
that would otherwise be issuable to the participant or by the
participant tendering other shares owned by him or her, valued at
their fair market value as of the date that the tax withholding
obligation arises.
The Company generally will be allowed a deduction for federal
income tax purposes in an amount equal to the ordinary income
recognized by the participant, provided that such amount
constitutes an ordinary and necessary business expense and is
reasonable and the limitations of Sections 280G and 162(m) of the
Code do not apply.
Change in
Control.
In general, if the total amount of payments to
a participant that are contingent upon a “change in
control” of the Company (as defined in Section 280G of the
Code), including awards under the 2016 Plan that vest upon a
“change in control,” equals or exceeds three times the
individual’s “base amount” (generally, such
participant’s average annual compensation for the five
calendar years preceding the change in control), then, subject to
certain exceptions, the payments may be treated as “parachute
payments” under the Code, in which case a portion of such
payments would be non-deductible to the Company and the participant
would be subject to a 20% excise tax on such portion of the
payments.
Certain Limitations
on Deductibility of Executive Compensation.
With
certain exceptions, Section 162(m) of the Code denies a deduction
to publicly held corporations for compensation paid to certain
executive officers in excess of $1 million per executive per
taxable year (including any deduction with respect to the exercise
of an NQSO or SAR or the disqualifying disposition of stock
purchased pursuant to an ISO). One such exception applies to
certain performance-based compensation provided that such
compensation has been approved by stockholders in a separate vote
and certain other requirements are met. The Company believes that
Stock Options, SARs and LSARs granted under the 2016 Plan should
qualify for the performance-based compensation exception to Section
162(m).
On November 21, 2016, the last reported sale price of Class B
Common Stock on the NYSE MKT was $3.79 per share.
24
EQUITY COMPENSATION PLAN
INFORMATION
Employee Stock Incentive
Program
The Company adopted the 2016 Plan, pursuant to which options to
purchase shares of Class B Common Stock, restricted shares of Class
B Common Stock and deferred stock units may be awarded. As fully
described in Proposal No. 2, the Company is asking the stockholders
to vote on an amendment to the 2016 Plan that will (a) increase the
number of shares of Class B Common Stock available for the grant of
awards thereunder by 500,000, (b) modify the non-employee
directors’ annual automatic grant to provide that, if the
Company’s market cap is below $40 million as calculated in
the Plan, a pro rata portion will be paid in cash, and (c) change
the vesting of future grants of restricted stock to be
automatically awarded to non-employee directors under the Plan to
vest in full upon grant instead of two years after grant. The
Company anticipates awarding options to purchase shares of Class B
Common Stock, restricted shares of Class B Common Stock and
deferred stock units to employees, officers, directors and
consultants under the 2016 Plan.
Equity Compensation
Plans and Individual Compensation Arrangements
The following chart provides aggregate information regarding grants
under all equity compensation plans of the Company through July 31,
2016.
|
|
Number of Securities to be Issued upon Exercise of
Outstanding Options
(1)
|
|
Weighted-Average Exercise Price of Outstanding
Options
|
|
Number of Securities Remaining Available for Future
Issuance under Equity Compensation Plans
|
Equity compensation plans approved by security
holders
|
|
1,434,737
|
|
$
|
0.92
|
|
58,859
|
Equity compensation plans not approved by
security holders
|
|
—
|
|
|
—
|
|
—
|
Total
|
|
1,434,737
|
|
$
|
0.92
|
|
58,859
|
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
APPROVAL OF AN AMENDMENT TO THE 2016 PLAN AS DESCRIBED
ABOVE.
25
PROPOSAL NO.
3
APPROVAL OF THE
ACCELERATION OF THE VESTING DATE OF RESTRICTED STOCK
THAT WILL BE AUTOMATICALLY AWARDED TO THE COMPANY’S
NON-EMPLOYEE DIRECTORS FROM JANUARY 5, 2019 TO JANUARY 18,
2017
The Company’s stockholders are being asked to approve the
acceleration of the vesting date of restricted stock that will be
automatically awarded to the Company’s non-employee directors
on January 5, 2017 from January 5, 2019 to January 18, 2017.
The Company’s 2016 Stock Option and Incentive Plan (the
“2016 Plan”) provides that on each January
5
th
(or the next business day if January 5
th
is not a business day) each of the Company’s non-employee
directors (as defined in the 2016 Plan) who is determined to be
independent, will receive total compensation of $50,000 if such
person served as a non-employee director during the entire prior
year. A non-employee director who is determined to be independent
who became a non-employee director during the prior year will
instead receive pro-rata amount (based on quarter(s) of service
following the date the non-employee director was appointed as a
non-employee director) of $50,000 on their first January
5
th
as a non-employee director. If the market value of our capital
stock is $40 million or higher based on the average closing prices
of Class B Common Stock on the NYSE MKT for the December preceding
the applicable January 5
th
,
all compensation will be in the form of shares of restricted shares
of Class B Common Stock, but if our market cap is below $40 million
using the same formulation, a pro-rata portion of the compensation
will be paid in cash (the “Annual Grant Calculation”).
The cash portion shall be pro rata based on the difference between
$40 million and our market cap. For example, if our market cap is
$30 million, a non-employee director who served as such during the
entire prior year would receive $12,500 in cash and the remaining
in restricted shares of Class B Common Stock. Accordingly, on
January 5, 2017, the Company’s non-employee directors will
receive such number of restricted shares of Class B Common Stock as
calculated by the Annual Grant Calculation (the “2017
Restricted Stock Grant”).
The Company’s current non-employee directors who were
determined to be independent are Marie Therese (MT) Carney, Mark
Ghermezian and Stephen Greenberg, each of whom joined the Board in
June 2016 and therefore will have his or her total compensation for
2016 pro-rated to $25,000.
Pursuant to the 2016 Plan, the 2017 Restricted Stock Grant will
vest two years after grant, i.e., on January 5, 2019. The
Company’s stockholders are being asked to approve the
acceleration of the vesting date of 2017 Restricted Stock Grant
from January 5, 2019 to January 18, 2017. The Board of Directors
adopted the proposed acceleration of the vesting date of the 2017
Restricted Stock Grant on September 29, 2016, subject to
stockholder approval at the Annual Meeting.
See
Proposal
No. 2, above, for, among other things, a summary description of the
2016 Plan, as proposed to be amended by Proposal No. 2. Such
summary does not purport to be complete and is qualified in its
entirety by the full text of the 2016 Plan, as proposed to be
amended by Proposal No. 2, which is attached hereto as Exhibit A
and has been filed with the SEC with this Proxy Statement.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR APPROVAL OF
THE ACCELERATION OF THE VESTING DATE OF RESTRICTED STOCK THAT
WILL
BE AUTOMATICALLY AWARDED TO THE COMPANY’S NON-EMPLOYEE
DIRECTORS
FROM JANUARY 5, 2019 TO JANUARY 18, 2017 AS DESCRIBED
ABOVE.
26
PROPOSAL NO.
4
ADVISORY VOTE ON
EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act of 1934,
as amended, we are asking our stockholders to cast an advisory vote
on the compensation of the “Named Executive Officers”
identified in the 2016 Summary Compensation Table in the
“Executive Compensation” section of this Proxy
Statement. This vote is advisory and not binding on the Company;
however, it will provide feedback concerning our executive
compensation program.
Our Compensation Committee believes that our executive compensation
program implements and achieves the goals of our executive
compensation philosophy. That philosophy, which is set by the
Compensation Committee, is designed to attract and retain qualified
and motivated personnel and align their interests with the
short-term and long-term goals of the Company and with the best
interests of our stockholders. Our compensation philosophy is to
provide compensation to attract the individuals necessary for our
current needs and growth initiatives, and provide them with the
proper incentives to motivate those individuals to achieve our
long-term plans.
The three broad components of our executive officer compensation
are base salary, annual cash incentive bonuses, and long-term,
equity-based incentive awards. The Compensation Committee
periodically reviews total compensation levels and the allocation
of compensation among these three components for each of the
executive officers in the context of our overall compensation
policy. The Compensation Committee believes that our current
compensation plans are competitive and reasonable.
Prior to the Spin-Off, all of the Named Executive Officers were
employees of IDT Corporation and all compensation for Fiscal 2016
prior to the Spin-Off that is included in the summary compensation
table that was paid by IDT was for services provided by the Named
Executive Officers to our business segments and other units of
IDT.
The pre-Spin-Off compensation of Messrs. Arnoy and Reich was set by
the management of IDT. Following the Spin-Off, compensation of
Messrs. Arnoy and Reich was set by our Compensation Committee.
Stockholders are urged to read the information in the
“Executive Compensation” section of this Proxy
Statement. The Compensation Committee and the Board of Directors
believe that the information provided in that section demonstrates
that our executive compensation program aligns our
executives’ compensation with the Company’s short-term
and long-term performance and provides the compensation and
incentives needed to attract, motivate and retain key executives
who are crucial to the Company’s long-term success.
Accordingly, the following resolution will be submitted for a
stockholder vote at the Annual Meeting:
“RESOLVED, that the stockholders of Zedge, Inc. (the
“Company”) approve, on an advisory basis, the
compensation of the Company’s Named Executive Officers, as
disclosed pursuant to Item 402 of Securities and Exchange
Commission Regulation S-K, including the compensation tables and
narrative disclosures.”
Although the advisory vote is non-binding, the Compensation
Committee and the Board of Directors will review the results of the
vote. The Compensation Committee will consider stockholders’
concerns and take them into account in future determinations
concerning our executive compensation program.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
THE APPROVAL,
ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE
COMPANY’S
NAMED EXECUTIVE OFFICERS, AS STATED IN THE ABOVE
RESOLUTION.
27
PROPOSAL NO.
5
ADVISORY VOTE ON
FREQUENCY OF FUTURE ADVISORY
VOTES ON EXECUTIVE COMPENSATION
In addition to seeking our stockholders’ advisory vote on the
compensation of our Named Executive Officers (Proposal No. 4), we
are asking our stockholders to express a preference as to how
frequently future advisory votes on executive compensation should
take place. As required by Section 14A of the Securities Exchange
Act of 1934, we are giving stockholders the opportunity to express
a preference to cast such advisory votes every year, every two
years or every three years; stockholders also have the option to
abstain from voting on this matter. For the reasons discussed
below, the Board of Directors recommends that advisory votes on
executive compensation take place every year.
The Board believes that a vote every year would provide adequate
assurance that the Board of Directors and the Compensation
Committee remain accountable for executive compensation decisions
on a frequent basis.
Accordingly, our Board believes that an advisory vote every year is
preferable, as it would foster a long-term approach to evaluating
our executive compensation program while maintaining accountability
for executive compensation decisions. If a plurality of the votes
cast on this matter at the Annual Meeting is cast in favor of
advisory votes on executive compensation every year, the Company
would adopt this approach. On this basis, the next advisory vote on
executive compensation, would take place at the Company’s
2018 Annual Meeting.
Although the frequency vote is non-binding, the Compensation
Committee and the Board of Directors will review the results of the
vote. The Board of Directors and the Compensation Committee will
consider stockholders’ views and take them into account in
determining the frequency of future advisory votes on executive
compensation.
THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS SELECT
“
ONE
YEAR
” ON THE PROPOSAL
CONCERNING THE FREQUENCY OF
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION.
28
PROPOSAL NO.
6
RATIFICATION OF THE
APPOINTMENT OF BDO USA, LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Company’s stockholders are being asked to ratify the
Board of Directors’ appointment of BDO USA, LLP
(“BDO”) for the Fiscal Year ending July 31, 2017.
BDO was the Company’s independent registered public
accounting firm for Fiscal 2016. The Audit Committee has approved
the engagement of BDO to serve as the Company’s independent
registered public accounting firm for Fiscal 2017. Neither the
Company’s governing documents nor applicable law require
stockholder ratification of our independent registered public
accounting firm. However, the Audit Committee will consider the
results of the stockholder vote for this proposal and, in the event
of a negative vote, will review any future selection of BDO. Even
if BDO’s appointment is ratified by the stockholders, the
Audit Committee may, in its discretion, appoint a new independent
registered public accounting firm at any time if it determines that
such a change would be in the best interests of the Company and its
stockholders.
We expect that representatives for BDO will be present in person or
telephonically at the Annual Meeting, will be available to respond
to appropriate questions via telephone and will have the
opportunity to make such statements as they may desire.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
RATIFICATION OF THE
APPOINTMENT OF BDO USA, LLP AS THE COMPANY’S INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JULY 31,
2017.
29
Audit and Non-Audit
Fees
The following table presents fees billed for professional services
rendered by BDO for the fiscal years ended July 31, 2016 and July
31, 2015:
Fiscal Year Ended July 31
|
|
|
|
|
Audit Fees
(1)
|
|
$
|
169,814
|
|
$
|
81,400
|
Audit Related Fees
|
|
|
—
|
|
|
—
|
Tax Fees
|
|
$
|
3,617
|
|
|
—
|
All Other Fees
|
|
|
—
|
|
|
—
|
Total
|
|
$
|
173,431
|
|
$
|
81,400
|
Policy on Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services
of the Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing, setting
compensation for, and overseeing the work of the Company’s
independent registered public accounting firm. The Audit Committee
has established a policy regarding pre-approval of all audit and
permissible non-audit services provided by the independent
registered public accounting firm, and all such services were
approved by the Audit Committee for the interim period following
the Spin-Off.
The Audit Committee assesses requests for services by the
independent registered public accounting firm using several
factors. The Audit Committee will consider whether such services
are consistent with the PCAOB’s and SEC’s rules on
auditor independence. In addition, the Audit Committee will
determine whether the independent registered public accounting firm
is best positioned to provide the most effective and efficient
service based upon the members’ familiarity with the
Company’s business, people, culture, accounting systems, risk
profile and whether the service might enhance the Company’s
ability to manage or control risk or improve audit quality.
Report of the Audit
Committee
The primary purpose of the Audit Committee is to assist the Board
of Directors in its general oversight of the Company’s
financial reporting process, internal controls, and audit
functions. The Audit Committee’s function is more fully
described in its charter, which can be found at the Corporate
Governance section of the Company’s web site,
http://investor.zedge.net/governance-documents
.
The Committee reviews the charter on an annual basis. The Board of
Directors annually reviews the NYSE MKT listing standards’
definition of independence for Audit Committee members and has
determined that each member of the Audit Committee meets that
standard. The Board of Directors has also determined that Stephen
Greenberg qualifies as an “audit committee financial
expert” within the meaning of Item 407(d)(5) of Regulation
S-K.
The Company’s management is responsible for the preparation,
presentation, and integrity of the Company’s financial
statements, accounting and financial reporting principles, internal
controls, and procedures designed to ensure compliance with
accounting standards, applicable laws, and regulations.
The Company’s independent registered public accounting firm
for Fiscal 2016, BDO USA, LLP, is responsible for performing
independent audits of the consolidated financial statements and
expressing an opinion on the conformity of those financial
statements with U.S. generally accepted accounting principles. In
accordance with law, the Audit Committee has ultimate authority and
responsibility for selecting, compensating, evaluating, and, when
appropriate, replacing the Company’s independent audit firm,
and evaluates its independence. The Audit Committee has the
authority to engage its own outside advisors, including experts in
particular areas of accounting, as it determines appropriate, apart
from counsel or advisors hired by the Company’s
management.
Audit Committee members are not professional accountants or
auditors, and their functions are not intended to duplicate or to
certify the activities of the Company’s management and the
independent audit firm; nor can the Audit Committee certify that
the independent audit firm is “independent” under
applicable rules. The Audit Committee
30
serves a Board-level oversight role in which it provides advice,
counsel, and direction to the Company’s management and to the
auditors on the basis of the information it receives, discussions
with the Company’s management and the auditors, and the
experience of the Audit Committee’s members in business,
financial, and accounting matters.
The Audit Committee’s agenda for the year includes reviewing
the Company’s financial statements, internal control over
financial reporting, and audit and other matters. The Audit
Committee meets each quarter with BDO USA, LLP and the
Company’s management to review the Company’s interim
financial results before the publication of the Company’s
quarterly earnings news releases and/or filings. The
Company’s management’s and the independent audit
firm’s presentations to, and discussions with, the Audit
Committee cover various topics and events that may have significant
financial impact or are the subject of discussions between the
Company’s management and the independent audit firm. The
Audit Committee reviews and discusses with the Company’s
management the Company’s major financial risk exposures and
the steps that the Company’s management has taken to monitor
and control such exposures. In accordance with law, the Audit
Committee is responsible for establishing procedures for the
receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or
auditing matters, including confidential, anonymous submission by
the Company’s employees, received through established
procedures, of any concerns regarding questionable accounting or
auditing matters.
Among other matters, the Audit Committee monitors the activities
and performance of the Company’s independent registered
public accounting firm, including the audit scope, external audit
fees, auditor independence matters, and the extent to which the
independent audit firm can be retained to perform non-audit
services. In accordance with Audit Committee policy and the
requirements of law, the Audit Committee pre-approves all services
to be provided by BDO USA, LLP. Pre-approval includes audit
services, audit-related services, tax services, and other
services.
The Committee has reviewed and discussed with the Company’s
management the audited financial statements of the Company for the
fiscal year ended July 31, 2016, as well as the effectiveness of
the Company’s internal controls over financial reporting as
of July 31, 2016. BDO USA, LLP has provided the Audit Committee
with the written disclosures and the letter required by the PCAOB
regarding the independent accountant’s communications with
the Audit Committee concerning independence, and the Audit
Committee has discussed with BDO USA, LLP and management that
firm’s independence. The Committee has also reviewed and
discussed with BDO USA, LLP the matters required to be discussed
with the independent registered public accounting firm by
applicable PCAOB rules regarding “Communication with Audit
Committees.”
Based on these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial
statements be included in the Company’s Annual Report on Form
10-K for the fiscal year ended July 31, 2016, for filing with the
Securities and Exchange Commission.
|
|
THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
|
|
|
|
|
|
Stephen Greenberg, Chairman
|
|
|
Marie Therese Carney
|
|
|
Mark Ghermezian
|
Notwithstanding
anything to the contrary set forth in any of the Company’s
previous filings under the Act, as amended, or the Exchange Act, as
amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the foregoing report, as well
as any charters op policies referenced within this Proxy Statement,
shall not be incorporated by reference into any such filings, nor
shall they be deemed to be soliciting material or deemed filed with
the SEC under the Act or under the Exchange Act.
31
OTHER
INFORMATION
Submission of Proposals
for the 2018 Meeting of Stockholders
Stockholders who wish to present proposals for inclusion in the
Company’s proxy materials in connection with the 2018 Annual
Meeting of Stockholders must submit such proposals in writing to
the Corporate Secretary of the Company at 22 Cortlandt Street,
14
th
Floor, New York, New York 10007, which proposals must be received
at such address no later than August 5, 2017. In addition, any
stockholder proposal submitted with respect to the Company’s
2018 Annual Meeting of Stockholders, which proposal is submitted
outside the requirements of Rule 14a-8 under the Exchange Act and,
therefore, will not be included in the relevant proxy materials,
will be considered untimely for purposes of Rule 14a-4 and 14a-5 if
written notice thereof is received by the Company’s Corporate
Secretary after October 22, 2017.
Availability of Annual
Report on Form 10-K
Additional copies of the Company’s Annual Report on Form 10-K
may be obtained by contacting Zedge Investor Relations, by phone at
(330) 577-3424, or by mail addressed to Zedge Investor Relations at
22 Cortlandt Street, 14
th
Floor, New York, New York 10007.
Other Matters
The Board of Directors knows of no other business that will be
presented at the Annual Meeting. If any other business is properly
brought before the Annual Meeting, it is intended that proxies
granted will be voted in respect thereof in accordance with the
judgments of the persons voting the proxies.
It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to fill in, sign and
promptly return the accompanying form in the enclosed envelope.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
November 23, 2016
|
|
|
|
|
|
|
|
|
|
|
Joyce Mason
Corporate Secretary
|
32
EXHIBIT
A
ZEDGE, INC.
2016 STOCK OPTION AND
INCENTIVE PLAN
Adopted as of May 23,
2016
(Amended and Restated on
September 29, 2016)
1. Purpose; Types of
Awards; Construction.
The purpose of the Zedge, Inc. 2016 Stock Option and Incentive Plan
(the “Plan”) is to provide incentives to executive
officers, employees, directors and consultants of Zedge, Inc. (the
“Company”), or any subsidiary of the Company which now
exists or hereafter is organized or acquired by the Company, to
acquire a proprietary interest in the Company, to continue as
executive officers, employees, directors or consultants, to
increase their efforts on behalf of the Company and to promote the
success of the Company’s business. The provisions of the Plan
are intended to satisfy the requirements of Section 16(b) of the
Securities Exchange Act of 1934, as amended, and of Section 162(m)
of the Internal Revenue Code of 1986, as amended, and shall be
interpreted in a manner consistent with the requirements
thereof.
2.
Definitions.
As used in this Plan, the following words and phrases shall have
the meanings indicated:
(a) “Agreement” shall mean a written agreement entered
into between the Company and a Grantee in connection with an award
under the Plan.
(b) “Board” shall mean the Board of Directors of the
Company.
(c) “Change in Control” means a change in ownership or
control of the Company effected through either of the
following:
(i) any “person,” as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than (A) the Company,
(B) any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, (C) any corporation or other
entity owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
Class B Common Stock, or (D) any person who, immediately following
the spin-off of the Company by way of a pro rata distribution of
the Company’s Class B Common Stock to the stockholders of IDT
Corporation, owned more than 25% of the combined voting power of
the Company’s then outstanding voting securities), is or
becomes the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly
from the Company or any of its affiliates other than in connection
with the acquisition by the Company or its affiliates of a
business) representing 25% or more of the combined voting power of
the Company’s then outstanding voting securities; or
(ii) during any period of not more than two consecutive years, not
including any period prior to the initial adoption of this Plan by
the Board, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
whose initial assumption of office is in connection with an actual
or threatened election contest, including, but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof.
(d) “Class B Common Stock” shall mean shares of Class B
Common Stock, par value $.01 per share, of the Company.
(e) “Code” shall mean the Internal Revenue Code of
1986, as amended from time to time.
(f) “Committee” shall mean the Compensation Committee
of the Board or such other committee as the Board may designate
from time to time to administer the Plan. The Board will cause the
Committee to satisfy
A-1
the applicable requirements of any stock exchange on which the
Common Stock may then be listed. For purposes of awards intended to
constitute performance awards, to the extent required by Code
Section 162(m), Committee means all of the members of the Committee
who are “outside directors” within the meaning of
Section 162(m) of the Code. For purposes of awards to Grantees who
are subject to Section 16 of the Exchange Act, Committee means all
of the members of the Committee who are “non-employee
directors” within the meaning of Rule 16b-3 adopted under the
Exchange Act.
(g) “Company” shall mean Zedge, Inc., a corporation
incorporated under the laws of the State of Delaware, or any
successor corporation.
(h) “Continuous Service” means that the provision of
services to the Company or a Related Entity in any capacity of
officer, employee, director or consultant is not interrupted or
terminated. Continuous Service shall not be considered interrupted
in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related
Entity or any successor in any capacity of officer, employee,
director or consultant, or (iii) any change in status as long as
the individual remains in the service of the Company or a Related
Entity in any capacity of officer, employee, director or consultant
(except as otherwise provided in the applicable Agreement). An
approved leave of absence shall include sick leave, short-term
disability, maternity leave, military leave (including without
limitation service in the National Guard or the Army Reserves) and
any other personal leave approved by the Company or the Committee.
For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days unless reemployment upon expiration of such leave
is guaranteed by statute or contract.
(i) “Corporate Transaction” means any of the following
transactions:
(i) a merger or consolidation of the Company with any other
corporation or other entity, other than (A) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving or parent entity) 80% or
more of the combined voting power of the voting securities of the
Company or such surviving or parent entity outstanding immediately
after such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no “person” (as defined in the
Exchange Act) acquired 25% or more of the combined voting power of
the Company’s then outstanding securities; or
(ii) a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially
all of its assets (or any transaction having a similar effect).
(j) “Disability” shall mean cause for termination of a
Grantee’s employment or service due to a determination that
the Grantee is disabled in accordance with a long-term disability
insurance program maintained by the Company or a total and
permanent disability as defined in Code Section 22(e)(3).
(k) “Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(l) “Fair Market Value” per share as of a particular
date shall mean (i) the closing sale price per share of Class B
Common Stock on the national securities exchange on which the Class
B Common Stock is principally traded for the last preceding date on
which there was a sale of Class B Common Stock on such exchange, or
(ii) if the shares of Class B Common Stock are then traded in an
over-the-counter market, the average of the closing bid and asked
prices for the shares of Class B Common Stock in such
over-the-counter market for the last preceding date on which there
was a sale of Class B Common Stock in such market, or (iii) if the
shares of Class B Common Stock are not then readily tradable on an
established securities market, such value as the Committee, in its
sole discretion, shall determine, provided however that such
determination (A) with respect to Nonqualified Stock Options, shall
be in good faith using a “reasonable application of a
reasonable valuation method” within the meaning of Treasury
Regulation Section 1.409A-1(b)(5)(iv)(B), and (B) with respect to
Incentive Stock Options, shall be in a manner that satisfies the
applicable requirements of Code Section 422.
(m) “Grantee” shall mean a person who receives a grant
of Options or Restricted Stock under the Plan.
(n) “Incentive Stock Option” shall mean any option
intended to be, and designated as, an incentive stock option within
the meaning of Section 422 of the Code.
A-2
(o) “Insider” shall mean a Grantee who is subject to
the reporting requirements of Section 16(a) of the Exchange
Act.
(p) “Insider Trading Policy” shall mean the Insider
Trading Policy of the Company, as may be amended from time to
time.
(q) “Non-Employee Director” means an independent member
of the Board, as determined by the Board, who is not an employee of
the Company or any Subsidiary.
(r) “Non-Employee Director Annual Grant” shall mean an
award of a number of shares of Restricted Stock as shall be equal
up to $50,000 based on the average closing prices of the Class B
common stock on the NYSE MKT for the December preceding the date of
grant; provided, however that if the Company’s market cap is
below $40 million based on the same formulation, a pro rata portion
(based on the difference between $40 million and the
Company’s market cap) will be paid in cash..
(s) “Non-Employee Director Grant Date” shall mean
January 5 of the applicable year (or the following business day if
January 5 is not a business day).
(t) “Nonqualified Stock Option” shall mean any option
not designated as an Incentive Stock Option.
(u) “Option” or “Options” shall mean a
grant to a Grantee of an option or options to purchase shares of
Class B Common Stock.
(v) “Option Agreement” shall have the meaning set forth
in Section 6 of the Plan.
(w) “Option Price” shall mean the exercise price of the
shares of Class B Common Stock covered by an Option.
(x) “Parent” shall mean any company (other than the
Company) in an unbroken chain of companies ending with the Company
if, at the time of granting an award under the Plan, each of the
companies other than the Company owns stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock in one of the other companies in such chain.
(y) “Related Entity” means any Parent, Subsidiary or
any business, corporation, partnership, limited liability company
or other entity in which the Company, a Parent or a Subsidiary
holds a substantial ownership interest, directly or indirectly. The
term “substantial ownership interest” means the
possession, directly or indirectly, of the power to direct the
management and policies of such person or entity, whether through
the ownership of voting or other securities, by contract or
otherwise.
(z) “Restricted Period” shall have the meaning set
forth in Section 9(b) of the Plan.
(aa) “Restricted Stock” means shares of Class B Common
Stock issued under the Plan to a Grantee for such consideration, if
any, and subject to such restrictions on transfer, rights of
refusal, repurchase provisions, forfeiture provisions and other
terms and conditions as shall be determined by the Committee.
(bb) “Related Entity Disposition” means the sale,
distribution or other disposition by the Company of all or
substantially all of the Company’s interest in any Related
Entity effected by a sale, merger or consolidation or other
transaction involving such Related Entity or the sale of all or
substantially all of the assets of such Related Entity.
(cc) “Retirement” shall mean a Grantee’s
retirement in accordance with the terms of any tax-qualified
retirement plan maintained by the Company or any of its affiliates
in which the Grantee participates.
(dd) “Rule 16b-3” shall mean Rule 16b-3, as from time
to time in effect, promulgated under the Exchange Act, including
any successor to such Rule.
(ee) “Subsidiary” shall mean any company (other than
the Company) in an unbroken chain of companies beginning with the
Company if each of the companies other than the last company in the
unbroken chain owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other companies in such chain.
A-3
(ff) “Tax Event” shall have the meaning set forth in
Section 15 of the Plan.
(gg) “Ten Percent Stockholder” shall mean a Grantee who
at the time an Incentive Stock Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or
Subsidiary.
3.
Administration.
(a) The Plan shall be administered by the Committee.
(b) The Committee shall have the authority in its discretion,
subject to and not inconsistent with the express provisions of the
Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Options and
Restricted Stock; to determine which options shall constitute
Incentive Stock Options and which Options shall constitute
Nonqualified Stock Options; to determine the purchase price of the
shares of Class B Common Stock covered by each Option; to determine
the persons to whom, and the time or times at which awards shall be
granted; to determine the number of shares to be covered by each
award; to interpret the Plan and any award under the Plan; to
reconcile any inconsistent terms in the Plan or any award under the
Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the
Agreements (which need not be identical) and to cancel or suspend
awards, as necessary; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c) All decisions, determination and interpretations of the
Committee shall be final and binding on all Grantees of any awards
under this Plan. No member of the Board or Committee shall be
liable for any action taken or determination made in good faith
with respect to the Plan or any award granted hereunder.
(d) The Committee may delegate to one or more executive officers of
the Company the authority to (i) grant awards under the Plan to
employees of the Company and its Subsidiaries who are not officers
or directors of the Company, (ii) execute and deliver documents or
take such other ministerial actions on behalf of the Committee with
respect to awards and (iii) to make interpretations of the Plan.
The grant of authority in this Section 3(d) shall be subject to
such conditions and limitations as may be determined by the
Committee. If the Committee delegates authority to any such
executive officer or executive officers of the Company pursuant to
this Section 3(d), and such executive officer or executive officers
grant awards pursuant to such delegated authority, references in
this Plan to the “Committee” as they relate to such
awards shall be deemed to refer to such executive officer or
executive officers, as applicable.
4.
Eligibility.
Awards may be granted to executive officers, employees, directors
and consultants of the Company or of any Subsidiary. In addition to
any other awards granted to Non-Employee Directors hereunder,
awards shall be granted to Non-Employee Directors pursuant to
Section 10 of the Plan. In determining the persons to whom awards
shall be granted and the number of shares to be covered by each
award, the Committee shall take into account the duties of the
respective persons, their present and potential contributions to
the success of the Company and such other factors as the Committee
shall deem relevant in connection with accomplishing the purposes
of the Plan.
5.
Stock.
(a) The maximum number of shares of Class B Common Stock reserved
for the grant of awards under the Plan shall be 691,000 (after
giving effect to the stock split of the Company’s shares of
common stock to be effective prior to the Company’s spinoff
from IDT Corporation), subject to adjustment as provided in Section
11 of the Plan. Such shares may, in whole or in part, be authorized
but unissued shares or shares that shall have been or may be
reacquired by the Company.
(b) If any outstanding award under the Plan should, for any reason
expire, be canceled or be forfeited without having been exercised
in full, the shares of Class B Common Stock allocable to the
unexercised, canceled or terminated portion of such award shall
(unless the Plan shall have been terminated) become available for
subsequent grants of awards under the Plan, unless otherwise
determined by the Committee.
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(c) In no event may a Grantee be granted during any calendar year
Options to acquire more than an aggregate of 60,000 shares of Class
B Common Stock subject to adjustment as provided in Section 11 of
the Plan.
6.
Terms and Conditions
of Options.
(a) OPTION AGREEMENT. Each Option granted pursuant to the Plan
shall be evidenced by a written agreement between the Company and
the Grantee (the “Option Agreement”), in such form and
containing such terms and conditions as the Committee shall from
time to time approve, which Option Agreement shall comply with and
be subject to the following terms and conditions, unless otherwise
specifically provided in such Option Agreement. For purposes of
interpreting this Section 6, a director’s service as a member
of the Board or a consultant’s service shall be deemed to be
employment with the Company.
(b) NUMBER OF SHARES. Each Option Agreement shall state the
number of shares of Class B Common Stock to which the Option
relates.
(c) TYPE OF OPTION. Each Option Agreement shall specifically
state that the Option constitutes an Incentive Stock Option or a
Nonqualified Stock Option. In the absence of such designation, the
Option will be deemed to be a Nonqualified Stock Option.
(d) OPTION PRICE. Each Option Agreement shall state the Option
Price, which, in the case of an Incentive Stock Option, shall not
be less than one hundred percent (100%) of the Fair Market Value of
the shares of Class B Common Stock covered by the Option on the
date of grant. The Option Price shall be subject to adjustment as
provided in Section 9 of the Plan.
(e) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid
in full, at the time of exercise, in cash or in shares of Class B
Common Stock having a Fair Market Value equal to such Option Price
or in a combination of cash and Class B Common Stock including a
cashless exercise procedure through a broker-dealer or otherwise;
provided, however, that in the case of an Incentive Stock Option,
the medium of payment shall be determined at the time of grant and
set forth in the applicable Option Agreement.
(f) TERM AND EXERCISABILITY OF OPTIONS. Each Option Agreement
shall provide the exercise schedule for the Option as determined by
the Committee, provided, that, the Committee shall have the
authority to accelerate the exercisability of any outstanding
option at such time and under such circumstances as it, in its sole
discretion, deems appropriate. The exercise period will be ten (10)
years from the date of the grant of the option unless otherwise
determined by the Committee; provided, however, that in the case of
an Incentive Stock Option, such exercise period shall not exceed
ten (10) years from the date of grant of such Option. The exercise
period shall be subject to earlier termination as provided in
Sections 6(g) and 6(h) of the Plan. An Option may be exercised, as
to any or all full shares of Class B Common Stock as to which the
Option has become exercisable, by written notice delivered in
person or by mail to the administrator designated by the Company,
specifying the number of shares of Class B Common Stock with
respect to which the Option is being exercised.
(g) TERMINATION OF CONTINUOUS SERVICE. Except as expressly
provided for in an applicable Option Agreement or as provided in
this Section 6(g) and in Section 6(h) of the Plan, an Option may
not be exercised unless the Grantee is then in the employ of, or
maintaining a director or consultant relationship with, or
otherwise a service provider to, the Company or a Subsidiary
thereof (or a company or a Parent or Subsidiary of such company
issuing or assuming the Option in a transaction to which Section
424(a) of the Code applies), and unless the Grantee has remained in
Continuous Service with the Company or any Subsidiary since the
date of grant of the Option. In the event that the Continuous
Service of a Grantee shall terminate (other than by reason of
death, Disability or Retirement), all Options of such Grantee that
are exercisable at the time of Grantee’s termination may,
unless earlier terminated in accordance with their terms, be
exercised within one hundred eighty (180) days after the date of
termination (or such different period as the Committee or the
applicable Option Agreement shall prescribe).
(h) DEATH, DISABILITY OR RETIREMENT OF GRANTEE. Unless
otherwise expressly provided for in an Option Agreement, if a
Grantee shall die while providing Continuous Service or if the
Grantee’s Continuous Service shall terminate by reason of
Disability, all Options theretofore granted to such Grantee
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(to the extent otherwise exercisable) may, unless earlier
terminated in accordance with their terms, be exercised by the
Grantee or by the Grantee’s estate or by a person who
acquired the right to exercise such Options by bequest or
inheritance or otherwise by result of death or Disability of the
Grantee, at any time within three hundred sixty five (365) days
after the death or Disability of the Grantee (or such different
period as the applicable Option Agreement or the Committee shall
prescribe). In the event that an Option granted hereunder shall be
exercised by the legal representatives of a deceased or former
Grantee, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the
right of such legal representative to exercise such Option. In the
event that the Continuous Service of a Grantee shall terminate on
account of such Grantee’s Retirement, all Options of such
Grantee that are exercisable at the time of such Retirement may,
unless earlier terminated in accordance with their terms, be
exercised at any time within one hundred eighty (180) days after
the date of such Retirement (or such different period as the
applicable Option Agreement or the Committee shall prescribe).
(i) OTHER PROVISIONS. The Option Agreements evidencing awards
under the Plan shall contain such other terms and conditions not
inconsistent with the Plan as the Committee may determine.
7.
Nonqualified Stock
Options.
Options granted pursuant to this Section 7 are intended to
constitute Nonqualified Stock Options and shall be subject only to
the general terms and conditions specified in Section 6 of the
Plan.
8.
Incentive Stock
Options.
Options granted pursuant to this Section 8 are intended to
constitute Incentive Stock Options and shall be subject to the
following special terms and conditions, in addition to the general
terms and conditions specified in Section 6 of the Plan:
(a) LIMITATION ON VALUE OF SHARES. To the extent that the
aggregate Fair Market Value of shares of Class B Common Stock
subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any
calendar year (under all plans of the Company or any Subsidiary)
exceeds $100,000, such excess Options, to the extent of the shares
covered thereby in excess of the foregoing limitation, shall be
treated as Nonqualified Stock Options. For this purpose, Incentive
Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of the shares of Class
B Common Stock shall be determined as of the date that the Option
with respect to such shares was granted.
(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock
Option granted to a Ten Percent Stockholder, (i) the Option Price
shall not be less than one hundred ten percent (110%) of the Fair
Market Value of the shares of Class B Common Stock on the date of
grant of such Incentive Stock Option, and (ii) the exercise period
shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
9.
Restricted
Stock.
The Committee may award shares of Restricted Stock to any eligible
executive officer, employee, director or consultant of the Company
or of any Subsidiary. Each award of Restricted Stock under the Plan
shall be evidenced by a written Agreement between the Company and
the Grantee, in such form as the Committee shall from time to time
approve, which Agreement shall comply with and be subject to the
following terms and conditions, unless otherwise specifically
provided in such Agreement:
(a)
NUMBER OF
SHARES.
Each Agreement shall state the number of shares
of Restricted Stock to be subject to an award.
(b)
RESTRICTIONS.
Shares
of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, for such period as the
Committee shall determine from the date on which the award is
granted (the “Restricted Period”). The Committee may
also impose such additional or alternative restrictions and
conditions on the shares as it deems appropriate including, but not
limited to, the satisfaction of performance criteria. Such
performance criteria may include sales, earnings before interest
and taxes, return on investment, earnings per share, any
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combination of the foregoing or rate of growth of any of the
foregoing, as determined by the Committee. The Company may, at its
option, maintain issued shares in book entry form. Certificates, if
any, for shares of stock issued pursuant to Restricted Stock awards
shall bear an appropriate legend referring to such restrictions,
and any attempt to dispose of any such shares of stock in
contravention of such restrictions shall be null and void and
without effect. During the Restricted Period, any such certificates
shall be held in escrow by an escrow agent appointed by the
Committee. In determining the Restricted Period of an award, the
Committee may provide that the foregoing restrictions shall lapse
with respect to specified percentages of the awarded shares on
successive anniversaries of the date of such award.
(c)
FORFEITURE.
Subject
to such exceptions as may be determined by the Committee, if the
Grantee’s Continuous Service with the Company or any
Subsidiary shall terminate for any reason prior to the expiration
of the Restricted Period of an award, any shares remaining subject
to restrictions (after taking into account the provisions of
Subsection (e) of this Section 9) shall thereupon be forfeited by
the Grantee and transferred to, and retired by, the Company without
cost to the Company or such Subsidiary, and such shares shall
become available for subsequent grants of awards under the Plan,
unless otherwise determined by the Committee.
(d)
OWNERSHIP.
During
the Restricted Period, the Grantee shall possess all incidents of
ownership of such shares, subject to Subsection (b) of this Section
9, including the right to receive dividends with respect to such
shares and to vote such shares.
(e)
ACCELERATED LAPSE OF
RESTRICTIONS.
Upon the occurrence of any of the events
specified in Section 12 of the Plan (and subject to the conditions
set forth therein), all restrictions then outstanding on any shares
of Restricted Stock awarded under the Plan shall lapse as of the
applicable date set forth in Section 12. The Committee shall have
the authority (and the Agreement may so provide) to cancel all or
any portion of any outstanding restrictions prior to the expiration
of the Restricted Period with respect to any or all of the shares
of Restricted Stock awarded on such terms and conditions as the
Committee shall deem appropriate.
10. Non-Employee
Director Restricted Stock.
The provisions of this Section 10 shall apply only to certain
grants of Restricted Stock to Non-Employee Directors, as provided
below. Except as set forth in this Section 10, the other provisions
of the Plan shall apply to grants of Restricted Stock to
Non-Employee Directors to the extent not inconsistent with this
Section. For purposes of interpreting Section 6 of the Plan and
this Section 10, a Non-Employee Director’s service as a
member of the Board or the board of directors of any Subsidiary
shall be deemed to be employment with the Company.
(a)
GENERAL
. Non-Employee
Directors shall receive Restricted Stock in accordance with this
Section 10. Restricted Stock granted pursuant to this Section 10
shall be subject to the terms of such section and shall not be
subject to discretionary acceleration of vesting by the Committee.
Unless determined otherwise by the Committee, Non-Employee
Directors shall not receive separate and additional grants
hereunder for being a Non-Employee Director of (i) the Company and
a Subsidiary or (ii) more than one Subsidiary.
(b)
INITIAL GRANTS
OF RESTRICTED STOCK.
A Non-Employee Director who first
becomes a Non-Employee Director shall receive a pro-rata amount
(based on quarter(s) of service following the date the Non-Employee
Director was appointed as a Non-Employee Director on the next
Non-Employee Director Annual Grant.
(c)
ANNUAL GRANTS OF
RESTRICTED STOCK.
On each Non-Employee Director Grant
Date, each Non-Employee Director who attended at least 75% of the
regularly scheduled meetings of the Board of Directors during a
calendar year shall receive a Non-Employee Director Annual Grant;
provided, however that a Non-Employee Director first appointed
during the previous calendar year shall receive only the initial
grant of restricted stock as set forth in Section 10(b).
(d)
VESTING OF RESTRICTED
STOCK.
Restricted Stock granted under this Section 10
shall be fully vested upon grant.
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11. Effect of Certain
Changes.
(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event
of any extraordinary dividend, stock dividend, recapitalization,
merger, consolidation, stock split, warrant or rights issuance, or
combination or exchange of such shares, or other similar
transactions, the Committee shall equitably adjust (i) the maximum
number of Options or shares of Restricted Stock that may be awarded
to a Grantee in any calendar year (as provided in Section 5
hereof), (ii) the number of shares of Class B Common Stock
available for awards under the Plan, (iii) the number and/or kind
of shares covered by outstanding awards and (iv) the price per
share of Options so as to reflect such event and preserve the value
of such awards; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.
(b) CHANGE IN CLASS B COMMON STOCK. In the event of a change
in the Class B Common Stock as presently constituted that is
limited to a change of all of its authorized shares of Class B
Common Stock, into the same number of shares with a different par
value or without par value, the shares resulting from any such
change shall be deemed to be the Class B Common Stock within the
meaning of the Plan.
12.
Corporate
Transaction; Change in Control; Related Entity
Disposition.
(a) CORPORATE TRANSACTION. In the event of a Corporate
Transaction, each award which is at the time outstanding under the
Plan shall automatically become fully vested and exercisable and,
in the case of an award of Restricted Stock, shall be released from
any restrictions on transfer (except with regard to the Insider
Trading Policy and such other agreements between the Grantee and
the Company) and repurchase or forfeiture rights, immediately prior
to the specified effective date of such Corporate Transaction.
Effective upon the consummation of the Corporate Transaction, all
outstanding awards of Options under the Plan shall terminate,
unless otherwise determined by the Committee. However, all such
awards shall not terminate if the awards are, in connection with
the Corporate Transaction, assumed by the successor corporation or
Parent thereof.
(b) CHANGE IN CONTROL. In the event of a Change in Control
(other than a Change in Control which is also a Corporate
Transaction), each award which is at the time outstanding under the
Plan automatically shall become fully vested and exercisable and,
in the case of an award of Restricted Stock, shall be released from
any restrictions on transfer and repurchase or forfeiture rights,
immediately prior to the specified effective date of such Change in
Control.
(c) RELATED ENTITY DISPOSITION. The Continuous Service of each
Grantee (who is primarily engaged in service to a Related Entity at
the time it is involved in a Related Entity Disposition) shall
terminate effective upon the consummation of such Related Entity
Disposition, and each outstanding award of such Grantee under the
Plan shall become fully vested and exercisable and, in the case of
an award of Restricted Stock, shall be released from any
restrictions on transfer (except with regard to the Insider Trading
Policy and such other agreements between the Grantee and the
Company). Unless otherwise determined by the Committee, the
Continuous Service of a Grantee shall not be deemed to terminate
(and each outstanding award of such Grantee under the Plan shall
not become fully vested and exercisable and, in the case of an
award of Restricted Stock, shall not be released from any
restrictions on transfer) if (i) a Related Entity Disposition
involves the spin-off of a Related Entity, for so long as such
Grantee continues to remain in the service of such entity that
constituted the Related Entity immediately prior to the
consummation of such Related Entity Disposition
(“SpinCo”) in any capacity of officer, employee,
director or consultant or (ii) an outstanding award is assumed by
the surviving corporation (whether SpinCo or otherwise) or its
parent entity in connection with a Related Entity Disposition.
(d) SUBSTITUTE AWARDS. The Committee may grant awards under
the Plan in substitution of stock-based incentive awards held by
employees, consultants or directors of another entity who become
employees, consultants or directors of the Company or any
Subsidiary by reason of a merger or consolidation of such entity
with the Company or any Subsidiary, or the acquisition by the
Company or a Subsidiary of property or equity of such entity, upon
such terms and conditions as the Committee may determine, and such
awards shall not count against the share limitation set forth in
Section 5 of the Plan.
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13.
Period During which
Awards May Be Granted.
Awards may be granted pursuant to the Plan from time to time within
a period of ten (10) years from May 23, 2016, the date the Board
adopted the Plan.
14.
Transferability of
Awards.
(a) Incentive Stock Options may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than
by the laws of descent and distribution and may be exercised,
during the lifetime of the Grantee, only by the Grantee or his or
her guardian or legal representative.
(b) Nonqualified Stock Options shall be transferable in the manner
and to the extent acceptable to the Committee, as evidenced by a
writing signed by the Company and the Grantee. Nonqualified Stock
Options shall be transferable by a Grantee as a gift to the
Grantee’s “family members” (as defined in Form
S-8) under such terms and conditions as may be established by the
Committee; provided that the Grantee receives no consideration for
the transfer. Notwithstanding the transfer by a Grantee of a
Nonqualified Stock Option, the transferred Nonqualified Stock
Option shall continue to be subject to the same terms and
conditions as were applicable to the Nonqualified Stock Option
immediately before the transfer (including, without limitation, the
Insider Trading Policy) and the Grantee will continue to remain
subject to the withholding tax requirements set forth in Section 15
hereof.
(c) The terms of any award granted under the Plan, including the
transferability of any such award, shall be binding upon the
executors, administrators, heirs and successors of the Grantee.
(d) Each Grantee who receives an award shall comply with any policy
adopted by the Company from time to time covering transactions in
the Company’s securities. By way of example, and not
limitation, Restricted Stock shall remain subject to the Insider
Trading Policy after the Restricted Period.
15.
Agreement by Grantee
regarding Withholding Taxes.
If the Committee shall so require, as a condition of exercise of an
Option or the expiration of a Restricted Period (each a “Tax
Event”), each Grantee shall agree that no later than the date
of the Tax Event, the Grantee will pay to the Company or make
arrangements satisfactory to the Committee regarding payment of any
federal, state or local taxes of any kind required by law to be
withheld upon the Tax Event. Unless determined otherwise by the
Committee, a Grantee shall permit, to the extent permitted or
required by law, the Company to withhold federal, state and local
taxes of any kind required by law to be withheld upon the Tax Event
from any payment of any kind due to the Grantee. Unless otherwise
determined by the Committee, any such above-described withholding
obligation may, in the discretion of the Company, be satisfied by
the withholding by the Company or delivery to the Company of Class
B Common Stock.
16.
Rights as a
Stockholder.
Except as provided in Section 9(d) of the Plan, a Grantee or a
transferee of an award shall have no rights as a stockholder with
respect to any shares covered by the award until the date of the
issuance of such shares to him or her. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distribution of other rights for
which the record date is prior to the date such shares are issued,
except as provided in Section 11(a) of the Plan.
17.
No Rights to
Employment; Forfeiture of Gains.
Nothing in the Plan or in any award granted or Agreement entered
into pursuant hereto shall confer upon any Grantee the right to
continue as a director of, in the employ of, or in a consultant
relationship with, the Company or any Subsidiary or to be entitled
to any remuneration or benefits not set forth in the Plan or such
Agreement or to interfere with or limit in any way the right of the
Company or any such Subsidiary to terminate such Grantee’s
employment or consulting relationship. Awards granted under the
Plan shall not be affected by any change in duties or position of a
Grantee as long as such Grantee continues to be employed by, or in
a consultant relationship with, or a director of the Company or any
Subsidiary. The Agreement for any award under the Plan may require
the Grantee to pay to the Company any financial gain realized from
the prior exercise, vesting or payment of the award
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in the event that the Grantee engages in conduct that violates any
non-compete, non-solicitation or non-disclosure obligation of the
Grantee under any agreement with the Company or any Subsidiary,
including, without limitation, any such obligations provided in the
Agreement.
18.
Beneficiary.
A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and
may, from time to time, amend or revoke such designation. If no
designated beneficiary survives the Grantee, the executor or
administrator of the Grantee’s estate shall be deemed to be
the Grantee’s beneficiary.
19.
Approval; Amendment
and Termination of the Plan.
(a) APPROVAL. The Plan initially became effective when adopted
by the Board on May 23, 2016 and shall terminate on the tenth
anniversary of such date (except as to awards outstanding on that
date). The Plan was ratified by the Company’s stockholder on
May 24, 2016. The Board amended the Plan on September 29, 2016 to,
among other things, (i) increase the amount of authorized shares
under the Plan to 691,000 shares of Class B Common Stock and (ii)
change the vesting of the Non-Employee Director Annual Grant to
immediate. The Company’s stockholders ratified such amendment
to the Plan on January 18, 2017.
(b) AMENDMENT AND TERMINATION OF THE PLAN. The Board, or the
Committee if so delegated by the Board, at any time and from time
to time may suspend, terminate, modify or amend the Plan; however,
unless otherwise determined by the Board, or the Committee if
applicable, an amendment that requires stockholder approval in
order for the Plan to continue to comply with any law, regulation
or stock exchange requirement shall not be effective unless
approved by the requisite vote of stockholders. Except as provided
in Section 11(a) of the Plan, no suspension, termination,
modification or amendment of the Plan may adversely affect any
award previously granted, unless the written consent of the Grantee
is obtained.
20.
Governing
Law.
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware.
21.
Section 409A of the
Code.
It is the intention of the Company that no award shall be
“deferred compensation” subject to Section 409A of the
Code, unless and to the extent that the Committee specifically
determines otherwise as provided in this Section 21, and the Plan
and the terms and conditions of all awards shall be interpreted
accordingly. The terms and conditions governing any awards that the
Committee determines will be subject to Section 409A of the Code
shall be set forth in the applicable award Agreement and shall
comply in all respects with Section 409A of the Code.
Notwithstanding any provision of this Plan to the contrary, if one
or more of the payments or benefits received or to be received by a
Grantee pursuant to an award would cause the Grantee to incur any
additional tax or interest under Section 409A of the Code, the
Committee may reform such provision to maintain to the maximum
extent practicable the original intent of the applicable provision
without violating the provisions of Section 409A of the Code.
Although the Company intends to administer the Plan so that Awards
will be exempt from, or will comply with, the requirements of
Section 409A of the Code, the Company does not warrant that any
Award under the Plan will qualify for favorable tax treatment under
Section 409A of the Code or any other provision of federal, state,
local or foreign law. The Company shall not be liable to any
Grantee for any tax, interest, or penalties that Grantee might owe
as a result of the grant, holding, vesting, exercise, or payment of
any award under the Plan.
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ANNUAL MEETING OF STOCKHOLDERS OF
ZEDGE, INC.
January 18, 2017
Important Notice Regarding the Availability of
Proxy Materials for the Zedge, Inc.
Stockholders Meeting to be Held on January 18,
2017
:
The Notice of Annual Meeting and Proxy Statement and the 2016
Annual Report are available at:
http://investor.zedge.net/
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line
and mail in the envelope provided.
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTES IN BLUE OR BLACK INK AS SHOWN HERE
x
THE BOARD OF DIRECTORS
RECOMMENDS VOTES “FOR” THE LISTED NOMINEES,
“FOR” PROPOSALS 2, 3, 4 AND 6, AND FOR “ONE
YEAR” FOR PROPOSAL 5.
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FOR
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AGAINST
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ABSTAIN
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AGAINST
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1. Election of
Directors:
NOMINEES:
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2. To approve an
amendment to the Zedge, Inc. 2016 Stock Option and Incentive Plan
that will, among other things (a) increase the number of shares of
the Company’s Class B Common Stock available for the grant of
awards thereunder by 500,000, (b) modify the non-employee
directors’ annual automatic grant to provide that, if the
Company’s market cap is below $40 million as calculated in
the Plan, a pro-rata portion will be paid in cash, and (c) change
the vesting of future grants of restricted stock to be
automatically awarded to non-employee directors under the Plan to
vest in full upon grant instead of two years after
grant.
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Marie Therese Carney
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Mark Ghermezian
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Stephen Greenberg
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Howard Jonas
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Michael Jonas
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FOR
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AGAINST
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ABSTAIN
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3. To approve the
acceleration of the vesting date of restricted stock that will be
automatically awarded to the Company’s non-employee directors
on January 5, 2017 from January 5, 2019 to January 18,
2017.
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FOR
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ABSTAIN
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4. To conduct an
advisory vote on executive compensation.
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1 Yr
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2 Yrs
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3 Yrs
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ABSTAIN
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5. To conduct an
advisory vote on frequency of future advisory votes on executive
compensation.
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FOR
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6. To ratify the
appointment of BDO USA, LLP as the Company’s independent
registered public accounting firm for the Fiscal Year ending July
31, 2017.
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To change the address
on your account, please check the box at right and indicate your
new address in the address space above. Please note that changes to
the registered name(s) on the account may not be submitted via this
method.
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MARK “X”
HERE IF YOU PLAN TO ATTEND THE MEETING.
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Signature of
Stockholder ____________________________
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Date:
______________
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Signature of
Stockholder _________________________
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Date:
_______________
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Note: Please sign
exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by a duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name
by an authorized person.
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Electronic Distribution
If you would like to receive future ZEDGE, INC. proxy statements
and annual reports electronically, please visit
www.amstock.com
.
Click on Shareholder Account Access to enroll. Please enter your
account number and tax identification number to log in, then select
Receive Company Mailings via e-Mail and provide your e-mail
address.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
ZEDGE, INC.
22 Cortlandt Street,
14
th
Floor, New York, New
York 10007
(330) 577-3424
PROXY FOR ANNUAL MEETING OF
STOCKHOLDERS
To Be Held January 18, 2017
The undersigned appoints Michael Jonas and Joyce J. Mason, or
either one of them, as the proxy of the undersigned with full power
of substitution to attend and vote at the Annual Meeting of
Stockholders (the “Annual Meeting”) of Zedge, Inc. to
be held at the Offices of Zedge, Inc., 22 Cortlandt Street,
14
th
Floor, New York, New York 10007 on January 18, 2017 at 10:30 a.m.,
and any adjournment or postponement of the Annual Meeting,
according to the number of votes the undersigned would be entitled
to cast if personally present, for or against any proposal,
including the election of members of the Board of Directors, and
any and all other business that may come before the Annual Meeting,
except as otherwise indicated on the reverse side of this card.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS
PROXY WILL BE VOTED “FOR” THE ELECTION OF THE LISTED
NOMINEES FOR THE BOARD OF DIRECTORS, “FOR” PROPOSALS 2,
3, 4 AND 6, AND FOR “ONE YEAR” FOR PROPOSAL 5, LISTED
ON THE REVERSE SIDE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
ANNUAL MEETING OF STOCKHOLDERS OF
ZEDGE, INC.
JANUARY 18, 2017
PROXY VOTING INSTRUCTIONS
INTERNET
–
Access “
www.voteproxy.com
”
and follow the on-screen instructions or scan the QR code with your
smartphone. Have your proxy card available when you access the web
page.
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Vote online until 11:59 PM EST the day before
the meeting.
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MAIL
– Date,
sign and mail your proxy card in the envelope provided as soon as
possible.
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IN
PERSON
– You may vote
your shares in person by attending the Annual Meeting.
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GO
GREEN
– e-Consent makes
it easy to go paperless. With e-Consent, you can quickly access
your proxy material, statements and other eligible documents
online, while reducing costs, clutter and paper waste. Enroll today
via
www.amstock.com
to enjoy online access.
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COMPANY NUMBER
______________________
ACCOUNT NUMBER
______________________
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$
Please detach along
perforated line and mail in the envelope provided
IF
you are not voting via the
Internet.
$
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTES IN BLUE OR BLACK INK AS SHOWN HERE
x
THE BOARD OF DIRECTORS
RECOMMENDS VOTES “FOR” THE LISTED NOMINEES,
“FOR” PROPOSALS 2, 3, 4 AND 6, AND FOR “ONE
YEAR” FOR PROPOSAL 5.
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FOR
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AGAINST
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ABSTAIN
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FOR
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AGAINST
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ABSTAIN
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1. Election of
Directors:
NOMINEES:
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2. To approve an
amendment to the Zedge, Inc. 2016 Stock Option and Incentive Plan
that will, among other things (a) increase the number of shares of
the Company’s Class B Common Stock available for the grant of
awards thereunder by 500,000, (b) modify the non-employee
directors’ annual automatic grant to provide that, if the
Company’s market cap is below $40 million as calculated in
the Plan, a pro-rata portion will be paid in cash, and (c) change
the vesting of future grants of restricted stock to be
automatically awarded to non-employee directors under the Plan to
vest in full upon grant instead of two years after
grant.
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Marie Therese Carney
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Mark Ghermezian
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Stephen Greenberg
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Howard Jonas
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Michael Jonas
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FOR
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AGAINST
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ABSTAIN
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3. To approve the
acceleration of the vesting date of restricted stock that will be
automatically awarded to the Company’s non-employee directors
on January 5, 2017 from January 5, 2019 to January 18,
2017.
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¨
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FOR
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AGAINST
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ABSTAIN
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4. To conduct an
advisory vote on executive compensation.
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¨
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1 Yr
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2 Yrs
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3 Yrs
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ABSTAIN
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5. To conduct an
advisory vote on frequency of future advisory votes on executive
compensation.
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¨
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¨
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¨
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FOR
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AGAINST
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ABSTAIN
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6. To ratify the
appointment of BDO USA, LLP as the Company’s independent
registered public accounting firm for the Fiscal Year ending July
31, 2017.
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¨
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¨
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¨
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|
|
|
|
|
|
To change the address
on your account, please check the box at right and indicate your
new address in the address space above. Please note that changes to
the registered name(s) on the account may not be submitted via this
method.
|
|
¨
|
|
MARK “X”
HERE IF YOU PLAN TO ATTEND THE MEETING.
|
|
¨
|
|
|
|
|
Signature of
Stockholder ____________________________
|
|
Date:
_______________
|
|
Signature of
Stockholder ____________________________
|
|
Date:
______________
|
|
Note: Please sign
exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by a duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name
by an authorized person.
|