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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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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))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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Streamline Health Solutions, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 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 transaction applies:
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(3)
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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 transaction:
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(5)
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Total fee paid:
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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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May 5,
2017
Dear
Fellow Stockholder,
On
behalf of the board of directors, I cordially invite you to attend the 2017 Annual Meeting of Stockholders of Streamline Health Solutions, Inc., which will be held at the
company's corporate headquarters, 1230 Peachtree Street NE, Second Floor, Atlanta, Georgia 30309, on Thursday, June 1, 2017, commencing at 9:30 a.m., Eastern Time. The matters to be
acted upon at the meeting are described in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.
Your
vote on the business to be considered at the meeting is important, regardless of the number of shares you own. To ensure your representation at the Annual Meeting, you are urged to
vote by proxy via the Internet or telephone pursuant to the instructions provided in the enclosed proxy card; or by completing, dating, signing and returning the enclosed proxy card.
The
Notice of Annual Meeting of Stockholders and Proxy Statement contain information about the official business of the Annual Meeting. Whether or not you expect to attend, please vote
your shares now. Of course, if you decide to attend the Annual Meeting, you will have the opportunity to revoke
your proxy and vote your shares in person. The Notice of Annual Meeting of Stockholders and Proxy Statement also are available at http://www.edocumentview.com/STRM.
Regards,
David
W. Sides
President and Chief Executive Officer
STREAMLINE HEALTH SOLUTIONS, INC.
1230 Peachtree St. NE, Suite 600
Atlanta, Georgia 30309
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2017
To the Stockholders of Streamline Health Solutions, Inc.:
Notice
is hereby given that the Annual Meeting of the Stockholders of Streamline Health Solutions, Inc. will be held on June 1, 2017, at 9:30 a.m., Eastern Time, at
the company's corporate headquarters, 1230 Peachtree Street NE, Second Floor, Atlanta, Georgia 30309, for the following purposes:
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1.
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PROPOSAL
1—To elect the six candidates nominated by our board of directors to serve as directors until a successor is duly elected and qualified at the
2018 Annual Meeting of Stockholders or otherwise or until any earlier removal or resignation.
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2.
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PROPOSAL
2—To approve a non-binding advisory vote on the compensation of our named executive officers ("say-on-pay").
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3.
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PROPOSAL
3—To approve the Streamline Health Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan.
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4.
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PROPOSAL
4—To ratify the appointment of the firm of RSM US LLP to serve as our independent registered public accounting firm for fiscal year 2017.
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5.
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To
consider any and all other business that may properly come before the meeting or any adjournment thereof.
Only
stockholders of record at the close of business on April 12, 2017 will be entitled to notice of, and to vote at, the Annual Meeting of Stockholders and any adjournment
thereof.
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By Order of the Board of Directors
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Nicholas A. Meeks
Senior Vice President and Chief Financial Officer
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Atlanta,
Georgia
May 5, 2017
A Proxy Statement and proxy card are included herewith. As a stockholder, you are urged to vote. See "General Information—Voting Methods" in the included Proxy
Statement for more information on your voting options. It is important that your shares be voted. In order to avoid the additional expense of further solicitation, we ask your cooperation in voting
promptly.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 1, 2017.
Our Notice of Annual Meeting of Stockholders, Proxy Statement for the 2017 Annual Meeting of Stockholders and 2016 Annual Report to Stockholders are also available at
http://www.edocumentview.com/STRM.
STREAMLINE HEALTH SOLUTIONS, INC.
1230 Peachtree St. NE, Suite 600
Atlanta, Georgia 30309
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 2017
GENERAL INFORMATION
Introduction
We are furnishing this Proxy Statement on behalf of the board of directors of Streamline Health Solutions, Inc., a Delaware corporation,
for use at our 2017 Annual Meeting of Stockholders, or at any adjournments or postponements of the meeting (the "Annual Meeting"), for the purposes set forth below and in the accompanying Notice of
Annual Meeting of Stockholders. The Annual Meeting will be held at the company's corporate headquarters, 1230 Peachtree Street NE, Second Floor, Atlanta, Georgia 30309, at 9:30 a.m. Eastern
Time, on Thursday, June 1, 2017. You may
obtain directions to the location of the Annual Meeting by visiting http://www.edocumentview.com/STRM.
As
used in this Proxy Statement, the terms "Streamline," the "company," "we," "us," and "our" refer to Streamline Health Solutions, Inc. The term "common stock" means shares of
our common stock, par value $.01 per share. The term "preferred stock" means shares of our Series A 0% Convertible Preferred Stock, par value $.01 per share.
This
Proxy Statement and the enclosed proxy card are first being mailed to stockholders on or about May 5, 2017. A copy of the 2016 Annual Report to Stockholders, including the
Annual Report on Form 10-K for the fiscal year ended January 31, 2017, as filed with the Securities and Exchange Commission (the "SEC"), is being mailed with this Proxy Statement.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on June 1, 2017:
This Proxy Statement and the 2016 Annual Report to Stockholders are available at http://www.edocumentview.com/STRM.
Stockholders Entitled to Notice and to Vote
All holders of record of our common stock and our preferred stock at the close of business on April 12, 2017 (the "Record Date"), will be
entitled to notice of and to vote at the Annual Meeting. Our shares of common stock and preferred stock vote together as a single class.
At
the close of business on the Record Date, we had 19,695,391 shares of common stock outstanding and entitled to vote and 2,949,995 shares of preferred stock outstanding and entitled to
vote. Holders of common stock are entitled to one vote for each share of our common stock held. Holders of preferred stock are entitled to vote such shares on a modified converted basis with each
holder of preferred stock entitled to such number of votes equal to the total number of shares of preferred stock held multiplied by 75%, rounded down to the nearest whole share. Unless waived,
holders of our preferred stock are subject to certain beneficial ownership limitations. As of the Record Date, the holders of preferred stock were entitled to an aggregate of 2,212,496 votes. Shares
of our common stock and preferred stock may not be voted cumulatively.
Quorum
Our bylaws provide that the holders of a majority of all of the shares of our capital stock issued, outstanding, and entitled to vote, whether
present in person or represented by proxy, shall constitute a quorum for the transaction of business at the Annual Meeting. Shares that are voted FOR, AGAINST, WITHHELD, or ABSTAIN, as applicable,
with respect to a matter are treated as being present at the
meeting
for purposes of establishing a quorum. At the Annual Meeting, 10,953,944 shares will constitute a quorum for the transaction of business.
Distinction between Holding Shares as a Stockholder of Record and as a Beneficial Owner
Some of our stockholders hold their shares through a broker, trustee, or other nominee rather than directly in their own name. As summarized
below, there are some distinctions between shares held of record and those shares owned beneficially.
Stockholder of Record.
If your shares are registered directly in your name with our transfer agent, Computershare Trust Company,
N.A., then you are
considered, with respect to those shares, the "stockholder of record." As the stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote in
person at the Annual Meeting.
Beneficial Owner.
If your shares are held in a brokerage account, by a trustee or by another nominee, then you are considered
the "beneficial owner"
of those shares. As the beneficial owner of those shares, you have the right to direct your broker, trustee, or nominee how to vote and you also are invited to attend the Annual Meeting. However,
because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a "legal proxy" from the broker, trustee or nominee that
holds your shares, giving you the right to vote the shares at the Annual Meeting.
If
you are not a stockholder of record, please understand that we do not know that you are a stockholder, or how many shares you own.
Voting Methods
By Mail.
Registered stockholders may vote their shares by signing, dating and mailing the enclosed proxy card using the enclosed
postage pre-paid
envelope. We strongly encourage you, however, to consider using the Internet or telephone voting options described below because these voting methods are faster and less costly than voting by mailing
your signed and dated proxy card. If you vote via the Internet or telephone, you do not need to mail your proxy card.
By Internet.
Registered stockholders may vote on the Internet at http://www.envisionreports.com/STRM. Please have your proxy card in
hand when going
online and follow the online instructions. Stockholders that vote by Internet must bear all costs associated with electronic access, including Internet access fees. Internet voting for registered
stockholders is available up until 1:00 a.m., Central Time, on June 1, 2017, the day of the Annual Meeting. The Internet voting procedures are designed to authenticate each stockholder
by use of a control number to allow stockholders to vote their shares and to confirm that
their instructions have been properly recorded. The control number can be found on the enclosed proxy card.
By Telephone.
Registered stockholders also may vote by telephone by calling 1-800-652-8683 (toll-free) and using any touch-tone
telephone to transmit
their votes up to 1:00 a.m., Central Time, on June 1, 2017, the day of the Annual Meeting. Please have your proxy card in hand when you call and then follow the instructions. The control
number necessary to vote your shares by telephone can be found on the enclosed proxy card.
By Attending the Annual Meeting.
If you attend the Annual Meeting and wish to vote in person, you may request a ballot when you arrive.
Alternatively, if you are a registered stockholder and attend the Annual Meeting, you may deliver your signed and dated proxy card in person. You must present a valid photo identification for
admission to the Annual Meeting.
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If your shares are held of record in the name of a bank, broker or other nominee you should follow the separate instructions that the nominee
provides to you. Although most banks and brokers now offer Internet and telephone voting, availability and specific processes will depend on their voting arrangements.
If
your shares are held of record in the name of your bank, broker or other nominee and you would like to vote in person at the Annual Meeting, you must bring to the Annual Meeting a
letter from the nominee indicating that you were the beneficial owner of the shares on the Record Date and have been granted a proxy by your bank, broker or nominee to vote the shares. You also must
present a valid photo identification for admission to the Annual Meeting.
Voting Requirements
At the Annual Meeting, stockholders will consider and act upon (1) the election of six directors for terms expiring at the 2018 Annual
Meeting of Stockholders, (2) the approval of a non-binding advisory vote on the compensation of our named executive officers ("say-on-pay"), (3) the approval of the Streamline Health
Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan, (4) the ratification of RSM US LLP to serve as the company's independent registered public accounting firm
for fiscal year 2017, and (5) such other business as may properly come before the Annual Meeting.
With
regard to Proposal 1 (Election of Directors), votes may be cast for the nominees or may be withheld. All nominees are current directors. The election of directors requires a
plurality of the votes of the shares present in person or represented by proxy at the Annual Meeting, and the six nominees receiving the greatest number of votes will be elected. Abstentions and
broker "non-votes" will have no effect on the outcome of this proposal.
With
regard to Proposal 2 ("Say-on-Pay"), votes may be cast for or against the proposal, or stockholders may abstain from voting on the proposal. The approval of Proposal 2 requires the
affirmative vote of the majority of the shares present in person or represented by proxy at the Annual Meeting. Abstentions will have the same effect as a vote against this proposal. Broker
"non-votes" will not be counted in determining the number of votes cast and, therefore, will have no effect on the outcome of this proposal. The vote on Proposal 2 is a non-binding advisory vote.
With
regard to Proposal 3 (Approval of the Streamline Health Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan), votes may be cast for or against the proposal,
or stockholders may abstain from voting on the proposal. The approval of Proposal 3 requires the affirmative vote of the majority of the shares present in person or represented by proxy at the Annual
Meeting. Abstentions will have the same effect as a vote against this proposal. Broker "non-votes" will not be counted in determining the number of votes cast and, therefore, will have no effect on
the outcome of this proposal.
With
regard to Proposal 4 (Ratification of RSM US LLP), votes may be cast for or against the proposal, or stockholders may abstain from voting on the proposal. The approval of
Proposal 4 requires the affirmative vote of the majority of the shares present in person or represented by proxy at the Annual Meeting. Abstentions will have the same effect as a vote against this
proposal. Broker "non-votes" will not be counted in determining the number of votes cast and, therefore, will have no effect on the outcome of this proposal.
Treatment of Voting Instructions
If you provide specific voting instructions, your shares will be voted as instructed.
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If
you hold shares as the stockholder of record and provide a proxy without giving specific voting instructions, then your shares will be voted in accordance with the recommendations of
our board of directors. Our board of directors recommends voting "FOR ALL NOMINEES" listed in Proposal 1, "FOR" Proposals 2, 3, and 4, and in accordance with the discretion of the named proxies on
other matters brought before the Annual Meeting.
You
may have granted to your broker, trustee, or other nominee discretionary voting authority over your account. Your broker, trustee, or other nominee may be able to vote your shares
depending on the terms of the agreement you have with your broker, trustee, or other nominee.
The
election of directors is no longer considered a "routine" matter as to which brokers may vote in their discretion on behalf of clients who have not furnished voting instructions with
respect to the election of directors. As a result, if you hold your shares in street name and do not provide your broker with voting instructions, your shares will not be voted at the Annual Meeting
with respect to Proposal 1 (Election of Directors), Proposal 2 ("Say-on-Pay"), or Proposal 3 (Approval of the Streamline Health Solutions, Inc. Second Amended and Restated 2013 Stock Incentive
Plan). The ratification of RSM US LLP as our independent registered public accounting firm is considered a "routine matter," and therefore, brokers will have the discretion to vote on this
matter even if they do not receive voting instructions from the beneficial owner of the shares.
The
persons identified as having the authority to vote the proxies granted by the proxy card will have discretionary authority to vote, in their discretion, to the extent permitted by
applicable law, on such other business as may properly come before the Annual Meeting and any postponement or adjournment. The board of directors is not aware of any other matters that are likely to
be brought before the Annual Meeting. If any other matter is properly presented for action at the Annual Meeting, including a proposal to adjourn or postpone the Annual Meeting to permit us to solicit
additional proxies in favor of any proposal, the persons named in the proxy card will vote on such matter in their own discretion.
Revocability of Proxies
A stockholder of record who has given a proxy may revoke it at any time prior to its exercise at the Annual Meeting by (i) giving written
notice of revocation to our Corporate Secretary, (ii) properly submitting a duly executed proxy bearing a later date, or (iii) appearing in person at the Annual Meeting and voting in
person.
If
you are the beneficial owner of shares held through a broker, trustee, or other nominee, you must follow the specific instructions provided to you by your broker, trustee, or other
nominee to change or revoke any instructions you already have provided to your broker, trustee, or other nominee.
Attendance
at the Annual Meeting, in and of itself, will not constitute a revocation of a proxy.
Costs of Proxy Solicitation
We will bear the expense of electronically hosting, printing and mailing proxy materials and soliciting the proxies we are seeking. In addition
to the solicitation of proxies by mail, solicitation may be made by certain of our directors, officers, and other employees in person, by telephone, or via facsimile. Our directors, officers and other
employees will receive no additional compensation for any such solicitations. We will request brokers and nominees who hold shares of our common stock in their names to furnish proxy materials to
beneficial owners of such shares, and we will reimburse such brokers and nominees for the reasonable expenses incurred in forwarding the materials to such beneficial owners. Your cooperation in voting
promptly will help to avoid additional expense.
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List of Stockholders
In accordance with Delaware law, a list of stockholders entitled to vote at the Annual Meeting will be available at the Annual Meeting and at
our principal executive offices, which are located at 1230 Peachtree St. NE, Suite 600, Atlanta, Georgia 30309, on the date of our Annual Meeting, June 1, 2017, and for ten
days prior to the Annual Meeting, between the hours of 9:00 a.m. and 4:00 p.m. Eastern Time.
PROPOSAL 1—ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect six directors, each to hold office until a successor is duly elected and qualified at the
2018 Annual Meeting of Stockholders, or otherwise, or until any earlier resignation or removal. All nominees standing for election are currently serving as members of our board of directors and have
consented to continue to serve. If any nominee for any reason is unable to serve or will not serve, the proxies may be voted for such substitute nominee as the proxy holder may determine. We are not
aware of any nominee who will be unable or unwilling to serve as a director.
Candidates
for director were identified (other than Messrs. Moseley and Valentine, who were specified by Noro-Moseley Partners VI, L.P. and Great Point
Partners, LLC, respectively, as described below) and recommended for nomination by the Governance and Nominating Committee of our board of directors. All members of the Governance and
Nominating Committee are independent directors. The Governance and Nominating Committee and our board of directors have determined that a potential candidate to be nominated to serve as a director
should have the following primary attributes: high achievement expectations with regard to increasing stockholder value; uncompromising position on maintaining ethics; conservative attitude towards
financial accounting and disclosure; and ownership of shares of our common stock to bring the perspective of a stockholder to the board of directors. The Governance and Nominating Committee and our
board of directors believe that the composition of the board of directors as a whole should reflect diversified business experiences, education, knowledge of and skills relating to the healthcare and
healthcare technology industries, sales and marketing, investment banking, accounting and finance, and knowledge of our operations. The Governance and Nominating Committee and the board of directors
take all of these diversity factors into account when considering individual director candidates because we believe that these diversity factors can enhance the overall perspectives of our board of
directors and of management.
To
date, neither our board of directors nor the Governance and Nominating Committee has deemed it necessary to engage a third party search firm to assist in identifying suitable
candidates for directors, but have the authority to do so in the future. Accordingly, no fees were paid to any such search firm in connection with the nominees for directors named in this Proxy
Statement. The Governance and
Nominating Committee currently believes that the existing members of our board of directors and executive management have sufficient networks of business contacts to form the candidate pool from which
nominees will be identified. Once a candidate is identified as a possible director nominee by the Governance and Nominating Committee, our board of directors (or as many members of the board of
directors as feasible) will meet with such candidate. The Governance and Nominating Committee will then take any feedback that it receives from the board of directors regarding the possible director
nominee and evaluate the candidate using the criteria outlined above. The Governance and Nominating Committee would evaluate a director candidate recommended by a stockholder using the same process
described above. To date, other than the candidates specified by Noro-Moseley Partners VI, L.P. and Great Point Partners, LLC as described below, we have never received a director
candidate recommended by a stockholder.
In
August 2012, we completed an equity investment from affiliated funds and accounts of Great Point Partners, LLC ("GPP"), Noro-Moseley Partners VI, L.P. ("NMP"), and
another investor affiliated
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with
NMP (the "2012 Private Placement"). In conjunction with such transaction, our board of directors increased the size of the board of directors in accordance with our bylaws, creating two vacancies
on the board of directors. Pursuant to the terms we agreed to in conjunction with the 2012 Private Placement, GPP and NMP were each granted the right to specify a director candidate to be
nominated by our board of directors for election at each Annual Meeting of Stockholders thereafter. Such right will expire for each holder at such time as GPP (collectively with its affiliated
funds and accounts) or NMP (collectively with its affiliates), as the case may be, holds shares of preferred and common stock representing less than 7.5% of our issued and outstanding shares of common
stock (on a fully diluted basis). Allen S. Moseley, a member of the general partner of NMP, was designated by NMP to fill one of the two vacancies, and Michael G. Valentine was designated
by GPP to fill the second vacancy. Messrs. Moseley and Valentine were evaluated by the Governance and Nominating Committee in accordance with our director review process and were
appointed by the board of directors to fill the vacancies.
Each
of NMP and GPP currently owns more than 7.5% of our shares of common stock (on a fully diluted basis) and has specified Messrs. Moseley and Valentine, respectively, to
be nominated by our board of directors for election at the Annual Meeting. In the event that Mr. Moseley or Mr. Valentine is not elected to our board of directors, NMP or GPP, as
the case may be, will be granted board observation rights.
Nominees for Election as Directors
The following six incumbent directors are being nominated by the board of directors for re-election to the board of directors: Michael K.
Kaplan, Allen S. Moseley, Jonathan R. Phillips, David W. Sides, Judith E. Starkey and Michael G. Valentine. The name, age, principal occupation for the last five years, selected biographical
information and period of service as a director of Streamline for each director nominee are set forth below.
Michael K. Kaplan
, age 51, has served on our board of directors since January 2012. Mr. Kaplan brings more than 20 years of
experience in various roles in the healthcare industry. He is currently Founder and Managing Director of Altos Health Management, a venture capital firm focused on the healthcare industry. Prior to
founding Altos Health Management in 2009, Mr. Kaplan was a partner at Three Arch Partners, a venture capital firm focused on healthcare. He was involved with 19 portfolio companies during
nearly a decade at Three Arch Partners. Before joining Three Arch Partners, Mr. Kaplan was an operating executive at Blue Shield of California where he had a variety of roles, including Vice
President of Corporate Development and Strategic Planning, Regional Chief Executive for Northern California, and Vice President of Business Transformation. Earlier in his career, Mr. Kaplan was
a Senior Manager in consulting for APM Incorporated/CSC Healthcare and a Financial Analyst at Kidder, Peabody & Co. Incorporated. Mr. Kaplan received his BS in Business
Administration from Washington University in St. Louis and an MBA from the Stanford Graduate School of Business. Mr. Kaplan is well-qualified to serve on our board of directors. He
brings a wealth of industry knowledge and experience to the board of directors from his experience in the healthcare industry. Mr. Kaplan's venture capital experience also allows him to provide
our board of directors with valuable insights and analysis as to strategic and financial developments within the industry and potential opportunities and consequences such developments create for us.
Allen S. Moseley
, age 47, has served on our board of directors since August 2012. He has served as a General Partner at Noro-Moseley
Partners ("Noro-Moseley") since 1998 and leads the firm's healthcare practice focused primarily in healthcare information technology, healthcare services, and medical devices. He currently represents
Noro-Moseley on the boards of various healthcare vendors. Prior to joining Noro-Moseley, Mr. Moseley was in the corporate finance group at The Robinson-Humphrey Company, an investment banking
firm previously owned by Citigroup and now part of SunTrust Banks, Inc. Mr. Moseley worked extensively in the healthcare and business services industries,
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advising
on a number of initial public offerings, mergers and acquisitions, and private placements. He also was involved in R-H Capital Partners, the private equity investment arm of the firm.
Previously, he held investment banking positions with Bowles Hollowell Conner & Company and Merrill Lynch & Co.
Mr. Moseley currently serves on the Board of Trustees of the Georgia Research Alliance and the Board of Directors of the Technology Association of Georgia. He was recently Chairman of Venture
Atlanta and Chairman of the Technology Association of Georgia. Mr. Moseley received a BA from the University of North Carolina at Chapel Hill, where he was a member of Phi Beta Kappa, and an
MBA from Harvard Business School. Mr. Moseley is well-qualified to serve on our board of directors. With vast experience in the healthcare industry and a background in investment banking,
Mr. Moseley brings a wealth of industry knowledge to our board of directors. Mr. Moseley's venture capital experience also allows him to provide our board of directors with valuable
insights and analysis as to strategic and financial developments within the industry and potential opportunities and consequences such developments create for us.
Jonathan R. Phillips
, age 44, has served on our board of directors since May 2005 and was elected Chairman of our board of directors in
May 2009. Mr. Phillips has served as Managing Director and Head of Private Equity at First Trust Portfolios, a diversified asset management firm headquartered in Wheaton, Illinois, since
November 2016. Mr. Phillips is also the founder and Managing Partner of First Health Capital Partners, LLC, a healthcare technology and services investment firm founded in January 2016.
In 2005, Mr. Phillips founded Healthcare Growth Partners, a provider of strategic and financial advisory services to healthcare technology companies, and served as its Managing Director until
November 2016. Prior to founding Healthcare Growth Partners, Mr. Phillips was a member of the Healthcare Investment Banking Group at William Blair and Company, LLC, an investment banking
firm. Prior to William Blair, he served in various roles in the healthcare practice of Deloitte Consulting. From 2007 until immediately prior to its acquisition by Merge Healthcare Incorporated
(Nasdaq: MRGE) in 2011, Mr. Phillips was a director of Ophthalmic Imaging Systems, Inc., a public company that provided software and technology for ophthalmology practices, where
he served on the audit, compensation, and nominating committees and chaired the special committee. Mr. Phillips also serves as a director for several private companies. Mr. Phillips
currently serves on the Board of Visitors of DePauw University, on the Rush University Medical Center Associates board, and on the nonprofit board of the Ray Graham Association, where he is a member
of the finance committee. Mr. Phillips is a securities principal having completed the Series 24, 7 and 63 exams. Mr. Phillips earned his MBA in Finance, Marketing and Health
Services Management from the J. L. Kellogg School of Management, Northwestern University, and his BA in Economics and Management from DePauw University. Mr. Phillips is well-qualified to serve
on our board of directors. He brings a wealth of industry knowledge and experience to the board of directors as a private equity investor managing a portfolio of over 40 companies, including 18
healthcare companies. During his career, Mr. Phillips has completed over 110 transactions involving healthcare companies, which transactions had an aggregate value of over $2 billion. He
also has completed over 40 strategic advisory engagements for healthcare technology and services companies. These experiences within the healthcare sector allow Mr. Phillips to provide our
board of directors with valuable insights and analysis as to strategic and financial developments within the industry and potential opportunities and consequences such developments create for us.
David W. Sides
, age 46, has served as President, Chief Executive Officer and a member of the company's board of directors since January
2015. From September 2014 until he was appointed to his current positions, Mr. Sides served as Executive Vice President and Chief Operating Officer of the company. Mr. Sides served as
Chief Executive Officer of iMDsoft from July 2012 to March 2014. While with iMDsoft, a global leader of high-end clinical information systems, Mr. Sides led the company's transformation
following the acquisition of the company by a private equity firm. From 1995 to 2012, Mr. Sides held a number of successive positions at Cerner Corporation, a global supplier of health care
information technology solutions, services, devices and hardware, culminating in serving as Senior Vice
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President
of Worldwide Consulting. In that position, he led professional services in 24 countries worldwide. From March 2014 to September 2014, Mr. Sides was an independent consultant.
Mr. Sides currently serves on the Board of Directors of EMIS Group PLC, a major provider of healthcare software, information technology and related services in the United Kingdom.
Mr. Sides has a B.A. in biophysics from the University of California, Berkeley as well as master's of both health administration and business administration from the University of Missouri,
Columbia. Mr. Sides is a Fellow of the American College of Healthcare Executives. Mr. Sides's service as our President and Chief Executive Officer, as well as his extensive experience in
the healthcare information technology industry, qualifies him to be an effective member of our board of directors. This experience provides the board with valuable insight into our industry and
business strategy.
Judith E. Starkey
, age 69, has served on our board of directors since September 2014. Ms. Starkey is the Founder and former
Chairperson of Chamberlin Edmonds & Associates, which she launched in 1986 and was acquired by Emdeon in 2010. Chamberlin Edmonds, now Change Healthcare, is a leading provider of patient
eligibility and enrollment services to hospitals, government agencies and managed care organizations. Since 2010, Ms. Starkey has been a self-employed entrepreneur, speaker and author.
Ms. Starkey began her career in health service management, medical cost control and government systems with the Social Security Administration. While employed by the government,
Ms. Starkey designed a management system that enabled states to comply with federal and state regulations. She also designed and implemented a process that reduced the cost of administering the
Social Security Disability Insurance Benefits program by several million dollars. Ms. Starkey is an oft-honored expert in her field and is an advanced member of the Healthcare Financial
Management Association, has delivered Congressional testimony and presents at national/state forums of healthcare professionals. She currently serves on the board of The Johns Hopkins Berman Institute
of Bioethics. Ms. Starkey received her BS degree in Psychology from Spring Hill College and her MS in Psychology from Georgia State University. Ms. Starkey's experience as an
entrepreneur and executive in the healthcare information technology industry provides our board with important insight in growing and managing our business. Further, her experience in government
provides the board with an important understanding of the regulatory environment for our company.
Michael G. Valentine
, age 48, has served on our board of directors since October 2012. He has served as the Chief Executive Officer of
Netsmart Technologies, Inc., an information technology company, since May 2011. From December 1998 to May 2011, he served as Executive Vice President and Chief Operating Officer at Cerner
Corporation, an information technology company. He held a succession of business ownership roles during his 13 years at Cerner. Prior to his role as Chief Operating Officer, he maintained
ownership of all client delivery and relationships for Cerner's worldwide operations. Prior to joining Cerner, Mr. Valentine started and managed a Midwest-based technology solutions and
services company. Before that, he was an executive in telecommunications and technology industry groups for seven years at Andersen Consulting. Mr. Valentine earned his BS in Industrial
Engineering from Kansas State University. With his extensive experience in healthcare information technology, Mr. Valentine brings valuable insight and experience to our board of directors.
Further, his leadership in key roles at information technology companies qualifies him to be an effective member of our board. Our board of
directors has determined that Mr. Valentine is an audit committee financial expert under SEC and Nasdaq Stock Market standards.
The board of directors recommends a vote "FOR ALL" nominees listed above.
8
PROPOSAL 2—ADVISORY VOTE ON COMPENSATION
OF NAMED EXECUTIVE OFFICERS ("SAY-ON-PAY")
Proposed Advisory Resolution of Stockholders
At the Annual Meeting, stockholders will be given the opportunity to vote on the following advisory resolution:
RESOLVED,
that the stockholders of Streamline Health Solutions, Inc. hereby approve, on an advisory basis, the compensation of the company's named executive officers, as disclosed in the
company's Proxy Statement for the 2017 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the disclosure under
"Compensation Discussion and Analysis," and the compensation tables and related narrative disclosure under "Executive Compensation."
References
in this Proxy Statement to "named executive officers" refer to David W. Sides, Nicholas A. Meeks, Randolph W. Salisbury, and Shaun L. Priest. For information regarding
the compensation of our named executive officers, see "Compensation Discussion and Analysis" and "Executive Compensation."
Background on Proposal
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and related SEC rules, stockholders are
being given the opportunity to vote at the Annual Meeting on this advisory resolution regarding the compensation of our named executive officers (commonly referred to as "say-on-pay"). As discussed in
"Compensation Discussion and Analysis—Overview of Streamline's Executive Compensation," the Compensation Committee's compensation objectives are to motivate executive officers to deliver
superior short-term performance by providing conservative, but competitive, base salaries and cash bonus opportunities; align the interests of our executive officers with the long-term interests of
the company's stockholders through the grant of equity incentive awards; and provide an overall compensation package that is conservative, but competitive and, therefore, promotes executive
recruitment and retention. The Compensation Committee has determined that the compensation structure for our named executive officers is effective and appropriate.
At
our Annual Meeting of Stockholders in 2013, our stockholders approved a one year frequency for say-on-pay proposals. We expect to hold the next say-on-pay proposal at our Annual
Meeting of Stockholders in 2018.
Effects of Advisory Vote
While the resolution is non-binding and will not be construed as overruling any decision by our board of directors or create or imply any
fiduciary duty by the board of directors, the board and the Compensation Committee value the opinions of our stockholders and will take into account the outcome of the vote when considering future
executive compensation arrangements.
Our board of directors recommends a vote "FOR" the advisory vote on the compensation of the named executive officers as set forth in this Proposal
2.
9
PROPOSAL 3—APPROVAL OF THE
STREAMLINE HEALTH SOLUTIONS, INC. SECOND AMENDED AND RESTATED 2013
STOCK INCENTIVE PLAN
General Information
On April 3, 2013, our board of directors adopted, and our stockholders subsequently approved, the Streamline Health
Solutions, Inc. 2013 Stock Incentive Plan, which we refer to as the "Original 2013 Plan" in this Proxy Statement. On March 28, 2014, our board of directors adopted, and our stockholders
subsequently approved, the Streamline Health Solutions, Inc. Amended and Restated 2013 Stock Incentive Plan, which we refer to as the "2013 Plan" in this Proxy Statement.
Upon
the recommendation of our Compensation Committee, on April 12, 2017, our board of directors approved, and recommends that our stockholders approve, the Streamline Health
Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan, which we refer to as the "Second Amended 2013 Plan" in this Proxy Statement. The Second Amended 2013 Plan increases the
number of shares of common stock available for issuance under the plan by 300,000 shares. For more information, see "—Share Limitations" below.
In
addition, the Second Amended 2013 Plan includes a few minor technical changes from the 2013 Plan. The Second Amended 2013 Plan is summarized below and the full text of the Second
Amended 2013 Plan is attached to this Proxy Statement as
Appendix A
. If our stockholders do not approve the Second Amended 2013 Plan, the 2013
Plan will remain in effect in accordance with its terms.
The
discussion that follows is qualified in all respects by reference to the terms of the Second Amended 2013 Plan. Stockholders should refer to the Second Amended 2013 Plan for more
complete and detailed information about the terms of the Second Amended 2013 Plan. Our board of directors believes that our equity compensation program allows us to attract, motivate, and retain
employees,
non-employee directors and independent contractors capable of achieving consistently superior business results. Our board of directors also believes that the Second Amended 2013 Plan effectively will
align the interests of plan participants with those of our stockholders by linking a portion of their compensation directly to increases in stockholder value. We have a history of linking pay to our
long-term stock performance for a broad group of employees and non-employee directors and select independent contractors. Approval of the Second Amended 2013 Plan should provide us with the
flexibility we need to continue to use equity compensation to attract, retain, and motivate talented employees, non-employee directors and independent contractors who are important to our long-term
growth and success.
On
April 21, 2017, the closing sales price of our common stock as reported on Nasdaq was $1.42 per share.
"Best Practices" Integrated Into Our Equity Compensation Program and the Second Amended 2013 Plan
Our compensation practices include a number of features that our board believes reflect responsible compensation and governance practices and
promote the interests of our stockholders. Approval of the Second Amended 2013 Plan will position us to continue these "best practices," including the following:
-
•
-
Limitation on Shares Issued.
Assuming stockholder approval of the Second
Amended 2013 Plan, 300,000 total new shares of common stock will be authorized for issuance under the Second Amended 2013 Plan, plus the number of shares remaining available for issuance with respect
to the aggregate of the 2,000,000 shares of common stock previously authorized for issuance under the 2013 Plan, the number of shares remaining available for issuance under the 2005 Incentive
Compensation Plan (the "2005 Plan") at the time the Original 2013 Plan originally became
10
11
-
•
-
Forfeiture and Recoupment.
The Second Amended 2013 Plan authorizes our
Compensation Committee or our board of directors to require forfeiture and/or recoupment of plan benefits if a participant engages in certain types of detrimental conduct and to require that a
participant be subject to any compensation recovery policy or similar policies that may apply to the participant or be imposed under applicable laws.
-
•
-
Independent Committee.
The Second Amended 2013 Plan will be administered by
our Compensation Committee. All members of our Compensation Committee qualify as "independent" under Nasdaq listing standards, as "non-employee directors" under Rule 16b-3 adopted under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as "outside directors" under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), to the extent
required with respect to any particular award.
-
•
-
No Dividends or Dividend Equivalents on Unearned Performance Awards.
Under
the Second Amended 2013 Plan, dividends and dividend equivalents on performance-based awards may only be paid if and to the extent the award has vested or been earned or become payable.
-
•
-
No Tax Gross-Ups.
The Second Amended 2013 Plan does not provide for any tax
gross-ups.
-
•
-
Efficient Use of Equity.
We are committed to the efficient use of equity
awards and are mindful of ensuring that our equity compensation program does not overly dilute our existing stockholders.
Share Limitations
The maximum number of shares that we may issue pursuant to awards granted under the Restated Second Amended Plan may not exceed the sum of
(a) 2,300,000 shares (the 2,000,000 shares of common stock authorized under the 2013 Plan plus the 300,000 new shares of common stock to be added subject to stockholder approval), plus
(b) any shares (i) remaining available for issuance under the 2005 Plan at the time the Original 2013 Plan became effective and (ii) subject to
an award granted under the 2005 Plan if the award is forfeited, cancelled, terminated, expires or lapses for any reason without issuance of the shares.
In
addition, if and to the extent required under Code Section 162(m), under the Second Amended 2013 Plan, in any 12-month period, (a) no participant may be granted options
and SARs that are not related to an option for more than 200,000 shares of common stock (or the equivalent value thereof based on the fair market value per share of the common stock on the date of
grant of an award); and (b) no participant may be granted awards other than options or SARs that are settled in shares of common stock for more than 50,000 shares of common stock (or the
equivalent value thereof based on the fair market value per share of the common stock on the date of grant of an award).
The
following are not included in calculating the Second Amended 2013 Plan share limitations described above: (a) dividends, including dividends paid in shares, or dividend
equivalents paid in cash in connection with outstanding awards, (b) awards that are settled in cash, and (c) any shares subject to an award under the Second Amended 2013 Plan or the 2005
Plan if the award is forfeited, canceled, terminated, expires or lapses for any reason without issuance of the underlying shares. In addition, (i) shares issued under the Second Amended 2013
Plan through the settlement, assumption, or substitution of outstanding awards granted by another entity or obligations to grant future awards as a condition of or in connection with a merger,
acquisition or similar transaction involving us acquiring another entity will not reduce the maximum number of shares of common stock available for delivery under the Second Amended 2013 Plan, and
(ii) available shares under a stockholder-approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for awards under the Second Amended 2013 Plan
(subject in each case to applicable stock exchange listing requirements) and will not reduce the maximum number of shares available under the Second
12
Amended
2013 Plan. Shares withheld or applied as payment in connection with the exercise of an award or the withholding or payment of taxes related to an award or separately surrendered by the
Participant for any such purpose will be treated as having been delivered for purposes of determining the maximum number of Shares available for grant under the Second Amended 2013 Plan and shall not
again be treated as available for grant.
The
number of shares reserved for issuance under the Second Amended 2013 Plan, the participant award limitations, and the terms of awards may be adjusted in the event of an adjustment in
our capital structure (due to a merger, stock split, stock dividend or similar event).
As
of April 21, 2017, the maximum aggregate number of shares available for future grants under the 2013 Plan, which is our only currently effective equity incentive plan, was
147,407 shares. In addition, at that time, there were 1,650,364 shares subject to unvested outstanding full value awards under either of
the 2013 Plan or the 2005 Plan, and there were 2,568,579 shares and 281,833 shares subject to outstanding options under those respective plans. The weighted average exercise price of these options was
$3.32 and the weighted average remaining term was 8 years.
Inclusive
of the shares authorized under the Second Amended 2013 Plan and the outstanding awards that may be paid out in the future under the Second Amended 2013 Plan and the 2005 Plan
and assuming the conversion or exercise of all other derivative securities, the total stockholder dilution of our stockholder-approved equity compensation plans is approximately 12.4%. In determining
the maximum number of shares reserved for issuance under the Second Amended 2013 Plan, our board of directors balanced the need for flexibility to continue to use equity compensation to attract,
retain, and motivate talented employees, non-employee directors, and independent contractors with the potential expense and delay incident to obtaining future stockholder approval for equity
compensation plans and the dilutive impact of such awards to our stockholders.
Burn Rate Commitment
In connection with the adoption of the 2013 Plan, we committed, over the period covering fiscal years 2013, 2014, 2015, and 2016, to cap our
average annual burn rate at 9.92%. Our actual burn rate has not exceeded the burn rate cap, and we commit to extend our current burn rate commitment by one additional fiscal year so that, in total,
our burn rate commitment covers the fiscal years 2013, 2014, 2015, 2016, and 2017.
In
calculating our compliance with this maximum burn rate commitment, we define "burn rate" as the number of shares subject to stock awards granted under the Second Amended 2013 Plan in
a fiscal year divided by the weighted average number of shares of our common stock outstanding (basic) during our fiscal year. For purposes of calculating the number of awards granted,
(i) awards of stock options and stock appreciation rights count as one share, and (ii) awards of restricted stock, restricted stock units or other full value awards count as 1.5 shares.
This
burn rate commitment will not apply to awards that are assumed or substituted in future acquisitions. Our burn rate may exceed 9.92% in any given fiscal year, provided our five-year
average burn rate remains at or below the commitment level.
Purpose and Eligibility; Term
The purposes of the Second Amended 2013 Plan are to encourage and enable selected employees, non-employee directors, and certain of our
independent contractors to acquire or increase their holdings of our common stock in order to promote a closer identification of their interests with our interests and the interests of our
stockholders, and to provide flexibility to us in our ability to motivate, attract, and retain the services of participants upon whose judgment, interest, and special effort the successful conduct of
our operation largely depends. If approved by the stockholders, the effective date
13
of
the Second Amended 2013 Plan will be April 12, 2017, and awards can be granted under the 2013 Plan until then, and under the Second Amended 2013 Plan after stockholder approval and until
April 12, 2027 or the Second Amended 2013 Plan's earlier termination by our board of directors or the issuance of all available shares. If not approved by the stockholders, the 2013 Plan, as in
effect prior to the amendment and restatement, will continue in accordance with its terms, and no awards may be granted with respect to the 300,000 new shares of common stock that were to be available
because of the amendment and restatement of the plan. Awards may be granted to employees, non-employee directors, and our independent contractors in the discretion of the Administrator (as defined
below under "—Administration; Amendment and Termination"). As of April 21, 2017, there were six members of the board of directors and approximately 130 employees, non-employee
directors and independent contractors who would potentially be eligible to receive awards under the Second Amended 2013 Plan, subject to being selected by the Compensation Committee, as described
above. Since each non-employee director and executive officer is eligible to participate in the Second Amended 2013 Plan, each may be deemed to have a substantial interest in the outcome of this
Proposal 3.
The
Second Amended 2013 Plan's purposes will be carried out by the granting of awards to selected participants. The types of awards authorized under the Second Amended 2013 Plan include
options in the form of incentive options and/or nonqualified options, SARs in the form of freestanding SARs and/or SARs related to other awards, restricted awards in the form of restricted stock
awards and restricted stock units, performance awards in the form of performance shares and performance units, phantom stock awards, other stock-based awards, and dividend equivalent awards. We
discuss the material terms of each type of award below.
Administration; Amendment and Termination
The Second Amended 2013 Plan provides that the plan will be administered by our Compensation Committee unless our board of directors elects to
administer the Second Amended 2013 Plan in whole or in part. As a matter of practice, the Compensation Committee will administer the Second Amended 2013 Plan, subject to oversight from our board of
directors, particularly of the plan's non-employee director equity compensation component. Each member of the Compensation Committee is "independent" under Nasdaq listing standards, a "non-employee
director" under Rule 16b-3 adopted under the Exchange Act, and an "outside director" under Section 162(m) of the Code. Our board of directors and the Compensation Committee are referred
to in this discussion collectively as the "Administrator."
Subject
to the terms of the Second Amended 2013 Plan, the Administrator's authority includes but is not limited to the authority to: (a) determine all matters relating to awards,
including selection of individuals to be granted awards, the types of awards, the number of shares of common stock, if any, subject to an award, and the terms, conditions, restrictions, and
limitations of an award; (b) prescribe the form or forms of agreements evidencing awards granted under the Second Amended 2013 Plan; (c) establish, amend, and rescind rules and
regulations for the administration of the Second Amended 2013 Plan; and (d) construe and interpret the Second Amended 2013 Plan, awards, and award agreements made under the Second Amended 2013
Plan, interpret rules and regulations for administering the Second Amended 2013 Plan, and make all other determinations deemed necessary or advisable for administering the Second Amended 2013 Plan. In
certain circumstances, the Administrator may delegate to one or more of our officers the authority to grant awards, and to make other determinations under the Second Amended 2013 Plan with respect to
such awards, to persons who are not directors or officers subject to the provisions of Section 16 under the Exchange Act or the requirements of "covered employees" under Code
Section 162(m).
The
Second Amended 2013 Plan may be amended or terminated at any time by our board of directors, and awards under the Second Amended 2013 Plan may be amended or terminated at any
14
time
by our board of directors or the Compensation Committee, in each case subject to the following: (a) stockholder approval is required of any Second Amended 2013 Plan amendment if approval
is required by applicable law, rule, or regulation or any tax or regulatory requirement applicable to the Second Amended 2013 Plan; and (b) an amendment or termination of an award may not
materially adversely affect the rights of a participant without the participant's consent. In addition, stockholder approval is required to (i) amend the terms of outstanding options or SARs to
reduce the option price or base price of such outstanding options or SARs; (ii) exchange outstanding options or SARs for cash,
for options or SARs with an option price or base price that is less than the option price or base price of the original option or SAR, or for other equity awards at a time when the original option or
SAR has an option price or base price, as the case may be, above the fair market value of the common stock; or (iii) take other action with respect to options or SARs that would be treated as a
repricing under the rules of the principal stock exchange on which shares of our common stock are listed. In addition, our board of directors intend to submit the material terms of the performance
measures under the Second Amended 2013 Plan to our stockholders every five years to the extent our board of directors deems appropriate to comply with Code Section 162(m). The Administrator may
adjust awards upon the occurrence of certain unusual or nonrecurring events if the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Second Amended 2013 Plan or necessary or appropriate to comply with applicable laws, rules, or regulations.
Vesting
The Administrator determines the exercise and vesting schedule and other terms and conditions of awards, subject to certain minimum vesting
restrictions for employee awards. Awards granted to an employee under the Second Amended 2013 Plan shall be subject to a minimum vesting period of three years (which may include installment vesting
within such three-year period as determined by the Administrator) or one year if the vesting is based on performance criteria other than solely continued service;
provided,
however
, that (i) the Administrator may provide for acceleration of vesting of all or a portion of an award in the event of a participant's death, disability, or
retirement, or, as set forth in the Second Amended 2013 Plan, upon the occurrence of a change of control of the company; (ii) the Administrator may provide for the grant of an award without a
minimum vesting period or may accelerate the vesting of all or a portion of an award for any reason, but only with respect to awards for no more than an aggregate of 10% of the total number of shares
of common stock authorized for issuance under the Second Amended 2013 Plan, upon such terms and conditions as the Administrator shall determine; (iii) the Administrator also may provide for the
grant of awards that have different vesting terms in the case of awards that are substituted for other equity awards in connection with mergers, consolidations or other similar transactions, awards
that are granted as an inducement to become our employee, or to replace forfeited awards from a former employer, or awards that are granted in exchange for foregone cash compensation; and
(iv) the Administrator may grant other stock-based awards under the Second Amended 2013 Plan without minimum vesting requirements.
Awards
A summary of the material terms of the types of awards authorized under the Second Amended 2013 Plan is provided below.
The Second Amended 2013 Plan authorizes the grant of both incentive options and nonqualified options, both of which are exercisable for shares
of our common stock, although incentive options may only be granted to our employees and those of our subsidiaries. The Administrator will determine the option price at which a participant may
exercise an option. The option price must be no less than
15
100%
of the fair market value per share of our common stock on the date of grant, or 110% of the fair market value with respect to incentive options granted to an employee who owns stock representing
more than 10% of the total voting power of all classes of our stock (except for certain options assumed or substituted in a merger or other transaction where the option price is adjusted in accordance
with applicable tax regulations). Unless an individual award agreement provides otherwise, the option price must be paid in the form of cash or cash equivalent. In addition, except where prohibited by
the Administrator or applicable laws, rules, and regulations, payment also may be made by: (a) delivery of shares of common stock owned by the participant; (b) shares of common stock
withheld upon exercise; (c) delivery of written notice of exercise to us and delivery to a broker of written notice of exercise and irrevocable instructions to deliver promptly to us the amount
of sale or loan proceeds to pay the option price; (d) such other payment methods as may be approved by the Administrator and which are acceptable under applicable law; or (e) any
combination of these methods. Subject to the minimum vesting restrictions for employees, the Administrator will determine the terms and conditions of an option and the period or periods during which,
and conditions pursuant to which, a participant may exercise an option. The option term may not exceed ten years (or five years with respect to incentive stock options granted to an employee who
possesses more than 10% of the total combined voting power of all classes of our stock). Options are generally subject to certain restrictions on exercise if the participant terminates employment or
service unless an award agreement or the Administrator provides otherwise.
Under the terms of the Second Amended 2013 Plan, stock appreciation rights (referred to as SARs) may be granted to the holder of an option (a
"related option") with respect to all or a portion of the shares of common stock subject to the related option (a "related SAR") or may be granted separately (a "freestanding SAR"). The consideration
to be received by the holder of a SAR may be paid in cash, shares of common stock (valued at fair market value on the date of the SAR
exercise), or a combination of cash and shares of common stock, as determined by the Administrator. The holder of a SAR is entitled to receive from us, for each share of common stock with respect to
which the SAR is being exercised, consideration equal in value to the excess of the fair market value of a share of common stock on the date of exercise over the base price per share of such SAR. The
base price may be no less than the fair market value per share of the common stock on the date the SAR is granted or the exercise price of an option for a related SAR (except for certain SARs assumed
or substituted in a merger or other transaction where the base price is adjusted in accordance with applicable tax regulations).
Subject
to the minimum vesting restrictions for employees, SARs are exercisable according to the terms established by the Administrator and stated in the applicable award agreement. A
SAR may not be exercised more than ten years after it was granted (or five years for SARs granted with respect to a related incentive stock option to an employee who possesses more than 10% of the
total combined voting power of all classes of our stock). SARs generally are subject to certain restrictions on exercise if the participant terminates employment or service unless an award agreement
or the Administrator provides otherwise.
Under the terms of the Second Amended 2013 Plan, the Administrator may grant restricted awards to participants in such numbers, upon such terms,
and at such times as the Administrator determines. Restricted awards may be in the form of restricted stock awards or restricted stock units that are subject to certain conditions, which conditions
must be met in order for such award to vest or be earned, in whole or in part, and no longer subject to forfeiture. Restricted stock awards are payable in shares of common stock. Restricted stock
units may be payable in cash or shares of common stock, or partly in cash and partly in shares of common stock, in accordance with the terms of the Second Amended 2013 Plan and the discretion of the
Administrator.
16
Subject
to the minimum vesting restrictions for employees, the Administrator will determine the restriction period for each restricted award and will determine the conditions that must
be met in order for a restricted award to be granted or to vest or be earned or become payable (in whole or in part). These conditions may include (but are not limited to) attainment of performance
objectives, continued service or employment for a certain period of time (or a combination of attainment of performance objectives and continued service), retirement, displacement, disability, death,
or any combination of conditions. In the case of restricted awards based upon performance criteria, or a combination of performance criteria and continued service, the Administrator will determine the
performance factors to be used in valuing restricted awards. These performance factors may vary from participant to participant and between groups of participants and will be based upon such
company-wide, business unit, division, or individual performance factors and criteria as the Administrator determines. However, with respect to restricted awards payable to "covered employees"
(generally the chief executive officer and the three next highest compensated named executive officers other than the chief financial officer) that are intended to qualify for the compensation
deduction limitation exception available under Code Section 162(m), to the extent required under Code Section 162(m), the performance measures are limited to one or more of the
performance factors described below under "—Performance-Based Compensation—Code Section 162(m) Requirements." In addition, with respect to participants who are not
covered employees, the Administrator may approve performance objectives based on other criteria, which may or may not be objective.
The
Administrator has authority to determine whether and to what degree restricted awards have vested and been earned and are payable, as well as to determine the forms and terms of
payment of restricted awards. If a participant's employment or service is terminated for any reason and all or any part of a restricted award has not vested or been earned pursuant to the terms of the
Second Amended 2013 Plan and the individual award agreement, the award will be forfeited, unless an award agreement or the Administrator provides otherwise.
Under the terms of the Second Amended 2013 Plan, the Administrator may grant performance awards to participants upon such terms and conditions
and at such times as the Administrator determines. Performance awards may be in the form of performance shares or performance units. An award of a performance share is a grant of a right to receive
shares of common stock or the cash value thereof (or a combination of both) that is contingent upon the achievement of performance or other objectives during a specified period and that has a value on
the date of grant equal to the fair market value of a share of common stock (as determined in accordance with the Second Amended 2013 Plan). An award of a performance unit is a grant of a right to
receive shares of common stock or a designated dollar value amount of common stock that is contingent upon the achievement of performance or other objectives during a specified period, and that has an
initial value established by the Administrator at the time of grant.
Subject
to the minimum vesting restrictions for employees, the Administrator will determine the performance period for each performance award and will determine the conditions that must
be met in order for a performance award to be granted or to vest or be earned or become payable (in whole or in part). These conditions may include (but are not limited to) attainment of performance
objectives, continued service or employment for a certain period of time, or a combination of such conditions. In the case of performance awards based upon specified performance objectives, the
Administrator will determine the performance factors to be used in valuing performance awards, and these performance factors may vary from participant to participant and between groups of participants
and will be based upon such company-wide, business unit, division, or individual performance factors and criteria as the Administrator determines. However, with respect to performance awards payable
to covered employees that are intended to qualify for the compensation deduction limitation exception available under Code
17
Section 162(m),
to the extent required under Code Section 162(m), the performance factors are limited to one or more of the performance factors described below under
"—Performance-Based Compensation—Code Section 162(m) Requirements." In addition, with respect to participants who are not covered employees, the Administrator may
approve performance objectives based on other criteria, which may or may not be objective. The Administrator has authority to determine whether and to what degree performance awards have been earned
and are payable, as well as to determine the forms and terms of payment of performance awards. If a participant's employment or service is terminated for any reason and all or any part of a
performance award has not been earned pursuant to the terms of the Second Amended 2013 Plan and the individual award agreement, the award will be forfeited, unless an award agreement or the
Administrator provides otherwise.
Under the terms of the Second Amended 2013 Plan, the Administrator may grant phantom stock awards to participants in such numbers, upon such
terms, and at such times as the Administrator may determine. An award of phantom stock is an award of a number of hypothetical share units with respect to shares of our common stock, with a value
based on the fair market value of a share of common stock.
Subject
to the terms of the Second Amended 2013 Plan, the Administrator has authority to determine whether and to what degree phantom stock awards have vested and are payable and to
interpret the terms and conditions of phantom stock awards. Upon vesting of all or part of a phantom stock award and satisfaction of other terms and conditions that the Administrator establishes, the
holder of a phantom stock award will be entitled to a payment of an amount equal to the fair market value of one share of our common stock with respect to each such phantom stock unit that has vested
and is payable. We may make payment in cash, shares of common stock, or a combination of cash and stock, as determined by the Administrator. If a participant's employment or service is terminated for
any reason and all or any part of a phantom stock award has not vested and become payable pursuant to the terms of the Second Amended 2013 Plan and the individual award, the participant will forfeit
the award unless an award agreement or the Administrator provides otherwise.
The Administrator may grant other stock-based awards, which may be valued in whole or in part by reference to, or otherwise based on or related
to, shares of common stock or awards for shares of common stock. Such other stock-based awards include, but are not limited to, awards granted in lieu of bonus, salary, or other compensation, awards
granted with vesting or performance conditions, and awards granted without being subject to vesting or performance conditions. Subject to the provisions of the Second Amended 2013 Plan, the
Administrator will determine the number of shares of common stock to be awarded to a participant under (or otherwise related to) such other stock-based awards, whether such awards may be settled in
cash or shares of common stock (or a combination of both), and the other terms and conditions of such awards.
The Administrator may provide that awards granted under the Second Amended 2013 Plan (other than options and SARs) earn dividends or dividend
equivalent rights;
provided, however
, dividends and dividend equivalents, if any, on unearned or unvested performance-based awards may not be paid (even
if accrued) unless and until the underlying award (or portion thereof) has vested or been earned and payable. We may pay such dividends or dividend equivalent rights currently or credit such dividends
or dividend equivalent rights to a participant's account, subject to the foregoing restrictions on unearned or unvested performance-based awards and such additional restrictions and conditions as the
Administrator may establish. Any dividends or dividend equivalent rights related to an award will be
18
structured
in a manner so as to avoid causing the award or related dividends or dividend equivalent rights to be subject to Code Section 409A or will otherwise be structured so that the award
and dividends and dividend equivalent rights are in compliance with Code Section 409A.
Change of Control
Under the terms of the Second Amended 2013 Plan, unless an individual award agreement provides otherwise, in the event of a change of control an
award will become vested (and, in the case of options and SARs, exercisable) in full if the employment or service of the participant is terminated within six months before the effective date of a
change of control (in which case vesting shall not occur until the effective date of the change of control) or one year after the effective date of a change of control (or such other period of time as
may be stated in a change in control or similar agreement) if such termination of employment or service (a) is initiated by us not for cause or (b) is initiated by the participant for
good reason. In the event of a change of control, the Administrator will have the authority to take a variety of actions regarding outstanding awards. Within a certain time frame and under specific
conditions, the Administrator may:
-
•
-
require all outstanding awards to be exercised by a certain date;
-
•
-
require the surrender of outstanding awards in exchange for a stock or cash payment equal to the per share change of control value of the
shares covered by the award less, if any, the exercise price or base value of the award;
-
•
-
make equitable adjustments to outstanding awards to reflect the change of control; and/or
-
•
-
provide for replacement of outstanding awards with awards in the successor to the company.
Transferability
Incentive options are not transferable other than by will or the laws of intestate succession or, in the Administrator's discretion, as may
otherwise be permitted in accordance with Code Section 422 and related regulations. Nonqualified options are not transferable other than by will or the laws of intestate succession, except for
transfers if and to the extent permitted by the Administrator in a manner consistent with the registration provisions of the Securities Act. Restricted awards, SARs, performance awards, phantom stock
awards, and other stock-based awards generally are not transferable other than transfers by will or the laws of intestate succession, and participants may not sell, transfer, assign, pledge, or
otherwise encumber shares subject to an award until the award has vested and all other conditions established by the Administrator have been met.
Forfeiture and Recoupment
As noted above, the Second Amended 2013 Plan authorizes the Administrator to require forfeiture and recoupment of plan benefits if a participant
engages in certain types of detrimental conduct and to require that a participant be subject to any compensation recovery policy or similar policies that may apply to the participant or be imposed
under applicable laws.
Performance-Based Compensation—Code Section 162(m) Requirements
The Second Amended 2013 Plan is intended to enable the grant of awards that are intended to comply with the requirements imposed by Code
Section 162(m) and related regulations in order to preserve, to the extent practicable, our tax deduction for awards made under the Second Amended 2013 Plan to "covered employees" (as described
above, which consists of the chief executive officer and the three next highest compensated named executive officers other than the chief financial officer). Code Section 162(m) generally
denies a public corporation a deduction for compensation in excess of $1,000,000 paid to each of the covered employees of the corporation unless the compensation is exempt
19
from
the $1,000,000 limitation because it qualifies as performance-based compensation. In order to qualify as performance-based compensation, the compensation paid under a plan to covered employees
must be paid under pre-established objective performance goals determined and certified in writing by a committee comprised of outside directors. All of the members of our Compensation Committee are
outside directors under Code Section 162(m) standards.
In
addition to other requirements for the performance-based compensation exception, stockholders must be advised of, and must approve, the material terms (or changes in material terms)
of the performance goals under which compensation is to be paid. Material terms include: (a) the employees eligible to receive the compensation; (b) a description of the business
criteria on which the performance goal may be based; and (c) either the maximum amount of the compensation to be paid if the performance goal is met or the formula used to calculate the amount
of compensation if the performance goal is met. The eligibility and participant award limitations are described above under "—Purpose and Eligibility; Term" and "—Share
Limitations." With respect
to awards payable to covered employees that are intended to qualify for the compensation deduction limitation exception under Code Section 162(m), to the extent required under Code
Section 162(m), the performance measures are limited to one or more of the following: (a) revenues or sales; (b) gross margins; (c) earnings per share; (d) net
bookings; (e) product production or shipments; (f) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (g) net
income; (h) operating income; (i) book value per share; (j) return on stockholders' equity; (k) return on investment; (l) return on capital; (m) improvements
in capital structure; (n) expense management; (o) operating margins; (p) maintenance or improvement of gross margins or operating margins; (q) stock price or total
stockholder return; (r) market share; (s) profitability; (t) costs; (u) cash flow or free cash flow; (v) working capital; (w) return on assets;
(x) economic wealth created, and (y) strategic business criteria, based on meeting specified goals or objectives related to market penetration, geographic business expansion, cost
targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, management of litigation, management of information technology, goals relating to
acquisitions or divestitures of products, product lines, subsidiaries, affiliates or joint ventures, quality matrices, customer service matrices, and/or execution of pre-approved corporate strategy.
Material Federal Income Tax Consequences
The following summary generally describes the material U.S. federal (and not foreign, state or local) income tax consequences of awards granted
under the Second Amended 2013 Plan as of the date of this Proxy Statement. The summary is general in nature and is not intended to cover all tax consequences that may apply to a particular employee or
to us. The provisions of the Code and related regulations concerning these matters are complicated and their impact in any one case may depend upon the particular circumstances.
Incentive options granted under the Second Amended 2013 Plan are intended to qualify as incentive stock options under Code Section 422.
Pursuant to Code Section 422, the grant and exercise of an incentive stock option generally will not result in taxable income to the participant (with the possible exception of alternative
minimum tax liability) if the participant does not dispose of the shares received upon exercise of such option less than one year after the date of exercise and two years after the date of grant, and
if the participant has continuously been our employee from the date of grant to three months before the date of exercise (or 12 months in the event of the participant's death or disability).
However, the excess of the fair market value of the shares received upon exercise of the incentive option over the option price for such shares generally will constitute an item of adjustment in
computing the participant's alternative minimum taxable income for the year of exercise. Thus, certain
20
participants
may increase their federal income tax liability as a result of the exercise of an incentive option under the alternative minimum tax rules of the Code.
We
generally will not be entitled to a deduction for income tax purposes in connection with the exercise of an incentive option. Upon the disposition of shares acquired upon exercise of
an incentive option, the participant will be taxed on the amount by which the amount realized upon such disposition exceeds the option price, and such amount will be treated as capital gain or loss.
If
the holding period requirements for incentive option treatment described above are not met, the participant will be taxed as if he or she received compensation in the year of the
disposition. The participant must treat gain realized in the premature disposition as ordinary income to the extent of the lesser of: (a) the fair market value of the stock on the date of
exercise minus the option price or (b) the amount realized on disposition of the stock minus the option price. Any gain in excess of these amounts may be treated as capital gain. We generally
are entitled to deduct, as compensation paid, the amount of ordinary income realized by the participant on premature disposition of the shares.
Pursuant
to the Code and the terms of the Second Amended 2013 Plan, in no event can there first become exercisable by a participant in any one calendar year incentive options granted by
us with respect to shares having an aggregate fair market value (determined at the time an option is granted) greater than $100,000. To the extent an incentive option granted under the Second Amended
2013 Plan exceeds this limitation, it will be treated as a nonqualified option. In addition, no incentive option may be granted to an individual who owns, immediately before the time that the option
is granted, stock possessing more than 10% of the total combined voting power of all classes of our stock, unless the option price is equal to or exceeds 110% of the fair market value of the stock and
the option period does not exceed five years.
The grant of the nonqualified option should not result in taxable income to a participant or a tax deduction to us. The difference between the
fair market value of the stock on the date of exercise and the option price will constitute taxable ordinary income to the participant on the date of exercise. We generally will be entitled to a
deduction in the same year in an amount equal to the income taxable to the participant. The participant's basis in shares of common stock acquired upon exercise of an option will equal the option
price plus the amount of income taxable at the time of
exercise. Any subsequent disposition of the stock by the participant will be taxed as a capital gain or loss to the participant, and will be long-term capital gain or loss if the participant has held
the stock for more than one year at the time of sale.
The grant of a SAR should not result in taxable income to a participant or a tax deduction to us. Upon exercise, the amount of cash and the fair
market value of shares received by the participant, less cash or other consideration paid (if any), is taxed to the participant as ordinary income, and we will receive a corresponding income tax
deduction to the extent the amount represents reasonable compensation and an ordinary and necessary business expense, subject to any required income tax withholding.
The grant of a restricted stock award will not result in taxable income to the participant or a tax deduction to us, unless the restrictions on
the stock do not present a substantial risk of forfeiture or the award is transferable, as defined under Code Section 83. In the year that the restricted stock is no longer subject to a
substantial risk of forfeiture, or the award is transferable, the fair market value of such shares at such date and any cash amount awarded, less cash or other consideration paid (if any),
21
will
be included in the participant's ordinary income as compensation;
provided, however
, in the case of restricted stock issued, at the beginning of
the restriction period, the participant may elect to include in his or her ordinary income as compensation at the time the restricted stock is awarded, the fair market value of such shares at such
time, less any amount paid for the shares. We will be entitled to a corresponding income tax deduction to the extent that the amount represents reasonable compensation and an ordinary and necessary
business expense, subject to any required income tax reporting.
Restricted Stock Units, Performance Awards, Phantom Stock Awards, Other Stock-Based Awards and Dividend
Equivalents
The grant of a restricted stock unit, performance award, phantom stock award, other stock-based award (subject to vesting conditions) or a
dividend equivalent award generally should not result in taxable income to the participant or a tax deduction to us. However, the participant will recognize income on account of the settlement of such
award. The income recognized by the participant at that time will be equal to any cash and the fair market value of any common stock that is received in settlement of the award. We are entitled to a
tax deduction upon the settlement of such an award equal to the ordinary income recognized by the participant to the extent that the amount represents reasonable compensation and an ordinary and
necessary business expense.
Awards granted under the Second Amended 2013 Plan may be subject to Code Section 409A and related regulations and other guidance. Code
Section 409A imposes certain requirements on compensation that is deemed under Code Section 409A to involve nonqualified deferred compensation. If Code Section 409A applies to any
award granted under the Second Amended 2013 Plan, and the award does not, when considered together with the Second Amended 2013 Plan, satisfy the requirements of Code Section 409A during a
taxable year, the participant will have ordinary income in the year of non-compliance in the amount of all deferrals subject to Code Section 409A to the extent that the award is not subject to
a substantial risk of forfeiture. The participant will be subject to an additional tax of 20% on all amounts includable in income and also may be subject to premium interest charges under Code
Section 409A. We do not have any responsibility to take, or to refrain from taking, any actions in order to achieve a certain tax result for any participant nor are we responsible for the
participant's tax consequences in connection with an award, including those under Section 409A of the Code.
As noted above, the Second Amended 2013 Plan is structured to permit the grant of awards that are intended to comply with the requirements
imposed by Code Section 162(m) in order to preserve, to the extent practicable, our tax deduction for awards made under the Second Amended 2013 Plan to covered employees. Code
Section 162(m) generally denies an employer a deduction for compensation paid to covered employees of a publicly-held corporation in excess of $1,000,000 unless
the compensation is exempt from the $1,000,000 limitation because it is performance-based compensation. Nevertheless, there is no guaranty that all awards granted under the Second Amended 2013 Plan
will be exempt from the deduction limitations of Section 162(m) of the Code, and we reserve the right to grant awards that are not intended to qualify for any exemption under
Section 162(m) of the Code.
New Plan Benefits
No awards will be granted under the Second Amended 2013 Plan with respect to the additional 300,000 new shares of common stock that are being
added to the plan as a result of the amendment and restatement, unless it is approved by our stockholders. If our stockholders approve the Second Amended 2013 Plan, neither the selection of
individuals who will receive awards under the Second
22
Amended
2013 Plan nor the amount of any such awards are yet determinable. Therefore, it is not possible to predict the benefits or amounts that will be received by, or allocated to, particular
individuals or groups of participants. For details on awards granted under the 2005 Plan and the 2013 Plan in fiscal year 2016 to our Named Executive Officers and directors, see the Summary
Compensation Table under "Executive Compensation—Summary Compensation" and the Director Compensation in 2016 table under "Director Compensation."
Our
board of directors believes that approval of the Second Amended 2013 Plan is in our company's best interest in order to continue the purposes of our equity compensation program and
provide competitive incentives for eligible participants. Our board of directors believes that substantial equity ownership encourages management to take actions favorable to our long-term interests
and those of our stockholders. Accordingly, equity-based compensation makes up a significant portion of the overall compensation of our executive officers. In addition, we grant unvested equity-based
awards to most of our newly-hired, full-time employees, and our non-employee directors, and our non-employee directors and many employees are periodically eligible thereafter for additional equity
awards. Our board of directors believes that stockholder approval of the Second Amended 2013 Plan will allow us to continue the use of equity compensation as a component of a competitive, but
measured, overall compensation program.
Our board of directors recommends a vote "FOR" approval of the Streamline Health Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan as
set forth in this Proposal 3.
PROPOSAL 4—RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee proposes and recommends that the stockholders ratify the selection by the Audit Committee of the firm of RSM US LLP
("RSM") to serve as our independent registered public accounting firm for fiscal year 2017. Action by our stockholders is not required by law in the appointment of an independent registered public
accounting firm, but the appointment is submitted by the Audit Committee in order to give our stockholders a voice in the designation of auditors. If the resolution ratifying our selection of RSM as
our independent registered public accounting firm is rejected by our stockholders, then the Audit Committee will reconsider its choice of independent auditors. Even if the resolution is approved, the
Audit Committee at its discretion may direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the
company and our stockholders.
RSM
was engaged as our independent registered public accounting firm on December 10, 2015. Prior to such time, KPMG LLP ("KPMG") served as our independent registered public
accounting firm. See "Independent Registered Public Accounting Firm—Change in Independent Registered Public Accounting Firm" below for more information on our change in independent
registered public accounting firms.
Our board of directors recommends a vote "FOR" ratification of the appointment of RSM as our independent registered public accounting firm for fiscal year
2017.
CORPORATE GOVERNANCE
We have established corporate governance practices designed to serve the best interest of our company and our stockholders. We are in compliance
with the current corporate governance requirements imposed by the rules and regulations of the SEC and the listing standards of The Nasdaq Stock Market ("Nasdaq"). Set forth below is information
regarding the meetings of the board of directors during fiscal 2016, a description of the board's standing committees and additional information about our corporate governance policies and procedures.
23
Board of Directors Meetings and Committees
The board of directors met six (6) times during fiscal year 2016. Standing committees of the board of directors currently include the
Audit Committee, the Compensation Committee, the Governance and Nominating Committee, and the Strategy Committee.
All
nominees for election as directors at the Annual Meeting were unanimously recommended by the Governance and Nominating Committee and unanimously nominated by the current board of
directors, including all of the independent directors. Under our bylaws, director nominations may be brought at an Annual Meeting of Stockholders only by or at the direction of the board of directors
or by a stockholder entitled to vote who has submitted a nomination in accordance with the requirements of the bylaws as in effect from time to time. For this Annual Meeting, we received no director
nominations from stockholders, other than the candidates specified by NMP and GPP as described above. For additional information, see "Stockholder Proposals for 2018 Annual Meeting of
Stockholders."
Our
board of directors has determined that Messrs. Kaplan, Moseley, Phillips, and Valentine and Ms. Starkey are all "Independent Directors" in accordance with the standards
set forth in Item 407(a)(1)(i) of Regulation S-K and in Rule 5605(a)(2) of the Nasdaq Marketplace Rules.
There
are no family relationships among any of the above named nominees for director or among any of the nominees and any of our executive officers.
In
fiscal year 2016, each director attended at least 75% of the aggregate number of meetings of our board of directors and of the committees of the board of directors on which he or she
served.
Our
board of directors has separated the positions of the Chairman of the Board and of the Chief Executive Officer. Our board of directors believes that this separation allows the Chief
Executive Officer to focus his attention on the day-to-day operation of the business and leadership of the management team. The board of directors further believes that having an independent Chairman
of the Board provides better accountability between the board of directors and our management team, and facilitates discussions among our directors, formally and informally. As Chairman of the Board,
Mr. Phillips is responsible for setting the board of directors' meeting agendas in consultation with the Chief Executive Officer and the other directors, and presides over meetings of our board
of directors and stockholders. Our directors believe that this structure provides strong leadership for our board of directors, while maintaining the Chief Executive Officer as our leader in the eyes
of customers, employees and stockholders.
The Audit Committee is comprised entirely of independent directors. Messrs. Valentine (Committee Chairman), Moseley and Phillips are
presently the members of the Audit Committee. The Audit Committee operates under a charter approved by our board of directors and available through our website at
http://www.streamlinehealth.net/investors. The Audit Committee met separately as a committee four (4) times during fiscal year 2016. The Audit Committee, along with management, met separately
or as part of the entire board of directors to review each of our quarterly and annual financial statements filed on Form 10-Q or Form 10-K prior to the filing of those reports with the
SEC. The Audit Committee Chairman separately discusses our financial reports with the auditors on a regular basis. The Audit Committee's functions include the engagement of our independent registered
public accounting firm, review of the results of the audit engagement and our financial results, review of our financial statements by the independent registered public accounting firm and their
opinion thereon, review of the auditors' independence, review of the effectiveness of our internal controls and similar functions, and approval of all auditing and non-auditing services performed by
our independent
24
registered
public accounting firm. The board of directors has determined that Mr. Valentine is an audit committee financial expert.
The Compensation Committee is comprised entirely of independent directors. Ms. Starkey (Committee Chairwoman), Mr. Kaplan and
Mr. Moseley are presently the members of the Compensation Committee. Mr. Phillips, as the independent Chairman of the Board, attends Compensation Committee meetings in a non-voting
capacity. Our board of directors adopted a formal written charter for the Compensation Committee, which is available through our website at http://www.streamlinehealth.net/investors, in January 2013
and amended it in March 2014. The Compensation Committee met two (2) times during fiscal year 2016. The Compensation Committee reviews the performance of, and establishes the salaries and all
other compensation of our executive officers. The Compensation Committee also administers the Amended and Restated 1996 Associate Stock Purchase Plan (the "ESPP") and the 2013 Plan and is responsible
for grants of equity awards under the 2013 Plan.
The Governance and Nominating Committee is comprised entirely of independent directors. Mr. Kaplan (Committee Chairman),
Mr. Phillips and Ms. Starkey are presently the members of the Governance and Nominating Committee. The purposes of the Governance and Nominating Committee are to assist the board of
directors in complying with and overseeing our Code of Business Conduct and Ethics (the "Code of Conduct"), to review and consider developments in corporate governance practices, to identify and
recommend individuals to the board of directors for nomination as members of our board of directors and its committees, and to develop and oversee the process for nominating board members. The
Governance and Nominating Committee operates under a charter approved by our board of directors and available through our website at http://www.streamlinehealth.net/investors. The Governance and
Nominating Committee met four (4) times during fiscal year 2016.
The
Governance and Nominating Committee has established procedures through which confidential complaints may be made by employees directly to the Chairman of the Governance and
Nominating
Committee regarding: illegal or fraudulent activity; questionable accounting, internal controls or auditing matters; conflicts of interest, dishonest or unethical conduct; disclosures in our filings
with the SEC; violations of our Code of Conduct; or any other matters relating to questionable actions taken by our employees, officers or directors.
The
Governance and Nominating Committee also has established a review process for all members of our board of directors. In this process, all members perform a self-review and assessment
of their own performance as a director and also review and provide constructive feedback of all the other directors. The Governance and Nominating Committee oversees a similar 360 degree review
process for our Chief Executive Officer where he is reviewed by himself, by the other directors, and by his direct management reports.
Messrs. Phillips (Committee Chairman), Moseley and Valentine are presently the members of the Strategy Committee. The purpose of the
Strategy Committee is to work with the Chief Executive Officer and senior management to oversee the development of our strategic plan and to assess and evaluate our strategic and financial
opportunities. The Strategy Committee did not meet during fiscal year 2016.
25
Corporate Governance Policies
We encourage stockholder communication with the board. Any stockholder who wishes to communicate with the board or with any particular director,
including any independent director, may send a letter addressed to the Corporate Secretary at Streamline Health Solutions, Inc., 1230 Peachtree St. NE, Suite 600, Atlanta, GA
30309. Communications should indicate that you are a company stockholder and clearly specify whether it is intended to be delivered to the entire board or to one or more particular directors(s). All
communications to directors will be transmitted promptly without any editing or screening by the Corporate Secretary.
The board of directors adopted our Code of Conduct, which applies to all of our directors, officers (including our Chief Executive Officer,
Chief Financial Officer, Chief Accounting Officer, and any person performing similar functions), and employees. Our Code of Conduct is available through our website at
http://www.streamlinehealth.net/investors.
We have not implemented a formal policy regarding director attendance at the Annual Meeting of Stockholders. Typically, our board of directors
holds its annual organizational meeting directly following the Annual Meeting of Stockholders, which results in most directors attending the Annual Meeting of Stockholders. All of our directors
attended the 2016 Annual Meeting of Stockholders, and we currently expect all directors standing for re-election to attend the Annual Meeting.
Our management is responsible for day-to-day risk management of the company. Management reports to the board of directors on the material risks
the company faces when management determines that the company's risk profile materially changes. The board of directors uses management's reports to evaluate the company's exposure to risks in light
of the company's business plan and growth strategies. The board of directors primarily focuses on risks in the areas of operations, liquidity and compliance, which the board of directors believes are
the areas most likely to have a potential impact on the company in a material way.
Our board of directors has scheduled regular executive sessions of our independent directors. At executive sessions, our independent directors
meet without management or any non-independent directors present. The board believes that executive sessions foster open and frank communication among the independent directors, which will ultimately
add to the effectiveness of the board, as a whole. Mr. Phillips, as the independent Chairman of the Board, presides over these executive sessions.
We do not extend loans to executive officers or directors, and we have no such loans outstanding.
26
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of the Record Date (April 12, 2017)
by: (i) each stockholder known by us to be the beneficial owner of more than 5% of our common stock; (ii) each director and each nominee for director; (iii) each named executive
officer; and (iv) all directors and current executive officers as a group.
Beneficial
ownership is determined in accordance with the rules of the SEC, which deem a person to beneficially own any shares the person has or shares voting or dispositive power over
and any additional shares obtainable within 60 days through the conversion of preferred stock or the exercise of options, warrants or other purchase rights. Shares of common stock subject to
preferred stock that is currently convertible or convertible within 60 days of the Record Date and options, warrants or other rights to purchase that are currently exercisable or are
exercisable within 60 days of the Record Date (including shares subject to restrictions that lapse within 60 days of the Record Date) are deemed outstanding for purposes of computing the
percentage ownership of the person holding such preferred stock, options, warrants or other rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other
person. Unless otherwise indicated, each person possesses sole voting and investment power with respect to the shares identified as beneficially owned. The percentages are based on 19,695,391 shares
of common stock outstanding as of the Record Date. None of our directors or executive officers beneficially owns any shares of our preferred stock. An asterisk indicates beneficial ownership of less
than 1% of the common stock outstanding.
|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Common Stock
Beneficially
Owned
|
|
Percent of
Common Stock
Owned
|
|
|
Five Percent Stockholders
|
|
|
|
|
|
|
|
|
AWM Investment Company, Inc.(1)
|
|
|
1,126,739
|
|
|
5.7
|
%
|
|
First Light Asset Management, LLC and Mathew P. Arens(2)
|
|
|
1,671,475
|
|
|
8.5
|
%
|
|
Great Point Partners, LLC(3)
|
|
|
2,134,940
|
|
|
10.8
|
%
|
|
IPP Holding Company, LLC(4)
|
|
|
989,477
|
|
|
5.0
|
%
|
|
Noro-Moseley Partners VI, L.P.(5)
|
|
|
2,123,333
|
|
|
10.8
|
%
|
|
Tamarack Advisers, LP(6)
|
|
|
1,138,000
|
|
|
5.8
|
%
|
|
Nantahala Capital Management, LLC, Wilmot B. Harkey and Daniel Mack(7)
|
|
|
1,470,063
|
|
|
7.5
|
%
|
|
David W. Sides(8)
|
|
|
1,021,139
|
|
|
5.2
|
%
|
|
Directors and Executive Officers
|
|
|
|
|
|
|
|
|
Michael K. Kaplan(9)
|
|
|
149,707
|
|
|
*
|
|
|
Nicholas A. Meeks(10)
|
|
|
468,854
|
|
|
2.4
|
%
|
|
Allen S. Moseley(11)
|
|
|
2,123,333
|
|
|
10.8
|
%
|
|
Jonathan R. Phillips(12)
|
|
|
602,721
|
|
|
3.1
|
%
|
|
Shaun L. Priest (13)
|
|
|
119,264
|
|
|
*
|
|
|
Randolph W. Salisbury(14)
|
|
|
430,800
|
|
|
2.2
|
%
|
|
David W. Sides(8)
|
|
|
1,021,139
|
|
|
5.2
|
%
|
|
Judith E. Starkey(15)
|
|
|
125,390
|
|
|
*
|
|
|
Michael G. Valentine(16)
|
|
|
99,909
|
|
|
*
|
|
|
All current directors and executive officers as a group (9 persons)(17)
|
|
|
5,141,117
|
|
|
26.1
|
%
|
-
(1)
-
Based
on the Schedule 13G/A filed with the SEC on February 10, 2017. Includes 274,537 shares of common stock held by Special Situations Cayman
Fund, L.P. ("SSCF"), 702,538 shares of common stock held by Special Situations Fund III QP, L.P. ("SSFQP") and 149,664 shares of common stock held by Special Situations Private Equity
Fund, L.P. ("SSPE"). AWM Investment Company, Inc.
27
("AWM")
is the investment adviser to SSCF, SSFQP and SSPE. The address of SSCF, SSFQP, SSPE and AWM is 527 Madison Avenue, Suite 2600, New York, NY 10022.
-
(2)
-
Based
on the Schedule 13G filed with the SEC on February 14, 2017. Mathew P. Arens is deemed to have sole voting and dispositive power over 45,500
shares of common stock and shared voting and dispositive power over 1,625,975 shares of common stock. First Light Asset Management, LLC ("First Light") is deemed to have shared voting and
dispositive power over 1,582,457 shares of common stock. First Light is deemed to be the beneficial owner of these shares by virtue of the fact that it acts as investment advisor to certain persons,
each of whom has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, these shares. Mr. Arens also is deemed to be the beneficial owner
of these shares because of his position as managing member and majority owner of First Light, and also owns additional shares of the common stock in his individual capacity. The address of
Mr. Arens and First Light is 3300 Edinborough Way, Suite 201, Edina, MN 55435.
-
(3)
-
Based
on the Schedule 13G/A filed with the SEC on February 14, 2017. Includes (i) 151,611 shares of common stock, (ii) 1,283,329 shares
of common stock issuable upon conversion of preferred stock and (iii) 700,000 shares of common stock issuable upon exercise of warrants, collectively owned by funds and accounts for
which GPP is the investment manager. By virtue of such status, GPP may be deemed to be the beneficial owner of such shares. Each of Dr. Jeffrey R. Jay, M.D., as senior
managing member of GPP, and David Kroin, as special managing member of GPP, has voting and investment power with respect to such shares and therefore may be deemed to be the beneficial
owner thereof. GPP, Dr. Jay, and Mr. Kroin disclaim beneficial ownership of such shares, except to the extent of their respective pecuniary interests therein. GPP's address
is 165 Mason Street, 3
rd
Floor, Greenwich, CT 06830.
-
(4)
-
Based
on the Schedule 13G filed with the SEC on April 18, 2013. IPP Holding Company, LLC ("IPP") and W. Ray Cross, a member and manager of IPP,
are deemed to share voting and dispositive power over all 989,477 shares. The address of IPP and Mr. Cross is 2773 Marshall Drive, Tifton, GA 31794.
-
(5)
-
Based
on the Schedule 13D filed with the SEC on August 29, 2012, as amended by the Schedule 13D/A filed with the SEC on September 5,
2013. Includes (i) 1,633,333 shares of common stock issuable upon conversion of preferred stock and (ii) 490,000 shares of common stock issuable upon exercise of warrants, collectively
beneficially owned by Noro-Moseley Partners VI, L.P. and its general partner, Moseley and Company VI, LLC (collectively, "Noro-Moseley"). Both entities are deemed to share voting
and dispositive power of all 2,123,333 shares. Noro-Moseley's address is 3284 Northside Parkway, N.W., Suite 525, Atlanta, GA 30327.
-
(6)
-
Based
on the Schedule 13G filed with the SEC on February 11, 2016. Tamarack Advisers, LP ("Tamarack Advisers") is deemed the beneficial owner of
such shares pursuant to separate arrangements whereby it acts as investment adviser to certain persons. Each person for whom Tamarack Advisers acts as investment adviser has the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the sale of, the common stock purchased or held pursuant to such arrangements. Tamarack Capital GP, LLC ("Tamarack
Capital") is deemed to be the beneficial owner of such shares because of its position of general partner and majority owner of Tamarack Advisers. Justin J. Ferayorni is deemed to be the beneficial
owner of such shares because he is the managing member and majority owner of Tamarack Capital. The address of Tamarack Advisers, Tamarack Capital and Mr. Ferayorni is 5050 Avenida Encinas,
Suite 360, Carlsbad, CA 92008.
-
(7)
-
Based
on the Schedule 13G filed with the SEC on February 14, 2017. Nantahala Capital Management, LLC ("Nantahala") is deemed to have shared
voting and dispositive power over 1,470,063 shares of common stock owned by funds and accounts for which is the investment
28
adviser.
By virtue of such status, Nantahala may be deemed to be the beneficial owner of such shares. Each of Wilmot B. Harkey and Daniel Mack, as managing members of Nantahala, has voting and
investment power with respect to such shares and therefore may be deemed to be the beneficial owner thereof. The address of Nantahala and Messrs. Harkey and Mack is 19 Old Kings Highway S,
Suite 200, Darien, CT 06820.
-
(8)
-
Includes
(i) stock options that are currently exercisable or exercisable within 60 days of the Record Date to purchase 410,139 shares of common stock,
(ii) 281,250 shares of restricted stock over which the holder has sole voting but no investment power, (iii) 50,000 shares of common stock held by a trust controlled by and for the
benefit of Mr. Sides and (iv) 181,000 shares of common stock held in an individual retirement account. The address of Mr. Sides is 1230 Peachtree Street NE,
Suite 600, Atlanta, GA 30309.
-
(9)
-
Includes
(i) 24,193 shares of restricted stock over which the holder has sole voting but no investment power, (ii) 25,000 shares of common stock held
in a trust controlled by and for the benefit of Mr. Kaplan and (iii) 10,000 shares of common stock held in an individual retirement account.
-
(10)
-
Includes
(i) stock options that are currently exercisable or exercisable within 60 days of the Record Date to purchase 297,639 shares of common stock
and (ii) 131,250 shares of restricted stock over which the holder has sole voting but no investment power.
-
(11)
-
Based
on the Schedule 13D filed with the SEC on August 29, 2012, as amended by the Schedule 13D/A filed with the SEC on September 5,
2013. Includes (i) 1,633,333 shares of common stock issuable upon conversion of preferred stock and (ii) 490,000 shares of common stock issuable upon exercise of warrants, collectively
beneficially owned by Noro-Moseley. Both entities are deemed to share voting and dispositive power of all 2,123,333 shares. Mr. Moseley, as a general partner at Noro-Moseley, has voting and
investment power with respect to such shares and therefore may be deemed to be the beneficial owner thereof. Mr. Moseley disclaims beneficial ownership of such shares, except to the extent of
his pecuniary interests therein. The address of Mr. Moseley is 1230 Peachtree Street NE, Suite 600, Atlanta, GA 30309.
-
(12)
-
Includes
(i) stock options that are currently exercisable or exercisable within 60 days of the Record Date to purchase 20,000 shares of common stock,
(ii) 64,516 shares of restricted stock over which the holder has sole voting but no investment power and (iii) 10,000 shares of common stock held by Mr. Phillips's wife.
-
(13)
-
Includes
(i) stock options that are currently exercisable or exercisable within 60 days of the Record Date to purchase 33,334 shares of common stock,
(iii) 48,430 shares of common stock held in an individual retirement account and (iv) 37,500 shares of restricted stock over which the holder has sole voting but no investment power.
-
(14)
-
Includes
(i) stock options that are currently exercisable or exercisable within 60 days of the Record Date to purchase 217,014 shares of common stock,
(ii) stock options that are currently exercisable or exercisable within 60 days of the Record Date to purchase 30,000 shares of common stock and that are held by a limited liability
company of which Mr. Salisbury is the managing member and the owner with his wife of all of the equity interests, (iii) 55,810 shares of common stock held in an individual retirement
account and (iv) 75,000 shares of restricted stock over which the holder has sole voting but no investment power.
-
(15)
-
Includes
32,258 shares of restricted stock over which the holder has sole voting but no investment power.
-
(16)
-
Includes
32,258 shares of restricted stock over which the holder has sole voting but no investment power.
-
(17)
-
Includes
(i) stock options that are currently exercisable or exercisable within 60 days of the Record Date to purchase 1,137,072 shares of common
stock and (ii) 2,533,573 shares of common stock held indirectly.
29
EXECUTIVE OFFICERS
The names, ages, and positions held by our executive officers as of the Record Date are below. All of our current executive officers hold office
until their successors are elected and qualified or until any removal or resignation. Our executive officers are elected by the board of directors and serve at the discretion of the board. For more
information about David W. Sides, our President and Chief Executive Officer, please see "Proposal 1—Election of Directors—Nominees for Election as Directors" in this Proxy
Statement.
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|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
First Appointed
as Executive
Officer
|
|
|
David W. Sides
|
|
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46
|
|
President, Chief Executive Officer, and Director
|
|
|
2014
|
|
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Nicholas A. Meeks
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33
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Senior Vice President and Chief Financial Officer
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2013
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Randolph W. Salisbury
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63
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Senior Vice President and Chief Marketing Officer
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2014
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Shaun L. Priest
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47
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Senior Vice President and Chief Growth Officer
|
|
|
2016
|
|
Nicholas A. Meeks
has served as our Senior Vice President and Chief Financial Officer since May 2013. Prior to that time, he served as our
Vice President of Financial Planning from the time he joined us in June 2012. Mr. Meeks has financial executive experience in areas including mergers and acquisitions, budgeting, forecasting,
and equity and debt capital financing transactions. From 2008 to June 2012, Mr. Meeks worked at Chamberlin Edmonds, which was acquired by Emdeon Inc., a leading provider of comprehensive
healthcare eligibility and enrollment services. At Chamberlin Edmonds, Mr. Meeks served as Director of Financial Planning and Analysis and led the finance function for the provider payment
integrity operating unit. He holds an MBA from The Fuqua School of Business at Duke University and a bachelor's degree from Emory University.
Randolph W. Salisbury
joined Streamline as Senior Vice President and Chief Marketing Officer in March 2014. From July 2008 to February
2014, Mr. Salisbury served as a founding partner and consultant at Mockingbird Partners Consulting Group, LLC, a marketing communications and investor relations consulting firm. During
his time with Mockingbird Partners, Mr. Salisbury performed marketing functions on behalf of various clients and performed investor relations consulting services for Streamline. Currently,
Mr. Salisbury is on the board of directors of Decooda, Inc., a private, software-as-a-service start-up company. Mr. Salisbury received his bachelor's degree from Ohio Wesleyan
University and his MBA from Goizueta Business School at Emory University.
Shaun L. Priest
has served as Senior Vice President and Chief Growth Officer since April 2016. Mr. Priest has extensive healthcare
information technology experience in management, sales, business development, marketing, support, and project implementations. From December 2007 to April 2016, Mr. Priest worked at Influence
Health, formerly MedSeek, a leading provider of integrated consumer engagement and activation platforms in the healthcare industry. At Influence Health, Mr. Priest served as Senior Vice
President of Strategic Accounts and Business Development, and performed sales and account management functions, working with a client base of over 1,000 hospitals, and creating partnerships and
strategies in both the United States and Canadian markets. Prior to his role at Influence Health, Mr. Priest held Vice President positions with Eclipsys, now Allscripts, and CDEX, Inc.
He also held implementation and project management positions at both Cerner and Meditech. Mr. Priest received his bachelor's degree from Providence College.
COMPENSATION DISCUSSION AND ANALYSIS
References in this Proxy Statement to our "named executive officers" refer to:
-
•
-
David W. Sides, President and Chief Executive Officer;
-
•
-
Nicholas A. Meeks, Senior Vice President and Chief Financial Officer;
30
-
•
-
Randolph W. Salisbury, Senior Vice President and Chief Marketing Officer; and
-
•
-
Shaun L. Priest, Senior Vice President and Chief Growth Officer.
Executive Summary
The Compensation Committee has a conservative pay-for-performance compensation philosophy and endeavors to have executive compensation practices
that align executive pay with company performance. In fiscal year 2016, the Compensation Committee took the following actions with respect to the executive compensation
program:
-
•
-
Made only modest increases to base salaries;
-
•
-
Continued to consider adjusted EBITDA, revenue and sales performance as financial measures for executive bonuses; and
-
•
-
Continued to award stock options and restricted stock in order to align the interests of our executives with those of our stockholders and
provide appropriate performance and retention incentives.
Streamline's
financial performance in fiscal year 2016 did not meet all the company's goals. As a result, the Compensation Committee awarded bonuses to the company's executives in an
amount equivalent to 21% of the target amount. Because in his capacity as Senior Vice President and Chief Growth Officer, Mr. Priest is responsible for leading the sales function for the
company, in determining his bonus, the Compensation Committee takes into account additional contingencies and increased opportunities based on certain sales performance targets not applicable to the
other executive officers' bonus payments. The Compensation Committee believes the bonuses awarded demonstrate strong alignment between executive pay and company performance.
In
fiscal year 2017, the Compensation Committee will consider the following factors, among others, in making executive compensation decisions:
-
•
-
The company has a relatively new President and Chief Executive Officer who is working with the Compensation Committee to evaluate and make
appropriate adjustments to Streamline's strategy, organization, and compensation arrangements; and
-
•
-
The company has a limited number of shares available for grant under its stockholder-approved equity incentive plan.
Based
on these and other factors, the Compensation Committee has recently made the following decisions with respect to the company's executive compensation in fiscal year
2017:
-
•
-
The base salaries for certain executive officers have been modestly increased; and
-
•
-
Additional shares of restricted stock and stock options have been granted to certain executive officers.
Compensation Philosophy
The Compensation Committee believes that executive compensation should be conservative and (i) provide an incentive for Streamline's
executives to achieve the company's goals,
(ii) reward executives with equity interests in the company and align the interests of executives with stockholder interests to enhance stockholder value and (iii) attract and retain key
executives critical to Streamline's long-term success. Under the oversight of the Compensation Committee, the company has developed and implemented a pay-for-performance executive compensation program
that rewards senior management for the achievement of certain financial performance objectives. Streamline achieves the philosophies of pay-for-performance and alignment of executive compensation with
stockholder value
31
primarily
by providing a substantial portion of each executive officer's total annual compensation through annual short-term cash bonus opportunities and grants of long-term equity, primarily in the
form of stock options and restricted stock. We describe our fiscal year 2016 short-term incentive plan in greater detail below under "—Cash Bonus Opportunity" and describe equity grants in
more detail under "—Long-Term Equity Incentive Compensation—Stock Options and Restricted Stock."
Say on Pay Results and Consideration of Stockholder Support
At the Annual Meeting of Stockholders on May 25, 2016, over 97% of the votes cast were in favor of the advisory vote to approve executive
compensation. The Compensation Committee considered this positive result and concluded that the stockholders continue to support the compensation paid to our executive officers and the company's
overall pay practices.
In
light of this support, the Compensation Committee decided to retain the core design of our executive compensation program for fiscal year 2016, with an emphasis on short and long-term
incentive compensation that rewards our senior executives when they successfully implement our business plan and, in turn, deliver value for our stockholders.
The
committee will continue to monitor best practices, future advisory votes on executive compensation and other stockholder feedback to guide it in evaluating the alignment of the
company's executive compensation program with the interests of the company and its stockholders. The committee invites our stockholders to communicate any concerns or opinions on executive pay
directly to the board. Please refer to "Corporate Governance—Corporate Governance Policies—Communications with the Board of Directors" for information about communicating with
the board.
Overview of Streamline's Executive Compensation
The Compensation Committee designed the company's compensation program to provide our executive officers with a combination of cash (salary and
bonus) and long-term equity incentive compensation to align their interests with those of our stockholders. For fiscal year 2016, our executive officer compensation primarily consisted of the
following components:
-
•
-
base salary;
-
•
-
cash bonus opportunity; and
-
•
-
long-term equity incentive awards.
Although
the Compensation Committee has not established a policy or formula for the allocation of total compensation among these different elements of total executive officer
compensation, the Compensation Committee endeavors to offer an appropriate mix among the different types of compensation:
-
•
-
to motivate executive officers to deliver superior short-term performance by providing conservative, but competitive, base salaries and cash
bonus opportunities;
-
•
-
to align the interests of our executive officers with the long-term interests of the company's stockholders through the grant of equity
incentive awards; and
-
•
-
to provide an overall compensation package that is conservative, but competitive and, therefore, promotes executive recruitment and retention.
The Compensation Committee Process
The Compensation Committee has the primary authority to determine Streamline's compensation philosophy and to establish compensation for the
executive officers. In establishing executive officer compensation, the Compensation Committee uses its subjective evaluation of the executives'
32
performance
and responsibilities, the company's overall performance and the President and Chief Executive Officer's recommendations. The Compensation Committee does not typically use any compensation
consultant in setting executive salaries, or in determining other components of executive compensation. Additionally, the Compensation Committee does not typically benchmark the compensation of
executive officers against compensation paid by other companies to their executives.
Management's Role in the Compensation-Setting Process
Company management plays a significant role in the compensation-setting process. The most significant aspects of management's role
are:
-
•
-
evaluating associate performance;
-
•
-
preparing information for Compensation Committee meetings;
-
•
-
establishing business performance targets and objectives;
-
•
-
providing information about the company's strategic objectives; and
-
•
-
recommending salary levels and equity awards.
In
the past, the Compensation Committee has authorized the President and Chief Executive Officer to negotiate employment agreements with senior executive officers (other than himself).
The negotiated employment agreements are subject to review and approval by the Compensation Committee. Also, in certain circumstances, the Compensation Committee may delegate to one or more of our
officers the authority to grant awards, and to make other determinations under the 2013 Plan with respect to such awards, to persons who are not directors or officers subject to the provisions of
Section 16 of the Exchange Act, and who are not subject to the requirements of "covered employees" under Section 162(m) of the Code.
Base Salary
The Compensation Committee seeks to provide base salaries for our executive officers that provide guaranteed cash compensation in accordance
with their experience, professional status and job responsibilities. Salaries for our named executive officers are generally provided for in their employment agreements, subject to review and
adjustment by the Compensation Committee from time to time. The Compensation Committee has not historically retained a compensation consultant to assist it in determining appropriate compensation
levels and has not engaged in any formal benchmarking processes. The Compensation Committee has instead relied on the general knowledge,
experience and judgment of its members, both with regard to competitive compensation levels and the relative success that has been achieved by the company. In addition, the committee takes into
account: years of service; level of experience; individual areas of responsibility; the annual rate of inflation; and the company's operating performance.
The
following table sets forth the base salaries for each of our named executive officers in effect as of January 31, 2017:
|
|
|
|
|
|
|
Name
|
|
Base Salary
|
|
|
David W. Sides
|
|
$
|
340,000
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|
|
Nicholas A. Meeks
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|
$
|
270,000
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|
Randolph W. Salisbury
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$
|
225,000
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|
|
Shaun L. Priest(1)
|
|
$
|
200,000
|
|
-
(1)
-
Mr. Priest
joined the company as Senior Vice President and Chief Growth Officer in April 2016.
33
Benefits
Streamline offers a comprehensive package of employee retirement and welfare benefits (including group life insurance, health and dental care
insurance, and long-term disability insurance), in which executive officers may participate on the same basis as other full-time associates.
Streamline
currently sponsors a 401(k) Plan for all of our eligible associates. This plan (the "401(k) Plan") is a tax-qualified retirement plan designed to meet the requirements of
Sections 401(a) and 401(k) of the Code. Under the 401(k) Plan, participants may elect to make pre-tax savings deferrals of from 1 percent to 60 percent of their compensation each
year, subject to annual limits on such deferrals (e.g., $18,000 in 2016) imposed by the Code. Participants age 50 and older also may elect to make certain catch-up contributions, subject to a
separate annual limit on such contributions (e.g., $6,000 in 2016) imposed by the Code. New participants automatically defer 6% of their compensation unless they make a contrary election. The
company matches dollar for dollar the first 4% of each associate's income contributed to the 401(k) Plan, including those contributions made by the executive officers.
The
company also offers the ESPP to encourage stock ownership by our associates, including our executive officers, at an approximate 15% discount to the market price.
Perquisites
Streamline offers limited perquisites to our executive officers. Prior to September 2014, the company provided the use of an automobile to
Mr. Meeks. The perquisites provided to each executive officer in fiscal year 2016 totaled less than $10,000 and less than 10% of total annual salary and bonus reported for each executive
officer.
Cash Bonus Opportunity
Each executive officer's employment agreement establishes a cash bonus target as a percentage of his base salary. The following table sets forth
the target bonuses for each of our named executive officers in effect as of January 31, 2017.
|
|
|
|
|
|
|
Name
|
|
Target Bonus
|
|
|
David W. Sides
|
|
|
65
|
%
|
|
Nicholas A. Meeks
|
|
|
40
|
%
|
|
Randolph W. Salisbury
|
|
|
50
|
%
|
|
Shaun L. Priest(1)
|
|
|
110
|
%
|
-
(1)
-
Mr. Priest
joined the company as Senior Vice President and Chief Growth Officer in April 2016.
The
Compensation Committee believes that cash bonuses should be contingent on performance relative to pre-established targets and objectives. Each cash bonus is determined based on
whether these pre-established performance goals are met, upon which, the executives would be eligible to receive a bonus in an amount determined by the Compensation Committee, although the
Compensation Committee may elect not to award such bonuses. For the named executive officers to have been eligible for the cash bonus for fiscal year 2016 to be paid at target levels, the company was
required to meet financial targets, as determined through an internal planning process, as follows:
-
•
-
An adjusted EBITDA target of $4.9 million;
-
•
-
Sales bookings as $2.5 million in annual recurring revenue; and
-
•
-
Revenue of $29 million.
34
We
calculate adjusted EBITDA as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation
expense, significant non-recurring operating expenses, and transaction-related expenses, including: gains and losses on debt and equity conversions, associate severances and related restructuring
expenses, associate inducements, and professional and advisory fees. In awarding any additional cash bonus amounts above target amounts, the Compensation Committee would consider extraordinary company
financial performance, as well as personal performance involving executive leadership.
The
Compensation Committee determined that not all of the objective financial goals were achieved for fiscal year 2016, and as a result, cash bonuses in an amount equivalent to 21% of
the target bonus amount were awarded. Because in his capacity as Senior Vice President Chief Growth Officer, Mr. Priest is responsible for leading the sales function for the company, in
determining his bonus, the Compensation Committee takes into account additional contingencies and increased opportunities based on certain sales performance targets not applicable to the other
executive officers' bonus payments. In awarding cash bonuses to executive officers for the fiscal year ending January 31, 2018, the Compensation Committee will consider multiple potential
performance criteria including sales, adjusted EBITDA and revenue targets, as well as successful completion of certain aspects of the company's strategic objectives.
Long-Term Equity Incentive Compensation—Stock Options and Restricted Stock
Streamline currently grants equity awards under the 2013 Plan. On August 19, 2014, our stockholders approved an amendment to the 2013
Plan to, among other things, increase the number of available shares under the plan by 1,600,000 shares. Awards can be granted under the 2013 Plan until May 31, 2023 or the earlier termination
of the 2013 Plan by the board. The 2013 Plan permits the grant of stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted
stock units, and other incentive awards. As of January 31, 2017, there were 339,114 shares available for grant under the 2013 Plan. Additionally, we are seeking approval of the Second Amended
2013 Plan. If approved, the Second Amended 2013 Plan will increases the number of shares of common stock available for issuance under the plan by 300,000 shares. For more information, see "Proposal 3"
above.
In
fiscal year 2016, long-term incentive compensation to key personnel, including the company's named executive officers, was comprised primarily of restricted stock grants, with a stock
option award to Mr. Priest. The stock option awarded last year vests ratably over a three year period from the date of grant. The restricted stock awarded last year vests in four equal
installments on the annual date of the grant. The Compensation Committee believes that its fiscal year 2016 approach to long-term incentive compensation provided the appropriate long-term incentives
from both executive retention and pay-for-performance perspectives. Because an officer will benefit from a stock option award only to the extent the company's stock price appreciates above the
exercise price of the stock option, stock options align the interests of management with those of stockholders and ensure that management achieves gains only to the extent that the company's share
value appreciates. Additionally, in fiscal year 2015, we began using restricted stock awards as part of the equity used to compensate our executive officers. The Compensation Committee introduced
restricted stock awards into the equity compensation mix because it encourages ownership in the company, further aligning the interests of stockholders and executives, and reduces future dilution as
compared to conventional stock options. The Compensation Committee believes that the granting of stock option and restricted stock awards supports the executive retention goal.
Streamline
has historically awarded equity grants to executive officers upon the commencement of their employment with the company. In addition, from time to time, the Compensation
Committee has considered and approved additional grants to certain associates of the company, including the executive officers, where circumstances make such grants appropriate to the company's
incentive and retention
35
goals.
In approving equity grants during fiscal year 2016, the Compensation Committee considered a number of factors, including the number of shares available for grant under the 2013 Plan, the grant
rate over certain periods (as a percentage of shares of common stock), the amount of restricted stock and stock options to be granted, the performance of the named executive officer and his role, the
impact of specific grants on the total compensation of the named executive officer, and the aggregate retention strength of all unvested equity held by such named executive officer and other key
personnel. During fiscal year 2016, the Compensation Committee approved grants of equity incentive awards to certain of our associates, including the following equity grants to our named executive
officers:
David W. Sides—President and Chief Executive Officer.
On February 4, 2016, Mr. Sides was granted 375,000 shares of
restricted stock, vesting in four equal annual installments commencing on February 4, 2017, subject to Mr. Sides's continued employment with the company over such period.
Nicholas A. Meeks—Senior Vice President and Chief Financial Officer.
On February 4, 2016, Mr. Meeks was granted 175,000
shares of restricted stock, vesting in four equal annual installments commencing on February 4, 2017, subject to Mr. Meeks' continued employment with the company over such period.
Randolph W. Salisbury—Senior Vice President and Chief Marketing Officer.
On May 26, 2016, Mr. Salisbury was granted
75,000
shares of restricted stock, vesting in four equal annual installments commencing on May 26, 2017, subject to Mr. Salisbury's continued employment with the company over such period.
Shaun L. Priest—Senior Vice President and Chief Growth Officer.
On April 6, 2016, in connection with his appointment as
Senior
Vice President and Chief Growth Officer of the company, Mr. Priest was granted an option to purchase 75,000 shares of the company's common stock at $1.41 per share, such options vesting in 36
substantially equal monthly installments commencing on May 6, 2016, subject to Mr. Priest's continued employment with the company over such period. On such date, Mr. Priest also
was granted 50,000 shares of restricted stock, vesting in four equal annual installments on each of the first four anniversaries of the grant date, subject to Mr. Priest's continued employment
with the company over such period.
Risk Considerations in our Compensation Program
The Compensation Committee generally structures the compensation of the executive officers to consist of both fixed and variable compensation.
The fixed (or base salary) portion of compensation is designed to provide a steady income so executives do not feel pressured to focus exclusively on short-term gains or annual stock price
performance, which may be to the detriment of long-term appreciation and other business metrics. The variable portion of compensation (e.g., cash bonuses, restricted stock, and stock option
awards) is designed to reward both individual performance and overall company performance. For individual and company performance, any cash bonuses are determined by the Compensation Committee. Stock
options will reward the recipient only if improved overall company performance is reflected in the stock price. Similarly, restricted stock grants further reward the recipient if overall company
performance is reflected in the public stock price. The Compensation Committee believes that the variable components of compensation are sufficient to motivate executive officers to produce short-term
and long-term company results, while the fixed element is also sufficient such that executives are not encouraged to take unnecessary or excessive risks in doing so.
Employment Agreements
Streamline has entered into employment agreements with each of Messrs. Sides, Meeks, Salisbury and Priest. We describe each of these
agreements in more detail below.
36
On
September 10, 2014, the company entered into an employment agreement with Mr. Sides, when he joined the company. The term of Mr. Sides's employment agreement is
two years, after which the agreement renews for successive one-year terms unless either party elects not to renew. As amended, Mr. Sides's employment agreement provides for an annual base
salary of $340,000 (subject to increase at the discretion of the Compensation Committee) and provides that Mr. Sides will be eligible for an annual cash bonus with a target amount of 65% of his
annual base salary, based on the achievement of certain performance objectives. In addition, Mr. Sides's employment agreement contains standard non-competition and non-solicitation provisions.
Mr. Sides's employment agreement further provides for standard expense reimbursement, vacation time, and other standard executive benefits.
On
May 22, 2013, the company entered into an employment agreement with Mr. Meeks when he was appointed Senior Vice President and Chief Financial Officer of the company. The
initial term of Mr. Meeks's employment agreement was one year, after which it renews for successive one-year terms unless either party elects not to renew. As amended, Mr. Meeks's
employment agreement provides for an annual base salary of $270,000 (subject to increase at the discretion of the Compensation Committee) and provides that Mr. Meeks will be eligible for an
annual cash bonus with a target amount of 40% of his annual base salary, based on the achievement of certain performance objectives. In addition, Mr. Meeks's employment agreement contains
standard non-competition and non-solicitation provisions. Mr. Meeks's employment agreement further provides for standard expense reimbursement, vacation time, and other standard executive
benefits.
On
February 3, 2014, the company entered into an employment agreement with Mr. Salisbury when he was appointed Senior Vice President and Chief Marketing Officer of the
company. The initial term of Mr. Salisbury's employment agreement was one year, after which it renews for successive one-year terms unless either party elects not to renew. As amended,
Mr. Salisbury's employment agreement provides for an annual base salary of $225,000 (subject to increase at the discretion of the Compensation Committee) and provides that Mr. Salisbury
will be eligible for an annual cash bonus with a target amount of 50% of his annual base salary, based on the achievement of certain performance objectives. In addition, Mr. Salisbury's
employment agreement contains standard non-competition and non-solicitation provisions. Mr. Salisbury's employment agreement further provides for standard expense reimbursement, vacation time,
and other standard executive benefits.
On
March 15, 2016, the company entered into an employment agreement with Mr. Priest when he was appointed Senior Vice President and Chief Growth Officer of the company. The
term of Mr. Priest's employment agreement is one year, after which the agreement renews for successive one-year terms unless either party elects not to renew. Mr. Priest's employment
agreement provides for an annual base salary of $200,000 (subject to increase at the discretion of the Compensation Committee) and provides that Mr. Priest will be eligible for an annual cash
bonus with a target amount of 110% of his annual base salary, based on the achievement of certain performance objectives. In addition, Mr. Priest's employment agreement contains standard
non-competition and non-solicitation provisions. Mr. Priest's employment agreement further provides for standard expense reimbursement, vacation time, and other standard executive benefits.
Each
of the employment agreements with Streamline's named executive officers provides assurances to the company with regard to the availability of the executive's services, provides
protection for the company's confidential information and trade secrets, and restricts the ability of the executive officers to compete with the company during their employment and for a specified
period after its termination. In return, the executive officers are provided assurances with regard to salary, other compensation and benefits, as well as severance benefits if their employment is
terminated by the company other than for "good cause." For this purpose, "good cause" includes the current use of illegal drugs, conviction of any crime which involves moral turpitude, fraud or
misrepresentation, commission of any act which would constitute a felony and which adversely impacts the business or reputation of the company, fraud, misappropriation or embezzlement of company funds
or property;
37
wrongful
conduct which is materially injurious to the reputation, business or business relationships of the company; material violation or default on any of the provisions of the employment agreement,
and the material and continuous failure to meet reasonable performance criteria or reasonable standards of conduct as established from time to time by the board of directors.
In
addition, each of our named executive officers is provided additional assurances following a change of control of the company. In such a situation, they would receive enhanced
severance benefits, but only if their employment were terminated without "good cause" or if they chose to terminate their employment for "good reason." This additional "double trigger" change of
control protection has been provided to our named executive officers because they are considered vulnerable in a change of control context due to their positions with the company, their relative
levels of equity ownership and the stage of their careers.
Executive Stock Ownership Guidelines
Streamline has not adopted any stock ownership guidelines for executives. Executives are eligible to participate in the ESPP, which allows
participants to purchase the company's common stock at an approximate 15% discount to the market price.
Stock Holding Periods
Streamline does not have any stock holding period requirements for executive officers beyond option exercise or restricted stock vesting.
Recoupment Policy
Streamline has not adopted a separate recoupment or "clawback" policy in the event of a financial restatement, but intends to do so once the SEC
finalizes the rules on this matter required by the Dodd-Frank Act.
Income Deduction Limitations
Section 162(m) of the Code generally sets a limit of $1 million on the amount of compensation that the company may deduct for
federal income tax purposes in any given year with respect to the compensation of each of our named executive officers. However, certain "performance-based" compensation that complies with the
requirements of Section 162(m) is not included in the calculation of the $1 million cap. The Compensation Committee may consider Section 162(m)'s conditions for deductibility when
structuring compensation arrangements for its officers, including the named executive officers. However, we believe that the Compensation Committee needs flexibility to pursue its incentive and
retention objectives, even if this means that a portion of executive compensation may not be deductible by the company. Accordingly, the Compensation Committee may approve elements of compensation for
certain officers that are not fully deductible under appropriate circumstances.
38
EXECUTIVE COMPENSATION
Summary Compensation
The following table is a summary of certain information concerning the compensation earned by our named executive officers for the fiscal years
presented. Each of our current named executive officers has an employment agreement that influences or defines certain of the elements of compensation shown below. For a description of the material
terms of these employment agreements, see "Compensation Discussion and Analysis—Employment Agreements."
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
Year
|
|
Salary(1)
($)
|
|
Bonus
($)
|
|
Stock
Awards(2)
($)
|
|
Option
Awards(2)
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
|
All Other
Compensation(4)
($)
|
|
Total
($)
|
|
|
David W. Sides(5)
|
|
|
2016
|
|
|
340,000
|
|
|
—
|
|
|
660,000
|
|
|
—
|
|
|
46,410
|
|
|
10,733
|
|
|
1,057,143
|
|
|
President and Chief
|
|
|
2015
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
175,139
|
|
|
116,698
|
|
|
8,575
|
|
|
600,412
|
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas A. Meeks
|
|
|
2016
|
|
|
270,000
|
|
|
—
|
|
|
308,000
|
|
|
—
|
|
|
22,680
|
|
|
10,717
|
|
|
611,397
|
|
|
Senior Vice President and
|
|
|
2015
|
|
|
235,000
|
|
|
—
|
|
|
34,664
|
|
|
252,010
|
|
|
70,318
|
|
|
10,633
|
|
|
602,625
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randolph W. Salisbury
|
|
|
2016
|
|
|
225,000
|
|
|
—
|
|
|
93,000
|
|
|
—
|
|
|
67,326
|
|
|
10,109
|
|
|
395,435
|
|
|
Senior Vice President and
|
|
|
2015
|
|
|
225,000
|
|
|
—
|
|
|
31,911
|
|
|
199,468
|
|
|
23,625
|
|
|
10,404
|
|
|
490,408
|
|
|
Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shaun L. Priest
|
|
|
2016
|
|
|
164,487
|
|
|
—
|
|
|
70,500
|
|
|
59,287
|
|
|
30,479
|
|
|
5,667
|
|
|
330,420
|
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Includes
amounts contributed by the named executive officers to our 401(k) Plan.
-
(2)
-
The
amounts included in the table above reflect the total grant date fair value and were determined in accordance with Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 718. The assumptions used in determining the grant date fair values of these awards are set forth in the footnotes to our consolidated financial
statements, which are included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2017 filed with the SEC.
-
(3)
-
Non-Equity
Incentive Plan Compensation reported for all named executive officers consists of compensation earned pursuant to the cash bonus opportunity. Because in
his capacity as Chief Growth Officer, Mr. Priest is responsible for leading the sales function for the company, his cash bonus opportunity also takes into account additional contingencies and
increased opportunities based on certain sales performance targets not applicable to the other executive officers' bonus payments. For more information, see "Compensation Discussion and
Analysis—Cash Bonus Opportunity."
-
(4)
-
Reflects
our matching contribution to the 401(k) Plan equal to a 100% match on the first 4% of the employee's compensation which is available to all employees who
participate in the plan. Excludes group life insurance, health care insurance, ESPP discounts, long-term disability insurance and similar benefits provided to all employees that do not discriminate in
scope, terms or operations in favor of the named executive officers. Also excludes perquisites and other personal benefits, the aggregate amount of which with respect to each of the named executive
officers does not exceed $10,000 reported for the fiscal years presented.
39
-
(5)
-
Mr. Sides
joined Streamline on September 10, 2014 as Senior Vice President and Chief Operating Officer. He served in that role until January 8,
2015 when he was promoted to President and Chief Executive Officer.
-
(6)
-
Mr. Priest
joined Streamline on April 6, 2016 as Senior Vice President and Chief Growth Officer.
Equity Compensation Information
Outstanding Equity Awards at 2016 Fiscal Year End
The following table sets forth information with respect to the named executive officers equity awards outstanding as of January 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of
Shares that
Have Not
Vested (#)
|
|
Market
Value of
Shares that
Have Not
Vested ($)
|
|
|
David W. Sides
|
|
|
194,445
|
|
|
55,555
|
(1)
|
|
4.15
|
|
9/9/2024
|
|
|
—
|
|
|
—
|
|
|
|
|
|
40,000
|
|
|
60,000
|
(2)
|
|
4.565
|
|
9/9/2024
|
|
|
—
|
|
|
—
|
|
|
|
|
|
50,000
|
|
|
—
|
|
|
4.28
|
|
1/7/2025
|
|
|
—
|
|
|
—
|
|
|
|
|
|
62,500
|
|
|
62,500
|
(3)
|
|
2.58
|
|
7/7/2025
|
|
|
375,000
|
(8)
|
|
660,000
|
|
|
Nicholas A. Meeks
|
|
|
55,000
|
|
|
—
|
|
|
3.46
|
|
6/25/2022
|
|
|
—
|
|
|
—
|
|
|
|
|
|
100,000
|
|
|
—
|
|
|
6.65
|
|
5/22/2023
|
|
|
—
|
|
|
—
|
|
|
|
|
|
21,250
|
|
|
1,250
|
(4)
|
|
5.50
|
|
3/5/2024
|
|
|
—
|
|
|
—
|
|
|
|
|
|
47,917
|
|
|
2,083
|
(5)
|
|
4.02
|
|
1/31/2025
|
|
|
—
|
|
|
—
|
|
|
|
|
|
50,000
|
|
|
50,000
|
(3)
|
|
2.58
|
|
7/7/2025
|
|
|
175,000
|
(8)
|
|
308,000
|
|
|
Randolph W. Salisbury
|
|
|
121,528
|
|
|
3,472
|
(6)
|
|
6.14
|
|
2/2/2024
|
|
|
—
|
|
|
—
|
|
|
|
|
|
30,000
|
|
|
—
|
|
|
4.00
|
|
9/14/2022
|
|
|
—
|
|
|
—
|
|
|
|
|
|
47,917
|
|
|
2,083
|
(5)
|
|
4.02
|
|
1/31/2025
|
|
|
—
|
|
|
—
|
|
|
|
|
|
31,250
|
|
|
31,250
|
(3)
|
|
2.58
|
|
7/7/2025
|
|
|
75,000
|
(9)
|
|
93,000
|
|
|
Shaun L. Priest
|
|
|
18,750
|
|
|
56,250
|
(7)
|
|
1.41
|
|
4/5/2026
|
|
|
50,000
|
(10)
|
|
70,500
|
|
-
(1)
-
This
option vests ratably monthly beginning on the first month after the grant date of September 10, 2014 until fully vested on September 10, 2017.
-
(2)
-
This
option vests ratably annually beginning on the first anniversary of the grant date of September 10, 2014 until fully vested on September 10, 2019.
-
(3)
-
This
option vests ratably monthly beginning on the first month after the grant date of July 8, 2015 until fully vested on July 8, 2018.
-
(4)
-
This
option vests ratably monthly beginning on the first month after the grant date of March 6, 2014 until fully vested on March 6, 2017.
-
(5)
-
This
option vests as follows: (i) one half vests in full on February 1, 2016 and (ii) the other half vests in 12 equal monthly installments
beginning on the first month after February 1, 2016.
-
(6)
-
This
option vests ratably monthly beginning on the first month after the grant date of February 3, 2014 until fully vested on February 3, 2017.
-
(7)
-
This
option vests ratably monthly beginning on the first month after the grant date of April 6, 2016 until fully vested on April 6, 2019.
40
-
(8)
-
This
restricted stock grant vests ratably annually beginning on the first anniversary after the grant date of February 4, 2016 until fully vested on
February 4, 2020.
-
(9)
-
This
restricted stock grant vests ratably annually beginning on the first anniversary after the grant date of May 26, 2016 until fully vested on
May 26, 2020.
-
(10)
-
This
restricted stock grant vests ratably annually beginning on the first anniversary after the grant date of April 6, 2016 until fully vested on
April 6, 2020.
Equity Compensation Plan Information
We maintain the 2013 Plan, pursuant to which we may grant awards of stock options, stock appreciation rights, restricted awards, performance
awards, phantom stock awards and other stock-based awards. We also maintain the ESPP, which allows employees to purchase the company's common stock at an approximate 15% discount to the market price.
The
following table presents additional information regarding securities authorized for issuance under our equity compensation plans as of January 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants, and
rights
(a)
|
|
Weighted-average exercise
price of outstanding
options, warrants,
and rights
(b)
|
|
Number of securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities reflected in
column (a))
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,800,480
|
(1)
|
$
|
3.71
|
|
|
841,661
|
(3)
|
|
Equity compensation plans not approved by security holders
|
|
|
300,000
|
(2)
|
$
|
4.43
|
|
|
—
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,100,480
|
(1)(2)
|
|
|
|
|
841,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Includes
1,800,480 options exercisable under the 2005 Plan and the 2013 Plan. Does not include outstanding shares of previously awarded restricted stock.
-
(2)
-
Stock
options granted under inducement grants in accordance with Nasdaq Marketplace Rule 5635(c)(4). The terms and conditions of each inducement grant are
similar to the terms and conditions of the stockholder-approved equity compensation plan in effect on the date of such inducement grant.
-
(3)
-
Includes
339,114 options or other share-based awards available under the 2013 Plan and 502,547 shares available under the ESPP as of January 31, 2017.
-
(4)
-
Our
board of directors has not established any specific number of shares that could be issued without stockholder approval. Inducement grants to new key employees
are determined on a case-by-case basis. Other than possible inducement grants, we expect that all equity awards will be made under stockholder-approved plans.
41
DIRECTOR COMPENSATION
For the 2016 fiscal year, we paid each of our non-employee directors an annual retainer of $10,000, other than our Chairman of the Board who we
paid an annual retainer of $35,000. We paid the annual retainers immediately following our 2016 Annual Meeting of Stockholders. For the 2017 fiscal year, we will pay each of our non-employee directors
an annual retainer of $20,000, other than our Chairman of the Board who we paid an annual retainer of $45,000. In order to attract and retain high quality non-employee independent directors, we allow
independent directors to accept restricted stock with a one-year vesting period, in equal value to all or a portion of their annual retainers, in lieu of cash. For the 2016 fiscal year, we did not pay
our directors additional fees for meeting attendance.
For
the 2016 fiscal year, we also granted each non-employee director (other than the Chairman of the Board) $30,000 in restricted stock with a one-year vesting period. These grants were
awarded on the day of our 2016 Annual Meeting of Stockholders. We awarded the Chairman of the Board $45,000 in restricted stock with a one-year vesting period on such date. We made these awards
pursuant to the 2013 Plan, and the awards were valued at the closing price of our common stock on the grant date. For the 2017 fiscal year, we will grant each non-employee director (other than the
Chairman of the Board) $40,000 in restricted stock with a one-year vesting period, and we will award the Chairman of the Board $55,000 in restricted stock with a one-year vesting period.
For
the 2016 fiscal year, the directors were awarded the following amounts of restricted stock: Michael K. Kaplan, 24,193 shares; Jonathan R. Phillips, 64,516 shares; Judith E. Starkey,
32,258 shares; and
Michael G. Valentine, 32,258 shares. These amounts include shares of restricted stock that certain directors agreed to accept in lieu of cash for all or a portion of their annual retainers.
We
believe that awarding restricted stock to directors is a necessary component of their total compensation, including their retainer fees, and aligns their interests with those of our
stockholders. Our Compensation Committee and board of directors have allowed a limited exception to this policy in connection with Mr. Moseley's service as a director on our board to account
for limitations on his ability to accept compensation for service as a director and in recognition that a grant of restricted stock to Noro-Moseley would not satisfy the intent of the board's policy.
For so long as Mr. Moseley remains a director on our board, we will pay the $40,000 cash equivalent value to Noro-Moseley instead of issuing restricted stock.
Mr. Sides,
as our President and Chief Executive Officer, was not separately compensated for his service on our board of directors. See the Summary Compensation Table under
"Executive Compensation—Summary Compensation" for information relating to the compensation paid to Mr. Sides. As a principal of Noro-Moseley, Mr. Moseley is not permitted to
accept personal compensation for service on boards of directors of companies in which Noro-Moseley invests. Therefore, the fees relating to Mr. Moseley's service as a director are paid directly
to Noro-Moseley. Retainer fees relating to Mr. Kaplan's service as a director are paid on his behalf to his company, Altos Health Management.
42
Director Compensation in 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid in
Cash
($)
|
|
Stock Awards
($)(1)(2)
|
|
Total
($)
|
|
|
Michael K. Kaplan(3)
|
|
|
10,000
|
|
|
29,999
|
|
|
39,999
|
|
|
Allen S. Moseley(5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Jonathan R. Phillips(4)
|
|
|
35,000
|
|
|
45,000
|
|
|
80,000
|
|
|
Judith E. Starkey(4)
|
|
|
10,000
|
|
|
30,000
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael G. Valentine(4)
|
|
|
10,000
|
|
|
30,000
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts included in the table above for Stock Awards reflect the total grant date fair value and were determined in accordance with FASB ASC Topic 718. The
assumptions used in determining the grant date fair values of these awards are set forth in the footnotes to our consolidated financial statements, which are included in our Annual Report on
Form 10-K for the fiscal year ended January 31, 2017 filed with the SEC.
-
(2)
-
Represent
the grant of restricted stock to Ms. Starkey and Mr. Valentine of $30,000 in restricted stock with a one-year vesting period, the grant of
restricted stock to Mr. Kaplan of $29,999 in restricted stock with a one-year vesting period, and the grant to Mr. Phillips of $45,000 in restricted stock with a one-year vesting period.
-
(3)
-
As
described above, retainer fees relating to Mr. Kaplan's service as a director are paid on his behalf to his company, Altos Health Management.
-
(4)
-
This
director elected to receive the annual retainer in the form of restricted stock.
-
(5)
-
As
described above, Mr. Moseley is not permitted to accept personal compensation for service on our board. A total of $40,000 was paid to Noro-Moseley
Partners VI, LP relating to his service as a director in fiscal 2016.
We
also have entered into indemnification agreements with each of our directors. Each indemnification agreement provides that we will indemnify the covered individual to the full extent
permitted by Delaware law. The indemnification agreement also requires that we maintain directors and officers liability insurance coverage substantially equivalent to our current coverage, provided
that the costs of maintaining such insurance does not become substantially disproportionate to the coverage obtained and that such insurance is reasonably available to us.
We
have provided liability insurance for our directors and officers since 1996. The current policies expire on April 26, 2018. Upon expiration, we expect to renew or replace the
current policies with at least equivalent coverage.
Compensation Committee Interlocks and Insider Participation
The following non-employee independent directors served on the Compensation Committee during the 2016 fiscal year: Messrs. Kaplan and
Moseley and Ms. Starkey. No member of the Compensation Committee is or was an officer or employee of ours or any subsidiary of ours. None of our directors or named executive officers serves on
any board of directors or compensation committee that compensates any member of the Compensation Committee. No member of the Compensation Committee had any relationship requiring disclosure under
"Related Party Transactions."
43
RELATED PARTY TRANSACTIONS
Transactions with Related Persons
Since February 1, 2015, there have been no related party transactions required to be disclosed pursuant to Item 404 of
Regulation S-K.
Review, Approval or Ratification of Transactions with Related Persons
Under Nasdaq Marketplace Rules, our Audit Committee (or another independent body of our board of directors) is required to conduct an
appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis. In accordance with our Audit Committee's charter, the Audit Committee is
responsible for overseeing all related party transactions. For these purposes, a "related party transaction" refers to any transaction that is required to be disclosed pursuant to Item 404 of
Regulation S-K.
In
addition, all of our employees, officers and directors are required to comply with our Code of Conduct. The Code of Conduct addresses, among other things, what actions are required
when potential conflicts of interest may arise, including those from related party transactions. Specifically, if an employee, officer or director believes a conflict of interest exists or may arise,
he or she is required to disclose immediately the nature and extent of the conflict, or potential conflict, to his or her supervisor, who, along with appropriate officials of Streamline, will evaluate
the conflict and take the appropriate action, if any, to ensure that our interests are protected.
AUDIT COMMITTEE REPORT
The Audit Committee, which operates under a charter approved by our board of directors and available through our website at
http://www.streamlinehealth.net/investors, oversees our financial reporting process on behalf of the board of directors. Our management has the primary responsibility for the consolidated financial
statements and the reporting process, including the systems of internal control over financial reporting. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management the
audited consolidated financial statements that are included in our Annual Report on Form 10-K, which review included a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of disclosures in the consolidated financial statements.
The
Audit Committee met independently or as part of the whole board of directors to review with management each of our quarterly and annual consolidated financial statements filed on
Form 10-Q or Form 10-K, prior to the filing of those reports with the SEC. The Audit Committee reviewed with RSM, our independent registered public accounting firm for fiscal year 2016,
who are responsible for expressing an opinion on the conformity of those audited consolidated financial statements with standards of the Public Company Accounting Oversight Board ("PCAOB"), their
judgments as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing
standards. In particular, the Audit Committee has discussed with RSM those matters required to be discussed by Auditing Standard No. 16, "Communication with Audit Committees." RSM also provided
to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent registered accountant's communications with the audit committee
concerning independence, and the Audit Committee discussed the independent registered public accounting firm's independence with the auditors themselves.
The
Audit Committee discussed with our independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent
registered public
44
accounting
firm, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting.
In
reliance on the reviews and discussions referred to above, the Audit Committee recommended to the board of directors (and the board of directors approved) that the audited
consolidated financial statements be included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2017 as filed with the SEC.
In
connection with the audit of our fiscal year 2016 consolidated financial statements, we entered into an audit engagement agreement with RSM which sets forth the terms by which RSM
would perform the audit services for us. The Audit Committee has determined that the terms and conditions of the RSM audit engagement agreement are similar to other registered public accounting firms,
and a common business practice between companies and their audit firms.
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AUDIT COMMITTEE
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Michael G. Valentine,
Chairman
Allen S. Moseley
Jonathan R. Phillips
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On December 10, 2015, RSM was engaged as our independent registered public accounting firm. Prior to that time, including for the fiscal
year ended January 31, 2015, KPMG served as our independent registered public accounting firm. A representative of RSM is expected to be present at the Annual Meeting and will have the
opportunity to make a statement if he or she desires to do so and is expected to be available to respond to appropriate questions. We do not expect a representative of KPMG to attend the Annual
Meeting.
Change in Independent Registered Public Accounting Firm
On December 10, 2015, the Audit Committee approved the engagement of RSM as our independent registered public accounting firm for the
fiscal year ended January 31, 2016 and the dismissal and replacement of KPMG as our independent registered public accounting firm. RSM's engagement as our independent registered public
accounting firm commenced on December 10, 2015. The dismissal of KPMG was effective on December 10, 2015. The decision to change auditors was the result of a comprehensive, competitive
process.
During
the company's fiscal years ended January 31, 2015 and 2014 and subsequent interim period through December 10, 2015, neither the company nor anyone on its behalf
consulted with RSM regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on
the company's consolidated financial statements, and neither a written report nor oral advice was provided to the company that RSM concluded was an important factor considered by the company in
reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a "disagreement" (as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a "reportable event" (as that term is defined in
Item 304(a)(1)(v) of Regulation S-K).
KPMG's
audit reports on the company's consolidated financial statements for each of the two fiscal years ended January 31, 2015 and 2014 did not contain an adverse opinion or a
disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended January 31, 2015 and 2014, and in the subsequent
interim period through
45
December 10,
2015, there were no disagreements between the company and KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure,
which disagreement, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreement in connection with its reports.
During
the fiscal years ended January 31, 2015 and 2014, and in the subsequent interim period through December 10, 2015, there was the following "reportable event" (as such
term is defined in Item 304(a)(1)(v) of Regulation S-K). The company disclosed in its Form 10-K for the fiscal year ended January 31, 2014 that its internal control over
financial reporting was not effective as of January 31, 2014 due to the existence of the following material weaknesses: (i) insufficient, inadequately trained personnel with U.S.
generally accepted accounting principles knowledge necessary to ensure appropriate accounting for routine and non-routine significant transactions; (ii) ineffective assessment of risks related
to achieving reliable financial reporting; (iii) ineffective written policies and procedures and monitoring of internal controls; (iv) ineffective internal controls over accounting for
revenues and the related accounts receivable, contracts receivable, and deferred revenues; (v) ineffective internal controls over accounting for period-end accounts payable and accrued
liabilities; (vi) ineffective controls over segregation of duties related to recording accounts receivable transactions and cash receipts and purchase and expense transactions and cash
disbursements, and safeguarding of cash; (vii) ineffective internal controls over accounting for capitalized software development costs and the related amortization; and
(viii) ineffective internal controls over information technology systems and end-user computing applications to properly restrict access and ensure appropriate segregation of duties affecting
transactional data and recording of journal entries. The material weaknesses resulted in material and other misstatements in the consolidated financial statements for the fiscal year ended
January 31, 2014 and periods prior thereto related to various financial statement accounts and the related disclosures as described above. In addition, in some instances, no misstatements were
identified, however the ineffectiveness of the design, implementation and operation of the controls caused the company to conclude that, as a result, there is a reasonable possibility that material
misstatements could occur in the company's consolidated financial statements. The material and other misstatements identified were corrected by the company's management prior to the issuance of the
consolidated financial statements for the fiscal year ended January 31, 2014.
Subsequent
to January 31, 2014, as part of the company's efforts to improve its finance and accounting function and to remediate the material weaknesses that existed in the
company's internal control over financial reporting and the company's disclosure controls and procedures at January 31, 2014, the company developed a remediation plan (the "Remediation Plan")
pursuant to which the company
implemented a number of measures. In the fiscal quarter ended January 31, 2015, the company completed the Remediation Plan. The company's management then assessed the effectiveness of the
company's internal control over financial reporting as of January 31, 2015, using criteria established in
Internal Control—Integrated Framework
(1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and concluded that the company's internal control over financial reporting was
effective as of January 31, 2015.
Other
than as described above, there were no reportable events during the fiscal years ended January 31, 2015 and 2014 and the subsequent interim period through
December 10, 2015. The Audit Committee discussed the subject matter of the reportable event with KPMG. The company has authorized KPMG to respond fully to the inquiries of RSM concerning all
matters related to the periods audited by KPMG, including with respect to the subject matter of the reportable event.
We
provided KPMG with a copy of the above disclosures and requested that KPMG furnish us with a letter addressed to the SEC stating whether or not it agrees with the above statements. A
copy of KPMG's letter dated December 16, 2015 was attached as Exhibit 16.1 to our Current Report on Form 8-K filed with the SEC on December 16, 2015.
46
Independent Registered Public Accounting Firm Fees
The following table sets forth the aggregate fees for the 2016 and 2015 fiscal years billed by RSM for audit and other services approved by the
Audit Committee.
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2016
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2015
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Audit Fees
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$
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406,750
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$
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300,000
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Audit-Related Fees
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—
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—
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Tax Fees
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—
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—
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All Other Fees
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—
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—
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Total Fees
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$
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406,750
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$
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300,000
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Fees
represented in the "Audit Fees" category include fees for audit work performed for our consolidated financial statements, as well as in connection with our acquisition of Opportune
IT Healthcare Solutions, Inc.
Audit Committee's Pre-Approval Policies and Procedures
All audit-related services, tax services and other non-audit services were pre-approved by the Audit Committee, which concluded that the
provision of such services by RSM was compatible with the maintenance of the respective firm's independence in the conduct of its auditing functions. The Audit Committee's outside auditor independence
policy provides for pre-approval of audit, audit-related and tax services specifically described by the committee on an annual basis and, in addition, individual engagements anticipated to exceed
pre-established thresholds must be separately approved.
OTHER SECURITIES FILINGS
The information contained in this Proxy Statement under the heading "Audit Committee Report" is not, and should not be deemed to be,
incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act that purport to incorporate by reference other SEC filings made by us, in whole or
in part, including this Proxy Statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and certain officers, and persons who beneficially own more than 10% of any
class of our equity securities, who collectively we refer to as "insiders," to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of common stock
and other equity securities of the company. Our insiders are required by SEC regulation to furnish us with copies of all Section 16(a) reports they file.
Based
solely on a review of the copies of the forms furnished to us, we believe that during the 2016 fiscal year our insiders complied with all applicable filing requirements.
OTHER BUSINESS
Our board of directors does not presently intend to bring any other business before the Annual Meeting, and, so far as is known to the board of
directors, no matters are to be brought before the Annual Meeting except as specified in the Notice of Annual Meeting of Stockholders. We have not been informed by any of our stockholders of any
intention to propose any other matter to be acted upon at the Annual Meeting. The persons named in the accompanying Proxy are allowed to exercise their discretionary authority to vote upon any other
business as may properly come before the Annual Meeting. As to any such other business that may properly come before the meeting, it is intended that
47
proxies,
in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.
ANNUAL REPORT ON FORM 10-K
A copy of our Annual Report on Form 10-K for the fiscal year ended January 31, 2017, as filed with the
SEC, will be mailed without charge to any beneficial owner of our common stock, upon request. Requests for Annual Reports on Form 10-K should be addressed to: Investor Relations, Streamline
Health Solutions, Inc., 1230 Peachtree St. NE, Suite 600, Atlanta, Georgia 30309. The Form 10-K includes certain exhibits. Copies of the exhibits will be provided only upon
receipt of payment covering our reasonable expenses for such copies. The Form 10-K and exhibits also may be obtained through our website at http://www.streamlinehealth.net/investors, or
directly from the SEC's website, http://www.sec.gov
.
STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended for inclusion in our proxy statement and form of proxy relating to our 2018 Annual Meeting of Stockholders must
be received by us not later than January 5, 2018. Such proposals should be sent to the Corporate Secretary, Streamline Health Solutions, Inc., 1230 Peachtree Street NE, Suite 600,
Atlanta, Georgia 30309. The inclusion of any proposal will be subject to applicable rules of the SEC, including Rule 14a-8 under the Exchange Act, and timely submission of a proposal does not
guarantee its inclusion in our proxy statement.
Any
stockholder who intends to propose any other matter to be acted upon at the 2018 Annual Meeting of Stockholders must do so in accordance with our bylaws. Under our bylaws, director
nominations and other business may be brought at an Annual Meeting of Stockholders only by or at the direction of our board of directors or by a stockholder entitled to vote who has submitted a
proposal in accordance with the requirements of our bylaws as in effect from time to time. To be timely under our bylaws as now in effect, a stockholder notice must be delivered or mailed to our
Corporate Secretary at our principal executive offices not less than 90 days prior to the first anniversary of the preceding year's Annual Meeting of Stockholders. Stockholder proposals for the
2018 Annual Meeting of Stockholders, other than proposals intended for inclusion in our proxy statement as set forth in the preceding paragraph, must be received by March 3, 2018. However, in
the event that the date of the 2018 Annual Meeting of Stockholders is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date,
then to be timely such notice must be received no later than the later of 90 days prior to the date of the meeting or the tenth day following the day on which public announcement of the date of
the meeting was made. Please refer to the full text of our advance notice bylaw provisions for additional information and requirements.
Only
such proposals as are (1) required by the rules of the SEC, and (2) permissible under the Delaware General Corporation Law will be included on the 2018 Annual Meeting
of Stockholders agenda.
* * * *
*
48
ALL STOCKHOLDERS ARE URGED TO VOTE. SEE "GENERAL INFORMATION
—
VOTING METHODS"
FOR MORE INFORMATION ON YOUR VOTING OPTIONS.
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By Order of the Board of Directors,
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Jonathan R. Phillips
Chairman of the Board
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Atlanta,
Georgia
May 5, 2017
49
Appendix A
STREAMLINE HEALTH SOLUTIONS, INC.
SECOND AMENDED AND RESTATED
2013 STOCK INCENTIVE PLAN
(As Amended and Restated Effective April 12, 2017)
STREAMLINE HEALTH SOLUTIONS, INC.
SECOND AMENDED AND RESTATED
2013 STOCK INCENTIVE PLAN
(As Amended and Restated Effective April 12, 2017)
1.
Definitions
In
addition to other terms defined herein or in an Award Agreement, the following terms shall have the meanings given below:
(b)
Administrator
means the Board, and, upon its delegation of all or part of its authority to administer the Plan to the
Committee, the Committee.
(c)
Affiliate
means any Parent or Subsidiary of the Company, and also includes any other business entity which is controlled
by, under common control with or controls the Company; provided, however, that
the term "Affiliate" shall be construed in a manner in accordance with the registration provisions of applicable federal securities laws if and to the extent required.
(d)
Applicable Law
means any applicable laws, rules or regulations (or similar guidance), including but not limited to the
Securities Act, the Exchange Act, the Code and the listing or other rules of any applicable stock exchange.
(e)
Award
means, individually or collectively, a grant under the Plan of an Option (including an Incentive Option or a
Nonqualified Option); a Stock Appreciation Right (including a Related SAR or a Freestanding SAR); a Restricted Award (including a Restricted Stock Award or a Restricted Unit Award); a Performance
Award (including a Performance Share Award or a Performance Unit Award); a Phantom Stock Award, an Other Stock-Based Award; a Dividend Equivalent Award; and/or any other award granted under the Plan.
(f)
Award Agreement
means an award agreement (which may be in written or electronic form, in the Administrator's discretion,
and which includes any amendment or supplement thereto) between the Company and a Participant specifying the terms, conditions and restrictions of an Award granted to the Participant. An Award
Agreement may also state such other terms, conditions and restrictions, including but not limited to terms, conditions and restrictions applicable to shares of Common Stock or any other benefit
underlying an Award, as may be established by the Administrator.
(g)
Base Price
means, with respect to an SAR, the initial price assigned to the SAR.
(h)
Board
or
Board of Directors
means the Board of Directors of the Company.
(i)
Cause
means, unless the Administrator determines otherwise, a Participant's termination of employment or service
resulting from the Participant's (i) termination for "Cause" (or term of similar meaning) as defined under the Participant's employment, change of control, consulting or other agreement with
the Company or an Affiliate, if any, or (ii) if the Participant has not entered into any such agreement (or, if any such agreement does not define "Cause" or similar term), then the
Participant's termination shall be for "Cause" if termination results due to the Participant's (A) dishonesty; (B) failure to perform his duties for the Company or an Affiliate; or
(C) engaging in fraudulent conduct or conduct that could be materially damaging to the Company without a reasonable good faith belief that such conduct was in the best interest of the Company.
The determination of "Cause" shall be made by the Administrator and its determination shall be final and conclusive. Without in any way limiting the effect of the foregoing, for purposes of the Plan
and an Award, a Participant's employment or service shall be deemed to have terminated for
A-2
Cause
if, after the Participant's employment or service has terminated, facts and circumstances are discovered that would have justified, in the opinion of the Administrator, a termination for Cause.
(j) A
Change of Control
shall (except as may be otherwise provided in an individual Award Agreement or as may be otherwise
required, if at all, under Code Section 409A) be deemed to have occurred on the earliest of the following dates:
(i) The
date any entity or person shall have become the beneficial owner of, or shall have obtained voting control over, fifty-one percent (51%) or more of the total voting
power of the Company's then outstanding voting stock;
(ii) The
date of the consummation of (A) a merger, consolidation or reorganization of the Company (or similar transaction involving the Company), in which the holders
of the Common Stock immediately prior to the transaction have voting control over less than fifty-one percent (51%) of the voting securities of the surviving corporation immediately after such
transaction, or (B) the sale or disposition of all or substantially all the assets of the Company; or
(iii) The
date there shall have been a change in a majority of the Board of Directors of the Company within a 12-month period unless the nomination for election by the
Company's stockholders of each new Director was approved by the vote of two-thirds of the members of the Board (or a committee of the Board, if nominations are approved by a Board committee rather
than the Board) then still in office who were in office at the beginning of the 12-month period.
(For
the purposes herein, the term "person" shall mean any individual, corporation, partnership, group, association or other person, as such term is defined in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, other than the Company, a Subsidiary of the Company or any employee benefit plan(s) sponsored or maintained by the Company or any Subsidiary thereof, and
the term "beneficial owner" shall have the meaning given the term in Rule 13d-3 under the Exchange Act.)
For
the purposes of clarity, a transaction shall not constitute a Change of Control if its principal purpose is to change the state of the Company's incorporation or create a holding company that
would be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transaction or is another transaction of other similar effect.
Notwithstanding
the preceding provisions of Section 1(i), in the event that any Awards granted under the Plan are deemed to be deferred compensation subject to (and not exempt from) the
provisions of Code Section 409A, then distributions related to such Awards to be made upon a Change of Control may be permitted, in the Administrator's discretion, upon the occurrence of one or
more of the following events (as they are defined and interpreted under Code Section 409A): (A) a change in the ownership of the Company; (B) a change in effective control of the
Company; or (C) a change in the ownership of a substantial portion of the assets of the Company.
The
Administrator shall have full and final authority, in its discretion (subject to any Code Section 409A considerations), to determine whether a Change of Control of the Company has occurred,
the date of the occurrence of such Change of Control and any incidental matters relating thereto.
(k)
Code
means the Internal Revenue Code of 1986, as amended. Any reference herein to a specific Code section shall be deemed
to include all related regulations or other guidance with respect to such Code section.
A-3
(l)
Committee
means the Compensation Committee of the Board or other committee of the Board which may be appointed to
administer the Plan in whole or in part.
(m)
Common Stock
means the Company's common stock, $0.01 par value, or any successor securities thereto.
(n)
Company
means Streamline Health Solutions, Inc., a Delaware corporation, together with any successor thereto.
(o)
Covered Employee
shall have the meaning given the term in Code Section 162(m).
(p)
Director
means a member of the Board or of the board of directors of an Affiliate.
(q)
Disability
shall, except as may be otherwise determined by the Administrator (taking into account any Code
Section 409A considerations), as applied to any Participant, have the meaning given in any Award Agreement, employment agreement, change of control agreement, consulting agreement or other
similar agreement, if any, to which the Participant is a party, or, if there is no such agreement (or if such agreement does not define "Disability"), "Disability" shall mean the inability of the
Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or which has lasted or can be
expected to last for a continuous period of not less than 12 months. The Administrator shall have authority to determine if a Disability has occurred.
(r)
Displacement
shall, except as may be otherwise determined by the Administrator (taking into account any Code
Section 409A considerations), as applied to any Participant, be as defined in any Award Agreement, employment agreement, change of control agreement, consulting agreement or other similar
agreement, if any, to which the Participant is a party, or, if there is no such agreement (or if such agreement does not define "Displacement"), "Displacement" shall mean the termination of the
Participant's employment or service due to the elimination of the Participant's job or position without fault on the part of the Participant. The Administrator shall have authority to determine if a
Displacement has occurred.
(s)
Dividend Equivalent Awards
shall mean a right granted to a Participant pursuant to Section 13 to receive the
equivalent value (in cash or shares of Common Stock) of dividends paid on Common Stock.
(t)
Effective Date
means the effective date of the amendment and restatement of the Plan, as provided in Section 4.
(u)
Employee
means any person who is an employee of the Company or any Affiliate (including entities which become Affiliates
after the Effective Date of the Plan). For this purpose, an individual shall be considered to be an Employee only if there exists between the individual and the Company or an Affiliate the legal and
bona fide relationship of employer and employee (taking into account Code Section 409A considerations if and to the extent applicable); provided, however, that, with respect to Incentive
Options, "Employee" means any person who is considered an employee of the Company or any Parent or Subsidiary for purposes of Treas. Reg. Section 1.421-1(h) (or any successor provision related
thereto).
(v)
Exchange Act
means the Securities Exchange Act of 1934, as amended.
(w)
Fair Market Value
per share of the Common Stock shall be established in good faith by the Administrator and, unless
otherwise determined by the Administrator, the Fair Market Value shall be determined in accordance with the following provisions: (A) if the shares of Common Stock are listed for trading on The
NASDAQ Stock Market ("
Nasdaq
") or another national or regional stock exchange, the Fair Market Value shall be the closing sales price per share of the
shares on Nasdaq or other principal stock exchange on which such securities are listed on the date
A-4
an
Option is granted or other determination is made (such date of determination being referred to herein as a "
valuation date
"), or, if there is no
transaction on such date, then on the trading date nearest preceding the valuation date for which closing price information is available, and, provided further, if the shares are not listed for
trading on Nasdaq or another stock exchange but are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, the Fair Market Value
shall be the closing sales price for such shares as quoted on such system or by such securities dealer on the valuation date, but if selling prices are not reported, the Fair Market Value of a share
of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the valuation date (or, if no such prices were reported on that date, on the last preceding date
such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (B) if the shares of Common Stock are not listed or reported in
any of the foregoing, then the Fair Market Value shall be determined by the Administrator based on such valuation measures or other factors as it deems appropriate. Notwithstanding the foregoing,
(i) with respect to the grant of Incentive Options, the Fair Market Value shall be determined by the Administrator in accordance with the applicable provisions of Section 20.2031-2 of
the Federal Estate Tax Regulations, or in any other manner consistent with the Code Section 422; and (ii) Fair Market Value shall be determined in accordance with Code
Section 409A if and to the extent required.
(x)
Freestanding SAR
means an SAR that is granted without relation to an Option, as provided in Section 8.
(y)
Good Reason
means, unless the Administrator determines otherwise, in the context of a Change of Control, a Participant's
termination of employment or service resulting from the Participant's (i) termination for "Good Reason" (or term of similar meaning) as defined under the Participant's employment, change of
control, consulting or other agreement with the Company or an Affiliate, if any, or (ii) if the Participant has not entered into any agreement (or, if any such agreement does not define "Good
Reason" or similar term), then a Participant's termination shall be for "Good Reason" if termination results due to any of the following without the Participant's consent: (A) a material
reduction in the Participant's base salary as in effect immediately prior to the date of the Change of Control, or (B) the assignment to the Participant of duties or responsibilities materially
inconsistent with, or a material diminution in, the Participant's position, authority, duties or responsibilities as in effect immediately prior to the Change of Control. Notwithstanding the
foregoing, with respect to Directors, unless the Administrator determines otherwise, a Director's termination from service on the Board shall be for "Good Reason" if the Participant ceases to serve as
a Director, or, if the Company is not the surviving company in the Change of Control event, a member of the board of directors of the surviving entity, in either case, due to the Participant's failure
to be nominated to serve as a director of such entity or the Participant's failure to be elected to serve as a director of such entity, but
not due to the Participant's decision not to continue service on the Board of Directors of the Company or the board of directors of the surviving entity, as the case may be. An event or condition that
would otherwise constitute "Good Reason" shall constitute Good Reason only if the Company fails to rescind or cure such event or condition within 30 days after receipt from the Participant of
written notice of the event which constitutes Good Reason and the Participant then terminates employment or service within 60 days after the period for the Company to cure such event or
condition expires, and Good Reason shall cease to exist for any event or condition described herein on the 60th day following the later of the occurrence or the Participant's knowledge thereof,
unless the Participant has given the Company written notice thereof prior to such date. The determination of "Good Reason" shall be made by the Administrator and its determination shall be final and
conclusive.
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(z)
Incentive Option
means an Option that is designated by the Administrator as an Incentive Option pursuant to
Section 7 and intended to meet the requirements of incentive stock options under Code Section 422.
(aa)
Independent Contractor
means an independent contractor, consultant or advisor providing services (other than
capital-raising services) to the Company or an Affiliate.
(bb)
Nonqualified Option
means an Option granted under Section 7 that is not intended to qualify (or does not qualify)
as an incentive stock option under Code Section 422.
(cc)
Option
means a stock option granted under Section 7 that entitles the holder to purchase from the Company a
stated number of shares of Common Stock at the Option Price, and subject to such terms and conditions, as may be set forth in the Plan or an Award Agreement or established by the Administrator.
(dd)
Option Period
means the term of an Option, as provided in Section 7(d).
(ee)
Option Price
means the price at which an Option may be exercised, as provided in Section 7(b).
(ff)
Other Stock-Based Award
means a right, granted to a Participant under Section 12, that relates to or is valued by
reference to shares of Common Stock or other Awards relating to shares of Common Stock.
(gg)
Parent
shall mean a "parent corporation," whether now or hereafter existing, as defined in Code Section 424(e).
(hh)
Participant
means an individual who is an Employee employed by, or a Director or Independent Contractor providing
services to, the Company or an Affiliate who satisfies the requirements of Section 6 and is selected by the Administrator to receive an Award under the Plan.
(ii)
Performance Award
means a Performance Share Award and/or a Performance Unit Award, as provided in Section 10.
(jj)
Performance Measures
mean one or more performance factors which may be established by the Administrator with respect to
an Award. Performance factors may be based on such corporate, business unit or division and/or individual performance factors and criteria as the Administrator in its discretion may deem appropriate;
provided, however, that, if and to the extent required under Code Section 162(m) with respect to Awards granted to Covered Employees that are intended to qualify as "performance-based
compensation" under Code Section 162(m), such performance factors shall be objective and shall be based upon one or more of the following criteria (as determined by the Administrator in its
discretion): (i) revenues or sales; (ii) gross margins; (iii) earnings per share; (iv) net bookings; (v) product production or shipments; (vi) consolidated
earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (vii) net income; (viii) operating income; (ix) book value per share;
(x) return on stockholders' equity; (xi) return on investment; (xii) return on capital; (xiii) improvements in capital structure; (xiv) expense management;
(xv) operating margins; (xvi) maintenance or improvement of gross margins or operating margins; (xvii) stock price or total stockholder return; (xviii) market share;
(xix) profitability; (xx) costs; (xxi) cash flow or free cash flow; (xxii) working capital; (xxiii) return on assets; (xxiv) economic wealth created, and/or
(xxv) strategic business criteria, based on meeting specified goals or objectives related to market penetration, geographic business expansion, cost targets, customer satisfaction, employee
satisfaction, management of employment practices and employee benefits, management of litigation, management of information technology, goals relating to acquisitions or divestitures of products,
product lines, subsidiaries, affiliates or joint ventures, quality matrices, customer service
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matrices
and/or execution of pre-approved corporate strategy. In addition, with respect to Participants who are not Covered Employees, the Administrator may approve performance objectives based on
other criteria, which may or may not be objective. To the extent that Code Section 162(m) is applicable,
the Administrator shall, within the time and in the manner prescribed by Code Section 162(m), define in an objective fashion the manner of calculating the Performance Measures it selects to use
for Covered Employees during any specific performance period. The foregoing criteria may relate to the Company, one or more of its Affiliates or one or more of its divisions, units, partnerships,
joint ventures or minority investments, facilities, product lines or products or any combination of the foregoing. The targeted level or levels of performance with respect to such business criteria
may be established at such levels and on such terms as the Administrator may determine, in its discretion, including but not limited to on an absolute basis, in relation to performance in a prior
performance period, and/or relative to one or more peer group companies or indices, or any combination thereof. Such performance factors may be adjusted or modified due to extraordinary items,
transactions, events or developments, or in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or the financial statements of the Company, or in
response to, or in anticipation of, changes in Applicable Law, accounting principles or business conditions, in each case as determined by the Administrator (subject to any Code Section 162(m)
restrictions applicable to Covered Employees for compensation that is intended to qualify as "performance-based compensation" under Code Section 162(m)).
(kk)
Performance Share
means an Award granted under Section 10, in an amount determined by the Administrator and
specified in an Award Agreement, stated with reference to a specified number of shares of Common Stock, that entitles the holder to receive shares of Common Stock, a cash payment or a combination of
Common Stock and cash (as determined by the Administrator), subject to the terms of the Plan and the terms and conditions established by the Administrator.
(ll)
Performance Unit
means an Award granted under Section 10, in an amount determined by the Administrator and
specified in an Award Agreement, that entitles the holder to receive shares of Common Stock, a cash payment or a combination of Common Stock and cash (as determined by the Administrator), subject to
the terms of the Plan and the terms and conditions established by the Administrator.
(mm)
Phantom Stock Award
means an Award granted under Section 11, entitling a Participant to a payment in cash, shares
of Common Stock or a combination of cash and Common Stock (as determined by the Administrator), following the completion of the applicable vesting period and compliance with the terms of the Plan and
other terms and conditions established by the Administrator. The unit value of a Phantom Stock Award shall be based on the Fair Market Value of a share of Common Stock.
(nn)
Plan
means the Streamline Health Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan (As
Amended and Restated Effective April 12, 2017), as it may be hereafter amended and/or restated.
(oo)
Prior Plan
means the Streamline Health Solutions, Inc. (formerly, the LanVision Systems, Inc.) 2005
Incentive Compensation Plan, as amended.
(pp)
Related SAR
means an SAR granted under Section 8 that is granted in relation to a particular Option and that can
be exercised only upon the surrender to the Company, unexercised, of that portion of the Option to which the SAR relates.
(qq)
Restricted Award
means a Restricted Stock Award and/or a Restricted Stock Unit Award, as provided in Section 9.
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(rr)
Restricted Stock Award
means shares of Common Stock granted to a Participant under Section 9. Shares of Common
Stock subject to a Restricted Stock Award shall cease to be restricted when, in accordance with the terms of the Plan and the terms and conditions established by the Administrator, the shares vest and
become transferable and free of substantial risks of forfeiture.
(ss)
Restricted Stock Unit
means a Restricted Award granted to a Participant pursuant to Section 9 which is settled,
if at all, (i) by the delivery of one share of Common Stock for each Restricted Stock Unit, (ii) in cash in an amount equal to the Fair Market Value of one share of Common Stock for each
Restricted Stock Unit, or (iii) in a combination of cash and shares equal to the Fair Market Value of one share of Common Stock for each Restricted Stock Unit, as determined by the
Administrator. A Restricted Stock Unit represents the promise of the Company to deliver shares of Common Stock, cash or a combination thereof, as applicable, at the end of the applicable restriction
period if and only to the extent the Award vests and ceases to be subject to forfeiture, subject to compliance with the terms of the Plan and Award Agreement and any terms and conditions established
by the Administrator.
(tt)
Retirement
shall, except as may be otherwise determined by the Administrator (taking into account any Code
Section 409A considerations), as applied to any Participant, have the meaning given in an Award Agreement, employment agreement, change in control agreement, consulting agreement or other
similar agreement, if any, to which the Participant is a party, or, if there is no such agreement (or if such agreement does not define "Retirement"), then "Retirement" shall, unless the Administrator
determines otherwise, mean retirement in accordance with the retirement policies and procedures established by the Company. The Administrator shall have authority to determine if a Retirement has
occurred.
(uu)
SAR
means a stock appreciation right granted under Section 8 entitling the Participant to receive, with respect
to each share of Common Stock encompassed by the exercise of such SAR, the excess of the Fair Market Value on the date of exercise over the Base Price, subject to the terms of the Plan and Award
Agreement and any other terms and conditions established by the Administrator. References to "SARs" include both Related SARs and Freestanding SARs, unless the context requires otherwise.
(vv)
Securities Act
means the Securities Act of 1933, as amended.
(ww)
Subsidiary
shall mean a "subsidiary corporation," whether now or hereafter existing, as defined in Code
Section 424(f).
(xx)
Termination Date
means the date of termination of a Participant's employment or service for any reason, as determined by
the Administrator.
2.
Purpose
The
purposes of the Plan are to encourage and enable selected Employees, Directors and Independent Contractors of the Company and its Affiliates to acquire or to increase their holdings
of Common Stock and other equity-based interests in the Company in order to promote a closer identification of their interests with those of the Company and its stockholders, and to provide
flexibility to the Company in its ability to motivate, attract and retain the services of Participants upon whose judgment, interest and special effort the successful conduct of its operation largely
depends. These purposes may be carried out through the granting of Awards to selected Participants, including the granting of Options in the form of Incentive Stock Options and/or Nonqualified
Options; SARs in the form of Freestanding SARs and/or Related SARs; Restricted Awards in the form of Restricted Stock Awards and/or Restricted Stock Units; Performance Awards in the form of
Performance Shares and/or Performance Units; Phantom Stock Awards; Other Stock-Based Awards; and/or Dividend Equivalent Awards.
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3.
Administration of the Plan
(a) The
Plan shall be administered by the Board of Directors of the Company or, upon its delegation, by the Committee (or a subcommittee thereof). To the extent required
under Rule 16b-3 adopted under the Exchange Act, the Committee shall be comprised solely of two or more "non-employee directors," as such term is defined in Rule 16b-3, or as may
otherwise be permitted under Rule 16b-3. Further, to the extent required by Code Section 162(m), the Plan shall be administered by a committee comprised of two or more "outside
directors" (as such term is defined in Code Section 162(m)) or as may otherwise be permitted under Code Section 162(m). In addition, Committee members shall qualify as "independent
directors" under applicable stock exchange rules if and to the extent required.
(b) Subject
to the provisions of the Plan, the Administrator shall have full and final authority in its discretion to take any action with respect to the Plan including,
without limitation, the authority (i) to determine all matters relating to Awards, including selection of individuals to be granted Awards, the types of Awards, the number of shares of Common
Stock, if any, subject to an Award, and all terms, conditions, restrictions and limitations of an Award; (ii) to prescribe the form or forms of Award Agreements evidencing any Awards granted
under the Plan; (iii) to establish, amend and rescind rules and regulations for the administration of the Plan; and (iv) to construe and interpret the Plan, Awards and Award Agreements
made under the Plan, to interpret rules and regulations for administering the Plan and to make all other determinations deemed necessary or advisable for administering the Plan. In addition,
(i) the Administrator shall have the authority, in its sole discretion but subject to Section 3(d) herein, to accelerate the date that any Award which was not otherwise exercisable,
vested or earned shall become exercisable, vested or earned in whole or in part without any obligation to accelerate such date with respect to any other Award granted to any recipient; and
(ii) the Administrator may in its sole discretion modify or extend the terms and conditions for exercise, vesting or earning of an Award (in each case, taking into account any Code
Section 409A considerations). The Administrator may determine that a Participant's rights, payments and/or benefits with respect to an Award (including but not limited to any shares issued or
issuable and/or cash paid or payable with respect to an Award) shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for Cause, violation of policies of the Company or
an Affiliate, breach of non-solicitation, noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, other conduct by the Participant that is determined by the
Administrator to be detrimental to the business or reputation of the Company or any Affiliate, and/or other circumstances where such reduction, cancellation, forfeiture or recoupment is required by
Applicable Law. In addition, the Administrator shall have the authority and discretion to establish terms and conditions of Awards (including but not limited to the establishment of subplans) as the
Administrator determines to be necessary or appropriate to conform to the applicable requirements or practices of jurisdictions outside of the United States. In addition to action by meeting in
accordance with Applicable Law, any action of the Administrator with respect to the Plan may be taken by a written instrument signed by all of the members of the Board or Committee, as appropriate,
and any such action so taken by written consent shall be as fully effective as if it had been taken by a majority of the members at a meeting duly held and called. All determinations of the
Administrator with respect to the Plan and any Award or Award Agreement will be final and binding on the Company and all persons having or claiming an interest in any Award granted under the Plan. No
member of the Board or Committee, as applicable, shall be liable while acting as Administrator for any action or determination made in good faith with respect to the Plan, an Award or an Award
Agreement. The members of the Board or Committee, as applicable, shall be entitled to indemnification and reimbursement in the manner and to the fullest extent provided in the Company's certificate of
incorporation and/or bylaws and/or pursuant to Applicable Law.
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(c) Notwithstanding
the other provisions of Section 3, the Administrator may delegate to one or more officers of the Company the authority to grant Awards to eligible
Participants, and to make any or all of the determinations reserved for the Administrator in the Plan and summarized in Section 3(b) with respect to such Awards (subject to any restrictions
imposed by Applicable Law and such terms and conditions as may be established by the Administrator); provided, however, that, if and to the extent required by Section 16 of the Exchange Act or
Code Section 162(m), the Participant, at the time of said grant or other determination, (i) is not deemed to be an officer or director of the Company within the meaning of
Section 16 of the Exchange Act; and (ii) is not deemed to be a Covered Employee as defined under Code Section 162(m). To the extent that the Administrator has delegated authority
to grant Awards pursuant to this Section 3(c) to one or more officers of the Company, references to the "Administrator" shall include references to such officer(s) and/or subcommittee, subject,
however, to the requirements of the Plan, Rule 16b-3, Code Section 162(m) and other Applicable Law.
(d) Notwithstanding
the other provisions of Section 3, Awards granted to an Employee under the Plan shall be subject to a minimum vesting period of three years (which
may include installment vesting within such three-year period as determined by the Administrator) or one year if the vesting is based on performance criteria other than continued service; provided,
however, that (i) the Administrator may provide for acceleration of vesting of all or a portion of an Award in the event of a Participant's death, Disability or Retirement, or, as set forth in
Section 14, upon the occurrence of a Change of Control of the Company; (ii) the Administrator may provide for the grant of an Award without a minimum vesting period or may accelerate the
vesting of all or a portion of an Award for any reason, but only with respect to Awards for no more than an aggregate of ten percent (10%) of the total number of shares of Common Stock authorized for
issuance under the Plan pursuant to Section 5(a) herein, upon such terms and conditions as the Administrator shall determine; (iii) the Administrator also may provide for the grant of
Awards that have different vesting terms in the case of Awards that are substituted for other equity awards in connection with mergers, consolidations or other similar transactions, Awards that are
granted as an inducement to be employed by the Company or an Affiliate or to replace forfeited awards from a former employer, or Awards that are granted in exchange for foregone cash compensation; and
(iv) the Administrator may grant Other Stock-Based Awards pursuant to Section 12 without minimum vesting requirements.
4.
Effective Date
The
Effective Date of the amendment and restatement of the Plan shall be April 12, 2017 (the "Effective Date"). Subject to Section 19(o), Awards may be granted on or after
the Effective Date, but no Awards may be granted after April 12, 2027. Awards that are outstanding at the end of the Plan term (or such earlier termination date as may be established by the
Board pursuant to Section 16(a)) shall continue in accordance with their terms, unless otherwise provided in the Plan or an Award Agreement.
5.
Shares of Stock Subject to the Plan; Award Limitations
(a)
Shares of Stock Subject to the Plan:
Subject to adjustments as provided in Section 5(d), the maximum
number of shares of Common Stock that may be issued pursuant to Awards granted under the Plan
shall increase by 300,000 shares and shall not exceed the sum of (i) 2,300,000 shares (the 2,000,000 shares originally reserved under the Plan plus the additional 300,000 shares), plus
(ii) the number of shares remaining available for issuance as of the March 28, 2014 under the Prior Plan (that is, shares not subject to outstanding awards under the Prior Plan nor
delivered from the shares reserved under the Prior Plan), plus (iii) the number of shares that become available under the Prior Plan after March 28, 2014 pursuant to forfeiture,
termination, lapse or satisfaction of a Prior Plan award in cash or property other than shares of Common Stock. Shares delivered under the Plan shall be authorized but unissued shares, treasury shares
or shares purchased on the open market or by
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private
purchase. The Company hereby reserves sufficient authorized shares of Common Stock to meet the grant of Awards hereunder.
(b)
Award Limitations:
Notwithstanding any provision in the Plan to the contrary, the following limitations
shall apply to Awards granted under the Plan, in each case subject to adjustments pursuant to Section 5(d):
(i) If
and to the extent required under Code Section 162(m), in any 12-month period, no Participant may be granted Options and SARs that are not related to an Option
for more than 200,000 shares of Common Stock (or the equivalent value thereof based on the Fair Market Value per share of the Common Stock on the date of grant of an Award);
(ii) If
and to the extent required under Code Section 162(m), in any 12-month period, no Participant may be granted Awards other than Options or SARs that are settled
in shares of Common Stock for more than 50,000 shares of Common Stock (or the equivalent value thereof based on the Fair Market Value per share of the Common Stock on the date of grant of an Award).
(For
purposes of Section 5(b)(i) and (ii), an Option and Related SAR shall be treated as a single Award.)
(c)
Shares Not Subject to Limitations:
The following will not be applied to the share limitations of
Section 5(a) above: (i) dividends, including dividends paid in shares, or dividend equivalents paid in cash in connection with outstanding Awards; (ii) Awards which are settled in
cash rather than the issuance of shares; and (iii) any shares subject to an Award if the Award is forfeited, cancelled, terminated, expires or lapses for any reason without the issuance of
shares underlying the Award. Further, (i) shares issued under the Plan through the settlement, assumption or substitution of outstanding awards granted by another entity or obligations to grant
future awards as a condition of or in connection with a merger,
acquisition or similar transaction involving the Company acquiring another entity shall not reduce the maximum number of shares of Common Stock available for delivery under the Plan; and
(ii) available shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for Awards under the Plan (subject to
applicable stock exchange listing requirements) and will not reduce the maximum number of shares available under the Plan. Shares withheld or applied as payment in connection with the exercise of an
Award or the withholding or payment of taxes related thereto or separately surrendered by the Participant for any such purpose will be treated as having been delivered for purposes of determining the
maximum number of Shares available for grant under the Plan and shall not again be treated as available for grant under the Plan.
(d)
Adjustments; Right to Issue Additional Securities:
If there is any change in the outstanding shares of
Common Stock because of a merger, consolidation or reorganization involving the Company, or if the Board of Directors of the Company declares a stock dividend, stock split distributable in shares of
Common Stock or reverse stock split, combination or reclassification of the Common Stock, or if there is a similar change in the capital stock structure of the Company affecting the Common Stock
(excluding conversion of convertible securities by the Company and/or the exercise of warrants by their holders), then the number of shares of Common Stock reserved for issuance under the Plan shall
be correspondingly adjusted, and the Administrator shall make such adjustments to Awards or to any provisions of this Plan as the Administrator deems equitable to prevent dilution or enlargement of
Awards or as may otherwise be advisable. Nothing in the Plan, an Award or an Award Agreement shall limit the ability of the Company to issue additional securities (including but not limited to the
issuance of other options or other derivative securities, warrants, additional shares or classes of Common Stock, preferred stock and/or other convertible securities).
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6.
Eligibility
An
Award may be granted only to an individual who satisfies all of the following eligibility requirements on the date the Award is granted:
(a) The
individual is either (i) an Employee, (ii) a Director or (iii) an Independent Contractor.
(b) With
respect to the grant of Incentive Options, the individual is otherwise eligible to participate under Section 6, is an Employee of the Company or a Parent or
Subsidiary and does not own, immediately before the time that the Incentive Option is granted, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company
or a Parent or Subsidiary. Notwithstanding the foregoing, an Employee who owns more than 10% of the total combined voting power of the Company or a Parent or Subsidiary may be granted an Incentive
Option if the Option
Price is at least 110% of the Fair Market Value of the Common Stock, and the Option Period does not exceed five years. For this purpose, an individual will be deemed to own stock which is attributable
to him under Code Section 424(d).
(c) With
respect to the grant of substitute awards or assumption of awards in connection with a merger, consolidation, acquisition, reorganization or similar transaction
involving the Company or an Affiliate, the recipient is otherwise eligible to receive the Award and the terms of the award are consistent with the Plan and Applicable Law (including, to the extent
necessary, the federal securities laws registration provisions, Code Section 409A and Code Section 424(a)).
(d) The
individual, being otherwise eligible under this Section 6, is selected by the Administrator as an individual to whom an Award shall be granted (as defined
above, a "
Participant
").
7.
Options
(a)
Grant of Options:
Subject to the limitations of the Plan, the Administrator may in its discretion grant
Options to such eligible individuals in such numbers, subject to such terms and conditions, and at such times as the Administrator shall determine. Both Incentive Options and Nonqualified Options may
be granted under the Plan, as determined by the Administrator; provided, however, that Incentive Options may only be granted to Employees of the Company or a Parent or Subsidiary. To the extent that
an Option is designated as an Incentive Option but does not qualify as such under Code Section 422, the Option (or portion thereof) shall be treated as a Nonqualified Option. An Option may be
granted with or without a Related SAR.
(b)
Option Price:
The Option Price per share at which an Option may be exercised shall be established by the
Administrator and stated in the Award Agreement evidencing the grant of the Option and shall be no less than 100% of the Fair Market Value per share of the Common Stock as determined on the date the
Option is granted (or 110% of the Fair Market Value with respect to Incentive Options granted to an Employee who owns stock possessing more than 10% of the total voting power of all classes of stock
of the Company or a Parent or Subsidiary, as provided in Section 6(b)). Further, (i) in no event shall the Option Price per share of any Option be less than the par value, if any, per
share of the Common Stock; and (ii) notwithstanding the preceding sentence, the Administrator may in its discretion authorize the grant of substitute or assumed options of an acquired entity in
a merger or similar transaction with an Option Price not equal to 100% of the Fair Market Value of the stock on the date of grant, if the terms of such substitution or assumption otherwise comply, to
the extent deemed applicable, with Code Section 409A and/or Code Section 424(a).
(c)
Date of Grant:
An Option shall be considered to be granted on the date that the Administrator acts to grant
the Option, or on such other date as may be established by the Administrator in accordance with Applicable Law.
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(d)
Option Period and Limitations on the Right to Exercise Options:
(i) The
Option Period shall be determined by the Administrator at the time the Option is granted and shall be stated in the Award Agreement. The Option Period shall not
extend more than 10 years from the date on which the Option is granted (or five years with respect to Incentive Options granted to an Employee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or a Parent or Subsidiary, as provided in Section 6(b)). Any Option or portion thereof not exercised before expiration of the
Option Period shall terminate. The period or periods during which, and the terms and conditions pursuant to which, an Option may vest and become exercisable shall be determined by the Administrator in
its discretion, subject to the terms of the Plan (including but not limited to Section 3(d) herein).
(ii) An
Option may be exercised by giving written notice to the Company in form acceptable to the Administrator at such place and subject to such conditions as may be
established by the Administrator or its designee. Such notice shall specify the number of shares to be purchased pursuant to an Option and the aggregate purchase price to be paid therefor and shall be
accompanied by payment of such purchase price. Unless an Award Agreement provides otherwise, such payment shall be in the form of cash or cash equivalent; provided that, except where prohibited by the
Administrator or Applicable Law (and subject to such terms and conditions as may be established by the Administrator), payment may also be made:
(1) By
delivery (by either actual delivery or attestation) of shares of Common Stock owned by the Participant for such time period, if any, as may be determined by the
Administrator;
(2) By
shares of Common Stock withheld upon exercise;
(3) By
delivery of written notice of exercise to the Company and delivery to a broker of written notice of exercise and irrevocable instructions to promptly deliver to the
Company the amount of sale or loan proceeds to pay the Option Price;
(4) By
such other payment methods as may be approved by the Administrator and which are acceptable under Applicable Law; or
(5) By
any combination of the foregoing methods.
Shares
delivered or withheld in payment on the exercise of an Option shall be valued at their Fair Market Value on the date of exercise, as determined by the Administrator or its
designee.
(iii) The
Administrator shall determine the extent, if any, to which a Participant may have the right to exercise an Option following termination of the Participant's
employment or service with the Company. Such rights, if any, shall be subject to the sole discretion of the Administrator, shall be stated in the individual Award Agreement, need not be uniform among
all Options issued pursuant to this Section 7, and may reflect distinctions based on the reasons for termination of employment or service. Subject to the provisions of Section 3(d)
herein, the Administrator also shall have authority, in its sole discretion (taking into account any Code Section 409A considerations), to accelerate the date for exercising all or any part of
an Option which was not otherwise vested and exercisable, extend the period during which an Option may be exercised, modify the other terms and conditions of exercise, or any combination of the
foregoing.
(e)
Notice of Disposition:
If shares of Common Stock acquired upon exercise of an Incentive Option are disposed
of within two years following the date of grant or one year following the transfer of such shares to a Participant upon exercise, the Participant shall, promptly following such disposition, notify the
Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Administrator may reasonably require.
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(f)
Limitation on Incentive Options:
In no event shall there first become exercisable by an Employee in any one
calendar year Incentive Options granted by the Company or any Parent or Subsidiary with respect to shares having an aggregate Fair Market Value (determined at the time an Incentive Option is granted)
greater than $100,000; provided that, if such limit is exceeded, then the first $100,000 of shares to become exercisable in such calendar year will be Incentive Options and the Options (or portion
thereof) for shares with a value in excess of $100,000 that first became exercisable in that calendar year will be Nonqualified Options. In the event the Code or the regulations promulgated thereunder
are amended after the Effective Date of the Plan to provide for a different limitation on the Fair Market Value of shares permitted to be subject to Incentive Options, then such different limit shall
be automatically incorporated herein. To the extent that any Incentive Options are first exercisable by a Participant in excess of the limitation described herein, the excess shall be considered a
Nonqualified Option.
(g)
Nontransferability of Options:
Incentive Options shall not be transferable (including by sale, assignment,
pledge or hypothecation) other than transfers by will or the laws of intestate succession or, in the Administrator's discretion, such transfers as may otherwise be permitted in accordance with Treas.
Reg. Section 1.421-1(b)(2) or Treas. Reg. Section 1.421-2(c) or any successor provisions thereto.
Nonqualified
Options shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession, except for transfers if and to the
extent permitted by the Administrator in a manner consistent with the registration provisions of the Securities Act. Except as may be permitted by the preceding, an Option shall be exercisable during
the Participant's lifetime only by him or by his guardian or legal representative. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
8.
Stock Appreciation Rights
(a)
Grant of SARs:
Subject to the limitations of the Plan, the Administrator may in its discretion grant SARs to
such eligible individuals, in such numbers, upon such terms and at such times as the Administrator shall determine. SARs may be granted to the holder of an Option (a "
Related
Option
") with respect to all or a portion of the shares of Common Stock subject to the Related Option (a "
Related SAR
") or may
be granted separately to an eligible individual (a "
Freestanding SAR
"). The Base Price per share of an SAR shall be no less than 100% of the Fair Market
Value per share of the Common Stock on the date the SAR is granted. Notwithstanding the foregoing, the Administrator may in its discretion authorize the grant of substitute or assumed SARs of an
acquired entity in a merger or similar transaction with a Base Price per share not equal to at least 100% of the Fair Market Value of the stock on the date of grant, if the terms of such substitution
or assumption otherwise comply, to the extent deemed applicable, with Code Section 409A and/or Code Section 424(a). An SAR shall be considered to be granted on the date that the
Administrator acts to grant the SAR, or on such other date as may be established by the Administrator in accordance with Applicable Law.
(b)
Related SARs:
A Related SAR may be granted either concurrently with the grant of the Related Option or (if
the Related Option is a Nonqualified Option) at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such Related Option. The Base Price of a Related SAR
shall be equal to the Option Price of the Related Option. A Related SAR that is related to an Incentive Option may be exercised only to the extent that the Related Option is exercisable and only when
the Fair Market Value exceeds the Option Price of the Related Option.
(c)
Exercise of SARs:
(i) Subject
to the terms of the Plan (including but not limited to Section 3(d) herein), SARs shall be vested and exercisable in whole or in part upon such terms and
conditions as may be established by the Administrator. The period during which an SAR may be exercisable shall not exceed 10 years from the date of grant or, in the case of Related SARs, such
shorter Option
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Period
as may apply to the Related Option. Any SAR or portion thereof not exercised before expiration of the period established by the Administrator shall terminate.
(ii) SARs
may be exercised by giving written notice to the Company in form acceptable to the Administrator at such place and subject to such terms and conditions as may be
established by the Administrator or its designee. Unless the Administrator determines otherwise, the date of exercise of an SAR shall mean the date on which the Company shall have received proper
notice from the Participant of the exercise of such SAR.
(iii) The
Administrator shall determine the extent, if any, to which a Participant may have the right to exercise an SAR following termination of the Participant's
employment or service with the Company. Such rights, if any, shall be determined in the sole discretion of the Administrator, shall be stated in the individual Award Agreement, need not be uniform
among all SARs issued pursuant to this Section 8, and may reflect distinctions based on the reasons for termination of employment or service. Subject to the provisions of Section 3(d)
herein, the Administrator also may, in its sole discretion (taking into account any Code Section 409A considerations), accelerate the date for exercising all or any part of an SAR which was not
otherwise exercisable on the Termination Date, extend the period during which an SAR may be exercised, modify the terms and conditions to exercise, or any combination of the foregoing.
(d)
Payment Upon Exercise:
Subject to the limitations of the Plan, upon the exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a share of Common Stock on the date of exercise
of the SAR over the Base Price of the SAR by (ii) the number of shares of Common Stock with respect to which the SAR is being exercised. The consideration payable upon exercise of an SAR shall
be paid in cash, shares of Common Stock (valued at Fair Market Value on the date of exercise of the SAR) or a combination of cash and shares of Common Stock, as determined by the Administrator.
(e)
Nontransferability:
Unless the Administrator determines otherwise, SARs shall not be transferable (including
by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession, except for transfers (other than of SARs that are related to Incentive Options) if and to the
extent permitted by the Administrator in a manner consistent with the registration provisions of the Securities Act. Except as may be permitted by the preceding sentence, SARs may be exercised during
the Participant's lifetime only by him or her or by his or her guardian or legal representative. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
9.
Restricted Awards
(a)
Grant of Restricted Awards:
Subject to the limitations of the Plan, the Administrator may in its discretion
grant Restricted Awards to such individuals, for such numbers of shares of Common Stock, upon such terms and at such times as the Administrator shall determine. Such Restricted Awards may be in the
form of Restricted Stock Awards and/or Restricted Stock Units that are subject to certain conditions, which conditions must be met in order for the Restricted Award to vest and be earned (in whole or
in part) and no longer subject to forfeiture. Restricted Stock Awards shall be payable in shares of Common Stock. Restricted Stock Units shall be payable in cash or shares of Common Stock, or partly
in cash and partly in shares of Common Stock, in accordance with the terms of the Plan and the discretion of the Administrator. The Administrator shall (subject to the provisions of
Section 3(d) herein) determine the nature, length and starting date of the period, if any, during which a Restricted Award may be earned (the "
Restriction
Period
"), and shall determine the conditions which must be met in order for a Restricted Award to be granted or to vest or be earned (in whole or in part), which conditions may
include, but are not limited to, payment of a stipulated purchase price, attainment of performance objectives, continued service or employment for a certain period of time, a combination of attainment
of performance objectives and continued service, Retirement, Displacement,
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Disability,
death or any combination of such conditions. In the case of Restricted Awards based upon performance criteria, or a combination of performance criteria and continued service, the
Administrator shall determine the Performance Measures applicable to such Restricted Awards (subject to Section 1(ii)).
(b)
Vesting of Restricted Awards:
Subject to the terms of the Plan (and taking into account any Code
Section 162(m) and/or 409A considerations), (i) the Administrator shall have sole authority to determine whether and to what degree Restricted Awards have vested and been earned and are
payable and to establish and interpret the terms and conditions of Restricted Awards, and (ii) the Administrator, in its sole discretion, may (subject to the provisions of Section 3(d))
accelerate the date that any Restricted Award granted to a Participant shall be deemed to be vested or earned in whole or in part, without any obligation to accelerate such date with respect to other
Awards granted to any Participant.
(c)
Termination of Employment or Service; Forfeiture:
Unless the Administrator determines otherwise, if the
employment or service of a Participant shall be terminated for any reason (whether by the Company or the Participant and whether voluntary or involuntary) and all or any part of a Restricted Award has
not vested or been earned pursuant to the terms of the Plan and related Award Agreement, such Award, to the extent not then vested or earned, shall be forfeited immediately upon such termination and
the Participant shall have no further rights with respect thereto.
(d)
Share Certificates; Escrow:
Unless the Administrator determines otherwise, a certificate or certificates
representing the shares of Common Stock subject to a Restricted Stock Award shall be issued in the name of the Participant (or, in the case of uncertificated shares, other written evidence of
ownership in accordance with Applicable Law shall be provided) after the Award has been granted. Notwithstanding the foregoing, the Administrator may require that (i) a Participant deliver the
certificate(s) (or other instruments) for such shares to the Administrator or its designee to be held in escrow until the Restricted Stock Award vests and is no longer subject to a substantial risk of
forfeiture (in which case the shares will be promptly released to the Participant) or is forfeited (in which case the shares shall be returned to the Company); and/or (ii) a Participant deliver
to the Company a stock power, endorsed in blank (or similar instrument), relating to the shares subject to the Restricted Stock Award which are subject to forfeiture. Unless the Administrator
determines otherwise, a certificate or certificate representing shares of Common Stock issuable pursuant to a Restricted Stock Unit shall be issued in the name of the Participant (or, in the case of
uncertificated shares, other written evidence of ownership in accordance with Applicable Law shall be provided) promptly after the Award (or portion thereof) has vested and is distributable.
(e)
Nontransferability:
Unless the Administrator determines otherwise, Restricted Awards that have not vested
shall not be transferable (including by sale, assignment, pledge or hypothecation) other than transfers by will or the laws of intestate succession, and the recipient of a Restricted Award shall not
sell, transfer, assign, pledge or otherwise encumber shares subject to the Award until the Restriction Period has expired and until all conditions to vesting have been met. The designation of a
beneficiary in accordance with the Plan does not constitute a transfer.
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10.
Performance Awards
(a)
Grant of Performance Awards:
Subject to the terms of the Plan, the Administrator may in its discretion grant
Performance Awards to such eligible individuals upon such terms and conditions and at such times as the Administrator shall determine. Performance Awards may be in the form of Performance Shares
and/or Performance Units. An Award of a Performance Share is a grant of a right to receive shares of Common Stock, the cash value thereof, or a combination thereof (in the Administrator's discretion),
which is contingent upon the achievement of performance or other objectives during a specified period and which has a value on the date of grant equal to the Fair Market Value of a share of Common
Stock. An Award of a Performance Unit is a grant of a right to receive shares of Common Stock or a designated dollar value amount of Common Stock which is contingent upon the achievement of
performance or other objectives during a specified period, and which has an initial value determined in a dollar amount established by the Administrator at the time of grant. Subject to
Section 5(b), the Administrator shall have discretion to determine the number of Performance Units and/or Performance Shares granted to any Participant. The Administrator shall (subject to the
provisions of Section 3(d)) determine the nature, length and starting date of the period during which a Performance Award may be earned (the "
Performance
Period
"), and shall determine the conditions which must be met in order for a Performance Award to be granted or to vest or be earned (in whole or in part), which conditions
may include but are not limited to payment of a stipulated purchase price, attainment of performance objectives, continued service or employment for a certain period of time or a combination of any
such conditions. Subject to Section 1(ii), the Administrator shall determine the Performance Measures to be used in valuing Performance Awards.
(b)
Earning of Performance Awards:
Subject to the terms of the Plan (and taking into account any Code
Section 162(m) and/or 409A considerations), (i) the Administrator shall have sole authority to determine whether and to what degree Performance Awards have been earned and are payable
and to interpret the terms and conditions of Performance Awards and the provisions of Section 10, and (ii) the
Administrator, in its sole discretion, may (subject to Section 3(d) herein) accelerate the date that any Performance Award granted to a Participant shall be deemed to be earned in whole or in
part, without any obligation to accelerate such date with respect to other Awards granted to any Participant.
(c)
Form of Payment:
Payment of the amount to which a Participant shall be entitled upon earning a Performance
Award shall be made in cash, shares of Common Stock, or a combination of cash and shares of Common Stock, as determined by the Administrator in its sole discretion. Payment may be made in a lump sum
or upon such terms as may be established by the Administrator (taking into account any Code Section 409A considerations).
(d)
Termination of Employment or Service; Forfeiture:
Unless the Administrator determines otherwise (taking into
account any Code Section 409A considerations), if the employment or service of a Participant shall terminate for any reason (whether by the Company or the Participant and whether voluntary or
involuntary) and the Participant has not earned all or part of a Performance Award pursuant to the terms of the Plan and related Award Agreement, such Award, to the extent not then earned, shall be
forfeited immediately upon such termination and the Participant shall have no further rights with respect thereto.
(e)
Nontransferability:
Unless the Administrator determines otherwise, Performance Awards which have not been
earned shall not be transferable (including by sale, assignment, pledge or hypothecation) other than transfers by will or the laws of intestate succession, and the recipient of a Performance Award
shall not sell, transfer, assign, pledge or otherwise encumber any shares or any other benefit subject to the Award until the Performance Period has expired and the conditions to earning the Award
have been met. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
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11.
Phantom Stock Awards
(a)
Grant of Phantom Stock Awards:
Subject to the terms of the Plan, the Administrator may in its discretion
grant Phantom Stock Awards to such eligible individuals, in such numbers, upon such terms and at such times as the Administrator shall determine. A Phantom Stock Award is an Award to a Participant of
a number of hypothetical share units with respect to shares of Common Stock, with a value based on the Fair Market Value of a share of Common Stock.
(b)
Vesting of Phantom Stock Awards:
Subject to the terms of the Plan (and taking into account any Code
Section 162(m) and/or 409A considerations), the Administrator shall have sole authority to determine whether and to what degree Phantom Stock Awards have vested and are payable and to interpret
the terms and conditions of Phantom Stock Awards. The Administrator, in its sole discretion, may (subject to the provisions of Section 3(d) herein and any Code Section 162(m) and/or 409A
considerations) accelerate the date that any Phantom Stock Award granted to a Participant shall be deemed to be earned in whole or in part, without any obligation to accelerate such date with respect
to other Awards granted to any Participant.
(c)
Termination of Employment or Service; Forfeiture:
Unless the Administrator determines otherwise (taking into
account any Code Section 409A considerations), if the employment or service of a Participant shall be terminated for any reason (whether by the Company or the Participant and whether voluntary
or involuntary) and all or any part of a Phantom Stock Award has not vested and become payable pursuant to the terms of the Plan and related Award Agreement, such Award, to the extent not then vested
or earned, shall be forfeited immediately upon such termination and the Participant shall have no further rights with respect thereto.
(d)
Payment of Phantom Stock Awards:
Upon vesting of all or a part of a Phantom Stock Award and satisfaction of
such other terms and conditions as may be established by the Administrator, the Participant shall be entitled to a payment of an amount equal to the Fair Market Value of one share of Common Stock with
respect to each such Phantom Stock unit which has vested and is payable.
Payment
may be made, in the discretion of the Administrator, in cash or in shares of Common Stock valued at their Fair Market Value on the applicable vesting date or dates (or other date or dates
determined by the Administrator), or in a combination thereof. Payment may be made in a lump sum or upon such terms as may be established by the Administrator (taking into account any Code
Section 409A considerations).
(e)
Nontransferability:
Unless the Administrator determines otherwise, (i) Phantom Stock Awards shall not
be transferable (including by sale, assignment, pledge or hypothecation) other than transfers by will or the laws of intestate succession and (ii) shares of Common Stock (if any) subject to a
Phantom Stock Award may not be sold, transferred, assigned, pledged or otherwise encumbered until the Phantom Stock Award has vested and all other conditions established by the Administrator have been
met. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
12.
Other Stock-Based Awards
The
Administrator shall have the authority to grant Other Stock-Based Awards. Such Other Stock-Based Awards may be valued in whole or in part by reference to, or otherwise based on or
related to, shares of Common Stock or Awards for shares of Common Stock, including but not limited to Other Stock-Based Awards granted in lieu of bonus, salary or other compensation, Other Stock-Based
Awards granted with vesting or performance conditions, and/or Other Stock-Based Awards
granted without being subject to vesting or performance conditions. Subject to the provisions of the Plan, the Administrator shall determine the number of shares of Common Stock to be awarded to a
Participant under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, shares of Common Stock or a combination of cash and shares of
Common Stock; and the other terms and conditions of such Awards. Unless the Administrator
A-18
determines
otherwise, (i) Other Stock-Based Awards shall not be transferable (including by sale, assignment, pledge or hypothecation) other than transfers by will or the laws of intestate
succession, and (ii) shares of Common Stock (if any) subject to an Other Stock-Based Award may not be sold, transferred, assigned, pledged or otherwise encumbered until the Other Stock-Based
Award has vested and all other conditions established by the Administrator have been met. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.
13.
Dividends and Dividend Equivalents
The
Administrator may, in its sole discretion, provide that Awards other than Options and SARs earn dividends or dividend equivalents; provided, however, that dividends and dividend
equivalents, if any, on unearned or unvested performance-based Awards shall not be paid (even if accrued) unless and until the underlying Award (or portion thereof) has vested and/or been earned. Such
dividends or dividend equivalents may be paid currently or may be credited to a Participant's account. Any crediting of dividends or dividend equivalents may be subject to such additional restrictions
and conditions as the Administrator may establish, including reinvestment in additional shares of Common Stock or share equivalents. Notwithstanding the other provisions herein, any dividends or
dividend equivalent rights related to an Award shall be structured in a manner so as to avoid causing the Award and related dividends or dividend equivalent rights to be subject to Code
Section 409A or shall otherwise be structured so that the Award and dividends or dividend equivalent rights are in compliance with Code Section 409A.
14.
Change of Control
(a)
Acceleration upon a Change of Control:
Notwithstanding any other provision in the Plan to the contrary, and
unless an individual Award Agreement provides otherwise, in the event that (a) the employment or service of a Participant is terminated within six months before (in which case vesting shall not
occur until the effective date of the Change of Control) or one year (or such other period after a Change of Control as may be stated in a Participant's change in control agreement, employment
agreement or similar agreement, if applicable) after the effective date of a Change of Control, and (b) such termination of employment or service is (i) by the Company not for Cause or
(ii) by the
Participant for Good Reason, then (X) all outstanding Options and SARs held by such Participant shall become fully vested and exercisable, whether or not then otherwise vested and exercisable;
and (Y) any restrictions, including but not limited to the Restriction Period, Performance Period and/or performance criteria applicable to any outstanding Award other than Options or SARs held
by such Participant shall be deemed to have been met, and such Awards shall become fully vested, earned and payable to the fullest extent of the original grant of the applicable Award. For
clarification, for the purposes of this Section 14, the "Company" shall include any successor to the Company.
(b)
Discretionary Authority of Administrator in connection with a Change of Control:
In the event of a Change of
Control, the Administrator may, on a Participant-by-Participant basis (and taking into account any Code Section 409A considerations) (i) terminate outstanding Options, SARs or Other
Stock-Based Awards in the nature of purchase rights immediately prior to the Change of Control, provided the Participant shall have been given at least seven days written notice of such transaction
and of the Administrator's intention to cancel the Options, SARs or Other Stock-Based Awards in the nature of purchase rights with respect to all shares of Common Stock for which the Options, SARs or
Other Stock-Based Awards in the nature of purchase rights remain unexercised at the time of the Change of Control; and provided further, that during such notice period, the Participant will be able to
give notice of exercise of any portion of the Award that will not be vested by the time of the Change of Control, and the actual exercise of such Award, or portion thereof, shall be contingent on the
occurrence of the Change of Control; (ii) cancel any outstanding Awards with respect to all Common Stock for which the Award remains unexercised or unsettled immediately prior to the Change of
Control in exchange for payment of an amount equal to the excess of the then Fair Market Value of
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the
underlying shares of Common Stock (whether or not the Award is vested, exercisable or payable at such time) less the unpaid exercise price, Base Price or purchase price of the Awards, if any;
provided, however, if the Fair Market Value of the shares of Common Stock subject to the Award is less than the unpaid Exercise Price, Base Price or purchase price of the Award, if any, the Award
shall be deemed to have been paid in full and shall be canceled upon the Change of Control with no further payment due the Participant; (iii) require that the Awards be assumed by the successor
corporation or that Awards for shares or other interests in the successor corporation with equivalent value be substituted for such Awards; or (iv) take such other action as the Administrator
shall determine to be reasonable under the circumstances to permit the Participant to realize the value of the Award. The application of the foregoing provisions, including, without limitation, the
issuance of any substitute Awards, shall be determined in good faith by the Administrator in its sole discretion. Any such adjustments may provide for the elimination of fractional shares of Common
Stock in exchange for a cash payment equal to the Fair Market Value of the eliminated fractional shares of Common Stock. The judgment of the Administrator with respect to any matter referenced in this
Section 14(b) shall be conclusive and binding upon each Participant and any other person without the need for any amendment to the Plan.
15.
Withholding; Other Tax Matters
(a) The
Company shall withhold all required local, state, federal, foreign and other taxes and any other amount required to be withheld by any governmental authority or law
from any amount payable in cash with respect to an Award. Prior to the delivery or transfer of any certificate for shares or any other benefit conferred under the Plan, the Company shall require any
Participant or other person to pay to the Company in cash the amount of any tax or other amount required by any governmental authority to be withheld and paid over by the Company to such authority for
the account of such recipient. Notwithstanding the foregoing, the Administrator may in its discretion establish procedures to permit a recipient to satisfy such obligation in whole or in part, and any
local, state, federal, foreign or other income tax obligations relating to such an Award, by electing (the "
election
") to have the Company withhold
shares of Common Stock from the shares to which the recipient is otherwise entitled. The number of shares to be withheld shall have a Fair Market Value as of the date that the amount of tax to be
withheld is determined as nearly equal as possible to (but not exceeding) the amount of such obligations being satisfied based on the applicable statutory rate. Each election must be made in writing
to the Administrator in accordance with election procedures established by the Administrator.
(b) Participants
are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including but not limited to any
taxes arising under Code Section 409A), and the Company shall not have any obligation to indemnify or otherwise hold any Participant harmless from any or all of such taxes. The Company shall
have no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for a Participant or any other person.
16.
Amendment and Termination of the Plan and Awards
(a)
Amendment and Termination of Plan:
The Plan may be amended, altered, suspended and/or terminated at any time
by the Board; provided, that (i) approval of an amendment to the Plan by the stockholders of the Company shall be required to the extent, if any, that stockholder approval of such amendment is
required by Applicable Law or, if the Administrator deems necessary, required by any tax or regulatory requirement applicable to the Plan; and (ii) except for adjustments made pursuant to
Section 5(d), the Company may not, without obtaining stockholder approval, (A) amend the terms of outstanding Options or SARs to reduce the Option Price or Base Price of such outstanding
Options or SARs; (B) exchange outstanding Options or SARs for cash, for Options or SARs with an Option Price or Base Price that is less than the Option Price or Base Price of the original
Option or SAR, or for other equity awards at a time when the original Option or SAR has an Option Price or Base Price, as
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the
case may be, above the then-current Fair Market Value of the Common Stock; or (C) take other action with respect to Options or SARs that would be treated as a repricing under the rules of
the principal stock exchange on which shares of the Common Stock are listed. To the extent the Board deems necessary to continue to comply with Code Section 162(m), the Board will submit the
material
terms of the Performance Measures in Section 1(ii) to the shareholders of the Company for re-approval every five (5) years.
(b)
Amendment and Termination of Awards:
The Administrator may amend, alter, suspend and/or terminate any Award
granted under the Plan, prospectively or retroactively, but such amendment, alteration, suspension or termination of an Award shall not, without the written consent of the recipient of an outstanding
Award, materially adversely affect the rights of the recipient with respect to the Award.
(c)
Amendments to Comply with Applicable Law:
Notwithstanding Section 16(a) and Section 16(b)
herein, the following provisions shall apply:
(i) The
Administrator shall have unilateral authority to amend the Plan and any Award (without Participant consent) to the extent necessary to comply with Applicable Law or
changes to Applicable Law (including but in no way limited to Code Section 409A, Code Section 422 and federal securities laws).
(ii) The
Administrator shall have unilateral authority to make adjustments to the terms and conditions of Awards in recognition of unusual or nonrecurring events affecting
the Company or any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in Applicable Law, or accounting principles, if the Administrator determines that such
adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or necessary or appropriate to comply with
applicable accounting principles or Applicable Law.
17.
Restrictions on Awards and Shares; Compliance with Applicable Law
(a)
General:
As a condition to the issuance and delivery of Common Stock hereunder, or the grant of any benefit
pursuant to the Plan, the Company may require a Participant or other person at any time and from time to time to become a party to an Award Agreement, other agreement(s) restricting the transfer,
purchase, repurchase and/or voting of shares of Common Stock of the Company, and any employment agreements, change of control agreements, consulting agreements, noncompetition agreements,
confidentiality agreements, nonsolicitation agreements, nondisparagement agreements or other agreements imposing such restrictions as may be required by the Company. In addition, without in any way
limiting the effect of the foregoing, each Participant or other holder of shares issued under the Plan shall be permitted to transfer such shares only if such transfer is in accordance with the Plan,
the Award Agreement, any other applicable agreements and Applicable Law. The acquisition of shares of Common Stock under the Plan by a Participant or any other holder of shares shall be subject to,
and conditioned upon, the agreement of the Participant or other holder of such shares to the restrictions described in the Plan, the Award Agreement, any other applicable agreements and Applicable
Law.
(b)
Compliance with Applicable Law:
The Company may impose such restrictions on Awards, shares of Common Stock
and any other benefits underlying Awards hereunder as it may deem advisable, including without limitation restrictions under the federal securities laws, the requirements of any stock exchange or
similar organization and any blue sky, state or foreign securities or other laws applicable to such securities. Notwithstanding any other Plan provision to the contrary, the Company shall not be
obligated to issue, deliver or transfer shares of Common Stock under the Plan, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution or
action is in compliance with Applicable Law (including but not limited to the requirements of the
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Securities
Act). The Company will be under no obligation to register shares of Common Stock or other securities with the Securities and Exchange Commission or to effect compliance with the exemption,
registration, qualification or listing requirements of any state securities laws, stock exchange or similar organization, and the Company will have no liability for any inability or failure to do so.
The Company may cause a restrictive legend or legends to be placed on any certificate issued pursuant to an Award hereunder in such form as may be prescribed from time to time by Applicable Law or as
may be advised by legal counsel.
18.
No Right or Obligation of Continued Employment or Service or to Awards
Neither
the Plan, an Award, an Award Agreement nor any other action related to the Plan shall confer upon a Participant any right to continue in the employ or service of the Company or
an Affiliate as an Employee, Director or Independent Contractor, or to interfere in any way with the right of the Company or an Affiliate to terminate the Participant's employment or service at any
time. Except as otherwise provided in the Plan, an Award Agreement or as may be determined by the Administrator, all rights of a Participant with respect to an Award shall terminate upon the
termination of the Participant's employment or service. In addition, no person shall have any right to be granted an Award, and the Company shall have no obligation to treat Participants or Awards
uniformly.
19.
General Provisions
(a)
Stockholder Rights:
Except as otherwise determined by the Administrator (and subject to the provisions of
Section 9(d) regarding Restricted Awards), a Participant and his legal representative, legatees or distributees shall not be deemed to be the holder of any shares of Common Stock subject to an
Award and shall not have any rights of a stockholder unless and until certificates for such shares have been issued and delivered to him, her or them under the Plan. A certificate or certificates for
shares of Common Stock acquired upon exercise of an Option or SAR shall be issued in the name of the Participant or his or her beneficiary and distributed to the Participant or his or her beneficiary
(or,
in the case of uncertificated shares, other written notice of ownership in accordance with Applicable Law shall be provided) as soon as practicable following receipt of notice of exercise and, with
respect to Options, payment of the Option Price (except as may otherwise be determined by the Company in the event of payment of the Option Price pursuant to Section 7(d)(ii)(C)). Except as
otherwise provided in Section 9(d) regarding Restricted Stock Awards or otherwise determined by the Administrator, a certificate for any shares of Common Stock issuable pursuant to a Restricted
Award, Performance Award, Phantom Stock Award or Other Stock-Based Award shall be issued in the name of the Participant or his beneficiary and distributed to the Participant or his beneficiary (or, in
the case of uncertificated shares, other written notice of ownership in accordance with Applicable Law shall be provided) after the Award (or portion thereof) has vested and been earned.
(b)
Section 16(b) Compliance:
To the extent that any Participants in the Plan are subject to
Section 16(b) of the Exchange Act, it is the general intention of the Company that transactions under the Plan shall comply with Rule 16b-3 under the Exchange Act and that the Plan shall
be construed in favor of such Plan transactions meeting the requirements of Rule 16b-3 or any successor rules thereto. Notwithstanding anything in the Plan to the contrary, the Administrator,
in its sole and absolute discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to Participants who are officers or directors subject to
Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants.
(c)
Code Section 162(m) Performance-Based Compensation.
To the extent to which Code Section 162(m)
is applicable, the Company intends that compensation paid under the Plan to Covered Employees will, to the extent practicable, constitute "qualified performance-based compensation" within the meaning
of Code Section 162(m), unless otherwise determined by the Administrator. Accordingly, Awards granted to Covered Employees which are intended to qualify for the performance-based exception
under Code Section 162(m) shall be deemed to include any such additional terms, conditions, limitations and provisions as are necessary to comply with the performance-based compensation
exemption of Code Section 162(m), unless the Administrator, in its discretion, determines otherwise.
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(d)
Unfunded Plan; No Effect on Other Plans:
(i) The
Plan shall be unfunded, and the Company shall not be required to create a trust or segregate any assets that may at any time be represented by Awards under the
Plan. The Plan shall not establish any fiduciary relationship between the Company and any Participant or other person.
Neither
a Participant nor any other person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Company or any Affiliate, including, without limitation,
any specific funds, assets or other property which the Company or any Affiliate, in their discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a
contractual right to shares of Common Stock or other amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Affiliate. Nothing contained in the Plan shall constitute a
guarantee that the assets of such entities shall be sufficient to pay any benefits to any person.
(ii) The
amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute compensation with respect to which any other employee
benefits of such Participant are determined, including, without limitation, benefits under any bonus, pension, profit sharing, life insurance or salary continuation plan, except as otherwise
specifically provided by the terms of such plan or as may be determined by the Administrator.
(iii) The
adoption of the Plan shall not affect any other stock incentive or other compensation plans in effect for the Company or any Affiliate, nor shall the Plan preclude
the Company from establishing any
other forms of stock incentive or other compensation for employees or service providers of the Company or any Affiliate.
(e)
Governing Law:
The Plan shall be governed by and construed in accordance with the laws of the State of
Delaware, without regard to the conflict of laws provisions of any state, and in accordance with applicable federal laws of the United States.
(f)
Beneficiary Designation:
The Administrator may, in its discretion, permit a Participant to designate in
writing a person or persons as beneficiary, which beneficiary shall be entitled to receive settlement of Awards (if any) to which the Participant is otherwise entitled in the event of death. In the
absence of such designation by a Participant, and in the event of the Participant's death, the estate of the Participant shall be treated as beneficiary for purposes of the Plan, unless the
Administrator determines otherwise. The Administrator shall have discretion to approve and interpret the form or forms of such beneficiary designation. A beneficiary, legal guardian, legal
representative or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent
that the Plan and/or Award Agreement provide otherwise, and to any additional restrictions deemed necessary or appropriate by the Administrator.
(g)
Gender and Number:
Except where otherwise indicated by the context, words in any gender shall include any
other gender, words in the singular shall include the plural and words in the plural shall include the singular.
(h)
Severability:
If any provision of the Plan shall be held illegal or invalid for any reason, such illegality
or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
(i)
Rules of Construction:
Headings are given to the sections of the Plan solely as a convenience to facilitate
reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such
provision of law.
A-23
(j)
Successors and Assigns:
The Plan shall be binding upon the Company, its successors and assigns, and
Participants, their executors, administrators and permitted transferees and beneficiaries.
(k)
Award Agreement:
The grant of any Award under the Plan shall be evidenced by an Award Agreement between the
Company and the Participant. Such Award Agreement may state terms, conditions and restrictions applicable to the Award and may state such other terms, conditions and restrictions, including but not
limited to terms, conditions and restrictions applicable to shares of Common Stock (or other benefits) subject to an Award, as may be established by the Administrator.
(l)
Right of Offset:
Notwithstanding any other provision of the Plan or an Award Agreement, the Company may
(subject to any Code Section 409A considerations) at any time reduce the amount of any payment or benefit otherwise payable to or on behalf of a Participant by the amount of any obligation of
the Participant to or on behalf of the Company or an Affiliate that is or becomes due and payable.
(m)
Uncertified Shares:
Notwithstanding anything in the Plan to the contrary, to the extent the Plan provides
for the issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may, in the Company's discretion, be effected on a non-certificated basis, to the extent not
prohibited by the Company's certificate of incorporation or bylaws or by Applicable Law (including but not limited to applicable state corporate law and the applicable rules of any stock exchange on
which the Common Stock may be traded).
(n)
Effect of Certain Changes in Status:
Notwithstanding the other terms of the Plan or an Award Agreement, the
Administrator has sole discretion to determine (taking into account any Code Section 409A considerations), at the time of grant of an Award or at any time thereafter, the effect, if any, on
Awards (including but not limited to modifying the vesting, exercisability and/or earning of Awards) granted to a Participant if the Participant's status as an Employee, Director or Independent
Contractor changes, including but not limited to a change from full-time to part-time, or vice versa, or if other similar changes in the nature or scope of the Participant's employment or service
occur.
(o)
Stockholder Approval:
The Plan, as amended and restated, is subject to approval by the stockholders of the
Company, which approval must occur, if at all, within 12 months of the Effective Date of the Plan. Unless the Awards may be granted under the Plan notwithstanding this amendment and
restatement, Awards granted prior to such stockholder approval shall be conditioned upon and shall be effective only upon approval of the Plan by such stockholders on or before the date above. No
Restricted Stock Award, however, may be granted prior to such stockholder approval unless such Award may be granted under the Plan notwithstanding this amendment and restatement. If the stockholders
do not approve this Plan, the amendment and restatement will not be effective, and the Plan, as before this amendment and restatement, will continue pursuant to its terms.
(p)
Deferrals:
The Administrator may permit or require a Participant to defer such Participant's receipt of the
payment of cash or the delivery of shares of Common Stock (or any other benefit) that would otherwise be payable with respect to an Award. Any such deferral shall be subject to such terms and
conditions as may be established by the Administrator and to any applicable Code Section 409A requirements.
(q)
Fractional Shares:
Except as otherwise provided in an Award Agreement or determined by the Administrator,
(i) the total number of shares issuable pursuant to the exercise, vesting or earning of an Award shall be rounded down to the nearest whole share, and (ii) no fractional shares shall be
issued. The Administrator may, in its discretion, determine that a fractional share shall be settled in cash.
(r)
Compliance with Recoupment, Ownership and Other Policies or Agreements:
Notwithstanding anything in the Plan
to the contrary, the Administrator may, at any time, consistent with, but without limiting, the authority granted in Section 3(b) herein, in its discretion provide that an Award or benefits
A-24
related
to an Award shall be forfeited and/or recouped if the Participant, during employment or service or following termination of employment or service for any reason, engages in certain specified
conduct, including but not limited to violation of policies of the Company or an Affiliate, breach of non-solicitation, noncompetition, confidentiality or other restrictive covenants, or other conduct
by the Participant that is determined by the Administrator to be detrimental to the business or reputation of the Company or any Affiliate. In addition, without limiting the effect of the foregoing,
as a condition to the grant of an Award or receipt or retention of shares of Common Stock, cash or any other benefit under the Plan, the Administrator may, at any time, require that a Participant
agree to abide by any equity retention policy, stock ownership guidelines, compensation recovery policy and/or other policies adopted by the Company or an Affiliate, each as in effect from time to
time and to the extent applicable to the Participant. Further, each Participant shall be subject to such compensation recovery, recoupment, forfeiture or other similar provisions as may apply under
Applicable Law.
20.
Compliance with Code Section 409A
Notwithstanding
any other provision in the Plan or an Award Agreement to the contrary, if and to the extent that Code Section 409A is deemed to apply to the Plan or any Award, it
is the general intention of the Company that the Plan and all such Awards shall, to the extent practicable, comply with, or be exempt from, Code Section 409A, and the Plan and any such Award
Agreement shall, to the extent practicable, be construed in accordance therewith. Deferrals of shares or any other benefit issuable pursuant to an Award otherwise exempt from Code Section 409A
in a manner that would cause Code Section 409A to apply shall not be permitted unless such deferrals are in compliance with, or exempt from, Code Section 409A. Without limiting the
effect of the foregoing, shares of Common Stock (or cash) subject to a Restricted Stock Unit (or other Awards, to the extent required under Code Section 409A) shall, upon vesting of the Award,
be issued and distributed to the Participant (or his or her beneficiary) no later than the later of (a) the 15th day of the third month following the end of the Participant's first
taxable year in which the amount is no longer subject to a substantial risk of forfeiture, or (b) the 15th day of the third month following the end of the Company's first taxable year in
which the amount is no longer subject to a substantial risk of forfeiture, or shall otherwise be distributable in accordance with Code Section 409A. In the event that the Company (or a
successor
thereto) has any stock which is publicly traded on an established securities market or otherwise, distributions that are subject to Code Section 409A to any Participant who is a "specified
employee" (as defined under Code Section 409A) upon a separation from service may only be made following the expiration of the six-month period after the date of separation from service (with
such distributions to be made during the seventh month following separation of service), or, if earlier than the end of the six-month period, the date of death of the specified employee, or as
otherwise permitted under Code Section 409A. Without in any way limiting the effect of any of the foregoing, (i) in the event that Code Section 409A requires that any special
terms, provisions or conditions be included in the Plan or any Award Agreement, then such terms, provisions and conditions shall, to the extent practicable, be deemed to be made a part of the Plan or
Award Agreement, as applicable, and (ii) terms used in the Plan or an Award Agreement shall be construed in accordance with Code Section 409A if and to the extent required. Further, in
the event that the Plan or any Award shall be deemed not to comply with Code Section 409A, then neither the Company, the Administrator nor its or their designees or agents shall be liable to
any Participant or other person for actions, decisions or determinations made in good faith.
A-25
MMMMMMMMMMMM . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on June 1, 2017. Vote by Internet • Go to www.envisionreports.com/STRM • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. T IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. T Proposals — The Board recommends a vote FOR ALL NOMINEES listed in Proposal 1 and FOR Proposals 2, 3, and 4. 1. Election of Directors: 01 - MICHAEL K. KAPLAN 04 - DAVID W. SIDES 02 - ALLEN S. MOSELEY 05 - JUDITH E. STARKEY 03 - JONATHAN R. PHILLIPS 06 - MICHAEL G. VALENTINE + Mark here to vote FOR ALL NOMINEES Mark here to WITHHOLD vote from all nominees 01 02 03 04 05 06 For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. For Against Abstain ForAgainst Abstain 2. Non-binding advisory vote on the compensation of the Company’s named executive officers (“say-on-pay”). 4. Vote to ratify the appointment of RSM US LLP to serve as the Company’s independent registered public accounting firm for fiscal year 2017. For Against Abstain 3. Vote to approve the Streamline Health Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as your name appears above. When shares are held as joint tenants, each holder should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MMMMMMMC 1234567890 IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 U P X3 2 8 4 7 3 1 02LATB MMMMMMMMM B A Annual Meeting Proxy Card1234 5678 9012 345 X IMPORTANT ANNUAL MEETING INFORMATION
. T IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. T Proxy — Streamline Health Solutions, Inc. + 1230 Peachtree St. N.E., Suite 600 Atlanta, GA 30309 This Proxy is solicited on behalf of the Board of Directors of the Company The undersigned hereby appoints David W. Sides and Nicholas A. Meeks and each of them, attorneys-in-fact and proxies, with full power of substitution, to vote as designated below all shares of the Common Stock of Streamline Health Solutions, Inc. that the undersigned would be entitled to vote if personally present at the annual meeting of stockholders to be held on June 1, 2017, at 9:30 a.m., and at any adjournment thereof. The undersigned acknowledges having received from Streamline Health Solutions, Inc., prior to the execution of this Proxy, a Notice of Annual Meeting, a Proxy Statement, and an Annual Report. This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this Proxy will be voted FOR ALL NOMINEES listed in Proposal 1 and FOR Proposals 2, 3, and 4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. Please mark, sign, date, and return the Proxy promptly using the enclosed envelope. (continued on other side) Non-Voting Items Change of Address — Please print new address below. + IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. C
QuickLinks
GENERAL INFORMATION
PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 2—ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS ("SAY-ON-PAY")
PROPOSAL 3—APPROVAL OF THE STREAMLINE HEALTH SOLUTIONS, INC. SECOND AMENDED AND RESTATED 2013 STOCK INCENTIVE PLAN
PROPOSAL 4—RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CORPORATE GOVERNANCE
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
EXECUTIVE OFFICERS
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE COMPENSATION
Summary Compensation Table
Outstanding Equity Awards at 2016 Fiscal Year End
Equity Compensation Plan Information
DIRECTOR COMPENSATION
Director Compensation in 2016
RELATED PARTY TRANSACTIONS
AUDIT COMMITTEE REPORT
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
OTHER SECURITIES FILINGS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
OTHER BUSINESS
ANNUAL REPORT ON FORM 10-K
STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING OF STOCKHOLDERS
STREAMLINE HEALTH SOLUTIONS, INC. SECOND AMENDED AND RESTATED 2013 STOCK INCENTIVE PLAN (As Amended and Restated Effective April 12, 2017)
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