SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
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by the Registrant
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by a Party other than the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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Pareteum Corporation
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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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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
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PARETEUM
CORP.
100
Park Avenue
New
York, New York 10017
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 12, 2017
TO THE STOCKHOLDERS OF PARETEUM CORP.:
The 2017 annual meeting
(the “Meeting”) of stockholders (the “Stockholders”) of Pareteum Corp. (the “Company”) will
be held at the offices of Sichenzia Ross Ference Kesner LLP, 1185 6th Ave, New York, NY 10036, on Tuesday, September 12, 2017,
at 10:00 a.m. local time. At the Meeting, the Stockholders of the Company’s outstanding capital stock will act on the following
matters:
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1.
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To elect four directors to serve until the next annual meeting of Stockholders and until their successors are duly elected and qualified;
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2.
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To ratify the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan, including the reservation of 6,500,000 shares of common stock thereunder;
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3.
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To ratify the appointment of SquarMilner LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017;
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4.
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To act upon such other matters as may properly come before the Meeting or any adjournment thereof.
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These matters are more
fully described in the proxy statement accompanying this notice.
The Board of Directors
has fixed the close of business on July 26, 2017 as the record date for the determination of Stockholders entitled to notice of
and to vote at the Meeting or any adjournment thereof. A list of Stockholders eligible to vote at the Meeting will be available
for review during our regular business hours at our principal offices in New York, New York for the 10 days prior to the Meeting
for review for any purposes related to the Meeting.
You are cordially invited
to attend the Meeting in person. However, to assure your representation at the Meeting, you are urged to vote by proxy by following
the instructions contained in the proxy statement. You may revoke your proxy in the manner described in the proxy statement at
any time before it has been voted at the Meeting. Any Stockholder attending the Meeting may vote in person even if he or she has
returned a proxy.
Your vote is important
.
Whether or not you plan to attend the Meeting, we hope that you will vote as
soon as possible.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE MEETING.
We are pleased to
take advantage of the Securities and Exchange Commission, or SEC, rules that allow us to furnish proxy materials, including this
notice, the proxy statement (including an electronic proxy card for the Meeting) and our 2016 Annual Report to Stockholders via
the Internet at
http://www.cstproxy.com/pareteum/2017
. Taking advantage of these rules allows us to lower the cost of delivering
Meeting materials to our Stockholders and reduce the environmental impact of printing and mailing these materials.
Dated: July 27, 2017
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By Order of the Board of Directors
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/s/ Robert H. Turner
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Robert H. Turner
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Executive Chairman
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PARETEUM
CORP.
100
Park Avenue
New
York, New York 10017
ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 12
,
2017
PROXY STATEMENT
The Board of Directors
of Pareteum Corp. (the “Company”) is soliciting proxies from its stockholders (the “Stockholders”) to be
used at the annual meeting of Stockholders (the “Meeting”) to be held at the offices of Sichenzia Ross Ference Kesner
LLP, 1185 6th Ave, New York, NY 10036, on Tuesday, September 12, 2017, beginning at 10:00 a.m. local time, and at any postponements
or adjournments thereof. This proxy statement contains information related to the Meeting. This proxy statement and the accompanying
form of proxy are first being sent to Stockholders on or about July 27, 2017.
REVOCABILITY OF PROXY AND SOLICITATION
Any Stockholder executing
a proxy that is solicited hereby has the power to revoke it prior to the voting of the proxy. Revocation may be made by attending
the Meeting and voting the shares of stock in person, or by delivering to the Secretary of the Company at the principal office
of the Company prior to the Meeting a written notice of revocation or a later-dated, properly executed proxy. Solicitation of proxies
may be made by directors, officers and other employees of the Company by personal interview, telephone, facsimile transmittal or
electronic communications. No additional compensation will be paid for any such services. This solicitation of proxies is being
made by the Company which will bear all costs associated with the mailing of this proxy statement and the solicitation of proxies.
INTERNET AND ELECTRONIC AVAILABILITY
OF PROXY MATERIALS
Under rules adopted
by the United States Securities and Exchange Commission (the “SEC”), the Company is making this proxy statement and
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 available on the Internet instead of
mailing a printed copy of these materials to each Stockholder. Stockholders who received a Notice of Internet Availability of Proxy
Materials (the “Notice”) by mail will not receive a printed copy of these materials other than as described below.
Instead, the Notice contains instructions as to how Stockholders may access and review all of the important information contained
in the materials on the Internet, including how Stockholders may submit proxies by telephone or over the Internet.
If you received
the Notice by mail and would prefer to receive a printed copy of the Company’s proxy materials, please follow the instructions
for requesting printed copies included in the Notice.
RECORD DATE
Stockholders of record
at the close of business on July 26, 2017, will be entitled to receive notice of, to attend and to vote at the Meeting.
ACTION TO BE TAKEN UNDER PROXY
Unless otherwise directed
by the giver of the proxy, the persons named in the form of proxy, namely, Robert H. Turner, our Executive Chairman, and Ted O’Donnell,
our Chief Financial Officer, will vote:
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FOR the election of four directors to serve until the next annual meeting of Stockholders and until
their successors are duly elected and qualified;
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FOR the ratification of the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan, including
the reservation of 6,500,000 shares of common stock thereunder;
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FOR the ratification of SquarMilner LLP as our independent registered public accounting firm for
the fiscal year ending December 31, 2017; and
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According to their judgment, on the transaction of such matters or other business as may properly
come before the Meeting or any adjournments thereof.
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Should any nominee
named herein for election as a director become unavailable for any reason, it is intended that the persons named in the proxy will
vote for the election of such other person in his stead as may be designated by the Board of Directors. The Board of Directors
is not aware of any reason that might cause any nominee to be unavailable.
WHO IS ENTITLED TO VOTE; VOTE REQUIRED;
QUORUM
As of July 26, 2017,
there were 14,505,522 shares of common stock issued and outstanding, which constitute all of the outstanding capital stock of
the Company. Stockholders are entitled to one vote for each share of common stock held by them.
A majority of the
outstanding shares (7,252,762
)
, present in person or represented by proxy, will constitute a quorum at the Meeting. For
purposes of the quorum and the discussion below regarding the vote necessary to take Stockholder action, Stockholders of record
who are present at the Meeting in person or by proxy and who abstain, including brokers holding customers’ shares of record
who cause abstentions to be recorded at the Meeting, are considered Stockholders who are present and entitled to vote and are
counted towards the quorum.
Brokers holding shares
of record for customers generally are not entitled to vote on “non-routine” matters, unless they receive voting instructions
from their customers. As used herein, “uninstructed shares” means shares held by a broker who has not received voting
instructions from its customers on a proposal. A “broker non-vote” occurs when a nominee holding uninstructed shares
for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with
respect to that non-routine matter. In connection with the treatment of abstentions and broker non-votes, (i) the election of four
directors (Proposal No. 1) and (ii) the ratification of the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan, including
the reservation of 6,500,000 shares of common stock thereunder (Proposal No. 2) are considered “non-routine” matters. Accordingly,
brokers are not entitled to vote uninstructed shares with respect to Proposal No. 1 and No. 2. The proposed ratification of SquarMilner
LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017 (Proposal
No. 3) is considered a “routine” matter. Accordingly, brokers are entitled to vote uninstructed shares only with respect
to Proposal No. 3.
Under Delaware state
law and provisions of the Company’s Certificate of Incorporation and By-Laws, as amended, the vote required for the election
of directors is a plurality of the votes of the issued and outstanding shares of common stock present in person or represented
by proxy at an annual meeting of Stockholders and entitled to vote on the election of directors. This means that the nominees who
receive the most votes will be elected to the open director positions. Abstentions, broker non-votes and other shares that are
not voted in person or by proxy will not be included in the vote count to determine if a plurality of shares voted are in favor
of each nominee.
QUESTIONS AND ANSWERS ABOUT THESE PROXY
MATERIALS
Why am I receiving these materials?
The Company has made
these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you
by mail, in connection with the Company’s solicitation of proxies for use at the Meeting of Stockholders to be held on September
12, 2017 at 10:00 a.m. local time at the offices of Sichenzia Ross Ference Kesner LLP, 1185 6th Ave, New York, NY 10036. These
materials describe the proposals on which the Company would like you to vote and also give you information on these proposals so
that you can make an informed decision. We are furnishing our proxy materials on or about July 27, 2017 to all Stockholders of
record entitled to vote at the Meeting.
What is included in these materials?
These materials include:
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this proxy statement for the Meeting; and
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the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC on March
29, 2017.
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If you requested printed
versions of these materials by mail, these materials also include the proxy card or the voter instruction form for the Meeting.
What is the proxy card?
The proxy card enables
you to appoint Robert H. Turner, our Executive Chairman, and Ted O’Donnell, our Chief Financial Officer, as your representative
at the Meeting. By completing and returning a proxy card, you are authorizing this individual to vote your shares at the Meeting
in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Meeting.
What items will be voted on?
You are being asked
to vote on these specific proposals:
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The election of four directors to serve until the next annual meeting of Stockholders and until
their successors are duly elected and qualified.
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The ratification of the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan, including the
reservation of 6,500,000 shares of common stock thereunder.
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The ratification of SquarMilner LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2017.
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We will also transact
any other business that properly comes before the Meeting.
How does the Board of Directors recommend that I vote?
Our Board of Directors
unanimously recommends that you vote your shares:
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FOR the election of four directors to serve until the next annual meeting of Stockholders and until
their successors are duly elected and qualified;
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FOR the ratification of the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan, including
the reservation of 6,500,000 shares of common stock thereunder;
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FOR the ratification of SquarMilner LLP as our independent registered public accounting firm for
the fiscal year ending December 31, 2017;
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We will also transact
any other business that properly comes before the Meeting.
Why did I receive a one-page notice in the mail regarding
the Internet availability of proxy materials this year instead of a full set of proxy materials?
Pursuant to rules adopted
by the SEC, the Company has elected to provide access to its proxy materials over the Internet. Accordingly, the Company is sending
the Notice to the Company’s Stockholders of record and beneficial owners. All Stockholders will have the ability to access
the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions
on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, Stockholders
may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. The Company encourages
you to take advantage of the availability of the proxy materials on the Internet.
What does it mean if I receive more
than one Notice?
You may have multiple
accounts at the transfer agent and/or with brokerage firms. Please follow directions on each Notice to ensure that all of your
shares are voted.
How can I get electronic
access to the proxy materials?
The Notice will provide
you with instructions regarding how to:
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view the Company’s proxy materials for the Meeting on the Internet;
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request hard copies of the materials; and
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instruct the Company to send future proxy materials to you electronically by email.
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Choosing to receive
future proxy materials by email will save the Company the cost of printing and mailing documents to you and will reduce the impact
of the Company’s Meeting on the environment. If you choose to receive future proxy materials by email, you will receive an
email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election
to receive proxy materials by email will remain in effect until you terminate it.
Who can vote at the Meeting of Stockholders?
There were
14,505,522 shares of common stock outstanding and 87 Stockholders of record on July 26, 2017. Beneficial owners hold their
shares at brokerage firms and other financial institutions. Only Stockholders of record at the close of business on July 26,
2017 are entitled to receive notice of, to attend, and to vote at the Meeting. Each share is entitled to one vote. All shares
of common stock shall vote together as a single class. Information about the stockholdings of our directors and executive
officers is contained in the section of this proxy statement entitled “Security Ownership of Certain Beneficial Owners
and Management.”
What is the difference between a Stockholder of record and
a beneficial owner of shares held in street name?
Most of our Stockholders
hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their
own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially in street
name.
Stockholder of Record
If on July 26, 2017
your shares were registered directly in your name with our transfer agent, you are considered a Stockholder of record with respect
to those shares, and the Notice was sent directly to you by the Company. If you request printed copies of the proxy materials by
mail, you will receive a proxy card. As the Stockholder of record, you have the right to direct the voting of your shares by returning
the proxy card to us. Whether or not you plan to attend the Meeting, if you do not vote over the Internet, please complete, date,
sign and return a proxy card to ensure that your vote is counted.
Beneficial Owner of Shares Held in Street Name
If on July 26, 2017
your shares were held in an account at a brokerage firm, bank, broker-dealer, or other nominee holder, then you are considered
the beneficial owner of shares held in “street name,” and the Notice was forwarded to you by that organization. The
organization holding your account is considered the Stockholder of record for purposes of voting at the Meeting. As the beneficial
owner, you have the right to direct that organization on how to vote the shares held in your account. However, since you are not
the Stockholder of record, you may not vote these shares in person at the Meeting unless you receive a valid proxy from the organization.
If you request printed copies of the proxy materials by mail, you will receive a voter instruction form.
How do I vote?
Stockholders of Record.
If you are a Stockholder
of record, you may vote by any of the following methods:
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Via the Internet.
You may vote by proxy via the Internet by following the instructions
provided in the Notice.
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By Telephone.
If you request printed copies of the proxy materials by mail, you may
vote by calling the toll free number found on the proxy card.
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By Mail.
If you request printed copies of the proxy materials by mail, you may vote
by completing, signing, dating and returning your proxy card in the pre-addressed, postage-paid envelope provided.
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In Person.
You may attend and vote at the Meeting. The Company will give you a ballot
when you arrive.
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Beneficial Owners of Shares Held in Street Name.
If you are a
beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting
instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may
generally vote on routine matters such as Proposal No. 3, but cannot vote on non-routine matters such as Proposal No.1 and Proposal
No. 2. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine
matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote
on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
If you are a beneficial
owner of shares held in street name, you may vote by any of the following methods:
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Via the Internet.
You may vote by proxy via the Internet by following the instructions
provided in the Notice.
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By Telephone.
If you request printed copies of the proxy materials by mail, you may
vote by proxy by calling the toll free number found on the voter instruction form.
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By Mail.
If you request printed copies of the proxy materials by mail, you may vote
by proxy by filling out the voter instruction form and returning it in the pre-addressed, postage-paid envelope provided.
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In Person.
If you are a beneficial owner of shares held in street name and you wish
to vote in person at the Meeting, you must obtain a legal proxy from the organization that holds your shares.
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What if I change my mind after I have
voted?
You may revoke your
proxy and change your vote at any time before the final vote at the Meeting. You may vote again on a later date via the Internet
or by telephone (only your latest Internet or telephone proxy submitted prior to the Meeting will be counted), by signing and returning
a new proxy card or a voter instruction form with a later date, or by attending the Meeting and voting in person. However, your
attendance at the Meeting will not automatically revoke your proxy unless you vote again at the Meeting or specifically request
that your prior proxy be revoked by delivering to the Company’s Secretary at 100 Park Avenue, New York, New York 10017 a
written notice of revocation prior to the Meeting.
Please note, however,
that if your shares are held of record by an organization, you must instruct them that you wish to change your vote by following
the procedures on the voter instruction form provided to you by the organization. If your shares are held in street name, and you
wish to attend the Meeting and vote at the Meeting, you must bring to the Meeting a legal proxy from the organization holding your
shares, confirming your beneficial ownership of the shares and giving you the right to vote your shares.
How are proxies voted?
All valid proxies received
prior to the Meeting will be voted. All shares represented by a proxy will be voted and, where a Stockholder specifies by means
of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the Stockholder’s
instructions.
What happens if I do not give specific
voting instructions?
Stockholders of Record.
If you are a Stockholder
of record and you:
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indicate when voting on the Internet or by telephone that you wish to vote as recommended by the
Board of Directors, or
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sign and return a proxy card without giving specific voting instructions,
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then the proxy holders will vote your shares
in the manner recommended by the Board of Directors on all matters presented in this proxy statement and as the proxy holders may
determine in their discretion with respect to any other matters properly presented for a vote at the Meeting.
Beneficial Owners of Shares Held in Street Name.
If you are a beneficial
owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions,
under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote
on routine matters, such as the ratification of SquarMilner LLP as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2017 (Proposal No. 3), but cannot vote on non-routine matters, which include (i) the
election of four directors (Proposal No. 1) and (ii) the ratification of the 2017 Pareteum Corp. Long-Term Incentive Compensation
Plan, including the reservation of 6,500,000 shares of common stock thereunder (Proposal No. 2).
Do I have dissenters’ right of appraisal?
Under the Delaware
General Corporations Law and our charter documents, holders of our common stock will not be entitled to statutory rights of appraisal,
commonly referred to as dissenters’ rights or appraisal rights (i.e., the right to seek a judicial determination of the “fair
value” of their shares and to compel the purchase of their shares for cash in that amount) with respect to the proposals contained
herein.
How many votes are required to elect the four nominated persons
to our Board of Directors?
The affirmative vote
of a plurality of the votes cast at the Meeting of the Stockholders by the holders of shares of common stock entitled to vote in
the election are required to elect each director. This means that the nominees who receive the most votes will be elected to the
open director positions, to serve until the next annual meeting of Stockholders and until their successors are duly elected and
qualified.
How many votes are required to approve the 2017 Pareteum
Corp. Long-Term Incentive Compensation Plan, including the reservation of 6,500,000 shares of common stock thereunder?
The affirmative vote
of a majority of the votes cast at the Meeting of the Stockholders by the holders of common stock are required to approve the ratification
of the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan, including the reservation of 6,500,000 shares of common stock
thereunder.
How many votes are required to ratify our independent public
accountants?
The affirmative vote
of a majority of the votes cast at the Meeting of the Stockholders by the holders of shares of common stock entitled to vote are
required to ratify SquarMilner LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2017.
Is my vote kept confidential?
Proxy instructions,
ballots and voting tabulations that identify individual Stockholders are handled in a manner that protects your voting privacy.
Your vote will not be disclosed either within the Company or to third parties, except:
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as necessary to meet applicable legal requirements;
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to allow for the tabulation and certification of votes; and
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to facilitate a successful proxy solicitation.
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Occasionally, Stockholders
provide written comments on their proxy cards, which may be forwarded to the Company’s management and the Board of Directors.
Do any of the Company’s officers and directors have
any interest in matters to be acted upon?
The members of our
Board of Directors and our executive officers do not have any interest in any proposal that is not shared by all other Stockholders
of the Company, other than Proposal No. 1, the election to our board of the four nominees set forth herein.
Where do I find the voting results of the Meeting?
We will announce voting
results at the Meeting and also in our Current Report on Form 8-K, which we anticipate filing by September 18, 2017.
Who can help answer my questions?
You can contact our
corporate headquarters at Pareteum Corp., 100 Park Avenue, New York, NY 10017, by phone at (212) 984-1096 or by sending a letter
to our Corporate Secretary, with any questions about any proposal described in this proxy statement or how to execute your vote.
Security Ownership of Certain Beneficial
Owners and Management
The following table
sets forth certain information regarding beneficial ownership of our common stock as of July 26, 2017: (i) by each of our directors,
(ii) by each of the Named Executive Officers, (iii) by all of our executive officers and directors as a group, and (iv) by each
person or entity known by us to beneficially own more than five percent (5%) of any class of our outstanding shares.
As of July 26, 2017,
there were 14,505,522 shares of our common stock outstanding.
Name of Beneficial Holder
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Number of Shares of
Common Stock
Owned(A)
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Percent of Class as of
July 26, 2017
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Saffelberg Investments N.V.
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1,263,844
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(1)
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8.5
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%
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Corbin Mezzanine Fund I, L.P.
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1,248,381
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(2)
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8.0
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%
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Bernard Moncarey
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1,140,840
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(3)
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7.6
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%
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Officers & Directors
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Yves Van Sante
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50,297
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*
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Hal Turner
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230,972
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(4)
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1.6
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%
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Roderick de Greef
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18,078
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*
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Robert Skaff
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72,167
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*
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Luis Jimenez-Tuñon
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0
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*
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Laura Thomas
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0
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*
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Victor Bozzo
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41,036
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(5)
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*
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Edward O’Donnell
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22,036
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(6)
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*
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Alexander Korff
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64,844
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(7)
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*
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All Officers and Directors as a Group
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499,430
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3.4
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%
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* Less than one percent
(A) Calculated in accordance with Rule 13d-(3)(d)(1) under the
Securities Exchange Act of 1934.
(1) Includes 226,172 shares underlying
a warrant exercisable at an exercise price of $1.87 and 90,812 shares underlying the 9% Note. Their address is in Gooik, Belgium.
(2) Includes 1,082,066 shares underlying
a warrant exercisable at $3.25 per share. Corbin Capital Partners, L.P., is an adviser to this entity, and Corbin Capital Partners
Management, LLC, the sole general partner of this entity, may be deemed to beneficially own the shares of Common Stock that may
be deemed beneficially owned by this entity. Their address is 590 Madison Avenue, 31st Floor, New York, New York 10022.
(3) Includes 410,000 shares underlying
a warrant exercisable at $3.50. His address is Rue Emile Lavandier, Luxembourg.
(4) Includes options to
purchase 125,000 shares of our Common Stock, all of which are exercisable on or before the Record Date, of which
75,000 options have an exercise price of $3.50 and 50,000 options have an exercise price of $8.25.
(5) Includes options to purchase 30,000
shares of our Common Stock, all of which are exercisable on or before the Record Date, and which have an exercise price of $4.3725.
(6) Includes options to purchase
10,000 shares of our Common Stock, all of which are exercisable on or before the Record Date, and which have an exercise price
of $2.755.
(7) Includes options to purchase 15,072 shares of our Common Stock, all of which are exercisable on or before the Record Date, of which 3,000 have an exercise price of $62.50; 1,500 have an exercise price of $28.75; 1,500 have an exercise price
of $38; 3,072 have an exercise price of $22; 1000 have an exercise price of $20.50; 5,000 have an exercise price of $2.8775. (Significant
Employee).
DIRECTORS AND OFFICERS
Set forth
below is certain information regarding our directors and executive officers. Our bylaws currently provide that the number of
directors constituting the Board of Directors (the “Board”) shall be determined solely and exclusively by
resolution duly adopted from time to time by the Board. There are six directors presently serving on our Board, and the
number of directors to be elected at this Meeting is four. Roderick de Greef and Robert Skaff are not standing for reelection
as a director at this Meeting.
The following table
presents information with respect to our senior officers and directors, as of the Record Date:
Name
|
|
Age
|
|
Position(s) Held
|
|
Director
Since
|
Robert H. Turner
|
|
68
|
|
Executive Chairman of the Board
|
|
2015
|
Robert Skaff
|
|
47
|
|
Director
|
|
2015
|
Roderick de Greef (1) (2) (3)
|
|
56
|
|
Director
|
|
2015
|
Yves van Sante (1) (2) (3)
|
|
55
|
|
Director
|
|
2014
|
Luis Jimenez-Tuñon (1) (2) (3)
|
|
38
|
|
Director
|
|
2017
|
Laura Thomas (1) (2) (3)
|
|
61
|
|
Director
|
|
2017
|
Victor Bozzo
|
|
49
|
|
Chief Executive Officer
|
|
N/A
|
Edward O’Donnell (4)
|
|
52
|
|
Chief Financial Officer
|
|
N/A
|
Alexander Korff (6)
|
|
35
|
|
General Counsel, Secretary & Compliance Officer
|
|
N/A
|
|
(1)
|
Currently a member of the Audit and Finance Committee
|
|
(2)
|
Currently a member of the Nominating and Corporate Governance Committee
|
|
(3)
|
Currently a member of the Compensation Committee
|
|
(4)
|
Chief Financial Officer since January 9, 2017
|
Robert H. Turner
was
appointed Executive Chairman of the Board on November 16, 2015. Mr. Turner has 40 years’ experience, cultivating and growing
“all stage” global software, telecom and tech companies. He emphasizes strategy, sales, organizational leadership,
and fundamental financial results and leads with a culture that passionately serves the needs of valued constituents, while sustaining
growth. Mr. Turner launched his career at AT&T, where he rose to serve at the highest ranks in a broad spectrum of international,
start-up, and corporate firms, including (selected highlights): NeoNova Network Services, Inc.; Pac West; Telecom, Inc.; Panterra
Networks; PTT Telecom Netherlands, US Inc. (now KPN); and BellSouth Communications, Inc. (now AT&T). Mr. Turner is also an
advisory board member of The Capital Angels, affiliated with SC Angel Network. Mr. Turner earned a Bachelor of Science degree and
a Master of Business Administration from the University of South Carolina, where he was presented with a Distinguished Alumni award
in 2010. Mr. Turner is Guest Lecturer in the Darla Moore School of Business Professional MBA program
Robert Skaff
has
been a director since December 16, 2015. Mr. Skaff is the founder of DiNotte Lighting Hampton which has developed world-class OEM
and recreational lighting products since 2005 and currently serves as a consultant for various manufacturing companies. Mr. Skaff
was previously the president of ID Control, a manufacturer of patented mobile video equipment for police vehicles and served as
Vice President for Decatur Electronics. Mr. Skaff was a principal and director of Management Information Systems at Johnson and
Johnston Associates which was later acquired by Gould Electronics, a subsidiary of Japan Energy. Mr. Skaff will not be standing
for reelection at this Meeting.
Roderick de Greef
has
been a director since September 23, 2015. He previously served as a director of the Company from January 2008 to October 2011.
Mr. de Greef (1961) is Chief Financial Officer of BioLife Solutions, Inc, a publicly listed biotechnology company. He has over
25 years of public company CFO experience with companies such as Cardiac Science, BioLife Solutions, Inc., and Cambridge Heart,
Inc. Mr. de Greef has been extensively involved in numerous financing transactions and several domestic international M&A transactions.
Mr. de Greef has also been member of the board of directors of several public and private companies over the past 15 years, including
Endologix, Inc. He was a member of the Board and Chairman of the Audit Committee of Pareteum Communications, Inc., from 2008 to
2011. Mr. de Greef received a BA in Economics and International Relations from San Francisco State University and an MBA from the
University of Oregon. Mr. de Greef will not be standing for reelection at this Meeting.
Yves van Sante
has
been a director since June 1, 2014. From July 2011 to May 2014, Mr. van Sante was a board observer for our Company, following his
service on our Board of Directors from October 2006 to July 2011. Mr. van Sante (1960) studied Marketing, Communication and Commercial
Management. He started his career in 1982 as an advisor at United Brokers and became sales manager for Brinkers International,
the market leader in refining oil for the food industry, a year later. From 1987 until 1993 he served as Sales and Marketing manager
Central Europe at 3C Communications in Luxemburg, where he launched Credit Card Telephony across Europe. Following this position,
he became a business unit manager Public Telephony at Belgacom, the Belgium incumbent, where he managed a department of 650 employees
and a € 40 million business. In 1994, together with Steven van der Velden, Yves van Sante co-founded InTouch Telecom. As its
managing director he was responsible for business development, sales and marketing. In 1999, when achieving a turnover of €
25 million and having grown to 125 staff, InTouch was sold to GTS, a pan European Telecom operator. Mr. van Sante became vice-president
Business Services with GTS in London, where he consolidated acquisitions and turned the voice Telco around into an IP operator.
In 2000 he became Managing Director of Eport, a call center owned by the Port of Ostend. After six months Eport was sold to the
Dutch call center Call-IT, and Mr. van Sante became advisor to its Management Board. In 2002 he founded Q.A.T. Investments. Concurrently,
he has held various Management and Board functions in companies in the QAT portfolio. Mr. van Sante is a member of De Warande and
member of the Board of Directors of Festival of Flanders.
Luis Jimenez-Tuñon
has
been a director since March 1, 2017. Mr. Jimenez-Tuñon is a distinguished mobile telecommunications industry leader, having
served as CEO of the Company’s largest customer, Vodafone Enabler Spain S.L. (“Vodafone Enabler”) from July 2011
to December 2016. In addition to his role at Vodafone Enabler, during a decade at Vodafone, Mr. Jimenez-Tuñon has also held
leadership positions at Vodafone Spain where he was responsible for business development and strategy of the group’s Mobile
Virtual Network Operators (MVNOs), enablers, roaming services, international carriers and wholesale fixed broadband business lines.
Mr. Jimenez-Tuñon is currently founder and CEO of Red Queen Ventures, S.L. (www.redqueen-ventures.com) a global high-tech
advisory and Investment Company focused on technology, telecom, MVNO/E, satellite and aerospace. As Chief executive of Vodafone
Enabler, he pioneered the Company’s innovative business model and powered the launch of Vodafone Spain’s second brand
Lowi.es which was awarded best Spanish MVNO in 2015 and 2016. Started in 2011, under his leadership, Vodafone enabler boosted its
revenue, profit and operational performance, and achieved internationalization. Previously, Luis held several executive positions
at Vodafone Spain, including Senior Vice President where he grew business to hundreds of millions of euros in yearly revenue. Mr.
Jimenez began his career in the satellite industry in 2002 holding various positions including Research engineer at the National
Space Institute of Denmark and later Deputy Commercial Director of INSA (today ISDEFE), Spain’s leading satellite operations
company managing NASA and ESA tracking stations. Luis has received several professional and academic awards at international and
national levels. Luis earned an Executive MBA from EOI Business School, a Master’s Degree in Satellite Communications from
Polytechnic University of Madrid, and an MSc in Telecommunications Engineering from the University of Zaragoza in cooperation with
the Technical University of Denmark. He also completed the Executive Management Program (SEP) from the Graduate School of business
at Stanford University in California, of which he is lifetime alumni. Along with his executive career, Luis has been guest speaker
at international business summits and has published several papers.
Laura Thomas
has been a director since July 25, 2017. Ms. Thomas presently serves as the Chief Financial Officer of Towerstream, Inc. Ms. Thomas
previously served on the Board of Directors of Impact Telecom (“Impact”), a full service telecommunications company,
from January 2016 through December 2016, during which time she served as Chairman of the Board of Directors from January 2016 through
June 2016. From December 2014 through December 2015 she served as the Chief Executive Officer of TNCI Operating Company, which
acquired Impact in January 2016. From 2000 through 2014 she served in a variety of roles at XO Holdings, Inc. (now XO Communications),
a telecommunications services provider, including as Chief Financial Officer from May 2009 through April 2011 and again from December
2013 through August 2014, and as Chief Executive Officer from April 2011 through December 2013.
Victor Bozzo
was
appointed Chief Executive Officer on November 1, 2016. Mr. Bozzo served as Senior Vice President, Worldwide Sales and Marketing
for Telarix Inc., a market leader in interconnect solutions for service providers. Under Mr. Bozzo’s sales and marketing
leadership, sales increased significantly and the company received numerous market leadership accolades, ultimately leading to
a highly successful exit for investors. Prior to joining Telarix, Mr. Bozzo served as President and General Manager of Pac-West’s
Emerging Technologies division after selling Pac-West his startup, Factor Communications, an innovative portfolio of cloud-based
communications services. He was also responsible for significant revenue and customer growth and investor returns at exTone Communications,
ITXC Corporation, and Voxware.
Edward O’Donnell
became
our Chief Financial Officer, effective January 9, 2017. Mr. O’Donnell has over 23 years of experience in investment banking,
advertising, private equity, investment, venture capital, technology, internet and other new media businesses. Prior to joining
the Company, Mr. O’Donnell served as the Chief Financial Officer of Ameri Holdings, Inc. (OTC: AMRH) from January 2016 through
December 2016. Mr. O’Donnell has served as the Chief Operating Officer of Radbourne Property Group, Inc., an innovative operator
of family entertainment centers, where his primary responsibilities included raising capital, external reporting, outlining capital
structure and budgeting. From February 2013 until April 2015, Mr. O’Donnell served as chief financial officer of AudioEye,
Inc. (OTC: AEYE) From December 2010 until January 2013, Mr. O’Donnell served as Vice President of Finance for Augme Technologies,
Inc. (Previously OTC: AUGT), which provides strategic services and mobile marketing technology to leading consumer and healthcare
brands. From January 2007 until November 2010, Mr. O’Donnell served as Chief Financial Officer of Carlyle Capital Group LLC,
a venture capital and private equity firm. Previously, Mr. O’Donnell also served as Senior Vice President of Finance &
Investor Relations of ACTV, Inc. (previously NASDAQ: IATV), where he developed the investor relations department before the company
was purchased by OpenTV, a subsidiary of Liberty Media. Previously, Mr. O’Donnell was a member of Aloysius Lyons, LLC. Aloysius
Lyons, LLC filed for protection under Chapter 7 of the federal bankruptcy laws in 2007. Aloysius Lyons, LLC received a discharge
relating to the matter in 2009 and has been dissolved. Mr. O’Donnell is a Certified Public Accountant in New York and a member
of NYSSCPAs and AICPA. Mr. O’Donnell earned a B.S, degree in Accountancy from Villanova University in 1991 and an M.B.A.
from Columbia Business School in 2003. We believe that Mr. O’Donnell’s extensive education and background in accounting
and finance makes him qualified to serve as our Chief Financial Officer.
Alexander Korff
was
appointed General Counsel, Secretary and Chief Compliance Officer effective April 1, 2016. Mr. Korff oversees the legal affairs
of the group, including corporate, commercial and financial transactions, intellectual property, governance and regulatory compliance.
Before joining Pareteum, Mr. Korff worked at international law firms Clifford Chance (in their London, Amsterdam and Warsaw offices)
and Bird & Bird in London, specializing in contentious and non-contentious commercial, IT and intellectual property law –
predominantly for technology- and telecom-sector clients. He has also worked as in-house legal counsel to defense and aviation
group EADS Airbus at their European headquarters in France. He previously held commercial posts with technology companies WorldPay
and Autonomy. Mr. Korff read law (LL.B) at Durham University, England, and undertook post-graduate legal studies at the London
College of Law. He speaks English, Dutch, German and French.
None of our directors
or executive officers has been involved in any legal proceeding enumerated in Regulation S-K Item 401 within the time periods described
in that regulation.
Board Committees
Our Board of Directors
has established three standing committees: (1) Audit and Finance, (2) Nominating and Corporate Governance, and (3) Compensation.
All committees operate
under a charter that has been approved by the Board of Directors and which is available on our website, www.pareteum.com.
Audit and Finance Committee
Our Board of Directors
has an Audit and Finance Committee, abbreviated to Audit Committee, composed of Messrs. de Greef (Chairman and member since September
23, 2015), van Sante (member since February 18, 2016) and Jimenez-Tuñon (member since March 1, 2017) and Ms. Thomas (member
since July 25, 2017, who will become Chairwoman effective September 13, 2017). The Audit and Finance Committee met four (4) times
during 2016. Each of the then-current members was present at all of the Audit and Finance Committee meetings held during 2016.
The Audit Committee
oversees our corporate accounting, financial reporting practices and the audits of financial statements. For this purpose, the
Audit and Finance Committee has a charter (which is reviewed annually) and performs several functions. The Audit and Finance Committee:
|
·
|
evaluates the independence and performance
of, and assesses the qualifications of, our independent auditor, and engages such independent auditor;
|
|
·
|
approves the plan and fees for the annual
audit, quarterly reviews, tax and other audit-related services, and approves in advance any non-audit service to be provided by
the independent auditor;
|
|
·
|
reviews and approves related-party transactions;
|
|
·
|
monitors the independence of the independent
auditor and the rotation of partners of the independent auditor on our engagement team as required by law;
|
|
·
|
reviews the financial statements to be
included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and reviews with management and the independent auditors
the results of the annual audit and reviews of our quarterly financial statements;
|
|
·
|
oversees all aspects our systems of internal
accounting control and corporate governance functions on behalf of the Board of Directors; and
|
|
·
|
provides oversight assistance in connection
with legal, ethical and risk management compliance programs established by management and the Board of Directors, including Sarbanes-Oxley
implementation, and makes recommendations to the Board of Directors regarding corporate governance issues and policy decisions.
|
Nominating and Corporate Governance Committee
Our Board of Directors
has a Nominating and Corporate Governance Committee, abbreviated to Nominating Committee, presently composed of Messrs. van Sante
(Chairman and member since December 16, 2015), de Greef (member since September 23, 2015) and Jimenez-Tuñon (member since
March 1, 2017) and Ms. Thomas (member since July 25, 2017). The Nominating Committee did not convene as such during 2016, preferring
the affairs of the Committee to be addressed by the full Board.
The Nominating Committee
is charged with the responsibility of reviewing our corporate governance policies and with presenting new potential director-nominees
to the Board of Directors for consideration. The Nominating Committee has a charter which is reviewed annually. All members of
the Nominating Committee are independent directors as defined by the rules of the NYSE American. The Nominating Committee will consider
director nominees recommended by stockholders. To recommend a nominee, please write to the Nominating and Corporate Governance
Committee, c/o the General Counsel, Pareteum Corporation, 100 Park Avenue, Suite 1600, New York City, NY 10017, USA. The Nominating
Committee will assess all director nominees using the same criteria it applies generally, described in this Form 10-K under the
heading “Director and Officer Qualifications.” During 2016, we did not pay any fees to any third parties to assist
in the identification of nominees.
Compensation Committee
Our Board
of Directors also has a Compensation Committee composed of Messrs. Jimenez-Tuñon (Chairman, since July 25, 2017), de
Greef, and van Sante and Ms. Thomas (member since July 25, 2017). Before December 16, 2015, the Compensation Committee was
composed of Jaime Bustillo, Carl Stevens, Francisco Ros and Mr. de Greef. The Compensation Committee reviews or
recommends the compensation arrangements for our management and employees and also assists the Board of Directors in
reviewing and approving matters such as Company benefit and insurance plans. The Compensation Committee met two (2) times
during 2016 and acted by Unanimous Written Consent one (1) time in 2016. Each of the then-committee members was present at
all of the Compensation Committee meetings held during 2016.
The Compensation Committee
has the authority to directly engage, at the Company’s expense, any compensation consultants or other advisers as it deems
necessary to carry out its responsibilities in determining the amount and form of employee, executive and director compensation.
In 2016, the Compensation Committee did not engage any such compensation consultants or advisers.
Director and Officer Qualifications
We have not formally
established any specific, minimum qualifications that must be met by each of our officers or directors or specific qualities or
skills that are necessary for one or more of our officers or members of the Board of Directors to possess. However, our Nominating
Committee generally evaluates and recommends candidates with a focus on the following qualities: educational background, diversity
of professional experience, knowledge of our industry and business, integrity, professional reputation, independence, wisdom and
ability to represent the best interests of our stockholders and other stakeholders.
Our Board of Directors
and officers are composed of a diverse group of leaders. In their prior positions they have gained experience in core management
skills, such as strategic and financial planning, public company financial reporting, compliance, risk management and leadership
development. Most of our officers and directors also have experience serving on boards of directors and board committees of other
public companies or private companies, and have an understanding of corporate governance practices and trends, which provides an
understanding of different business processes, challenges and strategies.
Attendance at Board, Committee and
Stockholder Meetings
Our Board of Directors
met in person and telephonically fourteen (14) times during 2016 and also acted by unanimous written consent eleven (11) times.
Each of the then-members of our Board of Directors was present at 75% or more of the Board of Directors meetings held in 2016.
In 2016, Mr. Turner
and Mr. De Greef attended the annual stockholder meeting. We have encouraged, but do not require, that all of our directors be
in attendance at the Meeting either in person or by remote communication. In addition, we have encouraged, but do not require,
our directors to attend future annual stockholder meetings in person.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires that our directors and executive officers
and persons who beneficially own more than 10% of our common stock (referred to herein as the “reporting persons”)
file with the SEC various reports as to their ownership of and activities relating to our common stock. Such reporting persons
are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review
of copies of Section 16(a) reports and representations received by us from reporting persons, and without conducting any independent
investigation of our own, in 2016, there were untimely filings of Forms 3, 4 and 5 as outlined herein, specifically: (i) one report
on Form 4 covering one transaction filed by Mark Nije; (ii) four reports on Form 4 covering four transactions filed by Patrick
M. Carroll; (iii) one report on Form 4 covering one transaction filed by Martin Zuuriber; (iv) one report on Form 4 covering one
transaction filed by Jaime Bustillo Velasco, (v) two reports on Form 4 covering two transactions filed by Roderick de Greef; (vi)
one report on Form 4 covering one transaction filed by Robert Skaff Jr; (vii) two reports on Form 4 covering two transactions filed
by Francisco Ros; (vii) three reports on Form 4 covering three transactions filed by Yves Roger van Sante; (viii) two reports on
Form 4 covering two transactions filed by Gary G. Brandt; (ix) one report on Form 4 covering one transaction filed by Robert Harold
Turner, and (x) one report on Form 3 covering one transaction filed by Victor Bozzo.
Code of Conduct
We have adopted a code
of conduct that outlines the principles, policies and laws that govern our activities and establishes guidelines for conduct in
the workplace. The code of conduct applies to all employees, as well as each member of our Board of Directors. All employees are
required to read the code of conduct and affirm in writing their acceptance of the code. Our code of conduct is posted on our website,
www.pareteum.com. We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver
from, a provision of our code of conduct by posting such information on our website, www.pareteum.com. A copy of our code of conduct
is also available in print, without charge, upon written request to Pareteum Corporation, 100 Park Avenue, Suite 1600, New York,
NY 10017, USA. Attn: General Counsel.
DIRECTOR COMPENSATION
The basic compensation
for serving as a non-executive director is USD $80,000 per year, with an additional USD $10,000 for non-executive directors serving
in one committee and USD $20,000 paid to non-executive directors who serve on more committees of our Board of Directors, USD $30,000
for serving as chairman of the Audit Committee and USD $5,000 for serving as a chairman of the other committees. Generally, during
a non-executive director’s first year of service, a minimum of 50% of such director’s compensation is paid through
the issuance of common stock with the remaining portion paid in cash. In subsequent years of service, a non-executive director
gets to elect the method and proportion of payment. Compensation was paid per quarter in arrears, whereby the conversion of cash
in shares was done at the average closing share price of the Company of the 10 days prior to the start of the quarter discounted
by 25%. This is in line with our policy to stimulate as much as possible conversion into shares to preserve our cash position.
The following table
represents compensation earned or paid in 2016 to our non-executive directors.
Name
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Non-
Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Carl Stevens
|
|
$
|
-
|
|
|
$
|
18,131
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
18,131
|
|
Yves van Sante (2)
|
|
$
|
-
|
|
|
$
|
140,428
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
140,428
|
|
Francisco Ros (3)
|
|
$
|
6,381
|
|
|
$
|
9,972
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
16,353
|
|
Roderick de Greef (4)
|
|
$
|
81,250
|
|
|
$
|
65,817
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
147,067
|
|
Robert Skaff (5)
|
|
$
|
52,170
|
|
|
$
|
71,059
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
123,229
|
|
|
(1)
|
The amounts included in these columns are the aggregate fair values of the awards granted by the
Company to the directors in the fiscal year in lieu of cash fees, valued in accordance with FASB ASC Topic 718 for the fiscal year
ended December 31, 2016. Pursuant to SEC rules, the amounts in these columns exclude the impact of estimated forfeitures related
to service-based vesting conditions. The share prices used for the 2016 calculations in this table are the share prices of the
last 10 trading days of the quarter covering the compensation related period. Compensation to the directors can be elected by the
directors, at the beginning of the quarter, either in cash or in shares. When directors opt for payment in shares there is a 25%
discount on the ‘purchase’ price. The amounts however are shown at fair market value by using the closing share price
at the last working day of the compensated quarter. In principle non-executive officer directors might earn up to approximately
33% more than the standard director fees if they have elected to receive 100% compensation in shares.
|
|
(2)
|
Mr. van Sante elected to have his directorship fees paid in shares.
|
|
(3)
|
Mr. Ros earned cash directorship fees of $6,381 in 2016, which have not yet been paid.
|
|
(4)
|
Mr. de Greef earned cash directorship fees of $81,250 in 2016, of which $10,417 has not yet been
paid.
|
|
(5)
|
Mr. Skaff earned cash directorship fees of $52,170 in 2016, which have not yet been paid.
|
EXECUTIVE COMPENSATION
In accordance with
Item 402 of Regulation S-K promulgated by the SEC, we are required to disclose certain information regarding the makeup of and
compensation for our company’s directors and named executive officers.
The following table
sets forth the compensation paid to our Chief Executive Officer, Chief Financial Officer and those executive officers that earned
in excess of $120,000 during the last two fiscal years ended December 31, 2016 and 2015 (collectively, the “Named Executive
Officers”):
Summary Compensation Table
Name and
principle
position
|
|
Year
|
|
Salary
($)(1)
|
|
|
Bonus
($)
|
|
|
Option
Awards
($)(2)
|
|
|
Option
Awards
(in
options)
|
|
|
All
Other
Compensation
($)(3)
|
|
|
Total
($)
|
|
|
Total
Number
of shares
|
|
|
Total
Number
of options
|
|
Robert H. Turner (i)
|
|
2016
|
|
$
|
331,021
|
(a)
|
|
$
|
675,000
|
(f)
|
|
$
|
530,838
|
|
|
|
200,000
|
(h)
|
|
$
|
257,785
|
|
|
$
|
1,794,644
|
|
|
|
86,000
|
|
|
|
200,000
|
|
(Executive Chairman)
|
|
2015
|
|
$
|
40,628
|
(a)
|
|
$
|
|
|
|
$
|
661,437
|
|
|
|
100,000
|
(j)
|
|
$
|
-
|
|
|
$
|
702,065
|
|
|
|
-
|
|
|
|
100,000
|
|
Victor Bozzo (ii)
|
|
2016
|
|
$
|
54,457
|
(b)
|
|
$
|
50,000
|
(g)
|
|
$
|
394,213
|
|
|
|
120,000
|
(k)
|
|
$
|
-
|
|
|
$
|
498,671
|
|
|
|
-
|
|
|
|
120,000
|
|
(CEO & Chief Executive Officer)
|
|
2015
|
|
$
|
-
|
(b)
|
|
$
|
-
|
|
|
$
|
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Alex Korff (iii)
|
|
2016
|
|
$
|
153,676
|
(c)
|
|
$
|
|
|
|
$
|
-
|
|
|
|
-
|
(l)
|
|
$
|
186,870
|
|
|
$
|
340,546
|
|
|
|
49,807
|
|
|
|
-
|
|
(General Counsel, Secretary & Compliance
Officer)
|
|
2015
|
|
$
|
125,349
|
(c)
|
|
$
|
|
|
|
$
|
15,656
|
|
|
|
1,500
|
|
|
$
|
(9,029
|
)
|
|
$
|
131,975
|
|
|
|
-
|
|
|
|
-
|
|
Edward O’Donnell (iv)
|
|
2016
|
|
$
|
-
|
(d)
|
|
$
|
|
|
|
$
|
-
|
|
|
|
-
|
(l)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(Chief Financial Officer)
|
|
2015
|
|
$
|
-
|
(d)
|
|
$
|
|
|
|
$
|
-
|
|
|
|
-
|
(l)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Erik Kloots (v)
|
|
2016
|
|
$
|
139,925
|
(e)
|
|
$
|
|
|
|
$
|
-
|
|
|
|
-
|
(l)
|
|
$
|
134,262
|
|
|
$
|
274,186
|
|
|
|
44,791
|
|
|
|
-
|
|
(Vice President-Finance and Principal Accounting
Officer)
|
|
2015
|
|
$
|
119,253
|
(e)
|
|
$
|
|
|
|
$
|
15,656
|
|
|
|
1,500
|
(l)
|
|
$
|
-
|
|
|
$
|
134,909
|
|
|
|
-
|
|
|
|
-
|
|
Notes:
|
(i)
|
Mr. Turner was appointed on November 16, 2015, compensation received in 2015 was pro-rated.
|
|
(ii)
|
Mr. Bozzo was appointed on November 1, 2016, compensation received in 2016 was pro-rated.
|
|
(iii)
|
Mr. Korff was appointed April, 1, 2016 and replacing Mr. A. Vermeulen who left the Company March
31, 2016.
|
|
(iv)
|
Mr. O’Donnell was appointed January 8, 2017, compensation to be received in 2017 will be
pro-rated.
|
|
(v)
|
Mr. Kloots was appointed April 1, 2016 compensation received in 2016 was pro-rated. Mr. Kloots’
term ended March 31, 2017.
|
|
(1)
|
These are the base salaries before any bonus and or non-cash awards. The base salary is determined
and paid on a monthly basis in euros, therefore, calculations include exchange results from euros to U.S. dollars. Payment can
be elected either in cash or in shares in lieu of salary and bonus. When officers opt for payment in shares there is a 25% discount
on the purchase price. The amounts, however, are shown at fair market value by using the share price of the preceding month closing
price. In principle, officers may earn up to approximately 33% more than the ‘agreed’ cash salary in the event they
elect to receive 100% compensation in shares. Such beneficial discount is included in “All Other Compensation” at the
fair market value of the equity, reduced by the denominated value in U.S. dollars of the cash salary used for this ‘exchange’
into non-cash compensation.
|
|
(2)
|
The amounts reported in this column represent the aggregate grant date fair value of the stock
option awards granted to the named executive officers in 2016 and 2015, respectively. We estimate the fair value of awards on the
grant date using the Black-Scholes option pricing model. The assumptions made in calculating the grant date fair value amounts
for stock option awards are incorporated herein by reference to the discussion of those assumptions in Note 23 to the financial
statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Note that the
amounts reported in this column reflect the Company’s accounting cost for the stock option awards, and do not correspond
to the actual economic value that will be received by the named executive officers from the award. Pursuant to SEC rules, the amounts
in this column exclude the impact of estimated forfeitures related to service-based vesting conditions. In case the options have
not vested yet the company has expensed a pro-rata portion until date of vesting. Expensing of performance based options will start
after setting the performance targets.
|
|
(3)
|
With respect to 2016 this value relates to the non-cash bonus for the chairman of the board and
other officers granted in 2016 and issued in January 2017 and in case of 2015 the value represents the 25% purchase price discount
the named executive officer received by way of electing equity compensation in lieu of cash compensation adjusted for fair value
at date of issuance.
|
|
(a)
|
These amounts have been agreed in USD and amounts to an annual amount of USD 300,000. The total
salary in 2016 amounts to $331,021 which includes the employer part of the social securities.
|
|
(b)
|
These amounts have been agreed in USD and amounts to an annual amount of USD 275,000. The total
salary in 2016 amounts to $54,457 which includes the employer part of the social securities and represents salary as of November
1, 2016.
|
|
(c)
|
These amounts have been agreed in GBP. The amount for 2016 has been agreed upon GBP 110,700. The
average exchange rate is $1.388 for 2016 and $1.440 in 2015. These averages are the average of the 4 exchange rates used during
the respective year by using the exchange rate of the first working day of each quarter.
|
|
(d)
|
No salary in 2015 and 2016, started in January 2016.
|
|
(e)
|
These amounts have been agreed in euro. Amount for 2016 has been EUR 108,230 and for 2015 EUR 96,006.
The average exchange rate is $1.114 for 2016 and $1.133 for 2015. These averages are the average of the 4 exchange rates used during
the respective year by using the exchange rate of the first working day of each quarter.
|
|
(f)
|
Bonus amount granted for an amount of USD 75,000 based on achievement of certain milestone. Bonus
granted of $600,000 was granted and accrued in the fourth quarter to be paid in the future.
|
|
(g)
|
Sign-in bonus for an amount of USD 50,000.
|
|
(h)
|
Comprised of 200,000 of a total grant of 300,000 shares in total divided between the
years 2016 and 2017, the 200,000 options which have been granted with immediate effect represent an initial fair market value of
$530,838, following the Black and Scholes calculation method.
|
|
(j)
|
Comprised of 100,000 options with an exercise price of $8.25 and a total initial fair value of
USD 661,437. In the years 2015, 2016, 2017 and 2018 equal tranches of 25,000 options will vest each year.
|
|
(k)
|
Comprised of 120,000 options with an exercise price of $4.3725 and a total initial fair market
value of USD 394,213 using the Black and Scholes valuation model. The options will annually vest in 4 equal tranches of 30,000
options and have a term of 7 years. The first tranche vested in 2016, others will vest in 2017, 2018 and 2019. Expensing will be
accounted for and spread over the period until vesting.
|
Narrative Disclosure to Summary Compensation Table
Consultancy and Employment Agreements
We currently have the
following agreements with our named executive officers:
Robert H. Turner,
Executive Chairman –
We entered into an employment agreement, effective as of November, 17 2015, with Mr. Turner,
to serve as Executive Chairman of the Company. Mr Turner is paid a base compensation of USD $300,000 gross per year. Mr. Turner
receives no fees (cash or stock) for serving on our Board of Directors. Mr. Turner has a number of granted options set at 2,500,000
carrying a 7 years exercise period after granting; the options would vest in four equal annual installments, following the joining
date. Mr. Turner is eligible to a performance related bonus, depending on business performance by the Group performance. Such bonus
shall be based solely upon your achievement of Board-approved and mutually agreed upon performance targets. For 2016 the on-target
bonus percentage is set at 100% against the Base salary paid in that year, capped at 200% maximum on cash payment; performance
over and above 200% is paid in equity at the then-current value of the Company.
Additionally, On November
18, 2016, the Company entered into an employment agreement Mr. Turner, the Company’s Executive Chairman and Principal Executive
Officer (the “Employment Agreement”). The Employment Agreement modifies and supplements the terms of the prior employment
letter between the Company and Mr. Turner dated November 2015 by providing for the following additional terms: (i) one-time bonuses
of USD $300,000 for achieving previously determined business and restructuring goals established by the Board and an extraordinary
bonus of USD $300,000 for Mr. Turner’s efforts on behalf of the Company during late 2015 and 2016 and to be paid as set forth
in the Employment Agreement; (ii) restricted common stock grants of 2,000,000 shares of the Company’s common stock; (iii)
options to purchase up to 7,500,000 shares of the Company’s stock, which options shall vest over a period of three (3) calendar
years, with 1,875,000 shares vesting immediately, and the remaining 5,625,000 shares vesting in 3 equal installments of 1,875,000
each, on the first, second and third anniversary of the option grant. The exercise price of the options is $.14 per share; and
(iv) other customary allowances, bonuses, reimbursements and vacation pay. The Employment Agreement also provides that if Mr. Turner’s
employment with the Company is terminated by the Company without “cause” or by Mr. Turner for “good reason”
(as such terms are defined in the Employment Agreement) the Company will pay Mr. Turner, 12 months’ salary at the rate of
his salary as of such termination, together with payment of the average earned bonuses (regular and extraordinary) since November
1, 2015.
Victor Bozzo, Chief
Executive Officer
– We entered into an employment agreement, effective as of November 1, 2016, with Mr. Bozzo, to
server as Chief Executive Officer of the Company. Mr. Bozzo is paid a base compensation of USD $275,000 gross per year. Mr. Bozzo
received a signing bonus of USD $50,000 gross, and has a total number of restricted common stock grants of shares with the equivalent
value of USD $10,000. Additionally, Mr. Bozzo received a restricted grant with the equivalent value of USD $15,000 within a reasonable
time following the 6-month anniversary of the Effective Date and USD $50,000 within the first calendar year anniversary date, with
each of these grants being subject to certain conditions set forth in the Employment Agreement. Additionally, Mr. Bozzo is entitled
to purchase options up to 3,000,000 shares of the Company’s stock, of which options to purchase 750,000 shares of common
stock will vest immediately, and the remaining 2,250,000 shares shall vest in 3 installments of 750,000 each annually on the first,
second and third anniversary of the option grant. The exercise price of the options is $.1749 per share; and other customary allowances,
bonuses, reimbursements and vacation pay. The Employment Agreement also provides that if Mr. Bozzo’s employment with the
Company is terminated by the Company without “cause” or by Mr. Bozzo for “good reason” the Company will
pay Mr. Bozzo 12 months’ salary at the rate of his salary as of such termination. Mr. Bozzo is also subject to customary
non-competition, non-solicitation and confidentiality requirements during and after the term of his employment.
Edward O’Donnell,
Chief Financial Officer
– The Company entered into an employment agreement, effective as of January 9, 2017 with
Mr. O’Donnell, to perform as Chief Financial Officer of the Company. Mr. O’Donnell is paid a base compensation of USD
$175,000 gross, and is entitled to an annual bonus of up to USD $75,000 gross. Additionally, Mr. O’Donnell received a signing
bonus of 25,000 restricted common shares, and options to purchase up to 1,000,000 shares of the Company’s stock, subject
to the Company’s employee stock option plan including restrictions and vesting schedule. Mr. O’Donnell is also entitled
to other customary allowances, bonuses, reimbursements and vacation pay. The employment agreement between the Company and Mr. O’Donnell
is an “at will” agreement, which also provides that if Mr. O’Donnell’s employment with the Company is terminated
by the Company, then, subject to a mutual release, the Company will pay Mr. O’Donnell’s base salary for an additional
270 days after termination in accordance with customary payroll practices. Mr. O’Donnell is also subject to customary confidentiality
requirements during and after the term of his employment.
Alexander Korff,
General Counsel and Chief Compliance Officer
– During 2016, the Company’s Swiss subsidiary and Mr. Korff were
parties to a consultancy agreement with his consulting company Karkinos IP Consulting Ltd which was paid approximately GBP 110,700
in 2016. Effective February 2017, Mr. Korff was engaged as an employee of the Company under an employment agreement for a total
of GBP 120,000 (USD $149,383) gross per annum. Additionally, Mr. Korff received options to purchase up to 500,000 shares of the
Company’s stock, subject to the Company’s employee stock option plan including restrictions and vesting schedule. Additionally,
Mr Korff will also be eligible for a bonus of up to fifty percent (50%) of his base salary above, where any such bonus is subject
to the Company’s achievement of its business plan targets. Mr. Korff is also entitled to other customary allowances, bonuses,
reimbursements and vacation pay. The employment agreement between the Company and Mr. Korff is an “at will” agreement,
which also provides that if Mr. Korff’s employment with the Company is terminated by the Company, then, subject to a mutual
release, the Company will pay Mr. Korff’s base salary for an additional 180 days after termination in accordance with customary
payroll practices. Mr. Korff is also subject to customary confidentiality requirements during and after the term of his employment.
Erik Kloots, Principal
Accounting Officer
– The Company entered into an employment agreement, effective as of January 1, 2007 with Mr. Kloots
to serve as the Company’s European Business Controller and then as the Company’s Global Director of Corporate Control & Finance,
reporting directly to the Company’s Chief Financial Officer. On April 1, 2016, Mr. Kloots was appointed as Principal Accounting
Officer and paid a base compensation of Euro 121,289.41 (USD $137,728). Mr. Kloots is also entitled to other customary allowances,
bonuses, reimbursements and vacation pay. Mr. Kloots is also subject to customary confidentiality requirements during and after
the term of his employment. Effective as of March 31, 2017, Erik Kloots, resigned from the Company as its Principal Accounting
Officer. The Company has an agreement (the “Settlement Agreement”) with Mr. Kloots to (i) make a lump sum severance
payment of gross Euro 121,289.41 (USD $129,746) gross no later than March 31, 2017, (ii) pay all unused holidays and pro-rata calculations
of 2016 holiday allowance, (iii) keep the Company laptop, and (iv) keep all past awarded stock-options through the life of the
options. Mr. Kloots will not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations,
policies or practices.
Severance and Change of Control
The named executive
officers (and certain former executive officers) have individual severance terms as described below. In addition, outstanding equity
awards made to our named executive officers under the 2008 Plan are subject to acceleration of any unvested portion of such awards
upon a change of control unless the terms of a particular award state otherwise.
Other than as set out
below, none of the agreements with named executives include any provisions for severance benefits or other payments upon a change
of control regardless of whether a named executive officer’s employment is terminated by him with or without good reason,
or whether the named executive officer is terminated by the Company with or without cause.
Robert H. Turner
-
The employment agreement with Mr. Turner is for an indefinite term. Under the terms of the employment agreement, Mr.
Turner is entitled to severance if Mr. Turner’s employment with the Company is terminated by the Company without “cause”
or by Mr. Turner for “good reason” (as such terms are defined in the Employment Agreement) the Company will pay Mr.
Turner, 12 months’ salary at the rate of his salary as of such termination, together with payment of the average earned bonuses
(regular and extraordinary) since November 1, 2015.
Victor Bozzo
–
The employment agreement with Mr. Bozzo is for an indefinite term. Under the terms of the employment agreement, Mr. Bozzo is entitled
to a severance if he is terminated by the Company without “cause” or by Mr. Bozzo for “good reason” the
Company will pay Mr. Bozzo 12 months’ salary at the rate of his salary as of such termination.
Edward O’Donnell
–
The employment agreement with Mr. O’Donnell is for an indefinite term. Under the terms of the employment agreement, Mr. O’Donnell
is entitled to a severance if he is terminated by the Company, then, subject to a mutual release, the Company will pay Mr. O’Donnell’s
base salary for an additional 270 days after termination in accordance with customary payroll practices.
Alexander Korff
–
The employment agreement entered on February 1, 2017 with Mr. Korff is for an indefinite term. Under the terms of the employment
agreement, Mr. Korff is entitled to a severance if he is terminated by the Company, then, subject to a mutual release, the Company
will pay Mr. Korff’s base salary for an additional 180 days after termination in accordance with customary payroll practices.
Erik Kloots
–
The employment agreement with Mr. Kloots is for an indefinite term. Under the terms of an additional agreement with the Board of
Directors on December 15, 2016, Mr. Kloots is entitled to severance if he is terminated by the Company without cause. In the event
the agreement were terminated by the Company without cause, the Company would be required to pay Mr. Kloots severance in cash equal
to six (6) months base-salary in addition to accrued but unpaid compensation and accrued vacation. Mr. Kloots has an agreement
with the Company to resign from all positions that he holds with the Company as of March 31, 2017.
Martin Zuurbier
- The consultancy agreement with Mr. Zuurbier was for a term of two (2) years and three (3) months and commenced on January,
1 2015 and was due to end on March 31, 2017. On January 29, 2016, Mr. Martin Zuurbier entered into certain Severance and Independent
Contractor Agreement pursuant to which Mr. Zuurbier resigned, effective December 31, 2015, from the Chief Technology Officer and
Co-President of Mobile Platform Activities and other executive positions of the Company for personal reasons. Mr. Zuurbier did
not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
In connection with his severance, Mr. Zuurbier received (i) a severance entitlement of Euro 100,000 (USD $109,096) and (ii) a grant
of 500,000 restricted shares of the Company’s common stock. On November 14, 2016, Mr. Zuurbier and the Company entered into
an Equity Conversion and Settlement Agreement, in which both parties agreed that the Company would issue to Mr. Zuurbier the total
of 1,115,000 shares of common stock that were included in the S-3, in order to settle an outstanding balance for the total of 115,00.
Further, it was agreed between the Company and Mr. Zuurbier that the Company would also pay in cash the total of Euro 19,500 (USD
$21,274) before December 2, 2016 towards the outstanding liability, and the Company would also pay the remaining payment of Euro
50,000 (USD $54,548) before March 31, 2017 to settle the payment liabilities as prescribed by the Severance and Independent Contractor
Agreement.
Mark Nije -
The
consultancy agreement with Mr. Nije was for a term of three (3) years which commenced on January 1, 2015. Under the terms of the
consultancy agreement, Mr. Nije is entitled to severance if he is terminated by the Company without cause. In the event the agreement
were terminated by the Company without cause, the Company would be required to give two (2) month’s written notice of termination
and pay Mr. Nije severance in cash equal to four (4) months base-salary in addition to accrued but unpaid compensation and accrued
vacation, but only if, Mr. Nije and us execute a valid and comprehensive mutual release of any and all claims that they may have
against us in a form provided by us and they executes such form within seven (7) days of tender. Mr. Nije has an agreement with
the Company to resign from all positions that he holds with the Company as of March 31, 2016. For a more detailed description,
see Item 9B, “Other Information”. Effective on December 20, 2016, Mr. Nije and the Company entered into an Amendment
of the Severance Agreement, in which the Company agreed to make an initial cash payment to Mr. Nije of Euro 42,500 (USD $44,390)
and beginning January 1, 2017 the Company shall pay to Mr. Nije the monthly amount of Euro 10,000 (USD $10,445) up to cover the
total outstanding balance of Euro 338,407 (USD $353,459) including the accrued statutory interest. In the event the Company fails
to pay timely the monthly invoiced amounts, the Company shall next to the monthly payment, without need of demand, make a penalty
payment of in the amount of Euro 5,000 (USD $5,222), plus interests thereon for each failure. In the event that the Company is
able to raise additional financing through the sale of equity or debt securities, from which the Company receives gross proceeds
of not less than USD $3,000,000, the Company shall, within 14 days thereof, make a lump sum payment to Mr. Nije in an amount equal
to fifty percent (50%) of the then outstanding balance of the obligation. The then outstanding balance, including accumulated interest
over the declining balance, is to be paid in equal monthly installments of no less than Euro 10,000 (USD $10,445) plus any amount
due thereunder to satisfy any value added taxes per month until the Obligation is repaid in full. The Company shall arrange for
the removal, at the Company’s sole expense, on or before December 29, 2016 (the “Removal Date”), of the trading
restriction on the 692,785 shares of stock issued to the Mr. Nije and the 141,910 shares of stock issued to the Management Entity
(collectively, the “Shares”), provided however that the Mr. Nije have complied with the applicable requirements under
Rule 144 by the Removal Date and the required broker’s rep letter and seller’s rep letter are provided to counsel engaged
for purposes of issuing the opinion relating to the removal of the trading restrictions on the Shares. Upon removal of such restrictions,
the Company will be solely responsible for arranging for the electronic delivery of the certificates evidencing the Shares, without
restrictions, manner of sale or direct resale requirements, to a broker designated by Mr. Nije. In the event that the Company fails
to comply with the obligations set out in clause 2 prior to the Removal Date, the Company shall, without need of demand, make a
penalty payment in the amount of Euro 25,000 (USD $26,112). The Company shall remove, on or before February 28, 2017, Mr. Nije
as a statutory director from Elephant Talk Communications SLU, Spain, including the removal from the applicable registers at the
chambers of commerce and tax authorities (the “Spain Removal”). In the event that the Company is unable to complete
the Spain Removal by the date set forth above, the Company shall make a payment to Mr. Nije as penalty in the amount of Euro 10,000
(USD $10,455). The Company shall remove, on or before March 31, 2017, Mr. Nije as a statutory director from the all existing legal
entities, including the removal from the applicable registers at the chambers of commerce and tax authorities. In the event that
the Company is unable to complete the Removal by the date set forth above, the Company shall make a payment to Mr. Nije as penalty
in the amount of Euro 5,000 (USD $5,222) for each entity Mr. Nije is still a registered statutory director.
Alex Vermeulen -
The
consultancy agreement with Mr. Vermeulen was for a term of three (3) years and commenced on January, 1 2015. Under the terms of
the employment agreement, Mr. Vermeulen was entitled to severance if he is terminated by the Company without cause. In the event
the agreement were terminated by the Company without cause, the Company would be required to give two (2) month’s written
notice of termination and pay Mr. Vermeulen severance in cash equal to four (4) months base salary in addition to accrued but unpaid
Compensation and accrued vacation, but only if, Mr. Vermeulen and the Company execute a valid and comprehensive mutual release
of any and all claims that they may have against in a form provided by the Company and they executes such form within seven (7)
days of tender. Mr. Vermeulen resigned from all positions that he held with the Company as of March 31, 2016. On October 20, 2016,
it has been agreed to a settlement of liabilities between the Company and Mr. Vermeulen, and their respective officers and directors,
under the severance agreement of March 28, 2016, and it was also agreed that the Company would issue to Mr. Vermeulen 600,000 restricted
shares of common stock that would be included in the S-3 registration statement, in order to settle an outstanding balance for
the amount of Euro 60,000 (USD $65,868). Further it is agreed that the Company would pay the remaining part of the outstanding
debt in cash, being then Euro 24,857.14 (USD $27,288), before December 24, 2016.
Armin Hessler –
The
employment agreement with Mr. Hessler was for an indefinite term. Under the terms of the employment agreement, Mr. Hessler was
entitled to severance if he were terminated by the Company without cause. In the event the agreement were terminated by the Company
before July 1, 2017, the Company would be required to pay Mr. Hessler severance in cash equal to the greater of (i) base salary
for the number of months between the date Mr. Hessler employment terminates and July 1, 2017; or (ii) six (6) months’ base
salary. In the event the agreement is terminated by us after July 1, 2017, we would be required to pay Mr. Hessler severance in
cash equal to six (6) months’ base salary. Mr. Hessler submitted his resignation as the Company’s Chief Operations
Officer effective as of November 2, 2016. The Company has agreed to make monthly cash severance payments to Mr. Hessler for a period
of nine months from the date of his resignation, equal to an aggregate gross amount of Euro 180,000 (USD $198,034). The Company
has also agreed to allow Mr. Hessler to keep an aggregate of 2,200,000 vested stock options. Mr. Hessler did not resign as a result
of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
GRANT
OF PLAN-BASED AWARDS
|
Name and
|
|
|
|
Estimated
Future Payouts
Under Non-Equity
Incentive Plan Awards
|
|
Estimated
Future Payouts
Under Equity
Incentive Plan Awards
|
|
All
Other
Stock
Awards:
Number
of
shares
of
Stocks
|
|
|
All
Other
Stock
Option
Awards:
Number
of
Securities
Underlying
|
|
|
Exercises
or Base
Price of
Option
|
|
|
Grant
Date
Fair Value
of Stock
and
Option
|
|
principle
position
|
|
Grant-
date
|
|
Threshold
($)
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
or
Units
(#)
|
|
|
Options
#
|
|
|
Awards
($/Sh)
|
|
|
Awards
($)(1)
|
|
Robert H. Turner
|
|
18-Nov-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
$
|
3.50
|
|
|
$
|
530,838
|
|
(Executive Chairman)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victor Bozzo
|
|
1-Nov-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
$
|
4,3725
|
|
|
$
|
394,213
|
|
(CEO & Chief Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Korff
|
|
8-Aug-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
140,100
|
|
(General Counsel, Secretary & Compliance
Officer)
|
|
28-Jul-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,807
|
|
|
|
|
|
|
|
|
|
|
|
36,336
|
|
Erik Kloots
|
|
8-Aug-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
140,100
|
|
Vice President-Finance and Principal Accounting
Officer
|
|
28-Jul-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,791
|
|
|
|
|
|
|
|
|
|
|
|
17,751
|
|
Edward O’Donnell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
(Chief Finance Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
The Company issued
the compensation shares to the above executive officers from the shares authorized, under its Amended and Restated 2008 Long-Term
Incentive Compensation Plan (“2008 Plan”).
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table
discloses information regarding outstanding equity awards granted or accrued as of December 31, 2016 for each of our named executive
officers.
Outstanding Equity Awards
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock that
have not
Vested (#)
|
|
|
Market
Value of
Shares or
Units of
Stock that
have not
Vested ($)
|
|
Robert H. Turner
|
|
|
25,000
|
(1)
|
|
|
|
|
|
$
|
8.25
|
|
|
16-Nov-22
|
|
|
|
|
|
$
|
|
|
(Executive Chairman)
|
|
|
25,000
|
(1)
|
|
|
|
|
|
$
|
8.25
|
|
|
16-Nov-22
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
25,000
|
(2)
|
|
$
|
8.25
|
|
|
16-Nov-22
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
25,000
|
(2)
|
|
$
|
8.25
|
|
|
16-Nov-22
|
|
|
|
|
|
$
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
3.50
|
|
|
18-Nov-23
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
3.50
|
|
|
18-Nov-23
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
3.50
|
|
|
18-Nov-23
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
3.50
|
|
|
18-Nov-23
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victor Bozzo
|
|
|
30,000
|
|
|
|
|
|
|
$
|
4,3725
|
|
|
1-Nov-23
|
|
|
|
|
|
$
|
|
|
(CEO & Chief Executive Officer)
|
|
|
|
|
|
|
30,000
|
|
|
$
|
4,3725
|
|
|
1-Nov-23
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
4,3725
|
|
|
1-Nov-23
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
4,3725
|
|
|
1-Nov-23
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Korff
|
|
|
1,000
|
|
|
|
|
|
|
$
|
62.50
|
|
|
1-Jan-21
|
|
|
|
|
|
$
|
|
|
(General Counsel, Secretary & Compliance Officer)
|
|
|
1,000
|
|
|
|
|
|
|
$
|
62.50
|
|
|
1-Jan-21
|
|
|
|
|
|
$
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
$
|
62.50
|
|
|
1-Jan-21
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
28.75
|
|
|
15-Jan-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
28.75
|
|
|
15-Jan-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
28.75
|
|
|
15-Jan-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
38.00
|
|
|
15-Jan-18
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
38.00
|
|
|
15-Jan-18
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
500
|
|
|
$
|
38.00
|
|
|
15-Jan-18
|
|
|
|
|
|
$
|
|
|
|
|
|
3,072
|
|
|
|
|
|
|
$
|
22.00
|
|
|
15-Apr-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
20.50
|
|
|
16-Jan-19
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
500
|
|
|
$
|
20.50
|
|
|
16-Jan-19
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
500
|
|
|
$
|
20.50
|
|
|
16-Jan-19
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward O’Donnell
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
$
|
|
|
(Chief Finance Officer)
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Erik Kloots
|
|
|
1,000
|
|
|
|
|
|
|
$
|
33.75
|
|
|
1-Jan-20
|
|
|
|
|
|
$
|
|
|
(Vice President-Finance and Principal Accounting Officer)
|
|
|
1,000
|
|
|
|
|
|
|
$
|
33.75
|
|
|
1-Jan-20
|
|
|
|
|
|
$
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
$
|
62.50
|
|
|
1-Jan-21
|
|
|
|
|
|
$
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
$
|
62.50
|
|
|
1-Jan-21
|
|
|
|
|
|
$
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
$
|
62.50
|
|
|
1-Jan-21
|
|
|
|
|
|
$
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
$
|
62.50
|
|
|
1-Jan-21
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
28.75
|
|
|
15-Jan-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
28.75
|
|
|
15-Jan-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
28.75
|
|
|
15-Jan-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
38.00
|
|
|
15-Jan-18
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
38.00
|
|
|
15-Jan-18
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
500
|
|
|
$
|
38.00
|
|
|
15-Jan-18
|
|
|
|
|
|
$
|
|
|
|
|
|
2,505
|
|
|
|
|
|
|
$
|
22.00
|
|
|
15-Apr-17
|
|
|
|
|
|
$
|
|
|
|
|
|
500
|
|
|
|
|
|
|
$
|
20.50
|
|
|
16-Jan-19
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
500
|
|
|
$
|
20.50
|
|
|
16-Jan-19
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
500
|
|
|
$
|
20.50
|
|
|
16-Jan-19
|
|
|
|
|
|
$
|
|
|
(1) The
stock options vested on the grant date November 16, 2015, and have a term of seven years from the date of grant.
(2) The
stock options were granted on November 16, 2015, have a term of seven years from the date of grant and will vest in equal tranches
in the years 2016, 2017 and 2018.
(3) The
stock options vested on the grant date December 4, 2013, and have a term of five years from the date of grant.
(4) The
stock options vested on the grant date April 5, 2013, and have a term of three years from the date of grant.
(5) The
stock options vested on the grant date January 23, 2015, and have a term of three years from the date of grant.
(6) The
stock options vested on the grant date January 23, 2015, and have a term of three years from the date of grant.
(7) The
stock options were granted on January 29, 2015, have a term of four years from the date of grant and will vest in three equal tranches
in the years 2016, 2017 and 2018.
(8) The
stock options were granted on April 1, 2015, have a term of five years from the date of grant and will vest in four equal tranches
in the years 2016, 2017, 2018 and 2019.
OPTION EXERCISES AND STOCK VESTED
The following table
represents stock options that have been exercised and restricted stock awards that have vested as of December 31, 2016.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
|
Value Realized on
Exercise ($)
|
|
|
Number of Shares
Acquired on Vesting
(#)(a)
|
|
|
Value Realized on
Vesting ($)
|
|
Robert H. Turner
|
|
|
0
|
|
|
$
|
-
|
|
|
|
86,000
|
|
|
$
|
257,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vic Bozzo
|
|
|
0
|
|
|
$
|
-
|
|
|
|
0
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Korff
|
|
|
0
|
|
|
$
|
-
|
|
|
|
49,807
|
|
|
$
|
186,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward O’Donnell
|
|
|
0
|
|
|
$
|
-
|
|
|
|
0
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Erik Kloots
|
|
|
0
|
|
|
$
|
-
|
|
|
|
44,791
|
|
|
$
|
134,262
|
|
Our named executive
officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by us during
2016. In addition, our named executive officers did not participate in, or otherwise receive any benefits under, a nonqualified
deferred compensation plan during 2016.
|
(a)
|
The awards have been granted and vested in 2016; however, some of the shares were only issued and
delivered early 2017. The corresponding share-based compensation expenses have been accounted for in 2016.
|
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
General
Four directors are
to be elected at the 2017 Meeting of Stockholders to serve until the next annual meeting of Stockholders. Unless otherwise instructed,
the persons named in the accompanying proxy intend to vote the shares represented by the proxy for the election of the nominees
listed below. Although it is not contemplated that any nominee will decline or be unable to serve as a director, in such event,
proxies will be voted by the proxy holder for such other persons as may be designated by the Board, unless the Board reduces the
number of directors to be elected. Election of a director requires a plurality of the votes cast at the Meeting.
The following table
sets forth the nominees for directors on the Board. Roderick de Greef and Robert Skaff are not standing for reelection as a director
at this Meeting. Certain biographical information about the nominees as of the Record Date can be found above in the section titled
“Directors and Officers.”
Nominees for Directors
Name
|
|
Age
|
|
|
Position(s) with the Company
|
|
Date First Elected or
Appointed
|
Robert H. Turner
|
|
68
|
|
|
Executive Chairman, Director
|
|
2015
|
Yves van Sante
|
|
55
|
|
|
Director
|
|
2014
|
Luis Jimenez-Tuñon
|
|
38
|
|
|
Director
|
|
2017
|
Laura Thomas
|
|
61
|
|
|
Director
|
|
2017
|
Vote Required
Approval for this proposal
requires the affirmative vote of the holders of a plurality of the common stock present at the Meeting.
THE BOARD RECOMMENDS A VOTE “FOR”
THIS PROPOSAL NO. 1.
PROPOSAL NO. 2
Ratification
of the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan, including the reservation of
6,500,000
shares
of common stock thereunder
On June 8, 2017, the
Board adopted the 2017 Pareteum Corp. Long-Term Incentive Compensation Plan (the “2017 Plan”), an omnibus equity incentive
plan pursuant to which the Company may grant equity and equity-linked awards to officers, directors, consultants and others. The
Board adopted the 2017 Plan as a means to offer incentives and attract, motivate and retain and reward persons eligible to participate
in the 2017 Plan. Accordingly, the Board unanimously approved and adopted the 2017 Plan, including authorization of the issuance
of 6,500,000 shares of the Company’s common stock.
Set forth below is
a summary of the 2017 Plan, which is qualified in its entirety by reference to the full text of the 2017 Plan, a copy of which
is included as
Appendix A
to this proxy statement.
Summary of the 2016 Plan
The following description
of certain features of the 2017 Plan is intended to be a summary only. The summary is qualified in its entirety by the full text
of the 2017 Plan that is attached hereto as
Appendix A
. Capitalized terms not defined herein shall have the meaning set
forth in the 2017 Plan.
Administration
The Board shall administer
the 2017 Plan. The Board may, by resolution, appoint the Compensation Committee to administer the 2017 Plan and delegate its powers
and otherwise under the 2107 Plan for purposes of Awards granted to Eligible Employees and Consultants.
Eligibility
Awards may be granted
pursuant to the 2017 Plan only to persons who are eligible persons. Under the 2017 Plan, “Eligible Employee” means
any employee of the Company, a Subsidiary, or an Affiliated Entity as approved by the Board; “Eligible Director” means
any member of the Board who is not an employee of the Company, a Subsidiary or an Affiliated Entity; and “Consultant”
means any person or entity who is engaged by the Company, a Subsidiary or an Affiliated Entity to render consulting or advisory
services.
Awards
Awards granted under
this Plan shall be subject to the following conditions:
(a) Any shares of Common
Stock related to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares of
Common Stock or are exchanged in the Board’s discretion for Awards not involving Common Stock, shall be available again for
grant under the 2017 Plan and shall not be counted against the shares authorized under Section 1.3.
(b) Common Stock delivered
by the Company in payment of an Award authorized under Articles V and VI of the 2017 Plan may be authorized and unissued Common
Stock or Common Stock held in the treasury of the Company.
(c) The Board shall,
in its sole discretion, determine the manner in which fractional shares arising under this Plan shall be treated.
(d) Separate certificates
or a book-entry registration representing Common Stock shall be delivered to a Participant upon the exercise of any Option.
(e) Eligible Directors
may only be granted Nonqualified Stock Options, Restricted Stock Awards, SARs or Performance Units under this Plan.
(f) The maximum term
of any Award shall be ten years.
Option Awards
.
The
Board may, from time to time, subject to the provisions of the 2017 Plan and such other terms and conditions as it may determine,
grant Options to Eligible Employees. These Options may be Incentive Stock Options or Nonqualified Stock Options, or a combination
of both. The Board may, subject to the provisions of the 2017 Plan and such other terms and conditions as it may determine, grant
Nonqualified Stock Options to Eligible Directors and Consultants. Each grant of an Option shall be evidenced by an Award Agreement
executed by the Company and the Participant, and shall contain such terms and conditions and be in such form as the Board may from
time to time approve
Restricted Stock.
The
Board may, from time to time, subject to the provisions of the 2017 Plan and such other terms and conditions as it may determine,
grant a Restricted Stock Award to Eligible Employees, Consultants or Eligible Directors. Restricted Stock Awards shall be awarded
in such number and at such times during the term of the 2017 Plan as the Board shall determine. Each Restricted Stock Award shall
be subject to an Award Agreement setting forth the terms of such Restricted Stock Award and may be evidenced in such manner as
the Board deems appropriate, including, without limitation, a book-entry registration or issuance of a stock certificate or certificates.
Stock Appreciation
Rights
.
The Board may from time to time, in its sole discretion, subject to the provisions of the 2017 Plan and subject
to other terms and conditions as the Board may determine, grant a SAR to any Eligible Employee, Consultant or Eligible Director.
SARs may be granted in tandem with an Option, in which event, the Participant has the right to elect to exercise either the SAR
or the Option. Upon the Participant’s election to exercise one of these Awards, the other tandem Award is automatically terminated.
SARs may also be granted as an independent Award separate from an Option. Each grant of a SAR shall be evidenced by an Award Agreement
executed by the Company and the Participant and shall contain such terms and conditions and be in such form as the Board may from
time to time approve, subject to the requirements of the 2017 Plan. The exercise price of the SAR shall not be less than the Fair
Market Value of a share of Common Stock on the Date of Grant of the SAR.
Performance Based Compensation
The Board may, from
time to time, subject to the provisions of the 2017 Plan and such other terms and conditions as it may determine, grant Performance
Units to Eligible Employees, Consultants and Eligible Directors. Each Award of Performance Units shall be evidenced by an Award
Agreement executed by the Company and the Participant, and shall contain such terms and conditions and be in such form as the Board
may from time to time approve.
The Board may from
time to time, subject to the provisions of the 2017 Plan and such other terms and conditions as the Board may determine, grant
a Performance Bonus to certain Eligible Employees selected for participation. The Board will determine the amount that may be earned
as a Performance Bonus in any period of one year or more upon the achievement of a performance target established by the Board.
The Board shall select the applicable performance target(s) for each period in which a Performance Bonus is awarded.
Change in Control
Notwithstanding any
other provision in this Plan to the contrary, Awards granted under the 2017 Plan to any Eligible Employee, Consultant or Eligible
Director shall be immediately vested, fully earned and exercisable upon the occurrence of a Change of Control Event unless the
terms of the Award state otherwise.
“Change of Control
Event” means, except as otherwise provided in an Award Agreement, each of the following:
(i) Any transaction
in which shares of voting securities of the Company representing more than 50% of the total combined voting power of all outstanding
voting securities of the Company are issued by the Company, or sold or transferred by the stockholders of the Company as a result
of which those persons and entities who beneficially owned voting securities of the Company representing more than 50% of the total
combined voting power of all outstanding voting securities of the Company immediately prior to such transaction cease to beneficially
own voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities
of the Company immediately after such transaction;
(ii) The merger or
consolidation of the Company with or into another entity as a result of which those persons and entities who beneficially owned
voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities
of the Company immediately prior to such merger or consolidation cease to beneficially own voting securities of the Company representing
more than 50% of the total combined voting power of all outstanding voting securities of the surviving corporation or resulting
entity immediately after such merger of consolidation; or
(iii) The sale of all
or substantially all of the Company’s assets to an entity of which those persons and entities who beneficially owned voting
securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of
the Company immediately prior to such asset sale do not beneficially own voting securities of the purchasing entity representing
more than 50% of the total combined voting power of all outstanding voting securities of the purchasing entity immediately after
such asset sale.
Section 162(m)
of the Internal Revenue Code
.
The Company intends for the 2017 Plan and the Awards made thereunder to be exempt from
the deductibility limitation in Code Section 162(m) if it is determined by the Board that such qualification is necessary or desirable
for an Award. Accordingly, the Board shall make determinations as to performance targets and all other applicable provisions of
the 2017 Plan as necessary in order for the 2017 Plan and Awards made thereunder to satisfy the requirements of Section 162(m)
of the Code.
New Plan Benefits
SEC rules
require us to disclose any amounts that we currently are able to determine will be allocated to our named executive officers,
directors and other employees following approval of the 2017 Plan. Subject to the approval by the stockholders of the
2017 Plan, the Company anticipates an aggregate of 2,350,000 shares and options to purchase an aggregate of 1,568,000 shares
will be issued to named executive officers, directors and other employees.
Equity Compensation Plan Information
(as of December 31, 2016)
Securities Authorized for Issuance under Equity Compensation
Plans
Plan Category
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
|
Number of securities
remaining available for
future issuance under
the equity compensation
plans (excluding
securities reflected in
column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
2006 Plan (1): 0
2008 Plan (2): 1,040,211
|
|
|
|
2006 Plan: n/a
2008 Plan: $13.25
|
|
|
|
2006 Plan: 0
2008 Plan: 586,636
|
|
Equity compensation plans not approved by security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
1,040,211
|
|
|
|
-
|
|
|
|
586,636
|
|
|
(1)
|
S-8 filed July 21, 2006.
|
|
(2)
|
S-8 filed July 11, 2008. The stockholders approved the increase of the total number of shares of
authorized to be issued under the 2008 Plan from 200,000 to 920,000, during 2013 the stockholders approved an increase from 920,000
to 1,840,000 and during 2014 an increase of the total number of shares available under the 2008 Plan from 1,840,000 to 2,240,000.
|
Vote Required
Approval for this proposal
requires the affirmative vote of the majority of the votes cast at the Meeting.
THE BOARD RECOMMENDS A VOTE “FOR”
THIS PROPOSAL NO. 2.
PROPOSAL NO. 3
THE RATIFICATION OF THE APPOINTMENT OF
SQUARMILNER LLP AS THE COMPANY’S INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2017
The Board has appointed
SquarMilner LLP (“SquarMilner”) of Los Angeles, California as our independent registered certified public accounting
firm for the fiscal year 2017 and has further directed that the selection of SquarMilner be submitted to a vote of Stockholders
at the Meeting for ratification.
As described below,
the Stockholder vote is not binding on the Board. If the appointment of SquarMilner is not ratified, the Board will evaluate the
basis for the Stockholders’ vote when determining whether to continue the firm’s engagement, but may ultimately determine to continue
the engagement of the firm or another audit firm without re-submitting the matter to Stockholders. Even if the appointment of SquarMilner
is ratified, the Board may in its sole discretion terminate the engagement of the firm and direct the appointment of another independent
auditor at any time during the year if it determines that such an appointment would be in the best interests of our Company and
our Stockholders.
Representatives of
SquarMilner are not expected to attend the Meeting.
Fees
During the years ended
December 31, 2016, and 2015, we engaged SquarMilner as our independent auditor. For the years ended December 31, 2016,
and 2015, we incurred fees as discussed below:
|
|
2016
|
|
|
2015
|
|
Audit fees
|
|
$
|
220,000
|
|
|
$
|
220,000
|
|
Audit-related fees
|
|
$
|
14,000
|
|
|
$
|
20,000
|
|
Tax fees
|
|
$
|
-
|
|
|
$
|
-
|
|
All other fees
|
|
$
|
-
|
|
|
$
|
-
|
|
Total Fees
|
|
$
|
234,000
|
|
|
$
|
240,000
|
|
Audit fees. Consist
of fees billed for professional services rendered for the audit of the consolidated financial statements and review of the quarterly
interim consolidated financial statements. These fees also include the review of registration statements and the delivery of consents
in connection with registration statements.
Audit-related fees.
Consist of the review of SEC comment letters and management response.
Tax fees. There were
no fees billed by SquarMilner for professional services rendered for tax compliance for the years ended December 31, 2016 and 2015.
All other fees. There
were no fees billed by SquarMilner for professional services rendered for other compliance purposes for the years ended December
31, 2016 and 2015.
The Audit Committee
of our Board of Directors has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved
the foregoing audit and audit-related services provided by SquarMilner in 2016 and 2015 consistent with the Audit Committee’s
responsibility for engaging our independent auditors. The Audit Committee also considered whether the non-audit services rendered
by our independent registered public accounting firm are compatible with an auditor maintaining independence. The Audit Committee
has determined that the rendering of such services is compatible with SquarMilner maintaining its independence.
Vote Required
Approval for this proposal
requires the affirmative vote of the majority of the votes cast at the Meeting.
THE BOARD RECOMMENDS A VOTE “FOR”
THIS PROPOSAL NO. 3.
AUDIT COMMITTEE REPORT
The Board has reviewed
and discussed with management our audited financial statements for the fiscal year ended December 31, 2016, which were audited
by SquarMilner, our independent registered public accounting firm. The Board discussed with SquarMilner the matters required to
be discussed pursuant to Public Company Accounting Oversight Board (United States) Auditing Standard 16 (Communication with Audit
Committee). The Board received the written disclosures and letter from the independent registered public accounting firm required
by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with
the Board concerning independence, and discussed with the independent registered public accounting firm the independent registered
public accounting firm’s independence. The Board also considered whether the provision of services other than the audit of
our financial statements for the fiscal year ended December 31, 2016 were compatible with maintaining SquarMilner’s independence.
The Board has selected
SquarMilner as our independent auditor for 2017.
|
Respectfully submitted by the Audit Committee,
|
|
|
|
Messrs. de Greef, van Sante and Jimenez-Tuñon and Ms. Thomas
|
HOUSE HOLDING OF MATERIALS
In some instances,
only one copy of the proxy materials is being delivered to multiple Stockholders sharing an address, unless we have received instructions
from one or more of the Stockholders to continue to deliver multiple copies. We will deliver promptly, upon oral or written request,
a separate copy of the applicable materials to a Stockholder at a shared address to which a single copy was delivered. If you wish
to receive a separate copy of the proxy materials you may call us at (212) 984-1096, or send a written request to Pareteum Corp.,
100 Park Avenue, New York City, NY 10017, attention: Secretary. If you have received only one copy of the proxy materials, and
wish to receive a separate copy for each Stockholder in the future, you may call us at the telephone number or write us at the
address listed above. Alternatively, Stockholders sharing an address who now receive multiple copies of the proxy materials may
request delivery of a single copy, also by calling us at the telephone number or writing to us at the address listed above.
STOCKHOLDER PROPOSALS FOR THE 2018 MEETING
Our bylaws provide
that, for matters to be properly brought before an annual meeting, business must be either (i) specified in the notice of
the annual meeting (or any supplement or amendment thereto) given by or at the direction of the Board, (ii) otherwise brought
before the annual meeting by or at the direction of the Board, or (iii) otherwise properly brought before the annual meeting
by a Stockholder.
Stockholder proposals
intended for inclusion in our proxy statement relating to the next annual meeting in 2018 must be received by us no later than
March 29, 2018. If the date of next year’s annual meeting is moved by more than 30 days before or after the anniversary date
of this year’s annual meeting, then the deadline for inclusion of a Stockholder proposal in our proxy materials is instead a reasonable
time before we begin to print and send our proxy materials for that meeting. Any such proposal must comply with Rule 14a-8
of Regulation 14A of the proxy rules of the SEC.
Notice to us of a Stockholder
proposal submitted otherwise than pursuant to Rule 14a-8 also will be considered untimely if received at our principal executive
offices other than during the time period set forth below and will not be placed on the agenda for the Meeting. In addition to
any other applicable requirements, for business to be properly brought before an annual meeting by a Stockholder, the Stockholder
must have given timely notice thereof in writing to our secretary. To be timely, a Stockholder’s notice must be delivered to the
secretary at our principal executive offices not later than the close of business on the ninetieth (90th) day nor earlier than
the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting;
provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than
seventy (70) days after such anniversary date, notice by the Stockholder must be so delivered not earlier than the close of
business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement
of the date of such meeting is first made by us.
OTHER MATTERS
The Board knows of
no matter to be brought before the Meeting other than the matters identified in this proxy statement. However, if any other matter
properly comes before the Meeting or any adjournment of the Meeting, it is the intention of the persons named in the proxy solicited
by the Board to vote the shares represented by them in accordance with their best judgment.
ANNUAL REPORT
Upon written request
to Pareteum Corp., 100 Park Avenue, New York City, NY 10017, attention: Secretary, we will provide without charge to each person
requesting a copy of our 2016 Annual Report, including the financial statements filed therewith. We will furnish a requesting Stockholder
with any exhibit not contained therein upon specific request. In addition, this Proxy Statement, as well as our 2016 Annual Report,
is available on our Internet website at http://www.pareteum.com.
|
BY ORDER OF THE BOARD
|
|
|
|
/s/ Robert H. Turner
|
|
Robert H. Turner
|
Appendix A
PARETEUM CORP.
2017 LONG-TERM INCENTIVE COMPENSATION
PLAN
ARTICLE I
PURPOSE
Section 1.1 Purpose.
This 2017 Long-Term
Incentive Compensation Plan (the “Plan”) is established by Pareteum Corp., a Delaware corporation (the “Company”),
to create incentives which are designed to motivate Participants to put forth maximum effort toward the success and growth of the
Company and to enable the Company to attract and retain experienced individuals who by their position, ability and diligence are
able to make important contributions to the Company’s success. Toward these objectives, the Plan provides for the grant of
Options, Restricted Stock Awards, Stock Appreciation Rights (“SARs”), Performance Units and Performance Bonuses to
Eligible Employees and the grant of Nonqualified Stock Options, Restricted Stock Awards, SARs and Performance Units to Consultants
and Eligible Directors, subject to the conditions set forth in the Plan.
Section 1.2 Establishment.
The Plan
is effective as of June 8, 2017 and for a period of ten years thereafter. The Plan shall continue in effect until all matters relating
to the payment of Awards and administration of the Plan have been settled. The Plan is subject to approval by the Company’s
stockholders in accordance with applicable law which approval must occur within the period ending twelve months after the date
the Plan is adopted by the Board. Pending such approval by the stockholders, Awards under the Plan may be granted, but no such
Awards may be exercised prior to receipt of stockholder approval. In the event stockholder approval is not obtained within a twelve-month
period, all Awards granted shall be void.
Section 1.3 Shares Subject to the Plan
.
Subject to the limitations set forth in the Plan, Awards may be made under this Plan for a total of 6,500,000 shares of the Company’s
common stock, par value $.00001 per share (the “Common Stock”), all of which may be issued in respect of Incentive
Stock Options.
ARTICLE II
DEFINITIONS
Section 2.1 “Account
”
means the recordkeeping account established by the Company to which will be credited an Award of Performance Units to a Participant.
Section 2.2 “Affiliated Entity”
means any corporation, partnership, limited liability company or other form of legal entity in which a majority of the partnership
or other similar interest thereof is owned or controlled, directly or indirectly, by the Company or one or more of its Subsidiaries
or Affiliated Entities or a combination thereof. For purposes hereof, the Company, a Subsidiary or an Affiliated Entity shall be
deemed to have a majority ownership interest in a partnership or limited liability company if the Company, such Subsidiary or Affiliated
Entity shall be allocated a majority of partnership or limited liability company gains or losses or shall be or control a managing
director or a general partner of such partnership or limited liability company.
Section 2.3 “Award”
means,
individually or collectively, any Option, Restricted Stock Award, SAR, Performance Unit or Performance Bonus granted under the
Plan to an Eligible Employee by the Board or any Nonqualified Stock Option, Performance Unit, SAR or Restricted Stock Award granted
under the Plan to a Consultant or an Eligible Director by the Board pursuant to such terms, conditions, restrictions, and/or limitations,
if any, as the Board may establish by the Award Agreement or otherwise.
Section 2.4 “Award Agreement”
means any written instrument that establishes the terms, conditions, restrictions, and/or limitations applicable to an Award
in addition to those established by this Plan and by the Board’s exercise of its administrative powers.
Section 2.5 “Board”
means
the Board of Directors of the Company and, if the Board has appointed a Committee as provided in Section 3.1, the term “Board”
shall include such Committee.
Section 2.6 “Change of Control
Event”
means, except as otherwise provided in an Award Agreement, each of the following:
(i) Any transaction in which shares of
voting securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities
of the Company are issued by the Company, or sold or transferred by the stockholders of the Company as a result of which those
persons and entities who beneficially owned voting securities of the Company representing more than 50% of the total combined voting
power of all outstanding voting securities of the Company immediately prior to such transaction cease to beneficially own voting
securities of the Company representing more than 50% of the total combined voting power of all outstanding voting securities of
the Company immediately after such transaction;
(ii) The merger or consolidation of the
Company with or into another entity as a result of which those persons and entities who beneficially owned voting securities of
the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company immediately
prior to such merger or consolidation cease to beneficially own voting securities of the Company representing more than 50% of
the total combined voting power of all outstanding voting securities of the surviving corporation or resulting entity immediately
after such merger of consolidation; or
(iii) The sale of all or substantially
all of the Company’s assets to an entity of which those persons and entities who beneficially owned voting securities of
the Company representing more than 50% of the total combined voting power of all outstanding voting securities of the Company immediately
prior to such asset sale do not beneficially own voting securities of the purchasing entity representing more than 50% of the total
combined voting power of all outstanding voting securities of the purchasing entity immediately after such asset sale.
Section 2.7 “Code”
means
the Internal Revenue Code of 1986, as amended. References in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under such section.
Section 2.8 “Committee”
means the Committee appointed by the Board as provided in Section 3.1.
Section 2.9 “Common Stock”
means the common stock, par value $.00001 per share, of the Company, and after substitution, such other stock as shall be substituted
therefore as provided in Article X.
Section 2.10 “Consultant”
means any person or entity who is engaged by the Company, a Subsidiary or an Affiliated Entity to render consulting or advisory
services.
Section 2.11 “Date of Grant”
means the date on which the grant of an Award is authorized by the Board or such later date as may be specified by the Board
in such authorization.
Section 2.12 “Disability”
means, except as otherwise provided in an Award Agreement, the Participant is unable to continue employment by reason of any
medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months. For purposes of this Plan, the determination of Disability shall be made in the sole
and absolute discretion of the Board.
Section 2.13 “Eligible Employee”
means any employee of the Company, a Subsidiary, or an Affiliated Entity as approved by the Board.
Section 2.14 “Eligible Director”
means any member of the Board who is not an employee of the Company, a Subsidiary or an Affiliated Entity.
Section 2.15 “Exchange Act”
means the Securities Exchange Act of 1934, as amended.
Section 2.16 “Fair Market Value”
means (A) during such time as the Common Stock is registered under Section 12 of the Exchange Act, the closing price of the
Common Stock as reported by an established stock exchange or automated quotation system on the day for which such value is to be
determined, or, if no sale of the Common Stock shall have been made on any such stock exchange or automated quotation system that
day, on the next preceding day on which there was a sale of such Common Stock, or (B) during any such time as the Common Stock
is not listed upon an established stock exchange or automated quotation system, the mean between dealer “bid” and “ask”
prices of the Common Stock in the over-the-counter market on the day for which such value is to be determined, as reported by the
National Association of Securities Dealers, Inc., or (C) during any such time as the Common Stock cannot be valued pursuant to
(A) or (B) above, the fair market value shall be as determined by the Board considering all relevant information including, by
example and not by limitation, the services of an independent appraiser.
Section 2.17 “Incentive Stock
Option”
means an Option within the meaning of Section 422 of the Code.
Section 2.18 “Nonqualified Stock
Option”
means an Option which is not an Incentive Stock Option.
Section 2.19 “Option”
means
an Award granted under Article V of the Plan and includes both Nonqualified Stock Options and Incentive Stock Options to purchase
shares of Common Stock.
Section 2.20 “Participant”
means an Eligible Employee, a Consultant or an Eligible Director to whom an Award has been granted by the Board under the Plan.
Section 2.21 “Performance Bonus”
means the cash bonus which may be granted to Eligible Employees under Article IX of the Plan.
Section 2.22 “Performance Units”
means those monetary units that may be granted to Eligible Employees, Consultants or Eligible Directors pursuant to Article
VIII hereof.
Section 2.23 “Plan”
means
this Pareteum Corp. 2017 Long-Term Incentive Compensation Plan.
Section 2.24 “Restricted Stock
Award”
means an Award granted to an Eligible Employee, Consultant or Eligible Director under Article VI of the Plan.
Section 2.25 “Retirement”
means, except as otherwise provided in an Award Agreement, the termination of an Eligible Employee’s employment with
the Company, a Subsidiary or an Affiliated Entity on or after attaining age 65.
Section 2.26 “SAR”
means
a stock appreciation right granted to an Eligible Employee, Consultant or Eligible Director under Article VII of the Plan.
Section 2.27 “Subsidiary”
shall have the same meaning set forth in Section 424 of the Code.
Section 2.28 “Compensation Committee”
means the Compensation Committee of the Board.
ARTICLE III
ADMINISTRATION
Section 3.1 Administration.
The
Board shall administer the Plan. The Board may, by resolution, appoint the Compensation Committee to administer the Plan and delegate
its powers described under this Section 3.1 and otherwise under the Plan for purposes of Awards granted to Eligible Employees and
Consultants.
Subject to the provisions of the Plan,
the Board shall have exclusive power to:
(a) Select Eligible Employees and Consultants
to participate in the Plan.
(b) Determine the time or times when Awards
will be made to Eligible Employees or Consultants.
(c) Determine the form of an Award, whether
an Incentive Stock Option, Nonqualified Stock Option, Restricted Stock Award, SAR, Performance Unit, or Performance Bonus, the
number of shares of Common Stock or Performance Units subject to the Award, the amount and all the terms, conditions (including
performance requirements), restrictions and/or limitations, if any, of an Award, including the time and conditions of exercise
or vesting, and the terms of any Award Agreement, which may include the waiver or amendment of prior terms and conditions or acceleration
or early vesting or payment of an Award under certain circumstances determined by the Board.
(d) Determine whether Awards will be granted
singly or in combination.
(e) Accelerate the vesting, exercise or
payment of an Award or the performance period of an Award.
(f) Determine whether and to what extent
a Performance Bonus may be deferred, either automatically or at the election of the Participant or the Board.
(g) Reduce the exercise price of any Option
or SAR to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option or SAR shall have
declined since the date such Award was granted.
(h) Take any and all other action it deems
necessary or advisable for the proper operation or administration of the Plan.
Notwithstanding the foregoing, the Board
may authorize the Company Chief Executive Officer, another executive officer, or a committee of such directors (the “Authorized
Officers”) to grant Options under the Plan, to the extent permitted by applicable law. If so authorized, the Authorized Officers
shall have the same authority as the Board under this Section 3.1 and otherwise under the Plan with respect to the grant of Options,
subject to the limitations set forth in such authorization, if any.
Section 3.2 Administration of Grants
to Eligible Directors.
The Board shall have the exclusive power to select Eligible Directors to participate in the Plan and
to determine the number of Nonqualified Stock Options, Performance Units, SARs or shares of Restricted Stock awarded to Eligible
Directors selected for participation. If the Board appoints a committee to administer the Plan, it may delegate to the committee
administration of all other aspects of the Awards made to Eligible Directors.
Section 3.3 Board to Make Rules and
Interpret Plan.
The Board in its sole discretion shall have the authority, subject to the provisions of the Plan, to establish,
adopt, or revise such rules and regulations and to make all such determinations relating to the Plan, as it may deem necessary
or advisable for the administration of the Plan. The Board’s interpretation of the Plan or any Awards and all decisions and
determinations by the Board with respect to the Plan shall be final, binding, and conclusive on all parties.
Section 3.4 Section 162(m)
. The
Company intends for the Plan and the Awards made thereunder to be exempt from the deductibility limitation in Code Section 162(m)
if it is determined by the Board that such qualification is necessary or desirable for an Award. Accordingly, the Board shall make
determinations as to performance targets and all other applicable provisions of the Plan as necessary in order for the Plan and
Awards made thereunder to satisfy the requirements of Section 162(m) of the Code. Subject to adjustment as provided in Article
X, the maximum number of shares with respect to which Options or SARs may be granted to any Participant in any one calendar year
is 6,500,000. With respect to other types of Awards intended to be exempt from the deductibility limitation in Code Section 162(m),
no Participant in any one calendar year may be granted Awards with respect to more than 6,500,000 shares of Common Stock in the
aggregate, or if such Awards are payable in cash, the fair market value equivalent thereof. If an Award is cancelled, the cancelled
Award shall continue to be counted towards the applicable limitations.
ARTICLE IV
GRANT OF AWARDS
Section 4.1 Grant of Awards.
Awards
granted under this Plan shall be subject to the following conditions:
(a) Any shares of Common Stock related
to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of shares of Common Stock or
are exchanged in the Board’s discretion for Awards not involving Common Stock, shall be available again for grant under the
Plan and shall not be counted against the shares authorized under Section 1.3.
(b) Common Stock delivered by the Company
in payment of an Award authorized under Articles V and VI of the Plan may be authorized and unissued Common Stock or Common Stock
held in the treasury of the Company.
(c) The Board shall, in its sole discretion,
determine the manner in which fractional shares arising under this Plan shall be treated.
(d) Separate certificates or a book-entry
registration representing Common Stock shall be delivered to a Participant upon the exercise of any Option.
(e) Eligible Directors may only be granted
Nonqualified Stock Options, Restricted Stock Awards, SARs or Performance Units under this Plan.
(f) The maximum term of any Award shall
be ten years.
ARTICLE V
STOCK OPTIONS
Section 5.1 Grant of Options.
The
Board may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant
Options to Eligible Employees. These Options may be Incentive Stock Options or Nonqualified Stock Options, or a combination of
both. The Board may, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant Nonqualified
Stock Options to Eligible Directors and Consultants. Each grant of an Option shall be evidenced by an Award Agreement executed
by the Company and the Participant, and shall contain such terms and conditions and be in such form as the Board may from time
to time approve, subject to the requirements of Section 5.2.
Section 5.2 Conditions of Options.
Each
Option so granted shall be subject to the following conditions:
(a) Exercise Price. Each Option shall state
the exercise price which shall be set by the Board at the Date of Grant; provided, however, no Option shall be granted at an exercise
price which is less than the Fair Market Value of the Common Stock on the Date of Grant.
(b) Form of Payment. The exercise price
of an Option may be paid (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) by delivering
shares of Common Stock having a Fair Market Value on the date of payment equal to the amount of the exercise price, but only to
the extent such exercise of an Option would not result in an adverse accounting charge to the Company for financial accounting
purposes with respect to the shares used to pay the exercise price unless otherwise determined by the Board; or (iii) a combination
of the foregoing. In addition to the foregoing, the Board may permit an Option granted under the Plan to be exercised by a broker-dealer
acting on behalf of a Participant through procedures approved by the Board.
(c) Exercise of Options. Options granted
under the Plan shall be exercisable, in whole or in such installments and at such times, and shall expire at such time, as shall
be provided by the Board in the Award Agreement. Exercise of an Option shall be by written notice to the Secretary of the Company
at least two business days in advance of such exercise stating the election to exercise in the form and manner determined by the
Board. Every share of Common Stock acquired through the exercise of an Option shall be deemed to be fully paid at the time of exercise
and payment of the exercise price.
(d) Other Terms and Conditions. Among other
conditions that may be imposed by the Board, if deemed appropriate, are those relating to (i) the period or periods and the conditions
of exercisability of any Option; (ii) the minimum periods during which Participants must be employed by the Company, its Subsidiaries,
or an Affiliated Entity, or must hold Options before they may be exercised; (iii) the minimum periods during which shares acquired
upon exercise must be held before sale or transfer shall be permitted; (iv) conditions under which such Options or shares may be
subject to forfeiture; (v) the frequency of exercise or the minimum or maximum number of shares that may be acquired at any one
time; (vi) the achievement by the Company of specified performance criteria; and (vii) non-compete and protection of business matters.
(e) Special Restrictions Relating to Incentive
Stock Options. Options issued in the form of Incentive Stock Options shall only be granted to Eligible Employees of the Company
or a Subsidiary, and not to Eligible Employees of an Affiliated Entity unless such entity shall be considered as a “disregarded
entity” under the Code and shall not be distinguished for federal tax purposes from the Company or the applicable Subsidiary.
(f) Application of Funds. The proceeds
received by the Company from the sale of Common Stock pursuant to Options will be used for general corporate purposes.
(g) Stockholder Rights. No Participant
shall have a right as a stockholder with respect to any share of Common Stock subject to an Option prior to the purchase of such
shares of Common Stock by exercise of the Option.
ARTICLE VI
RESTRICTED STOCK AWARDS
Section 6.1 Grant of Restricted Stock
Awards.
The Board may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may
determine, grant a Restricted Stock Award to Eligible Employees, Consultants or Eligible Directors. Restricted Stock Awards shall
be awarded in such number and at such times during the term of the Plan as the Board shall determine. Each Restricted Stock Award
shall be subject to an Award Agreement setting forth the terms of such Restricted Stock Award and may be evidenced in such manner
as the Board deems appropriate, including, without limitation, a book-entry registration or issuance of a stock certificate or
certificates.
Section 6.2 Conditions of Restricted
Stock Awards.
The grant of a Restricted Stock Award shall be subject to the following:
(a) Restriction Period. Restricted Stock
Awards granted to an Eligible Employee shall require the holder to remain in the employment of the Company, a Subsidiary, or an
Affiliated Entity for a prescribed period. Restricted Stock Awards granted to Consultants or Eligible Directors shall require the
holder to provide continued services to the Company for a period of time. These employment and service requirements are collectively
referred to as a “Restriction Period”. The Board or the Committee, as the case may be, shall determine the Restriction
Period or Periods which shall apply to the shares of Common Stock covered by each Restricted Stock Award or portion thereof. In
addition to any time vesting conditions determined by the Board or the Committee, as the case may be, Restricted Stock Awards may
be subject to the achievement by the Company of specified performance criteria based upon the Company’s achievement of all
or any of the operational, financial or stock performance criteria set forth on Exhibit A annexed hereto, as may from time to time
be established by the Board or the Committee, as the case may be. At the end of the Restriction Period, assuming the fulfilment
of any other specified vesting conditions, the restrictions imposed by the Board or the Committee, as the case may be shall lapse
with respect to the shares of Common Stock covered by the Restricted Stock Award or portion thereof. In addition to acceleration
of vesting upon the occurrence of a Change of Control Event as provided in Section 11.5, the Board or the Committee, as the case
may be, may, in its discretion, accelerate the vesting of a Restricted Stock Award in the case of the death, Disability or Retirement
of the Participant who is an Eligible Employee or resignation of a Participant who is a Consultant or an Eligible Director.
(b) Restrictions. The holder of a Restricted
Stock Award may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the shares of Common Stock represented
by the Restricted Stock Award during the applicable Restriction Period. The Board shall impose such other restrictions and conditions
on any shares of Common Stock covered by a Restricted Stock Award as it may deem advisable including, without limitation, restrictions
under applicable Federal or state securities laws, and may legend the certificates representing Restricted Stock to give appropriate
notice of such restrictions.
(c) Rights as Stockholders. During any
Restriction Period, the Board may, in its discretion, grant to the holder of a Restricted Stock Award all or any of the rights
of a stockholder with respect to the shares, including, but not by way of limitation, the right to vote such shares and to receive
dividends. If any dividends or other distributions are paid in shares of Common Stock, all such shares shall be subject to the
same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid.
ARTICLE VII
STOCK APPRECIATION RIGHTS
Section 7.1 Grant of SARs.
The Board
may from time to time, in its sole discretion, subject to the provisions of the Plan and subject to other terms and conditions
as the Board may determine, grant a SAR to any Eligible Employee, Consultant or Eligible Director. SARs may be granted in tandem
with an Option, in which event, the Participant has the right to elect to exercise either the SAR or the Option. Upon the Participant’s
election to exercise one of these Awards, the other tandem Award is automatically terminated. SARs may also be granted as an independent
Award separate from an Option. Each grant of a SAR shall be evidenced by an Award Agreement executed by the Company and the Participant
and shall contain such terms and conditions and be in such form as the Board may from time to time approve, subject to the requirements
of the Plan. The exercise price of the SAR shall not be less than the Fair Market Value of a share of Common Stock on the Date
of Grant of the SAR.
Section 7.2 Exercise and Payment.
SARs
granted under the Plan shall be exercisable in whole or in installments and at such times as shall be provided by the Board in
the Award Agreement. Exercise of a SAR shall be by written notice to the Secretary of the Company at least two business days in
advance of such exercise. The amount payable with respect to each SAR shall be equal in value to the excess, if any, of the Fair
Market Value of a share of Common Stock on the exercise date over the exercise price of the SAR. Payment of amounts attributable
to a SAR shall be made in shares of Common Stock.
Section 7.3 Restrictions.
In the
event a SAR is granted in tandem with an Incentive Stock Option, the Board shall subject the SAR to restrictions necessary to ensure
satisfaction of the requirements under Section 422 of the Code. In the case of a SAR granted in tandem with an Incentive Stock
Option to an Eligible Employee who owns more than 10% of the combined voting power of the Company or its Subsidiaries on the date
of such grant, the amount payable with respect to each SAR shall be equal in value to the applicable percentage of the excess,
if any, of the Fair Market Value of a share of Common Stock on the Exercise date over the exercise price of the SAR, which exercise
price shall not be less than 110% of the Fair Market Value of a share of Common Stock on the date the SAR is granted.
ARTICLE VIII
PERFORMANCE UNITS
Section 8.1 Grant of Awards.
The
Board may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant
Performance Units to Eligible Employees, Consultants and Eligible Directors. Each Award of Performance Units shall be evidenced
by an Award Agreement executed by the Company and the Participant, and shall contain such terms and conditions and be in such form
as the Board may from time to time approve, subject to the requirements of Section 8.2.
Section 8.2 Conditions of Awards.
Each
Award of Performance Units shall be subject to the following conditions:
(a) Establishment of Award Terms. Each
Award shall state the target, maximum and minimum value of each Performance Unit payable upon the achievement of performance goals.
(b) Achievement of Performance Goals. The
Board shall establish performance targets for each Award for a period of no less than a year based upon some or all of the operational,
financial or performance criteria listed in Exhibit A attached. The Board shall also establish such other terms and conditions
as it deems appropriate to such Award. The Award may be paid out in cash or Common Stock as determined in the sole discretion of
the Board.
ARTICLE IX
PERFORMANCE BONUS
Section 9.1 Grant of Performance Bonus.
The Board may from time to time, subject to the provisions of the Plan and such other terms and conditions as the Board may
determine, grant a Performance Bonus to certain Eligible Employees selected for participation. The Board will determine the amount
that may be earned as a Performance Bonus in any period of one year or more upon the achievement of a performance target established
by the Board. The Board shall select the applicable performance target(s) for each period in which a Performance Bonus is awarded.
The performance target shall be based upon all or some of the operational, financial or performance criteria listed in Exhibit
A attached.
Section 9.2 Payment of Performance Bonus.
In order for any Participant to be entitled to payment of a Performance Bonus, the applicable performance target(s) established
by the Board must first be obtained or exceeded. Payment of a Performance Bonus shall be made within 60 days of the Board’s
certification that the performance target(s) has been achieved unless the Participant has previously elected to defer payment pursuant
to a nonqualified deferred compensation plan adopted by the Company. Payment of a Performance Bonus may be made in either cash
or Common Stock as determined in the sole discretion of the Board.
ARTICLE X
STOCK ADJUSTMENTS
In the event that the shares of Common
Stock, as constituted on the effective date of the Plan, shall be changed into or exchanged for a different number or kind of shares
of stock or other securities of the Company or of another corporation (whether by reason of merger, consolidation, recapitalization,
reclassification, stock split, spin-off, combination of shares or otherwise), or if the number of such shares of Common Stock shall
be increased through the payment of a stock dividend, or a dividend on the shares of Common Stock, or if rights or warrants to
purchase securities of the Company shall be issued to holders of all outstanding Common Stock, then there shall be substituted
for or added to each share available under and subject to the Plan, and each share theretofore appropriated under the Plan, the
number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or
for which each such share shall be exchanged or to which each such share shall be entitled, as the case may be, on a fair and equivalent
basis in accordance with the applicable provisions of Section 424 of the Code; provided, however, with respect to Options, in no
such event will such adjustment result in a modification of any Option as defined in Section 424(h) of the Code. In the event there
shall be any other change in the number or kind of the outstanding shares of Common Stock, or any stock or other securities into
which the Common Stock shall have been changed or for which it shall have been exchanged, then if the Board shall, in its sole
discretion, determine that such change equitably requires an adjustment in the shares available under and subject to the Plan,
or in any Award, theretofore granted, such adjustments shall be made in accordance with such determination, except that no adjustment
of the number of shares of Common Stock available under the Plan or to which any Award relates that would otherwise be required
shall be made unless and until such adjustment either by itself or with other adjustments not previously made would require an
increase or decrease of at least 1% in the number of shares of Common Stock available under the Plan or to which any Award relates
immediately prior to the making of such adjustment (the “Minimum Adjustment”). Any adjustment representing a change
of less than such minimum amount shall be carried forward and made as soon as such adjustment together with other adjustments required
by this Article X and not previously made would result in a Minimum Adjustment. Notwithstanding the foregoing, any adjustment required
by this Article X which otherwise would not result in a Minimum Adjustment shall be made with respect to shares of Common Stock
relating to any Award immediately prior to exercise, payment or settlement of such Award. No fractional shares of Common Stock
or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the nearest whole share.
ARTICLE XI
GENERAL
Section 11.1 Amendment or Termination
of Plan.
The Board may alter, suspend or terminate the Plan at any time provided, however, that it may not, without stockholder
approval, adopt any amendment which would (i) increase the aggregate number of shares of Common Stock available under the Plan
(except by operation of Article X), (ii) materially modify the requirements as to eligibility for participation in the Plan, or
(iii) materially increase the benefits to Participants provided by the Plan.
Section 11.2 Termination of Employment;
Termination of Service.
Except as otherwise provided in an Award Agreement: (i) if an Eligible Employee’s employment
with the Company, a Subsidiary or an Affiliated Entity terminates as a result of death, Disability or Retirement, the Eligible
Employee (or personal representative in the case of death) shall be entitled to purchase all or any part of the shares subject
to any (x) vested Incentive Stock Option for a period of up to three months from such date of termination (one year in the case
of death or Disability), and (y) vested Nonqualified Stock Option during the remaining term of the Option; and (ii) if an Eligible
Employee’s employment terminates for any other reason, the Eligible Employee shall be entitled to purchase all or any part
of the shares subject to any vested Option for a period of up to three months from such date of termination. In no event shall
any Option be exercisable past the term of the Option. The Board may, in its sole discretion, accelerate the vesting of unvested
Options in the event of termination of employment of any Participant.
Except as otherwise provided in an Award
Agreement: (i) in the event a Consultant ceases to provide services to the Company or an Eligible Director terminates service as
a director of the Company, the unvested portion of any Award shall be forfeited unless otherwise accelerated pursuant to the terms
of the Eligible Director’s Award Agreement or by the Board; and (ii) the Consultant or Eligible Director shall have a period
of three years following the date he ceases to provide consulting services or ceases to be a director, as applicable, to exercise
any Nonqualified Stock Options which are otherwise exercisable on his date of termination of service.
Section 11.3 Limited Transferability
– Options.
The Board may, in its discretion, authorize all or a portion of the Nonqualified Stock Options granted under
this Plan to be on terms which permit transfer by the Participant to (i) the ex-spouse of the Participant pursuant to the terms
of a domestic relations order, (ii) the spouse, children or grandchildren of the Participant (“Immediate Family Members”),
(iii) a trust or trusts for the exclusive benefit of such Immediate Family Members, (iv) a partnership or limited liability company
in which such Immediate Family Members are the only partners or members, or (v) as otherwise determined by the Board in accordance
with applicable law. In addition, there may be no consideration for any such transfer. The Award Agreement pursuant to which such
Nonqualified Stock Options are granted expressly provide for transferability in a manner consistent with this paragraph. Subsequent
transfers of transferred Nonqualified Stock Options shall be prohibited except as set forth below in this Section 11.3. Following
transfer, any such Nonqualified Stock Options shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of Section 11.2 hereof the term “Participant” shall be deemed
to refer to the transferee. The events of termination of employment of Section 11.2 hereof shall continue to be applied with respect
to the original Participant, following which the Nonqualified Stock Options shall be exercisable by the transferee only to the
extent, and for the periods specified in Section 11.2 hereof. No transfer pursuant to this Section 11.3 shall be effective to bind
the Company unless the Company shall have been furnished with written notice of such transfer together with such other documents
regarding the transfer as the Board shall request. With the exception of a transfer in compliance with the foregoing provisions
of this Section 11.3, all other types of Awards authorized under this Plan shall be transferable only by will or the laws of descent
and distribution; however, no such transfer shall be effective to bind the Company unless the Board has been furnished with written
notice of such transfer and an authenticated copy of the will and/or such other evidence as the Board may deem necessary to establish
the validity of the transfer and the acceptance by the transferee of the terms and conditions of such Award.
Section 11.4 Withholding Taxes.
Unless
otherwise paid by the Participant, the Company, its Subsidiaries or any of its Affiliated Entities shall be entitled to deduct
from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes
required by law to be withheld with respect to such payment or may require the Participant to pay to it such tax prior to and as
a condition of the making of such payment. In accordance with any applicable administrative guidelines it establishes, the Board
may allow a Participant to pay the amount of taxes required by law to be withheld from an Award by (i) directing the Company to
withhold from any payment of the Award a number of shares of Common Stock having a Fair Market Value on the date of payment equal
to the amount of the required withholding taxes or (ii) delivering to the Company previously owned shares of Common Stock having
a Fair Market Value on the date of payment equal to the amount of the required withholding taxes. However, any payment made by
the Participant pursuant to either of the foregoing clauses (i) or (ii) shall not be permitted if it would result in an adverse
accounting charge with respect to such shares used to pay such taxes unless otherwise approved by the Board.
Section 11.5 Change of Control.
Notwithstanding
any other provision in this Plan to the contrary, Awards granted under the Plan to any Eligible Employee, Consultant or Eligible
Director shall be immediately vested, fully earned and exercisable upon the occurrence of a Change of Control Event unless the
terms of the Award state otherwise.
Section 11.6 Amendments to Awards.
The
Board may at any time unilaterally amend the terms of any Award Agreement, whether or not presently exercisable or vested, to the
extent it deems appropriate. However, amendments which are adverse to the Participant shall require the Participant’s consent.
Section 11.7 Registration; Regulatory
Approval.
Following approval of the Plan by the stockholders of the Company as provided in Section 1.2 of the Plan, the Board,
in its sole discretion, may determine to file with the Securities and Exchange Commission and keep continuously effective, a Registration
Statement on Form S-8 with respect to shares of Common Stock subject to Awards hereunder. Notwithstanding anything contained in
this Plan to the contrary, the Company shall have no obligation to issue shares of Common Stock under this Plan prior to the obtaining
of any approval from, or satisfaction of any waiting period or other condition imposed by, any governmental agency which the Board
shall, in its sole discretion, determine to be necessary or advisable.
Section 11.8 Right to Continued Employment.
Participation in the Plan shall not give any Eligible Employee any right to remain in the employ of the Company, any Subsidiary,
or any Affiliated Entity. The Company or, in the case of employment with a Subsidiary or an Affiliated Entity, the Subsidiary or
Affiliated Entity reserves the right to terminate any Eligible Employee at any time. Further, the adoption of this Plan shall not
be deemed to give any Eligible Employee or any other individual any right to be selected as a Participant or to be granted an Award.
Section 11.9 Reliance on Reports.
Each
member of the Board and each member of the Board shall be fully justified in relying or acting in good faith upon any report made
by the independent public accountants of the Company and its Subsidiaries and upon any other information furnished in connection
with the Plan by any person or persons other than himself or herself. In no event shall any person who is or shall have been a
member of the Board be liable for any determination made or other action taken or any omission to act in reliance upon any such
report or information or for any action taken, including the furnishing of information, or failure to act, if in good faith.
Section 11.10 Construction.
Masculine
pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections in the
Plan are for the convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles
or headings, shall control.
Section 11.11 Governing Law.
The
Plan shall be governed by and construed in accordance with the laws of the State of Delaware except as superseded by applicable
Federal law.
Section 11.12 Other Laws.
The Board
may refuse to issue or transfer any shares of Common Stock or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such shares or such other consideration might violate any applicable law or regulation
or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by
a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant
Participant, holder or beneficiary.
Section 11.13 No Trust or Fund Created.
Neither the Plan nor an Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship
between the Company and a Participant or any other person. To the extent that a Participant acquires the right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company.
Section 11.14 Conformance to Section
409A of the Code
To the extent that the Committee determines that any Award granted under the Plan is subject to Section 409A
of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the
Code. To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A of the Code
and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary,
in the event that the Committee determines that any Award may be subject to Section 409A of the Code and related Department of
Treasury guidance, the Committee may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies
and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee
determines are necessary or appropriate to (i) exempt the Award from Section 409A of the Code or (ii) comply with the requirements
of Section 409A of the Code and related Department of Treasury guidance.
EXHIBIT A
2017 Long-Term Incentive Compensation
Plan
Performance Criteria
Operational Criteria may include:
Reserve additions/replacements
Finding & development costs
Production volume
Production Costs
Acquisitions, dispositions, development and development related
activity
Financial Criteria may include:
Earnings (net income, earnings before interest, taxes, depreciation
and amortization (“EBITDA”)
Earnings per share:
Cash flow
Operating income
General and Administrative Expenses
Debt to equity ratio
Debt to cash flow
Debt to EBITDA
EBITDA to Interest
Return on Assets
Return on Equity
Return on Invested Capital
Profit returns/margins
Midstream margins
Stock Performance Criteria:
Stock price appreciation
Total stockholder return
Relative stock price performance
Pareteum (NASDAQ:TEUM)
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Pareteum (NASDAQ:TEUM)
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