UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities
Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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Surge Components, Inc.
(Name of Registrant as Specified in Its
Charter)
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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SURGE COMPONENTS, INC.
95 East Jefryn Blvd.
Deer Park, New York 11729
October 30, 2020
Dear Stockholders:
It is our pleasure
to invite you to the Annual Meeting of Stockholders (the “Annual Meeting”) of Surge Components, Inc. (“Surge”
or the “Company”) to be held on Monday, November 23, 2020, by telephone or at the following website address: https://event.on24.com/wcc/r/2790858/D2A4E8FBB2E4625C108E4FEAE87F69D3
and by entering the 12-digit control number included on the proxy card you received or in the instructions that accompanied your
proxy materials. The Annual Meeting will begin at 10:00 a.m., Eastern time. A Notice of the Annual Meeting of Stockholders,
Proxy Statement and Proxy Card are enclosed with this letter. A copy of the Company’s Annual Report to Stockholders for the
fiscal year ended November 30, 2019, also accompanies this mailing.
The Annual Meeting
will be held for the following purposes:
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To elect seven directors to the Board of Directors of the Company (the “Board” or “Board of Directors”) from the nominees named in the accompanying proxy statement (the “Proxy Statement”) to hold office until the Company’s 2021 annual meeting of stockholders and until their respective successors are duly elected and qualified;
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To ratify the appointment of Seligson & Giannattasio, LLP as the Company’s independent registered public accounting firm for the fiscal year ending November 30, 2020;
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To hold an advisory vote on the executive compensation of the Company’s named executive officers;
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To transact such other business as may properly come before the meeting or any postponements or adjournments thereof.
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It is important
that your shares be represented at the Annual Meeting. Even if you plan to attend the virtual Annual Meeting, we hope that you
will read the enclosed Notice of the Annual Meeting, Proxy Statement and the voting instructions on the enclosed Proxy Card. We
hope that you will promptly vote by completing, signing and dating the Proxy Card and mailing it in the enclosed, postage pre-paid
envelope, or vote by the Internet by following the instructions on the Proxy Card. If you hold your shares through an intermediary,
such as a bank or broker, you must register in advance to gain access to the virtual Annual Meeting to vote your shares during
the meeting or ask questions during the meeting. To register, you must submit proof of your proxy power (legal proxy) reflecting
your ownership of the Company’s common stock, along with your name and email address to Continental Stock Transfer &
Trust Company. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m.,
Eastern time, on November 17, 2020. Forward the email from your broker and attach an image of your legal proxy to www.cstproxy.com.
Any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in the accompanying Proxy Statement.
The attached Proxy
Statement is dated October 30, 2020, and is first being mailed to stockholders on or about November 3, 2020, together with
the Proxy Card and the Annual Report to Stockholders for the fiscal year ended November 30, 2019.
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Sincerely,
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/s/ Ira Levy
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Chief Executive Officer, President and Director
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SURGE COMPONENTS, INC.
95 East Jefryn Blvd.
Deer Park, New York 11729
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 23, 2020
TO THE STOCKHOLDERS OF SURGE COMPONENTS,
INC.:
NOTICE IS HEREBY GIVEN
that the annual meeting of the stockholders (the “Annual Meeting”) of Surge Components, Inc., a Delaware Corporation
(“Surge” or the “Company”), will be held on Monday, November 23, 2020, at 10:00 a.m., Eastern time. The
Annual Meeting is being held virtually for the following purposes:
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To elect seven directors to the Board of Directors of the Company (the “Board” or “Board of Directors”) from the nominees named in the accompanying proxy statement (the “Proxy Statement”) to hold office until the Company’s 2021 annual meeting of stockholders and until their respective successors are duly elected and qualified;
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To ratify the appointment of Seligson & Giannattasio, LLP as the Company’s independent registered public accounting firm for the fiscal year ending November 30, 2020;
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To hold an advisory vote on the executive compensation of the Company’s named executive officers;
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To transact such other business as may properly come before the meeting or any postponements or adjournments thereof.
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The Board of Directors
unanimously recommends that you use the enclosed Proxy Card to vote FOR each of the Company’s nominees for directors in proposal
1 and FOR proposals 2 and 3.
You are cordially invited
to attend the virtual Annual Meeting. The Board of Directors has fixed the close of business on October 15, 2020 as the record
date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting and at any postponement or adjournment
thereof.
YOUR VOTE IS EXTREMELY
IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. If you are a stockholder of record, whether or not you personally plan
to attend the virtual Annual Meeting, please take a few minutes now to vote over the internet by following the instructions on
the Proxy Card, or by completing, signing and dating the enclosed Proxy Card and mailing it in the postage pre-paid envelope provided.
If your shares are held in “street name,” that is, held for your account by a broker, bank or other nominee, you will
receive instructions from the holder of record that you must follow for your shares to be voted. Regardless of the number of Company
shares you own, your vote is important.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE BOARD OF DIRECTORS’ NOMINEES USING THE ENCLOSED
PROXY CARD.
THE BOARD ADDITIONALLY
RECOMMENDS VOTING FOR PROPOSALS 2 AND 3 USING THE ENCLOSED PROXY CARD.
The proxy statement
accompanying this notice provides a more complete description of the business to be conducted at the Annual Meeting. We encourage
you to read the proxy statement carefully and in its entirety.
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By order of the Board of Directors,
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/s/ Ira Levy
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Chief Executive Officer, President and Director
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Deer Park, New York
October 30, 2020
This Notice of Annual
Meeting of Stockholders, proxy statement and form of proxy are first being mailed to stockholders on or about November 3, 2020.
Important Notice Regarding the Availability
of Proxy Materials for the
Annual Meeting of Stockholders to be Held on November 23, 2020.
This Notice of Annual Meeting of Stockholders,
the accompanying Proxy Statement and our Annual Report to Stockholders for the fiscal year ended November 30, 2019, are available
free of charge at the “Investor Relations” portion of our website at http://www.surgecomponents.com/relations.asp.
TABLE OF CONTENTS
SURGE COMPONENTS, INC.
95 East Jefryn Blvd.
Deer Park, New York 11729
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
November 23, 2020
This Proxy Statement, along with a proxy
card and our 2020 Annual Report, is first being mailed
to stockholders on or about October 30, 2020
General Information
This proxy statement
(the “Proxy Statement”) is being furnished by the Board of Directors (the “Board” or the “Board of
Directors”) of Surge Components, Inc. (“Surge” or the “Company”) in connection with the solicitation
of proxies for use at the Annual Meeting of Stockholders of the Company to be held virtually at https://event.on24.com/wcc/r/2790858/D2A4E8FBB2E4625C108E4FEAE87F69D3
on Monday, November 23, 2020, at 10:00 a.m., Eastern time, and at any postponements or adjournments thereof (the “Annual
Meeting”). The Annual Meeting is being held for the purposes set forth in this Proxy Statement. This Proxy Statement, the
enclosed Proxy Card, and the Annual Report to Stockholders for the fiscal year ended November 30, 2019, are first being mailed
to stockholders on or about November 3, 2020.
Under our governing
documents, no other business may be raised by stockholders at the Annual Meeting unless proper notice has been given to us by the
stockholders seeking to bring such business before the meeting. If any other item or proposal properly comes before the Annual
Meeting, the proxies received will be voted on such matter in accordance with the discretion of the proxy holders.
Voting Procedures
If you are a record
holder, meaning your shares are registered in your own name, you may vote:
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By Mail: Complete, sign and date your enclosed Proxy Card and mail it in the enclosed envelope. Your shares will be voted according to your instructions.
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By E-Mail: You may cast your vote by E-Mail. Mark, sign and date your Proxy Card and sent it to proxy@continentalstock.com
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Online at the
virtual Annual Meeting: If you were a stockholder of record at the close of business on October 15, 2020, and have
your control number, you may vote your shares prior to the virtual Annual Meeting by following the instructions included in
the Proxy Statement and this Supplement, or during the virtual Annual Meeting by following the instructions available on the
virtual Annual Meeting website. A list of stockholders of record will be available electronically during the Annual Meeting.
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If your shares are
held in “street name,” meaning they are held for your account by a broker, bank or other nominee, these proxy materials
are being forwarded to you by that nominee. The nominee holding for your account is considered the stockholder of record for purposes
of voting at the Annual Meeting. As a beneficial owner, you may vote:
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Over the Internet: You
will receive instructions from your broker, bank or other nominee stating if they permit Internet voting and, if they do,
explaining how to do so. You should follow those instructions.
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By Mail: You will receive instructions from your broker, bank or other nominee explaining how you can vote your shares by mail. You should follow those instructions.
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(3)
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Online at the
virtual Annual Meeting: If you hold your shares through an intermediary, such as a bank or broker, you must register
in advance to gain access to the virtual Annual Meeting to vote your shares during the meeting or ask questions during the
meeting. You will not be able to vote at the meeting unless you have submitted proof of a legal proxy from your broker,
bank or other nominee issued in your name giving you the right to vote your shares.
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The shares represented
by any proxy card which is properly executed and received by the Company prior to or at the Annual Meeting (each, a “Conforming
Proxy”) will be voted in accordance with the specifications made thereon. Conforming Proxies on a Proxy Card on which
no specifications have been made by the stockholder will be voted in favor of the proposals described in the Proxy Statement. The
Board of Directors is not aware of any matters that are expected to come before the Annual Meeting other than those described in
this Proxy Statement. However, if any other matters are properly brought before the Annual Meeting, the persons named in the Proxy
Card will vote the shares represented by each Conforming Proxy on a Proxy Card on those matters as instructed by the Board
of Directors, or in the absence of express instructions from the Board of Directors, in accordance with their own best judgment.
For information regarding the revocation of a Conforming Proxy, please see “Revocation of Proxies”.
Proof of Ownership Required for Attending
the Annual Meeting Online
You are entitled to
attend the virtual Annual Meeting only if you are a stockholder of the Company’s common stock, par value $0.001 per share
(“Common Stock”), as of the close of business on October 15, 2020, the record date set by the Board of Directors (the
“Record Date”), or hold a valid proxy for the Annual Meeting. If you are a stockholder of record or a beneficial owner
of Common Stock that is held of record by a broker, bank or other nominee, you will need to submit proof of your proxy power (legal
proxy) reflecting your ownership of the Company’s common stock, along with your name and email address to Continental Stock
Transfer & Trust Company. Requests for registration must be labeled as “Legal Proxy” and be received no later than
5:00 p.m., Eastern time, on November 17, 2020. Forward the email from your broker and attach an image of your legal proxy to www.cstproxy.com.
Quorum
The presence at the
Annual Meeting, online or by proxy, of the holders of a majority of the issued and outstanding shares of Common Stock entitled
to vote, is necessary to constitute a quorum. Shares of Common Stock represented by Conforming Proxies will be counted as present
at the Annual Meeting for purposes of determining a quorum without regard as to whether the proxy is marked as casting a vote for
or against a proposal, withholding a vote or abstaining. Shares of Common Stock represented by Conforming Proxies that are voted
on at least one matter coming before the Annual Meeting will also be counted as present for purposes of determining a quorum, even
if the beneficial owner’s discretion has been withheld (a “broker non-vote”) for voting on some or all other
matters. For information regarding broker non-votes, please see “Revocation of Proxies.”
Required Vote
Each stockholder is
entitled to one vote for each share of Common Stock.
Proposal No. 1, concerning
the seven directors will be elected by a majority of votes cast for such Director nominee.. You may either vote FOR or WITHHOLD
authority to vote for the Company’s director nominees. If you withhold authority to vote with respect to any nominee, your
shares will be counted for purposes of establishing a quorum. Broker non-votes are not deemed “votes cast” with respect
to Proposal No. 1 and therefore will have no effect on the vote.
PLEASE SUPPORT YOUR
BOARD OF DIRECTORS’ NOMINEES BY VOTING FOR THE BOARD OF DIRECTORS’ NOMINEES ON THE PROXY CARD.
Pursuant to the Company’s
Articles of Incorporation, Bylaws and Delaware Law, proposals 2 and 3 will require the affirmative “FOR” votes of a
majority the votes cast for such proposal. You may vote FOR, AGAINST or ABSTAIN on Proposal Nos. 2 and 3. If you abstain from voting
on any of such proposals, your shares will nevertheless be counted as present for purposes of establishing a quorum at the Annual
Meeting. Abstentions will have no practical effect on Proposal Nos. 2 and 3. Broker non-votes will have no effect on the outcome
of the vote for Proposal No. 3.
If your shares are
registered in your name, your shares will not be voted unless you provide a proxy by Internet or mail, or vote at the virtual Annual
Meeting. If you hold shares through an account with a bank, broker, or other nominee, your shares will not be voted, except with
respect to certain routine matters, unless you provide voting instructions. Broker non-votes, if any, are counted as present for
purposes of determining the presence or absence of a quorum but will not be counted for purposes of determining whether a proposal
has been approved, except in the case of certain “routine” matters. Broker non-votes occur when brokers, banks and
other nominees do not receive voting instructions from their customers, and the broker, bank or other nominee does not have discretionary
voting authority with respect to a proposal. If you hold shares through a broker, bank or other nominee and you do not give instructions
as to how to vote, under the rules of the New York Stock Exchange, your broker, bank or other nominee may have authority to vote
your shares on certain routine matters but not on non-routine matters. If the nominee that holds your shares does not receive instructions
from you on how to vote your shares on a non-routine matter, the nominee that holds your shares will inform us that it does not
have the authority to vote on such matter with respect to your shares. Typically, “non-routine” matters include the
election of directors and the advisory proposal on executive compensation, and “routine” matters include ratification
of the appointment of independent auditors. Therefore, please instruct your broker how to vote your shares on these matters
promptly. We will publish final voting results in a Current Report on Form 8-K to be filed with the SEC within four business
days from the date of the Annual Meeting.
Solicitation of Proxies
We are required by
law to convene an Annual Meeting of our stockholders at which directors are elected. Because our shares are widely held, it would
be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, proxies are solicited
from our stockholders. United States federal securities laws require us to send you this Proxy Statement and specify the information
required to be contained in it. This solicitation of proxies is being made by the Board of Directors of the Company and all expenses
of this solicitation will be borne by the Company. These costs will include, among other items, the expense of preparing, assembling,
printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursements paid to brokerage
firms, banks and other fiduciaries for their reasonable out of pocket expenses for forwarding proxy materials to stockholders and
obtaining beneficial owner’s voting instructions. In addition to soliciting proxies by mail, directors, officers and employees
may solicit proxies on behalf of the Board of Directors, without additional compensation, personally or by telephone. We may also
solicit proxies by email from stockholders who are our employees or who previously requested to receive proxy materials electronically.
Revocation of Proxies
A stockholder of record
who has executed and delivered a Conforming Proxy may revoke such Conforming Proxy at any time before the Annual Meeting by (i)
timely completing and returning a new proxy card with a later date, (ii) voting on a later date by using the Internet, (iii) delivering
a written notice of revocation to the Corporate Secretary of the Company prior to the Annual Meeting or (iv) attending the Annual
Meeting and voting virtually. Only a stockholder’s latest proxy submitted prior to the Annual Meeting will be counted. A
stockholder’s attendance at the Annual Meeting will not automatically revoke such stockholder’s proxy unless such stockholder
votes at the Annual Meeting or specifically requests in writing that his or her prior proxy be revoked.
If you are a beneficial
owner, you may change your vote by submitting new voting instructions to your broker in accordance with such broker’s procedures.
Other Matters
If you have any questions
or require any assistance with voting your shares, or if you need additional copies of the proxy materials, please contact: Surge
Components, Inc., 95 East Jefryn Blvd., Deer Park, New York 11729, Attention: Corporate Secretary.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Our board of directors
was classified into the following three classes and their terms expire at the stockholders meeting in the year set forth in the
below chart:
Name
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Age
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Director Since
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Term Expires
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Ira Levy
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64
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1981
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Nominee 2020
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Steven J. Lubman
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65
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1981
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Nominee 2020
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Alan Plafker
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62
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2001
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Nominee 2020
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Martin Novick
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84
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2016
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Nominee 2020
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Lawrence Chariton
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63
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2001
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Nominee 2020
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Peter A. Levy
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60
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2017
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Nominee 2020
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Gary M. Jacobs
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63
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2003
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Nominee 2020
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At this Annual Meeting,
stockholders will be asked to elect each of the director nominees listed above to hold office until the 2021 Annual Meeting of
Stockholders or until his successor is elected and qualified or until his earlier resignation or removal. At the 2018 Annual Meeting
of stockholders, the stockholders voted to declassify the directors on a rolling forward basis. Therefore, the directors that are
being elected at this year’s stockholders meeting will be elected for a term ending at the next annual stockholders meeting.
Pursuant to the recommendation
of the Nominating and Corporate Governance Committee, the Board has nominated each of the seven listed director nominees, who each
currently serve as a director, to stand for reelection at the Annual Meeting.
The basic responsibility
of a Company director is to exercise his or her business judgment prudently and act in a manner that he or she believes in good
faith to be in the best interests of the Company and its stockholders. The Nominating and Corporate Governance Committee and the
Board consider individuals who have records for leadership and success in their areas of activity and who will make meaningful
contributions to the Board. Nominees for director are selected on the basis of Board experience, character, integrity, ability
to make independent analytical inquiries, business background, as well as an understanding of the Company’s business environment.
We believe that each
of the director nominees brings these qualifications in a positive manner to our Board of Directors. Moreover, the director nominees
provide our Board with a complement of specific business skills, experience and perspectives.
We have been advised
by each of the seven director nominees that they are willing to be named as nominees, and each is willing to continue to serve
as a director if elected. If some unexpected occurrence should make necessary, in the discretion of the Board, the substitution
of some other person for the nominees, it is the intention of the persons named in the proxy to vote for the election of such other
person as may be designated by the Board.
Conforming Proxies
on a Proxy Card held on the Record Date that are returned will be voted, unless otherwise specified, in favor of the nominees for
the directors named below. Each of the nominees has consented to be named in this Proxy Statement and to serve if elected, but
should any nominee be unable to serve or decline to serve for good cause (which event is not anticipated) the persons named in
the Proxy Card intend to vote for such substitute nominee or nominees as the Nominating and Corporate Governance Committee may
recommend and that the Board of Directors may nominate. If any such substitute nominee(s) are designated, we will file an amended
proxy statement and Proxy Card that, as applicable, identifies the substitute nominee(s), discloses that such nominee(s) have consented
to being named in the revised proxy statement and to serve if elected, and includes biographical and other information about such
nominee(s) as required by the rules of the SEC.
Nominees:
Ira Levy has
served as our President, Chief Executive Officer and director since our inception in November 1981, and as our Chief Financial
Officer since March 2010. From 1976 to 1981, Mr. Levy was employed by Capar Components Corp., an importer and supplier of capacitor
and resistor products. Mr. Levy has served on the board of trustees of the Bellmore Jewish Center since 2002 and served as its
president from 2006 to 2008. From 2000 to 2004, he served as a member of the board of trustees of METNY, the governing body of
the Conservative movement of Judaism for New York, New Jersey, and Connecticut. Mr. Levy studied Business Management at Hofstra
University. Mr. Levy’s experience in, and knowledge of, the electronics components business led to the conclusion that he
should serve on our board.
Steven J. Lubman has
served as our Vice President, Secretary and a director since our inception in November 1981. In June 1988, Mr. Lubman founded Challenge
Electronics (“Challenge”), a division of the Company. From 1980 through 1981, he served as the sales manager for NIC
Components Corp., a division of Nu Horizons Electronics Corp., a distributor of electronic components which was acquired by Arrow
Electronics, Inc. (NYSE: ARW) in January 2011. From 1976 through 1980, Mr. Lubman served as both an inside and then outside salesperson
for Capar Components Corp., a division of Diplomat Electronics Inc., a broad line distributor of electronic components including
integrated circuits, diodes, transistors, and capacitor products. Mr. Lubman’s more than 35 years of experience in, and knowledge
of the electronics components business, led to the conclusion that he should serve on our board.
Alan Plafker
has served as a director since June 2001. Since November 2016, he has served as Vice President of Garber Atlas Fries & Associates,
Inc., an insurance agency providing commercial and personal insurance coverage. From July 2000 to November 2016, Mr. Plafker served
as President and Chief Executive Officer of Member Brokerage Service LLC, a credit union service organization owned by Melrose
Credit Union, and also served as director of business services for the credit union. From January 1993 to July 2000, he served
as a member of the credit union’s board of directors and supervisory committee. Mr. Plafker has more than 35 years of executive
and management experience in the insurance and credit union industries. He is a New York State licensed insurance agent and broker.
Mr. Plafker has earned certification as a Certified Professional Insurance Agent from the AIMS Society and earned the CIC designation
from the Society of Certified Insurance Counselors. He has also earned the CUBLP (Credit Union Business Lending Professional) designation
from the CUNA Business Lending Certification Institute. In addition, he is a past President and currently serves on the Board of
Directors of the Professional Insurance Agents Association of New York State, and currently serves as Treasurer and as a member
of the Board of Directors for the New York Independent Livery Drivers Benefit Fund, a New York State benefit fund providing injury
benefits for livery drivers, to comply with the Workers’ Compensation Board regulations. Mr. Plafker received a Bachelor’s
degree in business administration from Adelphi University. Mr. Plafker’s experience in the insurance industry and knowledge
of financial matters led to the conclusion that he should serve on our board.
Martin Novick is
a real estate investor and was appointed to the Board in September 2016. He served as a vice president of Audiovox Electronic Corp.,
an international distributor and value-added service provider in the accessory, mobile and consumer electronics industries, from
1969 to 2008. He previously served on the board of directors of Audiovox Electronic Corp., Nu Horizons Electronics Corp., a distributor
of electronic components which was acquired by Arrow Electronics, Inc. (NYSE: ARW) in January 2011 and Arielle Electronics, a company
that sold bluetooth and wireless products. Mr. Novick holds a Bachelor’s Degree in Marketing from New York University. Mr.
Novick’s significant experience in the electronics industry and as a director of a public company led to the conclusion that
he should serve on our board.
Lawrence Chariton has
served as a director since 2001. Since May 2008, he has served as a consultant to Great American Jewelry, a retail jewelry firm.
He served for 32 years as Chief Operating Officer of Linda Shop Jewelry, a retail jewelry firm. Mr. Chariton previously served
as a member of the Board of Directors of New Island Hospital in Bethpage New York and subsequently served as a member of the Board
of Directors of St. Joseph’s Hospital from February 2007 to December 2010. Mr. Chariton served on the Board of Directors
of Jewish National Fund of Long Island. Mr. Chariton has a Bachelor’s degree in Accounting from Hofstra University and is
a graduate of the Gemological Institute of America in Diamond Grading and Color Essentials. Mr. Chariton’s experience running
a small business led to the conclusion that he should serve on our board.
Peter A. Levy
has been a director of the Company since April 2017. He is an equity shareholder at the law firm of Mandelbaum Salsburg, one of
the region’s oldest and most renowned law firms. He joined Mandelbaum as a member in September of 2015. In addition to practicing
law for 15 years, Mr. Levy spent 12 years as a partner at a regional accounting firm, Sobel & Company, and has served as the
chief operating officer of two different public companies, The Empire Sports & Entertainment and MYOS Corporation. As the president
of MYOS Corporation, he successfully positioned the company on the NASDAQ stock exchange. Mr. Levy has significant experience
in mergers and acquisitions, joint venture partnering, corporate governance, business processes, and strategic planning. Community
service is an important aspect of Mr. Levy’s life. For over 20 years he has been on the Board and also served as the
Corporate Liaison to Easter Seals – Camp ASCCA, America’s flagship camp for People with Disabilities, and he is
the co-builder of the Roswal-Levy Tower, the world’s largest wheelchair-accessible interactive climbing tower for the
disabled. For over a decade, Mr. Levy has been on the Board of Hamp’s Camp, a charity founded by former N.Y. Giants
running back Rodney Hampton, which is dedicated to providing leadership tools to underprivileged children in Atlanta, Newark, and
Houston. Mr. Levy’s financial experience led to the conclusion that he should serve on our board.
Gary M. Jacobs has
served as a director since July 2003. Since October 2014, Mr. Jacobs has served as President of Bar Bakers, LLC, a commercial food
manufacturer of nutritional bars, cookies and other baked goods. From March 2011 to October 2014, he served as a consultant to
several companies, providing advisory services in the areas of turn-around and financial and operational efficiencies. Mr. Jacobs
served as the Chief Financial Officer of Chem Rx from June 2008 until March 2011. From May 2005 to June 2008, Mr. Jacobs was the
Chief Financial Officer and Chief Operating Officer of Gold Force International, Ltd., a supplier of gold, silver and pearl jewelry
to U.S. retail chains, and Karat Platinum LLC, a developer of an alternative to platinum. From July 2003 to April 2005, Mr. Jacobs
served as President of The Innovative Companies, LLC, a supplier of natural stone. From October 2001 to February 2003, Mr. Jacobs
served as Executive Vice President of Operations and Corporate Secretary of The Hain Celestial Group, Inc., a food and personal
care products company. Mr. Jacobs also served as Executive Vice President of Finance, Chief Financial Officer and Treasurer of
The Hain Celestial Group, Inc. from September 1998 to October 2001. Prior to that, Mr. Jacobs was the Chief Financial Officer of
Graham Field Health Products, Inc., a manufacturing and distribution company. Mr. Jacobs served for 13 years as a member of the
audit staff of Ernst & Young LLP, where he attained the position of senior manager. He is a certified public accountant and
holds a Bachelor’s of Business Administration in Accounting from Adelphi University. Mr. Jacobs’s experience as a certified
public accountant and as a chief financial officer led to the conclusion that he should serve on our board.
Transactions with Related Persons, Promoters
and Certain Control Persons
The following is a
description of transactions with our executive officers, directors or 5% stockholders during the past two years. We believe that
all of the transactions described below were made on terms no less favorable to us than could have been obtained from unaffiliated
third parties. All future related party transactions will be approved by our audit committee or a majority of our independent directors
who do not have an interest in the transaction and who will have access, at our expense, to our independent legal counsel. Surge
and Challenge each lease their current executive offices from Great American Realty of Jefryn Blvd., LLC, an entity owned 50% by
Ira Levy, our Chief Executive Officer, and President and Steven Lubman, our Vice President, Secretary and Treasurer. Our
lease is through September 2030 and our annual rent payments were approximately $264,137, $260,241 and $256,721 for Fiscal 2019,
Fiscal 2018 and Fiscal 2017, respectively.
Procedures for Review and Approval of
Transactions with Related Persons
Pursuant to the Audit
Committee Charter, the Audit Committee is responsible for reviewing and approving all related party transactions as defined under
Item 404 of Regulation S-K, after reviewing each such transaction for potential conflicts of interests and other improprieties.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the
Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC initial
reports of ownership and reports of changes in the ownership of our common stock and other equity securities. Such persons are
required to furnish us copies of all Section 16(a) filings.
Based solely upon a
review of the copies of the forms furnished to us, we believe that our officers, directors and holders of more than 10% of our
common stock complied with all applicable filing requirements during the fiscal year ended November 30, 2019.
Required Vote
Each nominee shall
be elected by a majority of the votes cast in the election of such director nominee. Unless marked to the contrary, Conforming
Proxies on a Proxy Card will be voted FOR each of the nominees. Abstentions and broker non-votes will have no effect on the
outcome of the vote on Proposal No. 1.
Recommendation of the Board
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE SEVEN DIRECTOR NOMINEES AS A DIRECTOR.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee
has appointed Seligson & Giannattasio, LLP as our independent registered public accounting firm for the fiscal year ending
November 30, 2020. Although this appointment does not require ratification, the Board has directed that the appointment of Seligson
& Giannattasio, LLP be submitted to stockholders for ratification due to the significance of their appointment to us. If stockholders
do not ratify the appointment of Seligson & Giannattasio, LLP, the Audit Committee will consider the appointment of another
independent registered public accounting firm for the fiscal year ending November 30, 2021.
Seligson & Giannattasio,
LLP served as our independent registered public accounting firm for the fiscal year ended November 30, 2019. A representative of
Seligson & Giannattasio, LLP is expected to be present at the Annual Meeting.
Fees Billed by Our Independent Registered
Public Accounting Firm During Fiscal 2018 and 2019
The following table
sets forth the aggregate fees billed to us for the fiscal years ended November 30, 2018 and 2019 by Seligson & Giannattasio,
LLP:
|
|
2018
|
|
2019
|
Audit Fees(1)
|
|
$
|
172,500
|
|
|
$
|
172,500
|
|
Tax Fees(2)
|
|
$
|
12,000
|
|
|
$
|
12,000
|
|
|
(1)
|
Audit
Fees represent the aggregate fees for professional services for the audit of our annual financial statements and review of financial
statements included in our quarterly reports on Form 10-Q or services that are normally provided in connection with statutory
and regulatory filings or engagements for those fiscal years.
|
|
(2)
|
Tax
fees represent the aggregate fees billed for tax compliance, tax advice, and tax planning.
|
Audit Committee Pre-Approval Policies and Procedures
Pursuant to its charter,
the Audit Committee is responsible for the pre-approval of all audit and permissible non-audit services provided by our principal
independent accountants on a case-by-case basis. Our Audit Committee has established a policy regarding approval of all audit and
permissible non-audit services provided by our principal independent accountants. Our Audit Committee pre-approves these services
by category and service. Our Audit Committee has preapproved all of the services provided by our principal independent accountants
in the fiscal year ended November 30, 2019.
Vote Required
Approval of Proposal
No. 2 will require the approval of a majority of the votes cast at the Annual Meeting on the proposal. Unless marked to the contrary,
Conforming Proxies on a Proxy Card will be voted FOR Proposal No. 2. Abstentions will have no effect on the proposal.
Recommendation of the Board
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL NO. 2.
PROPOSAL NO. 3:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required by Section
14A of the Exchange Act and Rule 14a-21 promulgated thereunder, we are seeking an advisory, non-binding stockholder vote with respect
to compensation awarded to our named executive officers. We hold stockholder votes on executive compensation on an annual basis
until our next stockholder advisory vote on the frequency of say-on-pay votes.
Our executive compensation
program and compensation paid to our named executive officers are described in this Proxy Statement. Our compensation programs
are overseen by the Board and our Compensation Committee and reflect our philosophy to pay all of our employees, including our
named executive officers, in ways that support three primary business objectives:
|
●
|
Attract
and retain the best talent.
|
|
●
|
Support
our culture of performance.
|
|
●
|
Align
employee interests with long-term stockholder interests in the overall success of the Company.
|
To help achieve these
objectives, we structure our named executive officers’ compensation to reward the achievement of short-term and long-term
strategic and operational goals.
The Board believes
that the Company’s executive compensation programs use appropriate structures and sound pay practices that are effective
in achieving the Company’s core objectives and goals. Accordingly, the Board is asking you to vote on the adoption of the
following resolution:
RESOLVED, that the
stockholders of the Company hereby approve, on an advisory basis, the compensation of the Company’s named executive officers,
as disclosed in this Proxy Statement, including the compensation tables and related narrative discussion.
Vote Required
Approval of Proposal
No. 3 will require the approval of a majority of the votes cast at the Annual Meeting on this proposal. Unless marked to the contrary,
Conforming Proxies on a Proxy Card will be voted FOR Proposal No. 3. Abstentions will have no practical effect on this proposal.
Broker non-votes will have no effect on the outcome of the vote on the proposal.
The advisory vote on
executive compensation solicited by this proposal is not intended to address any specific item of compensation, but rather the
overall compensation of our named executive officers, which is disclosed elsewhere in this Proxy Statement. The vote is advisory,
and therefore is not binding on the Company or the Board in any way. Furthermore, because this non-binding, advisory resolution
primarily relates to the compensation of our named executive officers that have already been paid or contractually committed, there
is generally no opportunity for us to revisit these decisions. However, the Board values the opinions of our stockholders and will
take into account the outcome of the vote when considering future executive compensation policies and decisions.
Recommendation of the Board
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL NO. 3.
CORPORATE GOVERNANCE
Directors and Executive Officers
Our executive officers and directors, and
their ages, positions and offices with us are as follows:
Name
|
|
Age
|
|
Position
|
Ira Levy
|
|
64
|
|
Chief Executive Officer, Chief Financial Officer and President
|
Steven J. Lubman
|
|
65
|
|
Vice President, Secretary and Treasurer
|
Alan Plafker* (2)(3)
|
|
62
|
|
Director
|
Martin Novick* (2)(3)
|
|
84
|
|
Director
|
Lawrence Chariton* (2)(3)
|
|
63
|
|
Director
|
Gary Jacobs* (1)(2)(3)
|
|
63
|
|
Director
|
Peter Levy* (1)(2)(3)
|
|
60
|
|
Director
|
|
(1)
|
Member
of Compensation Committee.
|
|
(2)
|
Member
of Audit Committee
|
|
(3)
|
Member
of Nominating and Corporate Governance Committee
|
Director Independence
The Board has determined
that each of Messrs. Chariton, Plafker, Peter Levy, Novick and Jacobs qualify as “independent” under the Nasdaq Stock
Market Rules as well as Rule 10A-3 promulgated under the Exchange Act.
Board and Committee Meetings
During the fiscal year
ended November 30, 2019, the Board held 4 meetings. Each of the directors attended at least 75% of the aggregate of (i) the total
number of meetings of the Board (held during the period for which he served as a director), and (ii) the total number of meetings
held by all committees of the Board on which he served (during the periods that he served on such committees). We have no written
policy regarding director attendance at annual meetings of stockholders. Our last annual meeting of stockholders was held on November
26, 2019, and all of our directors attended such meeting.
Board Committees
The composition and
responsibilities of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee
are described below. Members will serve on these committees until their resignation or until otherwise determined by the Board.
Each committee operates under a charter that has been approved by the Board, and which is available on our website at http://www.surgecomponents.com/relations.asp.
Audit Committee
Our Audit Committee
is comprised of Messrs. Chariton, Plafker, Novick, Jacobs and Peter Levy, each of whom is an independent director of the Board.
Mr. Jacobs serves as chairman of the Audit Committee. Our Board has determined that Mr. Jacobs is an “audit committee financial
expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The audit committee members are “independent” as
that term is defined under the Nasdaq Stock Market Rules. During the fiscal year ended November 30, 2019, the Audit Committee held
four meetings.
The Audit Committee
is authorized to:
|
●
|
approve
and retain the independent auditors to conduct the annual audit of our books and records;
|
|
●
|
review
the proposed scope and results of the audit;
|
|
●
|
review
and pre-approve the independent auditor’s audit and non-audit services rendered;
|
|
●
|
approve
the audit fees to be paid;
|
|
●
|
review
accounting and financial controls with the independent auditors and our financial and accounting staff;
|
|
●
|
review
and approve transactions between us and our directors, officers and affiliates;
|
|
●
|
recognize
and prevent prohibited non-audit services;
|
|
●
|
establish
procedures for complaints received by us regarding accounting matters;
|
|
●
|
oversee
internal audit functions; and
|
|
●
|
prepare
the report of the Audit Committee that SEC rules require to be included in our annual meeting proxy statement.
|
Compensation Committee
Our Compensation Committee
is comprised of Peter Levy and Gary Jacobs, each of whom is an independent director. Mr. Levy serves as chairman of the Compensation
Committee. During the fiscal year ended November 30, 2019, the Compensation Committee held one meeting.
The Compensation Committee
is authorized to:
|
●
|
review
and recommend the compensation arrangements for management, including the compensation for our chief executive officer;
|
|
●
|
establish
and review general compensation policies with the objective of attracting and retaining superior talent, rewarding individual
performance and achieving our financial goals;
|
|
●
|
administer
our stock incentive plans; and
|
|
●
|
prepare
the report of the Compensation Committee that SEC rules require to be included in our annual meeting proxy statement.
|
Nominating and Corporate Governance
Committee
Our Nominating and
Corporate Governance Committee is comprised of Messrs. Chariton, Plafker Novick, Peter Levy and Jacobs, each of whom is an independent
director. Mr. Jacobs serves as chairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance
Committee held no meetings during the fiscal year ended November 30, 2019.
The Nominating and
Corporate Governance Committee is authorized to:
|
●
|
identify and nominate members of the board of directors;
|
|
|
|
|
●
|
oversee the evaluation of the board of directors and management;
|
|
|
|
|
●
|
develop and recommend corporate governance guidelines to the board of directors;
|
|
|
|
|
●
|
evaluate the performance of the members of the board of directors; and
|
|
|
|
|
●
|
make recommendations to the board of directors as to the structure, composition and functioning of the board of directors and its committees.
|
Director Nominations
In evaluating and determining
whether to nominate a candidate for a position on the Board, the Nominating and Corporate Governance Committee utilizes a variety
of methods and considers criteria such as high professional ethics and values, experience on the policy-making level in business
or experience relevant to our product candidates and a commitment to enhancing stockholder value. Candidates may be brought to
the attention of the Nominating and Corporate Governance Committee by current Board members, stockholders, officers or other persons.
The Nominating and Corporate Governance Committee will review all candidates in the same manner regardless of the source of the
recommendation.
We have no formal policy
regarding board diversity. Our Nominating and Corporate Governance Committee and Board may therefore consider a broad range of
factors relating to the qualifications and background of nominees, which may include diversity, which is not only limited to race,
gender or national origin. Our Nominating and Corporate Governance Committee’s and Board’s priority in selecting board
members is identification of persons who will further the interests of our stockholders through his or her established record of
professional accomplishment, the ability to contribute positively to the collaborative culture among board members and professional
and personal experiences and expertise relevant to our growth strategy.
The Nominating and
Corporate Governance Committee also considers stockholder recommendations for director nominees that are properly received in accordance
with our Bylaws and applicable rules and regulations of the SEC. In order to validly nominate a candidate for election or reelection
as a director, stockholders must give timely notice of such nomination in writing to our Corporate Secretary and include, as to
each person whom the stockholder proposes to nominate, all information relating to such person that is required to be disclosed
in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act, and the rules and regulations thereunder (including such person’s written consent
to being named in the proxy statement as a nominee and to serving as a director if elected). For more information on director candidate
nominations by stockholders, see “Procedures for Nominating Directors”.
Procedures for Nominating Directors
Effective
February 5, 2019, the Company began to be governed by newly adopted bylaws (the “Bylaws”). The Bylaws provide
for, among other things, the advance notice of director nominations.
The exclusive means
by which a stockholder may nominate a director is as follows: (i) in the case of the nomination of a director for election at an
annual meeting, by delivery of a notice to the secretary of the Company not less than sixty (60) days nor more than ninety (90)
days prior to the anniversary of the date on which the Corporation first mailed its proxy materials for the previous year’s
annual meeting of stockholders (or within a reasonable time before the date on which the Company mails its proxy materials for
the current year if during the prior year the Company did not hold an annual meeting); or (ii) in the case of the nomination of
a director for election at a special meeting, by delivery of a notice to the secretary not less than sixty days nor more than ninety
days prior to such special meeting, in either case setting forth: (a) the name, age, business address and the primary legal residence
address of each nominee proposed in such notice, (b) the principal occupation or employment of such nominee, (c) the number of
shares of capital stock of the Company which are owned directly or indirectly of record and directly or indirectly beneficially
owned by the nominee and each of its affiliates, (d) any material agreements, understandings or relationships, including financial
transactions and compensation, between the nominating stockholder and the proposed nominees and (d) such other information concerning
each such nominee as would be required, under the rules of the SEC, in a proxy statement soliciting proxies in a contested election
of such nominees. Such notice shall include a signed consent of each such nominee to serve as a director of the Company, if elected.
In addition, any stockholder nominee, to be validly nominated, is required to submit to the secretary the questionnaire required
pursuant to the Bylaws. A stockholder intending to nominate one or more candidates for election as directors must comply with the
advance notice bylaw provisions specifically applicable to the nomination of candidates for election as directors for such nomination
to be properly brought before the meeting.
To be eligible to be
a director nominee nominated by a stockholder or stockholders for election or reelection as a director of the Company, a nominee
must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.6.2 of the Bylaws) to the secretary
a written questionnaire (the “Questionnaire”) with respect to the background, qualification and experience of such
person and the background of any other person or entity on whose behalf the nomination is being made and a written representation
and agreement that such person: (a) will abide by the requirements of the Bylaws and the Company’s certificate of incorporation
as in effect at the time of their nomination and as validly amended, (b) is not and will not become a party to (1) any agreement,
arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person,
if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”) that has
not been disclosed to the Company or (2) any Voting Commitment that could limit or interfere with such person’s ability to
comply, if elected as a director of the Company, with such person’s fiduciary duties under applicable law, (c) is not and
will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with respect
to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that
has not been disclosed therein, and (d) in such person’s individual capacity and on behalf of any person or entity on whose
behalf the nomination is being made, would be in compliance, if elected as a director of the Company, and will comply with all
applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies
and guidelines of the Company. If, prior to the meeting, there is a change or inaccuracy in any information set forth on the Questionnaire,
then the director candidate must promptly notify the secretary by submitting in writing a revised Questionnaire. If a nominee fails
to provide such Questionnaire, revised Questionnaire or representation and agreement in accordance with the above, the information
may be deemed by the Board of Directors in its discretion not to have been provided in accordance with the Bylaws and such nominee
may be disqualified as a director nominee by the Board of Directors in its discretion.
In addition to all
other requirements set forth in the Bylaws, a nominating stockholder (including its affiliates) and each director nominee must
also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in the Bylaws.
Board Leadership Structure and Role
in Risk Oversight
Although we have not
adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally
determined that it is in our best interests and in the best interests of our stockholders to combine these roles. Mr. Levy has
served as our Chairman since November 1981. Due to our small size, we believe it is currently most effective to have the Chairman
and Chief Executive Officer positions combined.
Our board of directors
is primarily responsible for overseeing our risk management processes. The Board receives and reviews periodic reports from management,
auditors, legal counsel, and others, as considered appropriate regarding our assessment of risks. The Board focuses on the most
significant risks facing us and our general risk management strategy, and also ensures that risks undertaken by management are
consistent with the board’s appetite for risk. While the Board oversees our risk management, management is responsible for
day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing
the risks facing us and that our board leadership structure supports this approach.
Code of Ethics
We have adopted a code
of ethics that applies to our officers, directors and employees. A copy of the code of ethics is accessible on our website at http://www.surgecomponents.com/relations.asp.
Additional copies of the code of ethics may be obtained without charge, from us by writing or calling: 95 East Jefryn Blvd., Deer
Park, New York 11729, Attention: Corporate Secretary, Telephone: (631) 595-1818.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Under Rule 13d-3, a
beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares;
and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed
to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares
(for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the
percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition rights.
The following table
sets forth as of October 15, 2020, information regarding the beneficial ownership of our common stock by: (i) each person known
by the Company to be the beneficial owner of than five percent of the outstanding shares of common stock, (ii) each of our directors
and officers and (iii) all officers and directors, as a group:
|
|
Amount and
Nature of
|
|
Percentage of
|
|
|
Common Stock
|
|
Common Stock
|
|
|
Beneficially
|
|
Beneficially
|
Name and address of Beneficial Owner(1)
|
|
Owned
|
|
Owned(2)
|
|
|
|
|
|
Ira Levy
|
|
|
1,277,054
|
(3)
|
|
|
23.4
|
%
|
|
|
|
|
|
|
|
|
|
Steven J. Lubman
|
|
|
1,038,060
|
(3)
|
|
|
19.0
|
%
|
|
|
|
|
|
|
|
|
|
Lawrence Chariton
|
|
|
172,573
|
(5)
|
|
|
3.18
|
%
|
|
|
|
|
|
|
|
|
|
Alan Plafker
|
|
|
23,197
|
(5)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Martin Novick
|
|
|
15,000
|
(5)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Gary Jacobs
|
|
|
152,000
|
(4)
|
|
|
2.80
|
%
|
|
|
|
|
|
|
|
|
|
Peter Levy
|
|
|
15,000
|
(5)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (7 persons)
|
|
|
2,692,884
|
|
|
|
49.5
|
%
|
|
(1)
|
Except
as otherwise indicated, the address of each beneficial owner is c/o Surge Components, Inc., 95 East Jefryn Boulevard, Deer Park,
NY 11729.
|
|
(2)
|
Applicable
percentage ownership is based on 5,437,526 shares of common stock outstanding as of October 15, 2020.
|
|
(3)
|
Includes
50,000 shares issuable upon exercise of options with an exercise price of $0.87, which are exercisable within 60 days.
|
|
(4)
|
Includes
25,000 shares issuable upon exercise of options with an exercise price of $0.87, which are exercisable within 60 days
|
|
(5)
|
Includes
15,000 shares issuable upon exercise of options with an exercise price of $0.87, which are exercisable within 60 days.
|
Stockholder Communications with the Board
Stockholders who wish
to do so may communicate directly with the Board or specified individual directors by writing to:
Board of Directors (or name of individual
director)
c/o Corporate Secretary
Surge Components, Inc.
95 East Jefryn Blvd.
Deer Park, New York 11729
The Board of Directors
maintains a process for stockholders or other interested parties to communicate with the Board or any Board member. Stockholders
or interested parties who desire to communicate with the Board should send any communication to the Company’s Corporate Secretary,
Surge Components, Inc., 95 East Jefryn Blvd., Deer Park, New York 11729. We will forward all communications from security holders
and interested parties to the full Board, to non-management directors, to an individual director or to the chairperson of the Board
committee that is most closely related to the subject matter of the communication, except for the following types of communications:
(i) communications that advocate that we engage in illegal activity; (ii) communications that, under community standards, contain
offensive or abusive content; (iii) communications that have no relevance to our business or operations; and (iv) mass mailings,
solicitations and advertisements. The Corporate Secretary will determine when a communication is not to be forwarded. Our acceptance
and forwarding of communications to directors does not imply that directors owe or assume any fiduciary duties to persons submitting
the communications.
Additionally, the Audit
Committee has established procedures for the receipt, retention and confidential treatment of complaints received by Surge regarding
accounting, internal accounting controls or auditing matters, including procedures for confidential, anonymous submissions by employees
with respect to such matters. Employees and stockholders may raise a question or concern to the Audit Committee regarding accounting,
internal accounting controls or auditing matters by writing to:
Chairman, Audit Committee
c/o Corporate Secretary
Surge Components, Inc.
95 East Jefryn Blvd.
Deer Park, New York 11729
AUDIT COMMITTEE REPORT
The Audit Committee
has reviewed and discussed our financial statements for the fiscal year ended November 30, 2019 with both management and Seligson
& Giannattasio, LLP, our independent registered public accounting firm. In its discussion, management has represented to the
Audit Committee that our financial statements for the fiscal year ended November 30, 2019 were prepared in accordance with generally
accepted accounting principles.
The Audit Committee
meets with our independent registered public accounting firm, with and without management present, to discuss the results of their
annual audit and quarterly reviews, our internal controls and the overall quality of our financial reporting. The Audit Committee
has discussed with our independent registered public accounting firm the matters required to be discussed by the statement on Auditing
Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.
The Audit Committee
has received the written disclosures and the letter from our independent registered public accounting firm required by applicable
requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee
concerning independence, and has considered and discussed with Seligson & Giannattasio, LLP, such firm’s independence
and the compatibility of the non-audit services provided by the firm with its independence.
Based on the Audit
Committee’s review of the audited financial statements and the various discussions noted above, the Audit Committee recommended
to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended November
30, 2019.
|
AUDIT COMMITTEE
|
|
|
|
Gary Jacobs (Chairman)
|
|
Alan Plafker
|
|
Lawrence Chariton
Martin Novick
Peter Levy
|
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table
sets forth information regarding compensation paid to our executive officers for the years ended November 30, 2019 and November
30, 2018:
Name and Position
|
|
Fiscal
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
All Other
Compensation
($)(1)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ira Levy
|
|
2019
|
|
|
|
275,000
|
|
|
|
136,224
|
|
|
|
41,250
|
|
|
|
|
|
|
|
55,950
|
|
|
|
508,424
|
|
President CEO and CFO
|
|
2018
|
|
|
|
275,000
|
|
|
|
174,650
|
|
|
|
55,000
|
|
|
|
-
|
|
|
|
56,038
|
|
|
|
560,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven J. Lubman
|
|
2019
|
|
|
|
225,000
|
|
|
|
100,312
|
|
|
|
|
|
|
|
|
|
|
|
48,622
|
|
|
|
373,934
|
|
Vice President and Secretary
|
|
2018
|
|
|
|
225,000
|
|
|
|
133,459
|
|
|
|
33,750
|
|
|
|
-
|
|
|
|
47,143
|
|
|
|
439,352
|
|
|
(1)
|
Amounts
in this column include payments for medical insurance, automobile allowance and life and personal insurance. With respect
to Fiscal 2019, the amounts were comprised of the following items:
|
|
|
Medical
Insurance
|
|
Automobile
Allowances
|
|
Life and
Personal
Insurance
|
Ira Levy
|
|
$
|
29,550
|
|
|
$
|
17,891
|
|
|
$
|
8,509
|
|
Steven J. Lubman
|
|
$
|
29,550
|
|
|
$
|
11,400
|
|
|
$
|
7,672
|
|
2019 Base Salary and Bonus
In February 2016, the
Company entered into revised employment agreements with two officers of the Company. Pursuant to these agreements, the base salary
for one officer is $275,000 and the base salary for the other officer is $225,000. The agreements continue until terminated by
either party.
The Company’s
compensation committee may award these officers with bonuses and will review the base salary amounts for each of the officers on
an annual basis to determine if any changes to the base salary amounts need to be made. Pursuant to the employment agreements,
the officers are prohibited from engaging in activities which are competitive with those of the Company during their employment
with the Company and for one year following termination. If the agreement is terminated other than for cause, the officer would
be entitled to all base salary earned through the date of termination, accrued but unused vacation, all vested equity, and bonus
amounts payable to the officer through the date of termination. The officers would also be entitled to receive an additional thirty-six
months of annual compensation equal to the average of his base salary and bonus for the three calendar years prior to the date
of termination, payable in accordance with the Company’s regular payroll practice over a 52-week period.
The bonus granted to
the named executive officers in 2018 was based on certain performance goals that were set prior to the year by the Compensation
Committee and the executive, but ultimately the bonus is discretionary, as the Compensation Committee has the authority to make
all final decisions regarding the amount and form of bonuses provided to the executive officers. For Mr. Levy, his target bonus
amount is equal to fifty percent (50%) of his base salary, and Mr. Lubman’s target is equal to forty-five percent (45%) of
his base salary.
In 2018 the Compensation
Committee used four performance markers to guide their decisions regarding bonus amounts. The performance guidelines that were
applicable to Messrs. Levy and Lubman’s bonuses for the 2018 year included individual performance goals, revenue growth,
achieving the operating plan goals for specific divisions of the company, and achieving the operating plan for the company as a
whole. Each performance guideline was generally intended to make up twenty-five percent of the potential bonus amount for each
executive. Based upon the Company’s and the executives’ performance during the 2018 year, the Compensation Committee
granted awards that were approximately one hundred percent (100%) of the executives’ target award amount.
2019 Equity Compensation Awards
We have historically
granted fully vested stock awards and stock option awards. The amount of awards granted in any given year is determined based on
the performance of the company and the executive in the previous year. Performance is generally based upon the same performance
guidelines that are used for the annual cash bonus award for that year. The Compensation Committee sets a target award amount based
upon a percentage of the executive’s base salary. At the end of the year, the Compensation Committee determines the cash
amount that resulted from the previous year’s performance, with any discretionary adjustments that the Compensation Committee
deems to be appropriate, and converts that cash amount into a number of shares of stock awards or stock option awards, as applicable.
During the 2018 year, the Compensation Committee
set a target amount of twenty percent (20%) of base salary for Mr. Levy and a target of fifteen percent (15%) of base salary for
Mr. Lubman. Following the end of the 2018 year, the Compensation Committee determined that Messrs. Levy and Lubman should receive
equity awards equal in value to one hundred percent (100%) of their target award amount. The Compensation Committee used the Company’s
stock price of $1.88 on May 15, 2019 to convert the resulting cash award into 29,255 stock awards for Mr. Levy, and 17,952 stock
awards for Mr. Lubman. The equity awards, if any, that will be granted to the named executive officers with respect to 2019 year
performance will not be granted until the 2020 year, therefore they will be included in the compensation disclosures that we file
for the 2020 year.
Employment Agreements
In February 2016, the
Company entered into revised employment agreements (the “Levy Agreement” and the “Lubman Agreement”, individually,
and collectively, the “Employment Agreements”) with Ira Levy and Steven Lubman, respectively, which provides the executives
with a base salary of $275,000 and $225,000, respectively (“Base Salary”). The executives shall receive an annual bonus
as shall be determined by the Board or the Compensation Committee, as applicable, in its sole discretion, based upon criteria to
be established in its sole discretion. The executives shall also be entitled to receive additional cash, equity or other compensation
or benefits in consideration for their services to the Company, at such times and in such amounts as shall be determined in the
sole discretion of the Board or the Compensation Committee. In addition, the executives shall be entitled to receive grants of
stock options, stock and/or any other equity incentive awards available to senior executives, under the Company’s equity
incentive plans, at such times and in such amounts as shall be determined in the sole discretion of the Board or the Compensation
Committee.
The Employment Agreements
will remain in effect until terminated by either the Company or the executive. In the event an executive’s employment is
terminated by the Company for Cause (as defined in the Employment Agreements), or if an executive resigns other than for Good Reason
(as defined in the Employment Agreements), he shall be entitled to receive (i) any earned but unpaid salary, all vested equity,
and any earned but unpaid bonus awards through the date of termination, and (ii) reimbursement for any unreimbursed business expenses
incurred by him in accordance with the Company’s policy prior to the date of termination.
In the event an executive’s
employment is terminated by the Company other than for Cause or if an executive resigns for Good Reason, including a Change of
Control (as defined in the Employment Agreements) that is accompanied by the executive’s resignation within a twelve month
period following that Change of Control, such executive shall be entitled to any earned but unpaid salary, all vested equity, and
any earned but unpaid bonus awards through the date of termination. Such executive will also be paid an additional thirty-six months
of annual compensation equal to the average of his base salary and bonus for the three calendar years prior to the date of termination,
payable in accordance with the Company’s regular payroll practice over a 52-week period. The Company shall also (i) accelerate
the vesting on any of the executive’s unvested stock options, restricted stock grants or other equity incentive awards; and
(ii) reimburse the executive for any unreimbursed business expenses incurred by him in accordance with the Company’s policy
prior to the date of termination. In the event that the executive is terminated without Cause due to our inability to pay our debts
when they generally become due, we will not be liable for the cash severance payments or the payment of annual bonuses due to the
executive. The severance benefits potentially payable upon a termination other than for Cause or for Good Reason will be provided
subject to the executive signing a general release of claims in our favor prior to payment.
In the event an executive’s
employment is terminated by the Company upon death or disability, the executive or his estate shall be entitled to receive his
salary then in effect along with all other fringe benefits (including, without limitation, family medical benefits) for a period
of one year following the date of such termination. In addition, the executive or his estate shall have the right to exercise any
unexercised and vested options for a period of ninety days following the date of termination and to receive payment for any accrued
but unpaid vacation time.
The Employment Agreements
contain customary non-competition and non-solicitation provisions that extend to one year after the date of termination of the
executives’ employment with the Company. The executives also agreed to customary terms regarding confidentiality and ownership
of product ideas.
Outstanding Equity Awards at November 30, 2019
Name
|
|
Number of securities underlying options, Unexercisable (#)
|
|
|
Number of Securities Underlying Unexercised Options, Exercisable
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
Ira Levy
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Steven Lubman
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Director Compensation for Year Ending November 30, 2019
The following table
summarizes the compensation for our non-employee board of directors for the fiscal year ended November 30, 2019. All compensation
paid to our employee directors is included under the summary compensation table above. With respect to the 2019 fiscal year, the
director compensation program consisted of a monthly cash fee of $2,500 per month, with the amount increased to $3,500 per month
for a non-employee director that serves as the chairman of more than two committees on the Board of Directors. The non-employee
directors are also eligible to receive equity awards, although there is no annual target amount set for the non-employee directors.
Name
|
|
Fees Earned
or Paid in
Cash
($)
|
|
Option
Awards
($)(1)
|
|
Total
($)
|
Alan Plafker
|
|
|
30,000
|
|
|
-
|
|
|
30,000
|
Martin Novick
|
|
|
30,000
|
|
|
-
|
|
|
30,000
|
Lawrence Chariton
|
|
|
30,000
|
|
|
-
|
|
|
30,000
|
Gary Jacobs
|
|
|
42,000
|
|
|
-
|
|
|
42,000
|
Peter Levy
|
|
|
30,000
|
|
|
-
|
|
|
30,000
|
|
(1)
|
Amounts
in this column reflect the grant date value of the option awards granted to each of the directors in accordance with Topic 718,
disregarding any estimates of forfeitures. Further details of the methods and assumptions used for purposes of valuing these awards
are included in Note H of the Notes to Consolidated Financial Statements in this Annual Report. As of November 30, 2019, Mr. Chariton
held 25,000 shares of unexercised but vested stock option awards, and Mr. Jacobs held 50,000 shares of unexercised but vested
stock option awards.
|
STOCKHOLDER PROPOSALS FOR THE 2021 ANNUAL
MEETING
Stockholder proposals
intended for inclusion in our proxy statement for our next Annual Meeting (expected to be held on or about November 25, 2021 pursuant
to Rule 14a-8 under the Exchange Act must be submitted to us on or before July 25, 2021 so that they may be considered by us for
inclusion in our proxy statement relating to that meeting.
Our Bylaws provide
that nominations for the election of directors and proposals for other business to be consider at the annual meeting of stockholders
may be made upon timely notice given by any stockholder of record entitled to vote for the election of directors. A timely notice
must be made in writing, contain the information required by our Bylaws and be received by the Secretary of the Company, not later
than the close of business on the 90th day, nor earlier than the opening of business on the 120th day
before the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the upcoming
annual meeting is advanced more than 45 days before, or delayed more than 45 calendar days after, such anniversary date, notice
by the stockholder to be timely must be delivered not earlier than the opening of business on the 120th before
the meeting and not later than (x) the close of business on the 90th day before the meeting or (y) the close of
business on the 10th day following the day on which public announcement of the date of the annual meeting was first
made by the Company.
ANNUAL REPORT
The Annual Report is
being sent with this Proxy Statement to each stockholder and is available at the Investor Relations portion of our website as well
as on the SEC’s website at www.sec.gov. The Annual Report contains our audited financial statements for the fiscal
years ended November 30, 2018 and November 30, 2019. The Annual Report, however, is not to be regarded as part of the proxy soliciting
material.
DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS
Only one copy of this
Proxy Statement and one copy of our Annual Report are being delivered to multiple registered stockholders who share an address
unless we have received contrary instructions from one or more of the stockholders. A separate form of proxy and a separate notice
of the Annual Meeting are being included for each account at the shared address.
Registered stockholders
who share an address and would like to receive a separate copy of our Annual Report and/or a separate copy of this Proxy Statement,
or have questions regarding the householding process, may contact our transfer agent: Continental Stock Transfer & Trust Company,
by calling (212) 509-4000, or by forwarding a written request addressed to Continental Stock Transfer & Trust Company, 1 State
Street, 30th Floor, New York, New York 10004. Promptly upon request, a separate copy of our Annual Report and/or
a separate copy of this Proxy Statement will be sent. By contacting Continental Stock Transfer & Trust Company, LLC, registered
stockholders sharing an address can also (i) notify us that the registered stockholders wish to receive separate annual reports
to stockholders, proxy statements and/or Notices of Internet Availability of Proxy Materials, as applicable, in the future or (ii)
request delivery of a single copy of annual reports to stockholders, proxy statements and/or Notices of Internet Availability of
Proxy Materials, as applicable, in the future if registered stockholders at the shared address are receiving multiple copies.
Many brokers, brokerage
firms, broker/dealers, banks and other holders of record have also instituted “householding” (delivery of one copy
of materials to multiple stockholders who share an address). If your family has one or more “street name” accounts
under which you beneficially own shares of common stock of Surge, you may have received householding information from your broker,
brokerage firm, broker/dealer, bank or other nominee in the past. Please contact the holder of record directly if you have questions,
require additional copies of this Proxy Statement or our Annual Report or wish to revoke your decision to household and thereby
receive multiple copies. You should also contact the holder of record if you wish to institute householding.
OTHER MATTERS
Management does not
know of any other matters that are likely to be brought before the meeting. However, in the event that any other matters properly
come before the meeting, the persons named in the enclosed proxy will vote said proxy in accordance with their judgment in said
matters.
The information presented
in this proxy statement under the caption “Audit Committee Report” will not be deemed to be “soliciting material”
or deemed filed with the Securities and Exchange Commission under the Securities Act of 1933 or the Exchange Act, and nothing contained
in any previous filings made by the Company under such acts shall be interpreted as incorporating by reference the information
presented under said specified captions.
Where You Can Find More Information
We file annual and
quarterly reports and other reports and information with the Securities and Exchange Commission. These reports and other information
can be inspected and copied at, and copies of these materials can be obtained at prescribed rates from, the Public Reference Section
of the SEC at 100 F Street, N.E., Washington, D.C. 20549. We distribute to our stockholders annual reports containing financial
statements audited by our independent registered public accounting firm and, upon request, quarterly reports for the first three
quarters of each fiscal year containing unaudited financial information. In addition, the reports and other information are filed
through Electronic Data Gathering, Analysis and Retrieval (known as “EDGAR”) system and are publicly available on the
SEC’s Web site, located at http://www.sec.gov. We will provide without charge to you, upon written or oral request,
a copy of the reports and other information filed with the Securities and Exchange Commission.
Any requests for copies
of information, reports or other filings with the SEC should be directed to Surge Components, Inc., 95 E. Jefryn Blvd., Deer Park,
New York 11729, Attention: Investor Relations.
|
By Order of the Board of Directors
|
|
|
|
/s/ Ira Levy
|
|
Chief Executive Officer, President and Director
|
|
|
Deer Park, New York
October 30, 2020
|
|
Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and the Annual Report are available at the
Investor Relations portion of our website
at http://www.surgecomponents.com/relations.asp.
SURGE COMPONENTS, INC.
Annual Meeting of Stockholders
November 23, 2020 10:00 AM Eastern Time
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
OF SURGE COMPONENTS, INC.
The undersigned stockholder
of Surge Components, Inc., a Delaware corporation (the “Company”), hereby appoints Ira Levy and Steven J. Lubman, and
each of them, each with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby
authorizes them to represent and vote, all of the shares of common stock of the Company which the undersigned is entitled to vote,
on all matters that may properly come before the Annual Meeting of Stockholders of the Company to be held on November 23, 2020,
over the phone at (833) 540-1030 (United States toll-free) or (818) 337-2343 (standard rates apply) (conference ID 6819064) or
online at https://event.on24.com/wcc/r/2790858/D2A4E8FBB2E4625C108E4FEAE87F69D3 at 10:00 a.m., Eastern time, and at any adjournment
or postponement thereof (“Annual Meeting”). The undersigned stockholder hereby revokes any proxy or proxies heretofore
given by the undersigned for the Annual Meeting.
THIS PROXY CARD,
WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS
SIGNED, THIS PROXY CARD WILL BE VOTED “FOR” THE ELECTION OF ALL NOMINEES IN PROPOSAL 1, “FOR” PROPOSALS
2 AND 3, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Continued and to be signed on reverse
side
SURGE COMPONENTS, INC.
95 EAST JEFRYN BLVD.
DEER PARK, NEW YORK 11729
VOTE BY MAIL
Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to Continental Stock Transfer, 1 State Street, 30th
Floor, New York, NY 10004, Attention: Proxy Department.
VOTE BY E-MAIL
Mark, sign and date your proxy card and send it to proxy@continentalstock.com.
VOTE BY FAX
Mark, sign and date your proxy card and fax it to (212) 509-5152.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED
AND DATED.
1.
|
|
Election of Directors.
|
|
Vote FOR
|
|
Vote WITHHOLD
|
|
Vote FOR ALL
|
|
|
Ira Levy
Steven J. Lubman
Alan Plafker
Martin Novick
Lawrence Chariton
Peter A. Levy
Gary M. Jacobs
|
|
ALL
nominees
|
|
from
all
nominees
|
|
nominees except
the nominee(s)
marked below
|
|
|
|
|
☐
|
|
☐
|
|
_____________
|
|
|
|
|
|
|
|
|
|
2.
|
|
Ratification of the appointment of Seligson & Giannattasio, LLP as our independent registered public accounting firm for the fiscal year ending November 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
☐
|
|
☐
|
|
☐
|
3.
|
|
Advisory vote on executive compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE: The proxies are authorized
to vote on all such matters as may properly come before the meeting or any adjournment thereof.
Please sign exactly
as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title
as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full
corporate or partnership name, by authorized officer.
Signature
|
|
Date
|
|
|
|
Signature (Joint Owners)
|
|
Date
|
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