UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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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SILVERSUN TECHNOLOGIES, 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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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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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
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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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SILVERSUN TECHNOLOGIES, INC.
120 Eagle Rock Avenue
East Hanover, NJ 07936
(973) 396-1720
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 19, 2019
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of
Shareholders (the “Annual Meeting”) of SilverSun Technologies,
Inc., a Delaware corporation (together with its subsidiaries,
“Company”, “SilverSun”, “we”, “us” or “our”), which will be held on
December 19, 2019, at 10:00 A.M. EST at 120 Eagle Rock Avenue, East
Hanover, NJ 07936, for the following purposes:
1.
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To elect four (4) directors to hold office for a one year term and
until each of their successors are elected and qualified;
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To ratify the appointment of Friedman LLP as our independent
certified public accounting firm for the fiscal year ending
December 31, 2019;
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To approve the adoption of the SilverSun Technologies, Inc. 2019
Equity and Incentive Plan; and
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To transact such other business as may properly come before the
Annual Meeting or any postponement or adjournment thereof.
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The foregoing items of business are more fully described in the
Proxy Statement that is attached and made a part of this Notice.
Only stockholders of record of our common stock, par value $0.00001
per share (“Common Stock”) at the close of business on November 26,
2019 (the “Record Date”), will be entitled to notice of, and to
vote at, the Annual Meeting or any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting
in person. Your vote is important regardless of the number of
shares you own. Only record or beneficial owners of SilverSun
Common Stock as of the Record Date may attend the Annual Meeting in
person. When you arrive at the Annual Meeting, you must present
photo identification, such as a driver’s license. Beneficial owners
also must provide evidence of stockholdings as of the Record Date,
such as a recent brokerage account or bank statement.
Whether or not you expect to attend the Annual Meeting, please
submit a proxy to vote your shares either via Internet or by mail.
If you choose to submit your proxy by mail, please complete, sign,
date and return the enclosed proxy card in the enclosed
postage-paid envelope in order to ensure representation of your
shares. It will help in our preparations for the meeting if you
would check the box on the form of proxy if you plan on attending
the Annual Meeting. Your proxy is revocable in accordance with the
procedures set forth in the Proxy Statement.
In addition to mailing a printed copy of our proxy materials, to
each stockholder of record, we expect to make certain proxy
materials available over the Internet.
Accordingly, on or about November 26, 2019 we will begin mailing
the Proxy Materials to all stockholders of record as of the Record
Date.
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By Order of the Board of Directors
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/s/ Mark Meller
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Mark Meller
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Chairman
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November 26, 2019
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East Hanover, New Jersey
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YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
TO ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED
IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY
VOTE IN PERSON IF YOU WISH TO DO SO EVEN IF YOU HAVE PREVIOUSLY
SENT IN YOUR PROXY.
TABLE OF
CONTENTS
SILVERSUN TECHNOLOGIES, INC.
120 Eagle Rock Avenue
East Hanover, NJ 07936
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 2019
GENERAL INFORMATION ABOUT THE PROXY
STATEMENT AND ANNUAL MEETING
General
This Proxy Statement is being furnished to the shareholders of
SilverSun Technologies, Inc. (together with its subsidiaries, the
“Company”, “SilverSun”, “we”, “us” or “our”) in connection with the
solicitation of proxies by our Board of Directors (the “Board of
Directors” or the “Board”) for use at the Annual Meeting of
Shareholders to be held on December 19, 2019 at 10:00 A.M. EST at
120 Eagle Rock Avenue, East Hanover, New Jersey 07936, and at any
and all adjournments or postponements thereof (the “Annual
Meeting”), for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. Accompanying this Proxy Statement
is a proxy/voting instruction form (the “Proxy”) for the Annual
Meeting, which you may use to indicate your vote as to the
proposals described in this Proxy Statement. It is contemplated
that this Proxy Statement and the accompanying form of Proxy will
be first mailed to the Company’s shareholders on or
about November 26, 2019.
The Company will solicit shareholders by mail through its regular
employees and will request banks and brokers and other custodians,
nominees and fiduciaries, to solicit their customers who have stock
of the Company registered in the names of such persons and will
reimburse them for reasonable, out-of-pocket costs. In addition,
the Company may use the service of its officers and directors to
solicit proxies, personally or by telephone, without additional
compensation.
Why am I being provided with these proxy materials?
We have delivered printed versions of these proxy materials to you
by mail in connection with the solicitation by our Board of proxies
for the matters to be voted on at our Annual Meeting and at any
adjournment or postponement thereof.
What do I do if my shares are held in “street name”?
If your shares are held in a brokerage account or by a bank or
other holder of record, you are considered the “beneficial owner”
of shares held in “street name.” As the beneficial owner, you have
the right to direct your broker, bank or other holder of record on
how to vote your shares by following their instructions for voting.
Please refer to information from your bank, broker or other nominee
on how to submit your voting instructions.
What if other matters come up at the Annual Meeting?
At the date this Proxy Statement went to press, we did not know of
any matters to be properly presented at the Annual Meeting other
than those referred to in this Proxy Statement. If other matters
are properly presented at the meeting or any adjournment or
postponement thereof for consideration, and you are a stockholder
of record and have submitted a proxy card, the persons named in
your proxy card will have the discretion to vote on those matters
for you.
Voting Securities
Only shareholders of record as of the close of business on November
26, 2019 (the “Record Date”) will be entitled to vote at the Annual
Meeting and any adjournment or postponement thereof. As of the
Record Date, there were approximately 4,501,271 shares of Common
Stock of the Company issued and outstanding and entitled to vote
representing approximately 857 holders of record. Shareholders may
vote in person or by proxy. Each holder of shares of Common Stock
is entitled to one vote for each share of stock held on the
proposals presented in this Proxy Statement. The Company’s Bylaws,
as amended, provide that at least a majority of the outstanding
shares of stock entitled to vote, whether present in person or
represented by proxy, shall constitute a quorum for the transaction
of business at the Annual Meeting. The enclosed Proxy reflects the
number of shares that you are entitled to vote. Shares of Common
Stock may not be voted cumulatively.
Voting of Proxies
All valid proxies received prior to the Annual Meeting will be
voted. The Board of Directors recommends that you vote by proxy
even if you plan to attend the Annual Meeting. You can vote your
shares by proxy via Internet, mail or phone. To vote via Internet,
go to www.proxyvote.com and follow the instructions. To vote by
mail, fill out the enclosed Proxy, sign and date it, and return it
in the enclosed postage-paid envelope to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717. To vote by phone,
dial 1-800-690-6903 and follow the instructions. Voting by proxy
will not limit your right to vote at the Annual Meeting if you
attend the Annual Meeting and vote in person. However, if your
shares are held in the name of a bank, broker or other holder of
record, you must obtain a proxy executed in your favor, from the
holder of record to be able to vote at the Annual Meeting.
Revocability of Proxies
All Proxies which are properly completed, signed and returned prior
to the Annual Meeting, and which have not been revoked, will be
voted in favor of the proposals described in this Proxy Statement
unless otherwise directed. A shareholder may revoke his or her
Proxy at any time before it is voted either by filing with the
Secretary of the Company, at its principal executive offices
located at 120 Eagle Rock Avenue, East Hanover, New Jersey 07936, a
written notice of revocation or a duly-executed Proxy bearing a
later date or by attending the Annual Meeting and voting in
person.
Voting
Procedures and Vote Required
The presence, in person or by proxy, of a majority of the
outstanding shares of stock of the issued and outstanding shares of
Common Stock entitled to vote at the Annual Meeting is necessary to
establish a quorum for the transaction of business. Shares
represented by proxies which contain an abstention, as well as
“broker non-vote” shares (described below) are counted as present
for purposes of determining the presence or absence of a quorum for
the Annual Meeting.
All properly executed proxies delivered pursuant to this
solicitation and not revoked will be voted at the Annual Meeting as
specified in such proxies.
Vote Required for Election of Directors (Proposal No. 1).
Our Certificate of Incorporation, as amended, does not authorize
cumulative voting. Delaware law provides that directors are to be
elected by a plurality of the votes of the shares present in person
or represented by proxy at the Annual Meeting and entitled to vote
on the election of directors. This means that the four (4)
candidates receiving the highest number of affirmative votes at the
Annual Meeting will be elected as directors. Only shares that are
voted in favor of a particular nominee will be counted toward that
nominee’s achievement of a plurality. Shares present at the Annual
Meeting that are not voted for a particular nominee or shares
present by proxy where the shareholder properly withheld authority
to vote for such nominee will not be counted toward that nominee’s
achievement of a plurality.
Vote Required for Ratification of Auditors (Proposal No. 2).
Delaware law and our Bylaws, as amended, provide that, on all
matters (other than the election of directors and except to the
extent otherwise required by our Certificate of Incorporation, as
amended, or applicable Delaware law), the affirmative vote of a
majority of the shares present, in person or by proxy, and voting
on the matter, will be required for approval. Accordingly, the
affirmative vote of a majority of the shares present at the Annual
Meeting, in person or by proxy, and voting on the matter, will be
required to ratify the Board’s selection of Friedman LLP as our
independent auditors for the fiscal year ending December 31,
2019.
Vote Required to Approve the Adoption of the SilverSun
Technologies, Inc. 2019 Equity and Incentive Plan
(Proposal No. 3). Delaware Law and our Bylaws provide that, on
all matters (other than the election of directors and except to the
extent otherwise required by our Certificate of Incorporation, as
amended, or applicable Delaware law), the affirmative vote of a
majority of the shares present, in person or by proxy, and voting
on the matter, will be required for approval. Accordingly, the
affirmative vote of a majority of the shares present at the Annual
Meeting, in person or by proxy, and voting on the matter, will be
required to approve the SilverSun Technologies, Inc. Equity and
Incentive Plan.
If you hold shares beneficially in street name and do not provide
your broker with voting instructions, your shares may constitute
“broker non-votes.” Generally, broker non-votes occur on a matter
when a broker is not permitted to vote on that matter without
instructions from the beneficial owner and instructions are not
given. Brokers that have not received voting instructions from
their clients cannot vote on their clients’ behalf on “non-routine”
proposals. Broker non-votes are counted for the purposes of
obtaining a quorum for the Annual Meeting, and in tabulating the
voting result for any particular proposal, shares that constitute
broker non-votes are not considered entitled to vote. The vote on
Proposal No. 1 is considered “non-routine,” the vote on Proposal
No. 2 is considered “routine”. Abstentions are counted as “shares
present” at the Annual Meeting for purposes of determining the
presence of a quorum but are not counted in the calculation of the
vote.
Votes at the Annual Meeting will be tabulated by one or more
inspectors of election appointed by the Chairman of the Board.
Shareholders will not be entitled to dissenter’s rights with
respect to any matter to be considered at the Annual Meeting.
Shareholders List
For a period of at least ten days prior to the Annual Meeting, a
complete list of shareholders entitled to vote at the Annual
Meeting will be available at the principal executive offices of the
Company located at 120 Eagle Rock Avenue, East Hanover, NJ
07936 so that shareholders of record may inspect the list only for
proper purposes.
Expenses of Solicitation
The Company will pay the cost of preparing, assembling and mailing
this proxy-soliciting material, and all costs of solicitation,
including certain expenses of brokers and nominees who mail proxy
material to their customers or principals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, information
regarding beneficial ownership of our capital stock by:
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Each person, or group of affiliated persons, known by us to
beneficially own more than 5% of our Common Stock;
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Each of our named executive officers;
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Each of our directors; and
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All of our current executive officers and directors as a group.
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Beneficial ownership is determined according to the rules of the
Securities and Exchange Commission (the “SEC”) and generally means
that a person has beneficial ownership of a security if he, she or
it possesses sole or shared voting or investment power of that
security, including options that are currently exercisable or
exercisable within sixty (60) days of the Record Date. Except as
indicated by the footnotes below, we believe, based on the
information furnished to us, that the persons named in the table
below have sole voting and investment power with respect to all
shares of Common Stock shown that they beneficially own, subject to
community property laws where applicable.
Common Stock subject to stock options currently exercisable or
exercisable within sixty (60) days of the Record Date are deemed to
be outstanding for computing the percentage ownership of the person
holding these options and the percentage ownership of any group of
which the holder is a member but are not deemed outstanding for
computing the percentage of any other person.
Unless otherwise indicated, the address of each beneficial owner
listed in the table below is c/o SilverSun Technologies, Inc., 120
Eagle Rock Avenue, East Hanover, NJ 07936.
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Number of Shares of
Common Stock
Beneficially Owned
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Percentage of Ownership
of Common Stock (1)
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Officers and Directors
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Mark Meller
Chief Executive Officer, President and Chairman
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2,006,534 |
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44.58 |
%
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Christine Dye
Chief Financial Officer
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0 |
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%
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Joseph Macaluso
Director
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3,333 |
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Stanley Wunderlich
Director
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5,700 |
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* |
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John Schachtel
Director
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11,031 |
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Officers and Directors as a Group (4 persons)
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2,026,598 |
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45.02 |
%
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5% Beneficial Shareholders
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Jeffrey Roth (2)
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581,384 |
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12.91 |
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Poplar Point Capital Management L.L.C.
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283,633 |
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6.30 |
%
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Based on 4,501,271 shares of Common Stock outstanding as of
November 26, 2019. Shares of Common Stock subject to options or
warrants currently exercisable or exercisable within 60 days, are
deemed outstanding for purposes of computing the percentage of the
person holding such options or warrants, but are not deemed
outstanding for purposes of computing the percentage of any other
person.
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Mr. Roth is a former employee of SWK Technologies, Inc, a
wholly-owned subsidiary of SilverSun Technologies, Inc.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company’s Board of Directors is currently comprised of four
authorized directors. A total of four directors will be elected at
the Annual Meeting to serve until the next annual meeting of
shareholders to be held in 2020, or until their successors are duly
elected and qualified. Of the Board members whose term expires at
the Annual Meeting, Mark Meller, Joseph P. Macaluso, John Schachtel
and Stanley Wunderlich are all standing for reelection. The persons
named as “Proxies” in the enclosed Proxy will vote the shares
represented by all valid returned proxies in accordance with the
specifications of the shareholders returning such proxies. If no
choice has been specified by a shareholder, the shares will be
voted FOR the nominees. If at the time of the Annual Meeting any of
the nominees named below should be unable or unwilling to serve,
which event is not expected to occur, the discretionary authority
provided in the Proxy will be exercised to vote for such substitute
nominee or nominees, if any, as shall be designated by the Board of
Directors. If a quorum is present and voting, the nominees for
directors receiving the highest number of votes will be elected.
Abstentions and broker non-votes will have no effect on the
vote.
NOMINEES FOR ELECTION AS DIRECTOR
Nominees
The persons nominated as directors are as follows:
Name
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Age
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Position with the
Company/Independence
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New Board Term Expires
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Mark Meller
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60 |
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Chief Executive Officer, President and Chairman
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2020 |
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Joseph P. Macaluso
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68 |
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Independent/Chairman of Audit Committee
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2020 |
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Stanley Wunderlich
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68 |
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Independent/ Chairman of Nominating and Governance Committee
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2020 |
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John Schachtel
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58 |
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Independent/Chairman of Compensation Committee
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2020 |
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The following sets forth certain information about each of the
director nominees:
Mark Meller, Chief Executive Officer, President,
Director
Mr. Mark Meller has been the President and Director of the Company
since September 15, 2003, and was further appointed Chief Executive
Officer on September 1, 2004. He became Chairman of the Board on
May 10, 2009. From September 2003 through January 2015, he was
Chief Financial Officer of the Company. From October 2004 until
February 2007, Mr. Meller was the President, Chief Executive
Officer, Chief Financial Officer and Director of Deep Field
Technologies, Inc. From December 15, 2004 until September 2009, Mr.
Meller was the President, Chief Executive Officer, Chief Financial
Officer and Director of MM2 Group, Inc. From August 29, 2005 until
August 2006, Mr. Meller was the President, Chief Executive Officer
and Chief Financial Officer of iVoice Technology, Inc. From 1988
until 2003, Mr. Meller was Chief Executive Officer of Bristol
Townsend and Co., Inc., a New Jersey based consulting firm
providing merger and acquisition advisory services to middle market
companies. From 1986 to 1988, Mr. Meller was Vice President of
Corporate Finance and General Counsel of Crown Capital Group, Inc,
a New Jersey based consulting firm providing advisory services for
middle market leveraged buy-outs (LBO’s). Prior to 1986, Mr. Meller
was a financial consultant and practiced law in New York City. He
is a member of the New York State Bar.
Mr. Meller has a B.A. from the State University of New York at
Binghamton and a J.D. from the Boston University School of Law.
In evaluating Mr. Meller’s specific experience, qualifications,
attributes and skills in connection with his appointment to our
board, we took into account his experience in the industry and his
knowledge of running and managing the Company.
Joseph Macaluso, Director
Mr. Joseph Macaluso has been a member of the Board since January
2015. Mr. Macaluso has over 30 years of experience in financial
management. Mr. Macaluso has been the Principal Accounting Officer
of Tel-Instrument Electronics Corp., a developer and manufacturer
of avionics test equipment for both the commercial and military
markets since 2002. Previously, he had been involved in companies
in the medical device and technology industries holding positions
including Chief Financial Officer, Treasurer and Controller. He has
a B.S. in Accounting from Fairfield University.
In evaluating Mr. Macaluso’s specific experience, qualifications,
attributes and skills in connection with his appointment to Board,
we took into account his expertise in general management, finance,
corporate governance and strategic planning, as well as his
experience in operations and mergers and acquisitions.
Stanley Wunderlich, Director
Mr. Stanley Wunderlich has been a member of the Board since July
2011. Mr. Wunderlich has over 40 years of experience on Wall Street
as a business owner and consultant. Mr. Wunderlich is a
founding partner and has been Chairman and Chief Executive Officer
of Consulting for Strategic Growth 1, Ltd., specializing in
investor and media relations and the formation of capital for
early-growth stage companies both domestic and international, from
2000 through the present.
Mr. Wunderlich has a Bachelor’s degree from Brooklyn
College.
In evaluating Mr. Wunderlich’s experience, qualifications,
attributes and skills in connection with his appointment to our
Board, we took into account his experience in finance and investor
relations.
John Schachtel, Director
On March 27, 2017, Mr. Schachtel was appointed to the Board. Before
joining the Board, Mr. Schachtel was the Chief Operating Officer of
OneMain Finanacial Holdings, Inc. As Chief Operating Officer of
OneMain Finanacial Holdings, Inc., Mr. Schachtel’s responsibilities
included oversight of sales and field operations, marketing, and
centralized collections. Prior to assuming the Chief Operating
Officer role, Mr. Schachtel served 11 years as the Executive
Vice President, Northeast & Midwest Division for OneMain
Finanacial Holdings, Inc. He holds a Bachelor of Science degree
from Northwestern University and an MBA in Finance from New York
University.
Required Vote
Our Certificate of Incorporation, as amended, does not authorize
cumulative voting. Delaware law provides that directors are to be
elected by a plurality of the votes of the shares present in person
or represented by proxy at the Annual Meeting and entitled to vote
on the election of directors. This means that the four (4)
candidates receiving the highest number of affirmative votes at the
Annual Meeting will be elected as directors. Only shares that are
voted in favor of a particular nominee will be counted toward that
nominee’s achievement of a plurality. Shares present at the Annual
Meeting that are not voted for a particular nominee or shares
present by proxy where the shareholder properly withheld authority
to vote for such nominee will not be counted toward that nominee’s
achievement of a plurality.
At the Annual Meeting a vote will be taken on a proposal to
approve the election of the four (4) director nominees.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF
(I) MARK MELLER, (II) JOSEPH P. MACALUSO, (III) STANLEY WUNDERLICH
AND (IV) JOHN SCHACHTEL AS DIRECTORS.
CORPORATE GOVERNANCE
Board of
Directors
The Board oversees our business affairs and monitors the
performance of our management. In accordance with our corporate
governance principles, the Board does not involve itself in
day-to-day operations. The directors keep themselves informed
through discussions with the Chief Executive Officer, other key
executives, and by reading the reports and other materials sent to
them and by participating in Board and committee meetings. Our
directors hold office until the next annual meeting of shareholders
and until their successors are elected and qualified or until their
earlier resignation or removal, or if for some other reason they
are unable to serve in the capacity of director.
Director Independence
The Board currently consists of four (4) members: Mark Meller,
Joseph P. Macaluso, Stanley Wunderlich and John Schachtel. All of
our directors will serve until our Annual Meeting and until their
successors are duly elected and qualified.
As we are listed on the NASDAQ Capital Market, our determination of
independence of directors is made using the definition of
“independent director” contained in Rule 5605(a)(2) of the
Marketplace Rules of the NASDAQ Stock Market. The board
affirmatively determined that Joseph P. Macaluso, Stanley
Wunderlich and John Schachtel are “independent” directors, as that
term is defined in the NASDAQ Stock Market Rules.
Board Meetings and Attendance
The Board held 4 in person meetings in 2019. All Board
actions were taken at such meetings or via a unanimous written
consent as permitted by Delaware General Corporate Law.
Stockholder Communications with the
Board
Shareholders wishing to communicate with the Board, the
non-management directors, or with an individual Board member may do
so by writing to the Board, to the non-management directors, or to
the particular Board member, and mailing the correspondence to: c/o
Mark Meller, Chief Executive Officer, President and Chairman
SilverSun Technologies, Inc. 120 Eagle Rock Avenue, Suite 330, East
Hanover, New Jersey 07936. The envelope should indicate that it
contains a shareholder communication. All such shareholder
communications will be forwarded to the director or directors to
whom the communications are addressed.
Board Committees
Our Board of Directors has three (3) standing committees: an Audit
Committee, a Compensation Committee and a Nominating and Corporate
Governance Committee. Each committee has a charter, which is
available on our website at www.silversuntech.com.
Information contained on our website is not incorporated herein by
reference. Each of the board committees has the composition and
responsibilities described below. The members of these committees
are:
Current Committee Composition
Audit Committee
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Compensation Committee
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Nominating and Corporate
Governance Committee
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Joseph P. Macaluso*
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Joseph P. Macaluso
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Joseph P. Macaluso
|
Stanley Wunderlich
|
|
Stanley Wunderlich
|
|
Stanley Wunderlich*
|
John Schachtel
|
|
John Schachtel*
|
|
John Schachtel
|
* Denotes Chairman of committee.
Committee Composition after the Annual
Meeting†
Audit Committee
|
|
Compensation Committee
|
|
Nominating and Corporate
Governance Committee
|
Joseph P. Macaluso*
|
|
Joseph P. Macaluso
|
|
Joseph P. Macaluso
|
Stanley Wunderlich
|
|
Stanley Wunderlich
|
|
Stanley Wunderlich
|
John Schachtel
|
|
John Schachtel*
|
|
John Schachtel*
|
†Assumes the election of Joseph P. Macaluso, Stanley
Wunderlich and John Schachtel, who have each been serving their
respective capacities since joining the Board.
* Denotes Chairman of committee subject to election to the Board at
the Annual Meeting.
Audit Committee
We have an Audit Committee established in accordance with Section
3(a)(58)(A) of the Exchange Act. The members of our Audit Committee
are currently Joseph P. Macaluso, Stanley Wunderlich and John
Schachtel. The Board has selected Joseph P. Macaluso, Stanley
Wunderlich and John Schachtel to serve on the Audit Committee,
subject to their election to the Board. Mr. Macaluso will serve as
Chairman of the Audit Committee. Each of the current and newly
appointed Audit Committee members is “independent” within the
meaning of Rule 10A-3 under the Exchange Act and the NASDAQ Stock
Market Rules. Our Board of Directors has determined that Mr.
Macaluso qualifies as an “audit committee financial expert,” as
defined by applicable rules of the SEC.
The Audit Committee oversees our accounting and financial reporting
processes and oversees the audit of our financial statements and
the effectiveness of our internal control over financial reporting.
The specific functions of the Audit Committee include, but are not
limited to:
|
●
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selecting and recommending to the Board the appointment of an
independent registered public accounting firm and overseeing the
engagement of such firm;
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●
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approving the fees to be paid to the independent registered public
accounting firm;
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helping to ensure the independence of the independent registered
public accounting firm;
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overseeing the integrity of our financial statements;
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●
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preparing an audit committee report as required by the SEC to be
included in our annual proxy statement;
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resolving any disagreements between management and the auditors
regarding financial reporting;
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reviewing with management and the independent auditors any
correspondence with regulators and any published reports that raise
material issues regarding the Company’s accounting policies;
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reviewing and approving all related party transactions; and
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overseeing compliance with legal and regulatory requirements.
|
The Audit Committee was formed in 2017 in connection with the
Company’s uplist to the NASDAQ Capital Market. In 2019, Mr.
Macaluso, the current Chairman of the Company’s Audit Committee,
held approximately 5 telephonic meetings with the Company’s
Auditors. The Company’s Board were involved in reviewing the
Company’s financial statements and auditor’s comments as well.
Compensation Committee
The Compensation Committee was formed on March 27, 2017. The
members of our Compensation Committee are currently Joseph P.
Macaluso, Stanley Wunderlich and John Schachtel. The Board has
selected Joseph P. Macaluso, Stanley Wunderlich and John Schachtel
to serve on the Compensation Committee. Mr. Schachtel will serve as
Chairman of the Compensation Committee. Each of the current members
appointed to the Compensation Committee is “independent” within the
meaning of the NASDAQ Stock Market Rules. In addition, each current
member of our Compensation Committee qualifies as a “non-employee
director” under Rule 16b-3 of the Exchange Act. Our Compensation
Committee assists the Board in the discharge of its
responsibilities relating to the compensation of the Board and our
executive officers.
The Compensation Committee’s compensation-related responsibilities
include, but are not limited to:
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●
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reviewing and approving on an annual basis the corporate goals and
objectives with respect to compensation for our Chief Executive
Officer;
|
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●
|
reviewing, approving and recommending to our board of directors on
an annual basis the evaluation process and compensation structure
for our other executive officers;
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●
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determining the need for an the appropriateness of employment
agreements and change in control agreements for each of our
executive officers and any other officers recommended by the Chief
Executive Officer or board of directors;
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●
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providing oversight of management’s decisions concerning the
performance and compensation of other company officers, employees,
consultants and advisors;
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●
|
reviewing our incentive compensation and other equity-based plans
and recommending changes in such plans to our board of directors as
needed, and exercising all the authority of our board of directors
with respect to the administration of such plans;
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●
|
reviewing and recommending to our board of directors the
compensation of independent directors, including incentive and
equity-based compensation; and
|
|
|
|
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●
|
selecting, retaining and terminating such compensation consultants,
outside counsel or other advisors as it deems necessary or
appropriate.
|
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee was formed on
March 27, 2017. The members of our Nominating and Corporate
Governance Committee are currently Joseph P. Macaluso, Stanley
Wunderlich and John Schachtel. Mr. Schachtel would continue to
serve as Chairman of the Nominating and Corporate Governance
Committee. Each of the current and newly appointed Nominating and
Corporate Governance Committee members is “independent” within the
meaning of the NASDAQ Stock Market Rules. The purpose of the
Nominating and Corporate Governance Committee is to recommend to
the Board nominees for election as directors and persons to be
elected to fill any vacancies on the Board, develop and recommend a
set of corporate governance principles and oversee the performance
of the board.
The Nominating and Corporate Governance Committee’s
responsibilities include:
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●
|
recommending to the Board nominees for election as directors at any
meeting of shareholders and nominees to fill vacancies on the
Board;
|
|
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|
●
|
considering candidates proposed by shareholders in accordance with
the requirements in the Committee charter;
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●
|
overseeing the administration of the Company’s Code of Ethics;
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●
|
reviewing with the entire Board, on an annual basis, the requisite
skills and criteria for Board candidates and the composition of the
Board as a whole;
|
|
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|
●
|
the authority to retain search firms to assist in identifying board
candidates, approve the terms of the search firm’s engagement and
cause the Company to pay the engaged search firm’s engagement
fee;
|
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|
|
●
|
recommending to the Board on an annual basis the directors to be
appointed to each committee of the Board;
|
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|
|
|
●
|
overseeing an annual self-evaluation of the Board and its
committees to determine whether it and its committees are
functioning effectively; and
|
|
|
|
|
●
|
developing and recommending to the Board a set of corporate
governance guidelines applicable to the Company.
|
The Nominating and Corporate Governance Committee may delegate any
of its responsibilities to subcommittees as it deems appropriate.
The Nominating and Corporate Governance Committee is authorized to
retain independent legal and other advisors, and conduct or
authorize investigations into any matter within the scope of its
duties.
Family
Relationships
There are no family relationships among any of our directors,
director candidates or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive
officers has, during the past ten (10) years:
|
●
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Been convicted in a criminal proceeding or been subject to a
pending criminal proceeding (excluding traffic violations and other
minor offenses);
|
|
|
|
|
●
|
Had any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive
officer, either at the time of the bankruptcy filing or within two
years prior to that time;
|
|
|
|
|
●
|
Been subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or
temporarily enjoining, barring, suspending or otherwise limiting,
his involvement in any type of business, securities, futures,
commodities, investment, banking, savings and loan or insurance
activities, or to be associated with persons engaged in any such
activity;
|
|
|
|
|
●
|
Been found by a court of competent jurisdiction in a civil action
or by the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been
reversed, suspended or vacated;
|
|
●
|
Been the subject of, or a party to, any federal or state judicial
or administrative order, judgment, decree or finding, not
subsequently reversed, suspended or vacated (not including any
settlement of a civil proceeding among private litigants), relating
to an alleged violation of any federal or state securities or
commodities law or regulation, any law or regulation respecting
financial institutions or insurance companies including, but not
limited to, a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or
permanent cease-and-desist order, or removal or prohibition order,
or any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or
|
|
|
|
|
●
|
Been the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act),
any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association,
entity or organization that has disciplinary authority over its
members or persons associated with a member.
|
Except as set forth in our discussion below in “Certain
Relationships and Related Transactions,” none of our directors or
executive officers has been involved in any transactions with us or
any of our directors, executive officers, affiliates or associates
which are required to be disclosed pursuant to the rules and
regulations of the Commission.
Compliance with Section 16(a) of the Exchange
Act
Section 16(a) of the Exchange Act requires the Company’s directors,
executive officers and persons who beneficially own 10% or more of
a class of securities registered under Section 12 of the Exchange
Act to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Directors, executive officers
and greater than 10% stockholders are required by the rules and
regulations of the SEC to furnish the Company with copies of all
reports filed by them in compliance with Section 16(a).
Based solely on the Company’s review of the copies of such Forms
and written representations from certain reporting persons, the
Company believes that all filings required to be made by the
Company’s Section 16(a) reporting persons during the Company’s
fiscal year ended December 31, 2018 were made on a timely
basis.
Code of
Ethics
The Board has adopted a Code of Business Ethics and Conduct (the
“Code of Conduct”) which constitutes a “code of ethics” as defined
by applicable SEC rules and a “code of conduct” as defined by
applicable NASDAQ rules. We require all employees, directors and
officers, including our principal executive officer and principal
financial officer, to adhere to the Code of Conduct in addressing
legal and ethical issues encountered in conducting their work. The
Code of Conduct requires that these individuals avoid conflicts of
interest, comply with all laws and other legal requirements,
conduct business in an honest and ethical manner and otherwise act
with integrity. The Code of Conduct is available on our website at
www.silversuntech.com. The Company will post any amendments
to the Code of Conduct, as well as any waivers that are required to
be disclosed by the rules of the SEC on such website. Information
contained on our website is not a part of, and is not incorporated
into, this proxy statement, and the inclusion of our website
address in this proxy statement is an inactive textual reference
only.
Director Compensation
The following sets forth the compensation awarded to, earned by or
paid to the named director by us during the years ended December
31, 2018 and 2017.
Name
|
|
|
Fees Earned
or Paid in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Stanley Wunderlich
|
2018
|
|
|
12,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,000 |
|
|
2017
|
|
|
12,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph Macaluso
|
2018
|
|
|
18,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,000 |
|
|
2017
|
|
|
18,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Schachtel
|
2018
|
|
|
18,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,000 |
|
|
2017
|
|
|
13,500 |
|
|
|
|
|
|
|
19,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,423 |
|
Executive Compensation
The compensation provided to our “named executive officers” for
2018 and 2017 is set forth in detail in the Summary Compensation
Table and other tables and the accompanying footnotes and narrative
that follow this section. This section explains our executive
compensation philosophy, objectives and design, our
compensation-setting process, our executive compensation program
components and the decisions made for compensation in respect of
2018 for each of our named executive officers.
Compensation-Setting Process/Role of Our Compensation
Committee
The Compensation Committee has responsibility for the Company’s
compensation practices with appropriate approval and general
oversight from the Board. This responsibility includes the
determination of compensation levels and awards provided to the
named executive officers. The Compensation Committee provides a
recommendation for the performance review and any compensation
adjustments to the Board for approval. Grants of equity-based
compensation are approved by the Compensation Committee in
accordance with the Company’s stock incentive and award plan
established by the Compensation Committee.
Base Salary
We provide base salary as a fixed source of compensation for our
executive officers, allowing them a degree of certainty when having
a meaningful portion of their compensation “at risk” in the form of
equity awards covering the shares of a Company for whose shares
there has been limited liquidity to date. The Board recognizes the
importance of base salaries as an element of compensation that
helps to attract highly qualified executive talent.
Base salaries for our executive officers were established primarily
based on individual negotiations with the executive officers when
they joined us and reflect the scope of their anticipated
responsibilities, the individual experience they bring, the Board
members’ experiences and knowledge in compensating similarly
situated individuals at other companies, our then-current cash
constraints and a general sense of internal pay equity among our
executive officers and key personnel.
The Compensation Committee does not apply specific formulas in
determining base salary increases. Actual base salaries may differ
from the competitive market rates target as a result of various
other factors including relative depth of experience, prior
individual performance and expected future contributions, internal
pay equity considerations within our Company and the degree of
difficulty in replacing the individual.
Summary Compensation Table
The compensation provided to our “named executive officers” for
2018 and 2017 is set forth in detail in the Summary Compensation
Table and other tables and the accompanying footnotes and narrative
that follow this section. This section explains our executive
compensation philosophy, objectives and design, our
compensation-setting process, our executive compensation program
components and the decisions made for compensation in respect of
2018 for each of our named executive officers.
Our named executive officers who appear in the 2018 Summary
Compensation Table are:
Mark Meller
|
|
Chief Executive Officer and President
|
|
|
|
Crandall Melvin III
|
|
Chief Financial Officer
|
Summary Compensation Table
The following summary compensation table sets forth all
compensation awarded to, earned by, or paid to the named executive
officers paid by us during the years ended December 31, 2018 and
2017.
Name and Position(s)
|
|
Year
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock Awards ($)
|
|
|
Option Awards ($)
|
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
|
Nonqualified Deferred Compensation Earnings ($)
|
|
|
All Other Compensation ($)
|
|
|
Total Compensation ($)
|
|
Mark Meller
|
|
2018
|
|
$ |
704,685 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
704,685 |
|
President, Chief Executive Officer,
and Director
|
|
2017
|
|
$ |
640,862 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
640,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crandall Melvin III (1)
|
|
2018
|
|
$ |
200,000 |
|
|
$ |
6,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
206,500 |
|
Chief Financial Officer
|
|
2017
|
|
$ |
199,423 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
199,423 |
|
1Mr. Melvin retired as Chief Financial Officer effective
February 11, 2019.
Employment Agreements
Mark Meller, Chief Executive Officer
The Company’s Chief Executive Officer and President has had an
Employment Agreement with the Company since September 15,
2003. On February 4, 2016 (the “Effective Date”), the Company
entered into an amended and restated employment agreement (the
“Meller Employment Agreement”) with Mark Meller, pursuant to which
Mr. Meller will continue to serve as the Company’s President and
Chief Executive Officer.
The Meller Employment Agreement was entered into by the Company and
Mr. Meller primarily to extend the term of Mr. Meller’s
employment. The term of the Meller Employment Agreement
is for an additional 7 years through September of 2023 (the “Term”)
and shall automatically renew for additional periods of one year
unless otherwise terminated in accordance with the
terms therein. The Company will pay Mr. Meller an
annual salary of $565,000 per annum, with a ten percent (10%)
increase on September 1 and every anniversary of such date for the
duration of the Term. The Meller Employment Agreement provides
for a severance payment to Mr. Meller of three hundred percent
(300%), less $100,000 of his gross income for services rendered to
the Company in each of the five prior calendar years should his
employment be terminated following a change in control (as defined
in the Meller Employment Agreement).
Outstanding Equity Awards at Fiscal Year-End
2018
There were no outstanding equity awards at Fiscal Year-End
2018.
Director Agreements
On July 26, 2011, we entered into a director agreement with Stanley
Wunderlich, pursuant to which Mr. Wunderlich was appointed to the
Board effective July 26, 2011. On August 3, 2011 the Company
entered into an amended and restated director agreement (the
“Amended Agreement”). The term of the Amended Agreement is one year
from August 3, 2011. The Amended Agreement may, at the option of
the Board, be automatically renewed on such date that Mr.
Wunderlich is re-elected to the Board. In connection with a
recapitalization of the Company in 2012, Mr. Wunderlich and the
Company agreed to amend the Amended Director Agreement to (i)
change the Stipend to $1,000 per month, payable quarterly; (ii) to
forego the issuance of any warrants due to Wunderlich under the
Amended Agreement; and (iii) to cancel the future issuance of any
warrants due to Mr. Wunderlich under the Amended Agreement. To date
no warrants have been issued pursuant to this agreement.
On January 29, 2015, we entered into a director agreement
(“Macaluso Director Agreement”) with Joseph Macaluso, pursuant to
which Mr. Macaluso was appointed to the Board effective January 29,
2015 (the “Effective Date”). The Macaluso Director Agreement may,
at the option of the Board, be automatically renewed on such date
that Mr. Macaluso is re-elected to the Board. Under the Macaluso
Director Agreement, Mr. Macaluso is to be paid a stipend of one
thousand five hundred dollars ($1,500) (the “Stipend”) per month,
payable at the end of each fiscal quarter. Additionally, Mr.
Macaluso shall receive warrants (the “Warrants”) to purchase such
number of shares of the Company’s Common Stock, as shall equal (the
“Formula”) (A) $20,000 divided by (B) the closing price of the
Common Stock on the OTC Markets on the date of grant of the
Warrant. The exercise price of the Warrant shall be the
closing price on the date of the grant of such Warrant (the “Grant
Date”) plus $0.01. The Warrant shall be fully vested upon receipt
thereof (the “Vesting Date”).
On March 27, 2017, the Company and John Schachtel entered into a
director agreement (the “Schachtel Director Agreement”)
in connection with Mr. Schachtel’s appointment to the
Board. The term of the Schachtel Director Agreement
commenced on March 27, 2017, and continues through the Company’s
next annual stockholders’ meeting (the “Term”). The Director
Agreement automatically renews on such date that Mr. Schachtel is
re-elected to the Board.
Pursuant to the Schachtel Director Agreement, the Company will
provide Mr. Schachtel compensation of $1,000 for each month of the
Term. In addition, the Company will issue Mr. Schachtel a
warrant to purchase up to 5,000 shares of the Company’s Common
Stock (the “Warrant”). The Warrant vests immediately and is
exercisable for 5 years with an exercise price of $4.01.
Certain Relationships and Related Transactions, and Director
Independence.
The Company leases its North Syracuse office space from its former
CFO, Crandall Melvin III which May 31, 2021. The monthly rent for
this office space is $2,300. Total rent paid for 2018 and 2017 was
$27,600 and $25,200 respectively under this lease.
The Company leased its Seattle office space from Mary Abdian, an
employee of SWK, which expired September 30, 2018, however, this
lease was terminated on May 31, 2018 by mutual consent. The
monthly rent for this office space was $3,090 and increased 3% each
year. Total rent paid for 2018 and 2017 was $15,915 and
$37,357 respectively under this lease.
COMPENSATION COMMITTEE REPORT
Recommendations of the Compensation Committee. The
Compensation Committee of the Board is currently comprised of John
Schachtel, Stanley Wunderlich, and Joseph Macaluso, each of whom
the Board has determined to be independent. This report shall not
be deemed incorporated by reference into any filing under the
Securities Act of 1933, as amended (the “Securities Act”) or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) by
virtue of any general statement in such filing incorporating the
Annual Report by reference, except to the extent that the Company
specifically incorporates the information contained in this section
by reference and shall not otherwise be deemed filed under either
the Securities Act or the Exchange Act.
The Compensation Committee has reviewed and discussed with
management the disclosure regarding Executive Compensation
contained in this proxy statement for the Annual Meeting. Based on
the review and discussions, the Compensation Committee recommended
to the Board that such disclosure be included in this proxy
statement.
This Compensation Report has been furnished by the Compensation
Committee of the Board.
John Schachtel, Chairman
Joseph Macaluso
Stanley Wunderlich
AUDIT COMMITTEE REPORT
The following Report of the Audit Committee (the “Audit Report”)
does not constitute soliciting material and should not be deemed
filed or incorporated by reference into any other Company filing
under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Audit Report by reference therein.
Role of the Audit Committee
The Audit Committee’s primary responsibilities fall into three
broad categories:
First, the Audit Committee is charged with monitoring the
preparation of quarterly and annual financial reports by the
Company’s management, including discussions with management and the
Company’s outside auditors about draft annual financial statements
and key accounting and reporting matters.
Second, the Audit Committee is responsible for matters concerning
the relationship between the Company and its outside auditors,
including recommending their appointment or removal; reviewing the
scope of their audit services and related fees, as well as any
other services being provided to the Company; and determining
whether the outside auditors are independent (based in part on the
annual letter provided to the Company pursuant to Independence
Standards Board Standard No. 1).
Third, the Audit Committee reviews financial reporting, policies,
procedures and internal controls of the Company. The Audit
Committee has implemented procedures to ensure that during the
course of each fiscal year it devotes the attention that it deems
necessary or appropriate to each of the matters assigned to it
under the Audit Committee’s charter. In overseeing the preparation
of the Company’s financial statements, the Audit Committee met with
management and the Company’s outside auditors, including meetings
with the Company’s outside auditors without management present, to
review and discuss all financial statements prior to their issuance
and to discuss significant accounting issues. Management advised
the Audit Committee that all financial statements were prepared in
accordance with generally accepted accounting principles, and the
Audit Committee discussed the statements with both management and
the outside auditors. The Audit Committee’s review included
discussion with the outside auditors of matters required to be
discussed pursuant to Statement on Auditing Standards No. 61
(Communication with Audit Committees).
With respect to the Company’s outside auditors, the Audit
Committee, among other things, discussed with Friedman LLP matters
relating to its independence, including the disclosures made to the
Audit Committee as required by the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit
Committees).
Recommendations of the Audit Committee. In reliance on the
reviews and discussions referred to above, the Audit Committee
recommended to the Board that the Board approve the inclusion of
the Company’s audited financial statements in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2018,
for filing with the SEC.
This report has been furnished by the Audit Committee of the
Board.
Joseph Macaluso, Chairman
Stanley Wunderlich
John Schachtel
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
After soliciting bids and interviewing several leading accounting
firms, the Board has appointed Friedman LLP (“Friedman”), as our
independent registered public accounting firm to examine the
consolidated financial statements of the Company for fiscal year
ending December 31, 2019. The Board seeks an indication from
shareholders of their approval or disapproval of the
appointment.
Friedman will audit our consolidated financial statements for the
fiscal year ended December 31, 2019. We anticipate that a
representative of Friedman will be present by telephone at the
Annual Meeting, will have the opportunity to make a statement if
they desire to do so, and will be available to respond to
appropriate questions.
Our consolidated financial statements for the fiscal years ended
December 31, 2018 were audited by Friedman.
In the event shareholders fail to ratify the appointment of
Friedman, the Board of Directors will reconsider this appointment.
Even if the appointment is ratified, the Board of Directors, in its
discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year if
the Board of Directors determines that such a change would be in
the interests of the Company and its shareholders.
The following table sets forth the aggregate fees billed for each
of the last two fiscal years for professional services rendered by
the principal accountant for the audit of the Company’s annual
financial statements and review of financial statements included in
the Company’s quarterly reports or services that are normally
provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years.
The following table sets forth fees billed to the Company by the
Company’s independent auditors for (i) services rendered for the
audit of the Company’s annual financial statements and the review
of the Company’s quarterly financial statements, (ii) services
rendered that are reasonably related to the performance of the
audit or review of the Company’s financial statements that are not
reported as Audit Fees, and (iii) services rendered in connection
with tax preparation, compliance, advice and assistance.
Services
|
|
2018
|
|
|
2017
|
|
Audit Fees
|
|
$ |
90,000 |
|
|
$ |
90,000 |
|
|
|
|
|
|
|
|
|
|
Audit - Related Fees
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Tax fees
|
|
|
30,000 |
|
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
All Other Fees (a)
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
120,000 |
|
|
$ |
105,000 |
|
(a) All other fees include fees primarily for services
primarily related to assistance with document reviews and
assistance with revenue agent examination.
Prior to engaging our accountants to perform a particular service,
our Audit Committee obtains an estimate for the service to be
performed. All of the services described above were approved by the
Audit Committee in accordance with its procedures.
Audit Committee Pre-Approval Policies and Procedures
The Company’s Audit Committee has adopted policies and procedures
that shall require the pre-approval by the Audit Committee of all
fees paid to, and all services performed by, the Company’s
independent accounting firms. At the beginning of each year, the
Audit Committee shall approve the proposed services, including the
nature, type and scope of services contemplated and the related
fees, to be rendered by these firms during the year. In addition,
Audit Committee pre-approval is also required for those engagements
that may arise during the course of the year that are outside the
scope of the initial services and fees pre-approved by the Audit
Committee.
The affirmative vote of the holders of a majority of the Company’s
Common Stock represented and voting at the Annual Meeting either in
person or by proxy will be required for approval of this proposal.
Neither abstentions nor broker non-votes shall have any effect on
the outcome of this vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
RATIFICATION OF FRIEDMAN AS THE COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM.
PROPOSAL NO. 3
APPROVAL OF THE ADOPTION OF THE SILVERSUN TECHNOLOGIES,
INC.
2019 EQUITY AND INCENTIVE PLAN
Shareholders are being asked to approve the SilverSun Technologies,
Inc. 2019 Equity and Incentive Plan (the “2019 Plan”) which was
adopted by the Board on November 26, 2019, subject to shareholder
approval. If approved by shareholders, the 2019 Plan will provide
stock-based incentive compensation to select officers, employees,
non-employee directors, consultants and service providers.
The 2019 Plan was designed by the Compensation Committee with the
assistance of management as part of a comprehensive compensation
strategy to provide long-term incentives for employees and
non-employees to contribute to the growth of the Company and attain
specific performance goals.
Approval of the 2019 Plan will allow the Company to award stock
options in the form of non-qualified and incentive options, stock
appreciation rights, restricted stock, and restricted stock units
to employees and to non-employee directors, consultants and service
providers. In determining the number of shares available under the
2019 Plan, we considered the historical burn-rate of the Company’s
previous incentive plans, and the potential dilution to
shareholders. The 675,000 shares available under the 2019 Plan
represent approximately 15% of the Company’s 4,501,201 currently
outstanding shares (the “Share Reserve”). The Share Reserve will
automatically increase on January 1st of each year, for a period of
not more than ten years, commencing on January 1, 2020 and ending
on (and including) January 1, 2029, in an amount equal to 180,030
shares (which is the equivalent of 4.0% of the 4,500,755 shares of
common stock outstanding as of September 30, 2019). Notwithstanding
the foregoing, the Board may act prior to January 1st of a given
year to provide that there will be no January 1st increase in the
Share Reserve for such year or that the increase in the Share
Reserve for such year will be a lesser number of shares of Stock
than would otherwise occur pursuant to the preceding sentence. The
NASDAQ Capital Market closing price of a share of Common Stock on
November 25, 2019 was $3.33.
Based on historical burn rates and our current stock price, the
Compensation Committee believes the 675,000 shares that may be
awarded under the 2019 Plan together with the annual increase in
the Share Reserve should be sufficient to cover grants in the
coming years.
Plan Highlights
The essential features of our 2019 Plan are outlined below. The
following description is not complete and is qualified by reference
to the full text of our 2019 Plan, which is appended to this
Information Statement as Annex A.
Options are subject to the following conditions:
(i) The Committee (as defined below) determines the exercise price
of Incentive Options at the time the Incentive Options are granted.
The assigned exercise price must be no less than 100% of the Fair
Market Value (as defined in the 2019 Plan) of the Company’s Common
Stock on the Grant Day (as defined in the 2019 Plan). In the event
that the recipient is a Ten Percent Owner (as defined in the 2019
Plan), the exercise price must be no less than 110% of the Fair
Market Value of the Company on the Grant Day.
(ii) The exercise price of each Non-qualified Option will be at
least 100% of the Fair Market Value of such share of the Company’s
Common Stock on the date the Non-qualified Option is granted.
(iii) The Committee fixes the term of
Options, provided that Options may not be
exercisable more than ten years from the date the Option is
granted, and provided further that Incentive
Options granted to a Ten Percent Owner may not be exercisable more
than five years from the date the Incentive Option is granted.
(iv) Stock Options shall become exercisable and/or vested at such
time or times, whether or not in installments, as shall be
determined by the Committee at or after the Grant Date. The Award
Agreement may permit a grantee to exercise all or a portion of a
Stock Option immediately at grant; provided that the Shares issued
upon such exercise shall be subject to restrictions and a vesting
schedule identical to the vesting schedule of the related Stock
Option, such Shares shall be deemed to be Restricted Stock for
purposes of the Plan, and the optionee may be required to enter
into an additional or new Award Agreement as a condition to
exercise of such Stock Option. An optionee shall have the rights of
a stockholder only as to Shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options. An optionee
shall not be deemed to have acquired any Shares unless and until a
Stock Option shall have been exercised pursuant to the terms of the
Award Agreement and this Plan and the optionee’s name has been
entered on the books of the Company as a stockholder.
(v) Options are not transferable except to a recipient’s
family members or partnerships in which such family members are the
only partners and Options are exercisable only by the Options’
recipient, except upon the recipient’s death.
(vi) Incentive Options may not be issued in an amount or manner
where the amount of Incentive Options exercisable in one year
entitles the holder to Common Stock of the Company with an
aggregate Fair Market value of greater than $100,000.
Awards of Restricted Stock are subject to the following
conditions:
(i) The Committee grants Restricted Stock Options and determines
the restrictions on each Restricted Stock Award (as defined in the
2019 Plan). Upon the grant of a Restricted Stock Award and the
payment of any applicable purchase price, grantee is considered the
record owner of the Restricted Stock and entitled to vote the
Restricted Stock if such Restricted Stock is entitled to voting
rights.
(ii) Restricted Stock may not be delivered to the grantee until the
Restricted Stock has vested.
(iii) Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as provided
in the 2019 Plan or in the Award Agreement (as defined in the 2019
Plan).
Upon a Termination Event (as defined in the 2019 Plan), the Company
or its assigns shall have the right and option to repurchase from a
Holder of Shares (as defined in the 2019 Plan) received pursuant to
a Restricted Stock Award any Shares that are still subject to a
risk of forfeiture as of the Termination Event (as defined in the
2019 Plan).
Purpose
The objective of the 2019 Plan is to encourage and enable the
officers, employees, directors, consultants and other key persons
of the Company and its subsidiaries, upon whose judgment,
initiative and efforts the Company largely depends for the
successful conduct of its business, to acquire a proprietary
interest in the Company.
Grants
The 2019 Plan permits the granting of incentive stock options,
nonqualified stock options, stock awards, restricted stock units,
stock appreciation rights (“SARs”) and other equity-based
awards (collectively, “grants”). Although all employees and
all of the employees of our subsidiaries are eligible to receive
grants under our 2019 Plan, the grant to any particular employee is
subject to the discretion of the Compensation Committee of the
Board, comprised of not less than two directors (such body that
administers the 2019 Plan, the “Committee”).
The maximum number of Shares reserved and available for issuance
under the Plan shall be 675,000 Shares (the “Share Reserve”),
subject to adjustment and the following sentence regarding the
annual increase. The Share Reserve will automatically increase on
January 1st of each year, for a period of not more than ten years,
commencing on January 1, 2020 and ending on (and including) January
1, 2029, in an amount equal to 180,030 shares (which is the
equivalent of 4.0% of the 4,500,755 shares of Stock outstanding as
of September 30 , 2019). Notwithstanding the foregoing, the Board
may act prior to January 1st of a given year to provide that there
will be no January 1st increase in the Share Reserve for such year
or that the increase in the Share Reserve for such year will be a
lesser number of shares of Stock than would otherwise occur
pursuant to the preceding sentence. If a grant expires or
terminates for any reason before it is fully vested or exercised,
or if any grant is forfeited, we may again make the number of
shares subject to that grant that the participant has not purchased
or that has not vested subject to another grant under the 2019
Plan.
We have made and will make appropriate adjustments to outstanding
grants and to the number or kind of shares subject to the 2019 Plan
in the event of a stock split, reverse stock split, stock dividend,
share combination or reclassification and certain other types of
corporate transactions, including a merger or a sale of all or
substantially all of our assets.
All grants will be determined by the Compensation Committee or a
committee of the Board (the “Committee”) and at this time, no
grants have been determined or awarded.
Administration
The 2019 Plan shall be administered by the Compensation Committee
of the Board. The Compensation Committee shall have the
authority and power:
(i) to select the individuals to whom Awards may from time to
time be granted;
(ii) to determine the time or times of grant, and the amount, if
any, of Incentive Stock Options, Non-Qualified Stock Options, SARs,
Restricted Stock Awards, Unrestricted Stock Awards, Restricted
Stock Units, or any combination of the foregoing, granted to any
one or more grantees;
(iii) to determine the number and types of Shares to be covered by
any Award and, subject to the provisions of the 2019 Plan, the
price, exercise price, conversion ratio or other price relating
thereto;
(iv) to determine and, subject to the 2019 Plan, to modify
from time to time the terms and conditions, including restrictions,
not inconsistent with the terms of the 2019 Plan, of any Award,
which terms and conditions may differ among individual Awards and
grantees, and to approve the form of Award Agreements;
(v) to accelerate at any time the exercisability or vesting
of all or any portion of any Award;
(vi) to impose any limitations on Awards, including
limitations on transfers, repurchase provisions and the like, and
to exercise repurchase rights or obligations;
(vii) subject to any restrictions imposed under the 2019 Plan
or by Section 409A, to extend at any time the period in which Stock
Options may be exercised; and
(viii) at any time to adopt, alter and repeal such rules,
guidelines and practices for administration of the 2019 Plan and
for its own acts and proceedings as it shall deem advisable; to
interpret the terms and provisions of the 2019 Plan and any Award
(including Award Agreements); to make all determinations it deems
advisable for the administration of the 2019 Plan; to decide all
disputes arising in connection with the 2019 Plan; and to otherwise
supervise the administration of the 2019 Plan.
All decisions and interpretations of the Compensation Committee
shall be binding on all persons, including the Company and all
Holders.
Grant Instruments
All grants will be subject to the terms and conditions set forth in
our 2019 Plan and to such other terms and conditions consistent
with our 2019 Plan as the Compensation Committee deems appropriate
and as are specified in writing by the Committee to the individual
in a grant instrument or an amendment to the grant instrument. All
grants will be made conditional upon the acknowledgement of the
grantee in writing or by acceptance of the grant, that all
decisions and determinations of the Compensation Committee will be
final and binding on the grantee, his or her beneficiaries and any
other person having or claiming an interest under such grant.
Terms and Conditions of Grants
The grant instrument will state the number of shares subject to the
grant and the other terms and conditions of the grant, consistent
with the requirements of our 2019 Plan. The purchase price per
share subject to an option (or the exercise price per share in the
case of a SAR) must equal at least the fair market value of a share
of the Company’s common stock on the date of grant. The exercise
price per share for the Shares covered by a Stock Option shall be
determined by the Committee at the time of grant but shall not be
less than 100% of the Fair Market Value on the Grant Date. In the
case of an Incentive Stock Option that is granted to a Ten Percent
Owner, the exercise price per share for the Shares covered by such
Incentive Stock Option shall not be less than 110% of the Fair
Market Value on the Grant Date.
Under the 2019 Plan, the term “Fair Market Value” of the Stock on
any given date means the fair market value of the Stock determined
in good faith by the Committee based on the reasonable application
of a reasonable valuation method that is consistent with Section
409A of the Code. If the Stock is admitted to trade on a national
securities exchange, the determination shall be made by reference
to the closing price reported on such exchange. If there is no
closing price for such date, the determination shall be made by
reference to the last date preceding such date for which there is a
closing price. If the date for which Fair Market Value is
determined is the first day when trading prices for the Stock are
reported on a national securities exchange, the Fair Market Value
shall be the “Price to the Public” (or equivalent).
“Ten Percent Owner” means an employee who owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code)
more than 10 percent of the combined voting power of all classes of
stock of the Company or any parent of the Company or any
Subsidiary.
Transferability
Restricted Stock, Stock Options, SARs and, prior to exercise, the
Shares issuable upon exercise of such Stock Option, shall not be
transferable by the optionee otherwise than by will, or by the laws
of descent and distribution, and all Stock Options shall be
exercisable, during the optionee’s lifetime, only by the optionee,
or by the optionee’s legal representative or guardian in the event
of the optionee’s incapacity. Notwithstanding the foregoing, the
Committee, in its sole discretion, may provide in the Award
Agreement regarding a given Stock Option or Restricted Stock award
that the optionee may transfer by gift, without consideration for
the transfer, his or her Non-Qualified Stock Options to his or her
family members (as defined in Rule 701 of the Securities Act), to
trusts for the benefit of such family members, or to partnerships
in which such family members are the only partners (to the extent
such trusts or partnerships are considered “family members” for
purposes of Rule 701 of the Securities Act), provided that the
transferee agrees in writing with the Company to be bound by all of
the terms and conditions of this 2019 Plan and the applicable Award
Agreement, including the execution of a stock power upon the
issuance of Shares.
Amendment and Termination
The Board may, at any time, amend or discontinue the 2019 Plan and
the Committee may, at any time, amend or cancel any outstanding
Award for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the consent of the holder of
the Award. The Committee may exercise its discretion to reduce the
exercise price of outstanding Stock Options or effect repricing
through cancellation of outstanding Stock Options and by granting
such holders new Awards in replacement of the cancelled Stock
Options. To the extent determined by the Committee to be required
either by the Code to ensure that Incentive Stock Options granted
under the 2019 Plan are qualified under Section 422 of the Code or
otherwise, 2019 Plan amendments shall be subject to approval by the
Company stockholders entitled to vote at a meeting of stockholders.
Nothing in this Section 12 shall limit the Board’s or Committee’s
authority to take any action permitted pursuant to Section 3(c).
The Board reserves the right to amend the 2019 Plan and/or the
terms of any outstanding Stock Options to the extent reasonably
necessary to comply with the requirements of the exemption pursuant
to Rule 12h-1 of the Exchange Act.
Federal Income Tax Consequences
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of
participation in our 2019 Plan and does not attempt to describe all
possible federal or other tax consequences of such participation or
tax consequences based on particular circumstances.
Stock option grants under the 2019 Plan may be intended to qualify
as incentive stock options under Internal Revenue Code of 1986, as
amended (“IRC”) §422 or may be non-qualified stock options governed
by IRC §83. Generally, no federal income tax is payable by a
participant upon the grant of a stock option and no deduction is
taken by the Company. Under current tax laws, if a participant
exercises a non-qualified stock option, he or she will have taxable
income equal to the difference between the market price of the
stock on the exercise date and the stock option grant price. The
Company will be entitled to a corresponding deduction on its income
tax return. A participant will have no taxable income upon
exercising an incentive stock option if the shares received are
held for the applicable holding periods (except that alternative
minimum tax may apply), and the Company will receive no deduction
when an incentive stock option is exercised. The Company may be
entitled to a deduction in the case of a disposition of shares
acquired under an incentive stock option that occurs before the
applicable holding periods have been satisfied.
Restricted stock and restricted stock units are also governed by
IRC §83. Generally, no taxes are due when the award is made.
Restricted stock generally becomes taxable when it is no longer
subject to a “substantial risk of forfeiture” (i.e., becomes vested
or transferable). Restricted stock units become taxable when
settled. When taxable to the participant, income tax is paid on the
value of the stock or units at ordinary rates. The Company will
generally be entitled to a corresponding deduction on its income
tax return. Any additional gain on shares received are then taxed
at capital gains rates when the shares are sold.
The grant of a stock appreciation right will not result in income
for the participant or in a tax deduction for the Company. Upon the
settlement of such a right, the participant will recognize ordinary
income equal to the aggregate value of the payment received, and
the Company generally will be entitled to a tax deduction in the
same amount.
The foregoing is only a summary of the effect of federal income
taxation on the participant and the Company under the 2019 Plan. It
does not purport to be complete and does not discuss the tax
consequences arising in the context of a participant’s death or the
income tax laws of any municipality, state or foreign country in
which the participant’s income may be taxable.
Tax Withholding
Each grantee shall, no later than the date as of which the value of
an Award or of any Shares or other amounts received thereunder
first becomes includable in the gross income of the grantee for
income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld by
the Company with respect to such income. The Company and any
Subsidiary shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to
the grantee. The Company’s obligation to deliver stock certificates
(or evidence of book entry) to any grantee is subject to and
conditioned on any such tax withholding obligations being satisfied
by the grantee.
The Company’s minimum required tax withholding obligation may be
satisfied, in whole or in part, by the Company withholding from
Shares to be issued pursuant to an Award a number of Shares having
an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the minimum withholding amount
due.
No Dissenters’ Rights
Under the DGCL, the Stockholders are not entitled to dissenters’
rights with respect to the 2019 Plan, and the Company will not
independently provide Stockholders with any such right.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF
THE ADOPTION OF THE SILVERSUN TECHNOLOGIES, INC. 2019
EQUITY AND INCENTIVE PLAN.
FUTURE
SHAREHOLDER PROPOSALS
The Board has not yet determined the date on which the next Annual
Meeting of shareholders will be held. Shareholders may submit
proposals on matters appropriate for shareholder action at annual
meetings in accordance with the rules and regulations adopted by
the Securities and Exchange Commission. Any proposal which an
eligible shareholder desires to have included in our proxy
statement and presented at the next Annual Meeting of Shareholders
will be included in our proxy statement and related proxy card if
it is received by us a reasonable time before we begin to print and
send our proxy materials and if it complies with Securities and
Exchange Commission rules regarding inclusion of proposals in proxy
statements. In order to avoid controversy as to the date on which
we receive a proposal, it is suggested that any shareholder who
wishes to submit a proposal submit such proposal by certified mail,
return receipt requested. Notices should be directed to: SilverSun
Technologies, Inc., 120 Eagle Rock Ave., Suite 330, East Hanover,
NJ 07936, Attention: Secretary.
Other deadlines apply to the submission of shareholder proposals
for the next Annual Meeting that are not required to be included in
our proxy statement under Securities and Exchange Commission rules.
With respect to these shareholder proposals for the next Annual
Meeting, a shareholder’s notice must be received by us a reasonable
time before we begin to print and send our proxy materials. The
form of proxy distributed by the Board of Directors for such
meeting will confer discretionary authority to vote on any such
proposal not received by such date. If any such proposal is
received by such date, the proxy statement for the meeting will
provide advice on the nature of the matter and how we intend to
exercise our discretion to vote on each such matter if it is
presented at that meeting.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K AND
HOUSEHOLDING
A copy of the Company’s Annual Report on Form 10-K as filed with
the SEC is available upon written request and without charge to
shareholders by writing to the Company at 120 Eagle Rock Avenue,
East Hanover, New Jersey 07936 or by calling telephone number (973)
396-1720.
In certain cases, only one Proxy Statement may be delivered to
multiple shareholders sharing an address unless the Company has
received contrary instructions from one or more of the shareholders
at that address. The Company will undertake to deliver promptly
upon written or oral request a separate copy of the Proxy
Statement, as applicable, to a shareholder at a shared address to
which a single copy of such documents was delivered. Such request
should also be directed to Chief Executive Officer, SilverSun
Technologies, Inc., at the address or telephone number indicated in
the previous paragraph. In addition, shareholders sharing an
address can request delivery of a single copy of Proxy Statements
if they are receiving multiple copies of Proxy Statements by
directing such request to the same mailing address.
OTHER BUSINESS
We have not received notice of and do not expect any matters to be
presented for vote at the Annual Meeting, other than the proposals
described in this Proxy Statement. If you grant a proxy, the person
named as proxy holder, Mark Meller, or their nominees or
substitutes, will have the discretion to vote your shares on any
additional matters properly presented for a vote at the Annual
Meeting. If for any unforeseen reason, any of our nominees are not
available as a candidate for director, the proxy holder will vote
your proxy for such other candidate or candidates nominated by our
Board.
ADDITIONAL INFORMATION
We are subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance
therewith, we file periodic reports, documents and other
information with the SEC relating to our business, financial
statements and other matters. Such reports and other information
may be inspected and are available for copying at the offices of
the SEC, 100 F Street, N.E., Washington, D.C. 20549 or may be
accessed at www.sec.gov. Information regarding the operation
of the public reference rooms may be obtained by calling the SEC at
1-800-SEC-0330. You are encouraged to review our Annual Report on
Form 10-K, together with any subsequent information we filed or
will file with the SEC and other publicly available
information.
OTHER
MATTERS
We have not received notice of and do not expect any matters to be
presented for vote at the Annual Meeting, other than the proposals
described in this Proxy Statement. If you grant a proxy, the person
named as proxy holder, Mark Meller, or their nominees or
substitutes, will have the discretion to vote your shares on any
additional matters properly presented for a vote at the Annual
Meeting. If for any unforeseen reason, any of our nominees are not
available as a candidate for director, the proxy holder will vote
your proxy for such other candidate or candidates nominated by our
Board.
*************
It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to mark, date,
execute and promptly return the accompanying proxy card.
November 26, 2019
|
By Order of the Board of Directors,
|
|
|
|
/s/ Mark Meller
|
|
Mark Meller
|
|
Chairman
|
SILVERSUN TECHNOLOGIES, INC.
120 EAGLE ROCK AVENUE, SUITE 30
EAST HANOVER, NEW JERSEY 07936
UNITED STATES
|
|
|
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12/18/2019. Have your proxy card in hand when you access the
web site and follow the instructions to obtain your records and to
create an electronic voting instruction form.
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when you call and then follow the instructions.
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 Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: ☒
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Board of Directors recommends a vote "FOR"
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the following nominees:
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1. To elect four (4) directors to hold
office for a one year term and until each of their successors are
elected and qualified;
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Nominees
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For
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Against
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Abstain
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For
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Against
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Abstain
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1a. Mark Meller
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3. To approve the adoption of the SilverSun Technologies,
Inc. 2019 Equity and Incentive Plan;
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1b. Joseph Macaluso
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1c. Stanley Wunderlich
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NOTE: Such other business as may properly come before
the meeting or any adjournment thereof.
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1d. John Schachtel
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The Board of Directors recommends a vote "FOR"
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proposals 2 and 3.
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For
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Against
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Abstain
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2. To ratify the appointment of Friedman
LLP as our independent certified public accounting firm for
the fiscal year ending December 31, 2019; and
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For address change/comments, mark here.
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(see reverse for instructions)
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Yes
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No
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Please indicate if you plan to attend this meeting
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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.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting:
The Proxy Statement and Form 10-K are available at
www.proxyvote.com
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SILVERSUN TECHNOLOGIES, INC.
Annual Meeting of Shareholders
December 19, 2019 10:00 AM
This proxy is solicited by the Board of Directors
The undersigned hereby appoints Mark Meller, Chief Executive
Officer of SilverSun Technologies, Inc., as Proxy with full power
of substitution to vote all the shares of Common Stock which the
undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders to be held on December 19, 2019, at
10 A.M. EST at 120 Eagle Rock Avenue, East Hanover, NJ 07936 or at
any postponement or adjournment thereof, and upon any and all
matters which may properly be brought before the Annual Meeting or
any postponement or adjournments thereof, hereby revoking all
former proxies.
This proxy, when properly executed, will be voted in the manner
directed herein. If no such direction is made, this proxy will be
voted in accordance with the Board of Directors'
recommendations.
(If you noted any Address Changes and/or Comments above, please
mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
Appendix A
SILVERSUN TECHNOLOGIES, INC.
2019 EQUITY AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN: DEFINITIONS
The name of the plan is the SILVERSUN TECHNOLOGIES, INC. 2019
EQUITY AND INCENTIVE PLAN (the “Plan”). The purpose of the Plan is
to encourage, retain and enable the officers, employees, directors,
Consultants and other key persons of SILVERSUN TECHNOLOGIES, INC.,
a Delaware corporation (including any successor entity, the
“Company”) and its Subsidiaries, upon whose judgment, initiative
and efforts the Company largely depends for the successful conduct
of its business, to acquire a proprietary interest in the
Company.
The following terms shall be defined as set forth below:
“Affiliate” of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with the first mentioned
Person. A Person shall be deemed to control another Person if such
first Person possesses directly or indirectly the power to direct,
or cause the direction of, the management and policies of the
second Person, whether through the ownership of voting securities,
by contract or otherwise.
“Award” or “Awards,” except where referring to a
particular category of grant under the Plan, shall include
Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights (“SAR”), Restricted Stock Awards (including
preferred stock), Unrestricted Stock Awards, Restricted Stock Units
or any combination of the foregoing.
“Award Agreement” means a written or electronic agreement
setting forth the terms and provisions applicable to an Award
granted under the Plan. Each Award Agreement may contain terms and
conditions in addition to those set forth in the Plan; provided,
however, in the event of any conflict in the terms of the Plan and
the Award Agreement, the terms of the Plan shall govern.
“Board” means the Board of Directors of the Company.
“Cause” shall have the meaning as set forth in the Award
Agreement(s). In the case that any Award Agreement does not contain
a definition of “Cause,” it shall mean (i) the grantee’s dishonest
statements or acts with respect to the Company or any Affiliate of
the Company, or any current or prospective customers, suppliers
vendors or other third parties with which such entity does
business; (ii) the grantee’s commission of (A) a felony or (B) any
misdemeanor involving moral turpitude, deceit, dishonesty or fraud;
(iii) the grantee’s failure to perform his assigned duties and
responsibilities to the reasonable satisfaction of the Company
which failure continues, in the reasonable judgment of the Company,
after written notice given to the grantee by the Company; (iv) the
grantee’s gross negligence, willful misconduct or insubordination
with respect to the Company or any Affiliate of the Company; or (v)
the grantee’s material violation of any provision of any
agreement(s) between the grantee and the Company relating to
noncompetition, nonsolicitation, nondisclosure and/or assignment of
inventions.
“Chief Executive Officer” means the Chief Executive Officer
of the Company or, if there is no Chief Executive Officer, then the
President of the Company.
“Code” means the Internal Revenue Code of 1986, as amended,
and any successor Code, and related rules, regulations and
interpretations.
“Committee” means the Committee of the Board referred to in
Section 2.
“Consultant” means any entity or natural person that
provides bona fide services to the Company (including a
Subsidiary), and such services are not in connection with the offer
or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the
Company’s securities.
“Disability” means such condition which renders a Person (A)
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can
be expected to result in death or can be expect to last for a
continuous period of not less than 12 months, (B) by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under
an accident and health plan covering employees of the Company, (C)
determined to be totally disabled by the Social Security
Administration, or (D) determined to be disabled under a disability
insurance program which provides for a definition of disability
that meets the requirements of this section.
“Effective Date” means the date on which the Plan is adopted
as set forth in this Plan.
“Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
“Fair Market Value” of the Stock on any given date means the
fair market value of the Stock determined in good faith by the
Committee based on the reasonable application of a reasonable
valuation method that is consistent with Section 409A of the Code.
If the Stock is admitted to trade on a national securities
exchange, the determination shall be made by reference to the
closing price reported on such exchange. If there is no closing
price for such date, the determination shall be made by reference
to the last date preceding such date for which there is a closing
price. If the date for which Fair Market Value is determined is the
first day when trading prices for the Stock are reported on a
national securities exchange, the Fair Market Value shall be the
“Price to the Public” (or equivalent).
“Good Reason” shall have the meaning as set forth in the
Award Agreement(s). In the case that any Award Agreement does not
contain a definition of “Good Reason,” it shall mean (i) a material
diminution in the grantee’s base salary except for across-the-board
salary reductions similarly affecting all or substantially all
similarly situated employees of the Company or (ii) a change of
more than 100 miles in the geographic location at which the grantee
provides services to the Company, so long as the grantee provides
at least 90 days’ notice to the Company following the initial
occurrence of any such event and the Company fails to cure such
event within 30 days thereafter.
“Grant Date” means the date that the Committee designates in
its approval of an Award in accordance with applicable law as the
date on which the Award is granted, which date may not precede the
date of such Committee approval.
“Holder” means, with respect to an Award or any Shares, the
Person holding such Award or Shares, including the initial
recipient of the Award or any Permitted Transferee.
“Incentive Stock Option” means any Stock Option designated
and qualified as an “incentive stock option” as defined in Section
422 of the Code.
“Non-Qualified Stock Option” means any Stock Option that is
not an Incentive Stock Option.
“Option” or “Stock Option” means any option to
purchase shares of Stock granted pursuant to Section 5.
“Permitted Transferees” shall mean any of the following to
whom a Holder may transfer Shares hereunder (as set forth in
Section 9(a)(ii)(A)): the Holder’s child, stepchild, grandchild,
parent, step-parent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Holder’s household
(other than a tenant or employee), a trust in which these persons
have more than fifty percent of the beneficial interest, a
foundation in which these persons control the management of assets,
and any other entity in which these persons own more than fifty
percent of the voting interests; provided, however, that any such
trust does not require or permit distribution of any Shares during
the term of the Award Agreement unless subject to its terms. Upon
the death of the Holder, the term Permitted Transferees shall also
include such deceased Holder’s estate, executors, administrators,
personal representatives, heirs, legatees and distributees, as the
case may be.
“Person” shall mean any individual, corporation, partnership
(limited or general), limited liability company, limited liability
partnership, association, trust, joint venture, unincorporated
organization or any similar entity.
“Restricted Stock Award” means Awards granted pursuant to
Section 7 and “Restricted Stock” means Shares issued pursuant to
such Awards.
“Restricted Stock Unit” means an Award of phantom stock
units to a grantee, which may be settled in cash or Shares as
determined by the Committee, pursuant to Section 8.
“Sale Event” means the consummation of i) a change in the
ownership of the Company, ii) a change in effective control of the
Company, or iii) a change in the ownership of a substantial portion
of the assets of the Company. The occurrence of a Sale Event shall
be acknowledged by the plan administrator or board of directors, by
strictly applying these provisions without any discretion to
deviate from the objective application of the definitions provided
herein. ; provided, however, that any capital raising event, or a
merger effected solely to change the Company’s domicile shall not
constitute a “Sale Event.”
Except as otherwise provided herein, a change in the ownership of
the Company occurs on the date that any one person, or more than
one person acting as a group acquires ownership of stock of the
Company that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or
total voting power of the stock of the Company. However, if any one
person, or more than one person acting as a group, is considered to
own more than 50 percent of the total fair market value or total
voting power of the stock of the Company the acquisition of
additional stock by the same person or persons is not considered to
cause a change in the ownership of the Company (or to cause a
change in the effective control of the Company). An increase in the
percentage of stock owned by any one person, or persons acting as a
group, as a result of a transaction in which the corporation
acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this section. This section
applies only when there is a transfer of stock of the Company (or
issuance of stock) which remains outstanding after the
transaction.
A change in the effective control of the Company occurs only on
either of the following dates: (1) The date any one person, or more
than one person acting as a group acquires (or has acquired during
the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the
Company possessing 30 percent or more of the total voting power of
the stock of the Company; (2) The date a majority of members of the
Company’s board of directors is replaced during any 12-month period
by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s board of directors before
the date of the appointment or election.
A change in the ownership of a substantial portion of the Company’s
assets occurs on the date that any one person, or more than one
person acting as a group acquires (or has acquired during the 12-
month period ending on the date of the most recent acquisition by
such person or persons) assets from the Company that have a total
gross fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the Company
immediately before such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of
the corporation, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such
assets.
“Section 409A” means Section 409A of the Code and the
regulations and other guidance promulgated thereunder.
“Securities Act” means the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
“Service Relationship” means any relationship as a full-time
employee, part-time employee, director or other key person
(including Consultants) of the Company or any Subsidiary or any
successor entity (e.g., a Service Relationship shall be deemed to
continue without interruption in the event an individual’s status
changes from full-time employee to part-time employee or
Consultant).
“Shares” means shares of Stock.
“Stock” means the Common Stock, par value $0.001 per share,
of the Company.
“Stock Appreciation Right” means any right to receive from the
Company upon exercise by an optionee or settlement, in cash,
Shares, or a combination thereof, the excess of (i) the Fair Market
Value of one Share on the date of exercise or settlement over (ii)
the exercise price of the right on the date of grant, or if granted
in connection with an Option, on the date of grant of the
Option.
“Subsidiary” means any corporation or other entity (other
than the Company) in which the Company has more than a 50 percent
interest, either directly or indirectly.
“Ten Percent Owner” means an employee who owns or is deemed
to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10 percent of the combined voting power of all
classes of stock of the Company or any parent of the Company or any
Subsidiary.
“Termination Event” means the termination of the Award
recipient’s Service Relationship with the Company and its
Subsidiaries for any reason whatsoever, regardless of the
circumstances thereof, and including, without limitation, upon
death, disability, retirement, discharge or resignation for any
reason, whether voluntarily or involuntarily. The following shall
not constitute a Termination Event: (i) a transfer to the service
of the Company from a Subsidiary or from the Company to a
Subsidiary, or from one Subsidiary to another Subsidiary or (ii) an
approved leave of absence for military service or sickness, or for
any other purpose approved by the Committee, if the individual’s
right to re-employment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence
was granted or if the Committee otherwise so provides in
writing.
“Unrestricted Stock Award” means any Award granted pursuant
to Section 7 and “Unrestricted Stock” means Shares issued pursuant
to such Awards.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT
GRANTEES AND DETERMINE AWARDS
(a) Administration of Plan. The Plan shall be
administered by the Compensation Committee of the Board, comprised
of not less than two directors. All references herein to the
“Committee” shall be deemed to refer to the group then responsible
for administration of the Plan at the relevant time (i.e., either
the Board of Directors or a committee or committees of the Board,
as applicable).
(b) Powers of Committee. The Committee shall have the
power and authority to grant Awards consistent with the terms of
the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to
time be granted;
(ii) to determine the time or times of grant, and the amount, if
any, of Incentive Stock Options, Non-Qualified Stock Options, SARs,
Restricted Stock Awards, Unrestricted Stock Awards, Restricted
Stock Units, or any combination of the foregoing, granted to any
one or more grantees;
(iii) to determine the number and types of Shares to be covered by
any Award and, subject to the provisions of the Plan, the price,
exercise price, conversion ratio or other price relating
thereto;
(iv) to determine and, subject to Section 12, to modify from
time to time the terms and conditions, including restrictions, not
inconsistent with the terms of the Plan, of any Award, which terms
and conditions may differ among individual Awards and grantees, and
to approve the form of Award Agreements;
(v) to accelerate at any time the exercisability or vesting of
all or any portion of any Award;
(vi) to impose any limitations on Awards, including
limitations on transfers, repurchase provisions and the like, and
to exercise repurchase rights or obligations;
(vii) subject to Section 5(a)(ii) and any restrictions imposed
by Section 409A, to extend at any time the period in which Stock
Options may be exercised; and
(viii) at any time to adopt, alter and repeal such rules,
guidelines and practices for administration of the Plan and for its
own acts and proceedings as it shall deem advisable; to interpret
the terms and provisions of the Plan and any Award (including Award
Agreements); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the
administration of the Plan.
All decisions and interpretations of the Committee shall be binding
on all persons, including the Company and all Holders.
(c) Award Agreement. Awards under the Plan shall be
evidenced by Award Agreements that set forth the terms, conditions
and limitations for each Award.
(d) Indemnification. Neither the Board nor the
Committee, nor any member of either or any delegate thereof, shall
be liable for any act, omission, interpretation, construction or
determination made in good faith in connection with the Plan, and
the members of the Board and the Committee (and any delegate
thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage
or expense (including, without limitation, reasonable attorneys’
fees) arising or resulting therefrom to the fullest extent
permitted by law and/or under the Company’s governing documents,
including its certificate of incorporation or bylaws, or any
directors’ and officers’ liability insurance coverage which may be
in effect from time to time and/or any indemnification agreement
between such individual and the Company.
(e) Foreign Award Recipients. Notwithstanding any
provision of the Plan to the contrary, in order to comply with the
laws in other countries in which the Company and any Subsidiary
operate or have employees or other individuals eligible for Awards,
the Committee, in its sole discretion, shall have the power and
authority to: (i) determine which Subsidiaries, if any, shall be
covered by the Plan; (ii) determine which individuals, if any,
outside the United States are eligible to participate in the Plan;
(iii) modify the terms and conditions of any Award granted to
individuals outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise
procedures and other terms and procedures, to the extent the
Committee determines such actions to be necessary or advisable (and
such subplans and/or modifications shall be attached to the Plan as
appendices); provided, however, that no such subplans and/or
modifications shall increase the share limitation contained in
Section 3(a) hereof; and (v) take any action, before or after an
Award is made, that the Committee determines to be necessary or
advisable to obtain approval or comply with any local governmental
regulatory exemptions or approvals.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS AND OTHER
TRANSACTIONS; SUBSTITUTION
(a) Stock Issuable. The maximum number of Shares
reserved and available for issuance under the Plan shall be 675,000
Shares (the “Share Reserve”), subject to adjustment as provided in
Section 3(b) and the following sentence regarding the annual
increase. In addition, the Share Reserve will automatically
increase on January 1st of each year, for a period of not more than
ten years, commencing on January 1, 2020 and ending on (and
including) January 1, 2029, in an amount equal to 180,030 shares
(which is the equivalent of 4.0% of the 4,500,755 shares of Stock
outstanding as of September 30 , 2019). Notwithstanding the
foregoing, the Board may act prior to January 1st of a given year
to provide that there will be no January 1st increase in the Share
Reserve for such year or that the increase in the Share Reserve for
such year will be a lesser number of shares of Stock than would
otherwise occur pursuant to the preceding sentence. If a Stock
Award or any portion thereof (i) expires or otherwise terminates
without all of the shares covered by such Stock Award having been
issued or (ii) is settled in cash (i.e., the Participant receives
cash rather than stock), the Shares subject to such Stock Award, to
the extent of any such expiration, termination or settlement, will
again be available for issuance under the Plan. If any shares of
Stock issued pursuant to a Stock Award are forfeited back to or
repurchased by the Company because of the failure to meet a
contingency or condition required to vest such shares in the
Participant, then the shares that are forfeited or repurchased will
revert to and again become available for issuance under the Plan.
Any shares reacquired by the Company in satisfaction of tax
withholding obligations on a Stock Award or as consideration for
the exercise or purchase price of a Stock Award will again become
available for issuance under the Plan. For purposes of this
limitation, the Shares underlying any Awards that are forfeited,
canceled, reacquired by the Company prior to vesting, satisfied
without the issuance of Stock or otherwise terminated (other than
by exercise) shall be added back to the Shares available for
issuance under the Plan. Subject to such overall limitations,
Shares may be issued up to such maximum number pursuant to any type
or types of Award, and no more than 200,000 Shares may be issued
pursuant to Incentive Stock Options. The value of any Shares
granted to a non-employee director of the Company, when added to
any annual cash payments or awards, shall not exceed an aggregate
value of [two hundred thousand dollars ($200,000) in any calendar
year].
(b) Changes in Stock. Subject to Section 3(c) hereof,
if, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split
or other similar change in the Company’s capital stock, the
outstanding Shares are increased or decreased or are exchanged for
a different number or kind of shares or other securities of the
Company, or additional Shares or new or different shares or other
securities of the Company or other non-cash assets are distributed
with respect to such Shares or other securities, in each case,
without the receipt of consideration by the Company, or, if, as a
result of any merger or consolidation, or sale of all or
substantially all of the assets of the Company, the outstanding
Shares are converted into or exchanged for other securities of the
Company or any successor entity (or a parent or subsidiary
thereof), the Committee shall make an appropriate and proportionate
adjustment in (i) the maximum number of Shares reserved for
issuance under the Plan, (ii) the number and kind of Shares or
other securities subject to any then outstanding Awards under the
Plan, (iii) the repurchase price, if any, per Share subject to each
outstanding Award, and (iv) the exercise price for each Share
subject to any then outstanding Stock Options under the Plan,
without changing the aggregate exercise price (i.e., the exercise
price multiplied by the number of Stock Options) as to which such
Stock Options remain exercisable. The Committee shall in any event
make such adjustments as may be required by the laws of Delaware
and the rules and regulations promulgated thereunder. The
adjustment by the Committee shall be final, binding and conclusive.
No fractional Shares shall be issued under the Plan resulting from
any such adjustment, but the Committee in its discretion may make a
cash payment in lieu of fractional shares.
(c) Sale Events.
(i) Options.
(A) In the case of and subject to the consummation of a Sale
Event, the Plan and all outstanding Options and SARs issued
hereunder shall become one hundred percent (100%) vested upon the
effective time of any such Sale Event. New stock options or other
awards of the successor entity or parent thereof shall be
substituted therefor, with an equitable or proportionate adjustment
as to the number and kind of shares and, if appropriate, the per
share exercise prices, as such parties shall agree (after taking
into account any acceleration hereunder and/or pursuant to the
terms of any Award Agreement).
(B) In the event of the termination of the Plan and all
outstanding Options and SARs issued hereunder pursuant to Section
3(c), each Holder of Options shall be permitted, within a period of
time prior to the consummation of the Sale Event as specified by
the Committee, to exercise all such Options or SARs which are then
exercisable or will become exercisable as of the effective time of
the Sale Event; provided, however, that the exercise of Options not
exercisable prior to the Sale Event shall be subject to the
consummation of the Sale Event.
(C) Notwithstanding anything to the contrary in Section
3(c)(i)(A), in the event of a Sale Event, the Company shall have
the right, but not the obligation, to make or provide for a cash
payment to the Holders of Options, without any consent of the
Holders, in exchange for the cancellation thereof, in an amount
equal to the difference between (A) the value as determined by the
Committee of the consideration payable per share of Stock pursuant
to the Sale Event (the “Sale Price”) times the number of Shares
subject to outstanding Options being cancelled (to the extent then
vested and exercisable, including by reason of acceleration in
connection with such Sale Event, at prices not in excess of the
Sale Price) and (B) the aggregate exercise price of all such
outstanding vested and exercisable Options.
(ii) Restricted Stock and Restricted Stock Unit
Awards.
(A) In the case of and subject to the consummation of a Sale
Event, all unvested Restricted Stock and unvested Restricted Stock
Unit Awards issued hereunder shall become one hundred percent
(100%) vested, with an equitable or proportionate adjustment as to
the number and kind of shares subject to such awards as such
parties shall agree (after taking into account any acceleration
hereunder and/or pursuant to the terms of any Award Agreement).
(B) Such Restricted Stock shall be repurchased from the Holder
thereof at the then Fair Market Value of such shares, (subject to
adjustment as provided in Section 3(b)) for such Shares.
(C) Notwithstanding anything to the contrary in Section
3(c)(ii)(A), in the event of a Sale Event, the Company shall have
the right, but not the obligation, to make or provide for a cash
payment to the Holders of Restricted Stock or Restricted Stock Unit
Awards, without consent of the Holders, in exchange for the
cancellation thereof, in an amount equal to the Sale Price times
the number of Shares subject to such Awards, to be paid at the time
of such Sale Event or upon the later vesting of such Awards.
SECTION 4. ELIGIBILITY
Grantees under the Plan will be such full or part-time officers and
other employees, directors, Consultants and key persons of the
Company and any Subsidiary who are selected from time to time by
the Committee in its sole discretion; provided, however, that
Awards shall be granted only to those individuals described in Rule
701(c) of the Securities Act.
SECTION 5. STOCK OPTIONS
Upon the grant of a Stock Option, the Company and the grantee shall
enter into an Award Agreement. The terms and conditions of each
such Award Agreement shall be determined by the Committee, and such
terms and conditions may differ among individual Awards and
grantees.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may
be granted only to employees of the Company or any Subsidiary that
is a “subsidiary corporation” within the meaning of Section 424(f)
of the Code. To the extent that any Option does not qualify as an
Incentive Stock Option, it shall be deemed a Non-Qualified Stock
Option.
(a) Terms of Stock Options. The Committee in its
discretion may grant Stock Options to those individuals who meet
the eligibility requirements of Section 4. Stock Options shall be
subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable.
(i) Exercise Price. The exercise price per share for
the Shares covered by a Stock Option shall be determined by the
Committee at the time of grant but shall not be less than 100
percent of the Fair Market Value on the Grant Date. In the case of
an Incentive Stock Option that is granted to a Ten Percent Owner,
the exercise price per share for the Shares covered by such
Incentive Stock Option shall not be less than 110 percent of the
Fair Market Value on the Grant Date.
(ii) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no Stock Option shall be exercisable
more than ten years from the Grant Date. In the case of an
Incentive Stock Option that is granted to a Ten Percent Owner, the
term of such Stock Option shall be no more than five years from the
Grant Date.
(iii) Exercisability; Rights of a Stockholder. Stock
Options shall become exercisable and/or vested at such time or
times, whether or not in installments, as shall be determined by
the Committee at or after the Grant Date. The Award Agreement may
permit a grantee to exercise all or a portion of a Stock Option
immediately at grant; provided that the Shares issued upon such
exercise shall be subject to restrictions and a vesting schedule
identical to the vesting schedule of the related Stock Option, such
Shares shall be deemed to be Restricted Stock for purposes of the
Plan, and the optionee may be required to enter into an additional
or new Award Agreement as a condition to exercise of such Stock
Option. An optionee shall have the rights of a stockholder only as
to Shares acquired upon the exercise of a Stock Option and not as
to unexercised Stock Options. An optionee shall not be deemed to
have acquired any Shares unless and until a Stock Option shall have
been exercised pursuant to the terms of the Award Agreement and
this Plan and the optionee’s name has been entered on the books of
the Company as a stockholder.
(iv) Method of Exercise. Stock Options may be exercised
by an optionee in whole or in part, by the optionee giving written
or electronic notice of exercise to the Company, specifying the
number of Shares to be purchased. Payment of the purchase price may
be made by one or more of the following methods (or any combination
thereof) to the extent provided in the Award Agreement:
(A) In cash, by certified or bank check, by wire transfer of
immediately available funds, or other instrument acceptable to the
Committee;
(B) If permitted by the Committee, by the optionee delivering
to the Company a promissory note, if the Board has expressly
authorized the loan of funds to the optionee for the purpose of
enabling or assisting the optionee to effect the exercise of his or
her Stock Option; provided, that at least so much of the exercise
price as represents the par value of the Stock shall be paid in
cash if required by state law;
(C) If permitted by the Committee, through the delivery (or
attestation to the ownership) of Shares that have been purchased by
the optionee on the open market or that are beneficially owned by
the optionee and are not then subject to restrictions under any
Company plan. To the extent required to avoid variable accounting
treatment under applicable accounting rules, such surrendered
Shares if originally purchased from the Company shall have been
owned by the optionee for at least six months. Such surrendered
Shares shall be valued at Fair Market Value on the exercise
date;
(D) If permitted by the Committee and by the optionee
delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to
the Company for the purchase price; provided that in the event the
optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure;
or
(E) If permitted by the Committee, and only with respect to
Stock Options that are not Incentive Stock Options, by a “net
exercise” arrangement pursuant to which the Company will reduce the
number of Shares issuable upon exercise by the largest whole number
of Shares with a Fair Market Value that does not exceed the
aggregate exercise price.
Payment instruments will be received subject to collection. No
certificates for Shares so purchased will be issued to the optionee
or, with respect to uncertificated Stock, no transfer to the
optionee on the records of the Company will take place, until the
Company has completed all steps it has deemed necessary to satisfy
legal requirements relating to the issuance and sale of the Shares,
which steps may include, without limitation, (i) receipt of a
representation from the optionee at the time of exercise of the
Option that the optionee is purchasing the Shares for the
optionee’s own account and not with a view to any sale or
distribution of the Shares or other representations relating to
compliance with applicable law governing the issuance of
securities, (ii) the legending of the certificate (or notation on
any book entry) representing the Shares to evidence the foregoing
restrictions, and (iii) obtaining from optionee payment or
provision for all withholding taxes due as a result of the exercise
of the Option. The delivery of certificates representing the shares
of Stock (or the transfer to the optionee on the records of the
Company with respect to uncertificated Stock) to be purchased
pursuant to the exercise of a Stock Option will be contingent upon
(A) receipt from the optionee (or a purchaser acting in his or her
stead in accordance with the provisions of the Stock Option) by the
Company of the full purchase price for such Shares and the
fulfillment of any other requirements contained in the Award
Agreement or applicable provisions of laws and (B) if required by
the Company, the optionee shall have entered into any stockholders
agreements or other agreements with the Company and/or certain
other of the Company’s stockholders relating to the Stock. In the
event an optionee chooses to pay the purchase price by
previously-owned Shares through the attestation method, the number
of Shares transferred to the optionee upon the exercise of the
Stock Option shall be net of the number of Shares attested to by
the Optionee.
(b) Annual Limit on Incentive Stock Options. To the
extent required for “incentive stock option” treatment under
Section 422 of the Code, the aggregate Fair Market Value
(determined as of the Grant Date) of the Shares with respect to
which Incentive Stock Options granted under the Plan and any other
plan of the Company or its parent and any Subsidiary that become
exercisable for the first time by an optionee during any calendar
year shall not exceed $100,000 or such other limit as may be in
effect from time to time under Section 422 of the Code. To the
extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.
(c) Termination. Any portion of a Stock Option that is
not vested and exercisable on the date of termination of an
optionee’s Service Relationship shall immediately expire and be
null and void. Once any portion of the Stock Option becomes vested
and exercisable, the optionee’s right to exercise such portion of
the Stock Option (or the optionee’s representatives and legatees as
applicable) in the event of a termination of the optionee’s Service
Relationship shall continue until the earliest of: (i) the date
which is: (A) 12 months following the date on which the optionee’s
Service Relationship terminates due to death or Disability (or such
longer period of time as determined by the Committee and set forth
in the applicable Award Agreement), or (B) three months following
the date on which the optionee’s Service Relationship terminates if
the termination is due to any reason other than death or Disability
(or such longer period of time as determined by the Committee and
set forth in the applicable Award Agreement), or (ii) the
Expiration Date set forth in the Award Agreement; provided that
notwithstanding the foregoing, an Award Agreement may provide that
if the optionee’s Service Relationship is terminated for Cause, the
Stock Option shall terminate immediately and be null and void upon
the date of the optionee’s termination and shall not thereafter be
exercisable.
SECTION 6. STOCK APPRECIATION RIGHTS
The Committee is authorized to grant SARs to optionees with the
following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of
the Plan, as the Committee shall determine –
(a) SARs
may be granted under the Plan to optionees either alone or in
addition to other Awards granted under the Plan and may, but need
not, relate to specific Option granted under Section 5.
(b) The
exercise price per Share under a SAR shall be determined by the
Committee, provided, however, that except in the case of a
substitute Award, such exercise price shall not be less than the
fair market value of a Share on the date of grant of such SAR.
(c) The
term of each SAR shall be fixed by the Committee but shall not
exceed 10 years from the date of grant of such SAR.
(d) The
Committee shall determine the time or times at which a SAR may be
exercised or settled in whole or in part. Unless otherwise
determined by the Committee or unless otherwise set forth in an
Award Agreement, the provisions set forth in Section 5 above with
respect to exercise of an Award following termination of service
shall apply to any SAR. The Committee may specify in an Award
Agreement that an “in-the-money” SAR shall be automatically
exercised on its expiration date.
SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The Committee
may, in its sole discretion, grant (or sell at par value or such
other purchase price determined by the Committee) to an eligible
individual under Section 4 hereof a Restricted Stock Award under
the Plan. The Committee shall determine the restrictions and
conditions applicable to each Restricted Stock Award at the time of
grant. Conditions may be based on the type of stock upon which
restrictions are placed, continuing employment (or other Service
Relationship), achievement of pre-established performance goals and
objectives and/or such other criteria as the Committee may
determine. Upon the grant of a Restricted Stock Award, the Company
and the grantee shall enter into an Award Agreement. The terms and
conditions of each such Award Agreement shall be determined by the
Committee, and such terms and conditions may differ among
individual Awards and grantees.
(b) Rights as a Stockholder. Upon the grant of the
Restricted Stock Award and payment of any applicable purchase
price, a grantee of Restricted Stock shall be considered the record
owner of and shall be entitled to vote the Restricted Stock if, and
to the extent, such Shares are entitled to voting rights, subject
to such conditions contained in the Award Agreement. The grantee
shall be entitled to receive all dividends and any other
distributions declared on the Shares; provided, however, that the
Company is under no duty to declare any such dividends or to make
any such distribution. Unless the Committee shall otherwise
determine, certificates evidencing the Restricted Stock shall
remain in the possession of the Company until such Restricted Stock
is vested as provided in subsection (d) below of this Section, and
the grantee shall be required, as a condition of the grant, to
deliver to the Company a stock power endorsed in blank and such
other instruments of transfer as the Committee may prescribe.
(c) Restrictions. Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed
of except as specifically provided herein or in the Award
Agreement. Except as may otherwise be provided by the Committee
either in the Award Agreement or, subject to Section 12 below, in
writing after the Award Agreement is issued, if a grantee’s Service
Relationship with the Company and any Subsidiary terminates, the
Company or its assigns shall have the right, as may be specified in
the relevant instrument, to repurchase some or all of the Shares
subject to the Award at such purchase price as is set forth in the
Award Agreement.
(d) Vesting of Restricted Stock. The Committee at the
time of grant shall specify in the Award Agreement the date or
dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which the substantial risk of
forfeiture imposed shall lapse and the Restricted Stock shall
become vested, subject to such further rights of the Company or its
assigns as may be specified in the Award Agreement.
SECTION 8. UNRESTRICTED STOCK AWARDS
The Committee may, in its sole discretion, grant (or sell at par
value or such other purchase price determined by the Committee) to
an eligible person under Section 4 hereof an Unrestricted Stock
Award under the Plan. Unrestricted Stock Awards may be granted in
respect of past services or other valid consideration, or in lieu
of cash compensation due to such grantee.
SECTION 9. RESTRICTED STOCK UNITS
(a) Nature of Restricted Stock Units. The Committee
may, in its sole discretion, grant to an eligible person under
Section 4 hereof Restricted Stock Units under the Plan. The
Committee shall determine the restrictions and conditions
applicable to each Restricted Stock Unit at the time of grant.
Vesting conditions may be based on continuing employment (or other
Service Relationship), achievement of pre-established performance
goals and objectives which may be based on targets for revenue,
revenue growth, EBITDA, net income, earnings per share and/or other
such criteria as the Committee may determine. Upon the grant of
Restricted Stock Units, the grantee and the Company shall enter
into an Award Agreement. The terms and conditions of each such
Award Agreement shall be determined by the Committee and may differ
among individual Awards and grantees. On or promptly following the
vesting date or dates applicable to any Restricted Stock Unit, but
in no event later than March 15 of the year following the year in
which such vesting occurs, such Restricted Stock Unit(s) shall be
settled in the form of cash or shares of Stock, as specified in the
Award Agreement. Restricted Stock Units may not be sold, assigned,
transferred, pledged, or otherwise encumbered or disposed of.
(b) Rights as a Stockholder. A grantee shall have the
rights of a stockholder only as to Shares, if any, acquired upon
settlement of Restricted Stock Units. A grantee shall not be deemed
to have acquired any such Shares unless and until the Restricted
Stock Units shall have been settled in Shares pursuant to the terms
of the Plan and the Award Agreement, the Company shall have issued
and delivered a certificate representing the Shares to the grantee
(or transferred on the records of the Company with respect to
uncertificated stock), and the grantee’s name has been entered in
the books of the Company as a stockholder.
(c) Termination. Except as may otherwise be provided by
the Committee either in the Award Agreement or in writing after the
Award Agreement is issued, a grantee’s right in all Restricted
Stock Units that have not vested shall automatically terminate upon
the grantee’s cessation of Service Relationship with the Company
and any Subsidiary for any reason.
SECTION 10. TRANSFER RESTRICTIONS; COMPANY RIGHT OF FIRST
REFUSAL; COMPANY REPURCHASE RIGHTS
(a) Restrictions on Transfer.
(i) Non-Transferability of Stock Options. Restricted
Stock awards granted under Section 7, Stock Options, SARs and,
prior to exercise, the Shares issuable upon exercise of such Stock
Option, shall not be transferable by the optionee otherwise than by
will, or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the optionee’s lifetime, only
by the optionee, or by the optionee’s legal representative or
guardian in the event of the optionee’s incapacity. Notwithstanding
the foregoing, the Committee, in its sole discretion, may provide
in the Award Agreement regarding a given Stock Option or Restricted
Stock award that the optionee may transfer by gift, without
consideration for the transfer, his or her Non-Qualified Stock
Options to his or her family members (as defined in Rule 701 of the
Securities Act), to trusts for the benefit of such family members,
or to partnerships in which such family members are the only
partners (to the extent such trusts or partnerships are considered
“family members” for purposes of Rule 701 of the Securities Act),
provided that the transferee agrees in writing with the Company to
be bound by all of the terms and conditions of this Plan and the
applicable Award Agreement, including the execution of a stock
power upon the issuance of Shares. Stock Options, SARs and the
Shares issuable upon exercise of such Stock Options, shall be
restricted as to any pledge, hypothecation, or other transfer,
including any short position, any “put equivalent position” (as
defined in the Exchange Act) or any “call equivalent position” (as
defined in the Exchange Act) prior to exercise.
(ii) Shares. No Shares shall be sold, assigned,
transferred, pledged, hypothecated, given away or in any other
manner disposed of or encumbered, whether voluntarily or by
operation of law, unless (i) the transfer is in compliance with the
terms of the applicable Award Agreement, all applicable securities
laws (including, without limitation, the Securities Act), and with
the terms and conditions of this Section 9, (ii) the transfer does
not cause the Company to become subject to the reporting
requirements of the Exchange Act, and the transferee consents in
writing to be bound by the provisions of the Plan and the Award
Agreement, including this Section 10. In connection with any
proposed transfer, the Committee may require the transferor to
provide at the transferor’s own expense an opinion of counsel to
the transferor, satisfactory to the Committee, that such transfer
is in compliance with all foreign, federal and state securities
laws (including, without limitation, the Securities Act). Any
attempted transfer of Shares not in accordance with the terms and
conditions of this Section 9 shall be null and void, and the
Company shall not reflect on its records any change in record
ownership of any Shares as a result of any such transfer, shall
otherwise refuse to recognize any such transfer and shall not in
any way give effect to any such transfer of Shares. The Company
shall be entitled to seek protective orders, injunctive relief and
other remedies available at law or in equity including, without
limitation, seeking specific performance or the rescission of any
transfer not made in strict compliance with the provisions of this
Section 10. Subject to the foregoing general provisions, and unless
otherwise provided in the applicable Award Agreement, Shares may be
transferred pursuant to the following specific terms and conditions
(provided that with respect to any transfer of Restricted Stock,
all vesting and forfeiture provisions shall continue to apply with
respect to the original recipient):
(A) Transfers to Permitted Transferees. The Holder may
transfer any or all of the Shares to one or more Permitted
Transferees; provided, however, that following such transfer, such
Shares shall continue to be subject to the terms of this Plan
(including this Section 9) and such Permitted Transferee(s) shall,
as a condition to any such transfer, deliver a written
acknowledgment to that effect to the Company and shall deliver a
stock power to the Company with respect to the Shares.
Notwithstanding the foregoing, the Holder may not transfer any of
the Shares to a Person whom the Company reasonably determines is a
direct competitor or a potential competitor of the Company or any
of its Subsidiaries.
(B) Transfers Upon Death. Upon the death of the Holder,
any Shares then held by the Holder at the time of such death and
any Shares acquired after the Holder’s death by the Holder’s legal
representative shall be subject to the provisions of this Plan, and
the Holder’s estate, executors, administrators, personal
representatives, heirs, legatees and distributees shall be
obligated to convey such Shares to the Company or its assigns under
the terms contemplated by the Plan and the Award Agreement.
(b) Right of First Refusal. In the event that a Holder
desires at any time to sell or otherwise transfer all or any part
of his or her Shares (other than shares of Restricted Stock which
by their terms are not transferrable), the Holder first shall give
written notice to the Company of the Holder’s intention to make
such transfer. Such notice shall state the number of Shares that
the Holder proposes to sell (the “Offered Shares”), the price and
the terms at which the proposed sale is to be made and the name and
address of the proposed transferee. At any time within 30 days
after the receipt of such notice by the Company, the Company or its
assigns may elect to purchase all or any portion of the Offered
Shares at the price and on the terms offered by the proposed
transferee and specified in the notice. The Company or its assigns
shall exercise this right by mailing or delivering written notice
to the Holder within the foregoing 30-day period. If the Company or
its assigns elect to exercise its purchase rights under this
Section 9(b), the closing for such purchase shall, in any event,
take place within 45 days after the receipt by the Company of the
initial notice from the Holder. In the event that the Company or
its assigns do not elect to exercise such purchase right, or in the
event that the Company or its assigns do not pay the full purchase
price within such 45-day period, the Holder shall be required to
pay a transaction processing fee of $10,000 to the Company (unless
waived by the Committee) and then may, within 60 days thereafter,
sell the Offered Shares to the proposed transferee and at the same
price and on the same terms as specified in the Holder’s notice.
Any Shares not sold to the proposed transferee shall remain subject
to the Plan. If the Holder is a party to any stockholders
agreements or other agreements with the Company and/or certain
other of the Company’s stockholders relating to the Shares, (i) the
transferring Holder shall comply with the requirements of such
stockholders agreements or other agreements relating to any
proposed transfer of the Offered Shares, and (ii) any proposed
transferee that purchases Offered Shares shall enter into such
stockholders agreements or other agreements with the Company and/or
certain of the Company’s stockholders relating to the Offered
Shares on the same terms and in the same capacity as the
transferring Holder.
(c) Company’s Right of Repurchase.
(i) Right of Repurchase for Unvested Shares Issued Upon the
Exercise of an Option. Upon a Termination Event, the Company or
its assigns shall have the right and option to repurchase from a
Holder of Shares acquired upon exercise of a Stock Option which is
still subject to a risk of forfeiture as of the Termination Event.
Such repurchase rights may be exercised by the Company within the
later of (A) six months following the date of such Termination
Event or (B) seven months after the acquisition of Shares upon
exercise of a Stock Option. The repurchase price shall be equal to
the lower of the original per share price paid by the Holder,
subject to adjustment as provided in Section 3(b) of the Plan, or
the current Fair Market Value of such Shares as of the date the
Company elects to exercise its repurchase rights.
(ii) Right of Repurchase With Respect to Restricted
Stock. Upon a Termination Event, the Company or its assigns
shall have the right and option to repurchase from a Holder of
Shares received pursuant to a Restricted Stock Award any Shares
that are still subject to a risk of forfeiture as of the
Termination Event. Such repurchase right may be exercised by the
Company within six months following the date of such Termination
Event. The repurchase price shall be the lower of the original per
share purchase price paid by the Holder, subject to adjustment as
provided in Section 3(b) of the Plan, or the current Fair Market
Value of such Shares as of the date the Company elects to exercise
its repurchase rights.
(iii) Procedure. Any repurchase right of the Company
shall be exercised by the Company or its assigns by giving the
Holder written notice on or before the last day of the repurchase
period of its intention to exercise such repurchase right. Upon
such notification, the Holder shall promptly surrender to the
Company, free and clear of any liens or encumbrances, any
certificates representing the Shares being purchased, together with
a duly executed stock power for the transfer of such Shares to the
Company or the Company’s assignee or assignees. Upon the Company’s
or its assignee’s receipt of the certificates from the Holder, the
Company or its assignee or assignees shall deliver to him, her or
them a check for the applicable repurchase price; provided,
however, that the Company may pay the repurchase price by
offsetting and canceling any indebtedness then owed by the Holder
to the Company.
(d) Escrow Arrangement.
(i) Escrow. In order to carry out the provisions of
this Section 9 of this Plan more effectively, the Company shall
hold any Shares issued pursuant to Awards granted under the Plan in
escrow together with separate stock powers executed by the Holder
in blank for transfer. The Company shall not dispose of the Shares
except as otherwise provided in this Plan. In the event of any
repurchase by the Company (or any of its assigns), the Company is
hereby authorized by the Holder, as the Holder’s attorney-in-fact,
to date and complete the stock powers necessary for the transfer of
the Shares being purchased and to transfer such Shares in
accordance with the terms hereof. At such time as any Shares are no
longer subject to the Company’s repurchase and first refusal
rights, the Company shall, at the written request of the Holder,
deliver to the Holder a certificate representing such Shares with
the balance of the Shares to be held in escrow pursuant to this
Section.
(ii) Remedy. Without limitation of any other provision
of this Plan or other rights, in the event that a Holder or any
other Person is required to sell a Holder’s Shares pursuant to the
provisions of Sections 9(b) or (c) hereof and in the further event
that he or she refuses or for any reason fails to deliver to the
Company or its designated purchaser of such Shares the certificate
or certificates evidencing such Shares together with a related
stock power, the Company or such designated purchaser may deposit
the applicable purchase price for such Shares with a bank
designated by the Company, or with the Company’s independent public
accounting firm, as agent or trustee, or in escrow, for such Holder
or other Person, to be held by such bank or accounting firm for the
benefit of and for delivery to him, her, them or it, and/or, in its
discretion, pay such purchase price by offsetting any indebtedness
then owed by such Holder as provided above. Upon any such deposit
and/or offset by the Company or its designated purchaser of such
amount and upon notice to the Person who was required to sell the
Shares to be sold pursuant to the provisions of Sections 9(b) or
(c), such Shares shall at such time be deemed to have been sold,
assigned, transferred and conveyed to such purchaser, such Holder
shall have no further rights thereto (other than the right to
withdraw the payment thereof held in escrow, if applicable), and
the Company shall record such transfer in its stock transfer book
or in any appropriate manner.
(e) Lockup Provision. If requested by the Company, a
Holder shall not sell or otherwise transfer or dispose of any
Shares (including, without limitation, pursuant to Rule 144 under
the Securities Act) held by him or her for such period following
the effective date of a public offering by the Company of Shares as
the Company shall specify reasonably and in good faith. If
requested by the underwriter engaged by the Company, each Holder
shall execute a separate letter confirming his or her agreement to
comply with this Section.
(f) Adjustments for Changes in Capital Structure. If,
as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split
or other similar change in the Common Stock, the outstanding Shares
are increased or decreased or are exchanged for a different number
or kind of securities of the Company, the restrictions contained in
this Section 9 shall apply with equal force to additional and/or
substitute securities, if any, received by Holder in exchange for,
or by virtue of his or her ownership of, Shares.
(g) Termination. The terms and provisions of Section
9(b) and Section 9(c) (except for the Company’s right to repurchase
Shares still subject to a risk of forfeiture upon a Termination
Event) shall terminate upon consummation of any Sale Event, in
either case as a result of which Shares are registered under
Section 12 of the Exchange Act and publicly-traded on any national
security exchange.
SECTION 11. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall, no later
than the date as of which the value of an Award or of any Shares or
other amounts received thereunder first becomes includable in the
gross income of the grantee for income tax purposes, pay to the
Company, or make arrangements satisfactory to the Committee
regarding payment of, any Federal, state, or local taxes of any
kind required by law to be withheld by the Company with respect to
such income. The Company and any Subsidiary shall, to the extent
permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the grantee. The Company’s
obligation to deliver stock certificates (or evidence of book
entry) to any grantee is subject to and conditioned on any such tax
withholding obligations being satisfied by the grantee.
(b) Payment in Stock. The Company’s minimum required
tax withholding obligation may be satisfied, in whole or in part,
by the Company withholding from Shares to be issued pursuant to an
Award a number of Shares having an aggregate Fair Market Value (as
of the date the withholding is effected) that would satisfy the
minimum withholding amount due.
SECTION 12. SECTION 409A AWARDS
To the extent that any Award is determined to constitute
“nonqualified deferred compensation” within the meaning of Section
409A (a “409A Award”), the Award shall be subject to such
additional rules and requirements as may be specified by the
Committee from time to time. In this regard, if any amount under a
409A Award is payable upon a “separation from service” (within the
meaning of Section 409A) to a grantee who is considered a
“specified employee” (within the meaning of Section 409A), then no
such payment shall be made prior to the date that is the earlier of
(i) six months and one day after the grantee’s separation from
service, or (ii) the grantee’s death, but only to the extent such
delay is necessary to prevent such payment from being subject to
interest, penalties and/or additional tax imposed pursuant to
Section 409A. The Company makes no representation or warranty and
shall have no liability to any grantee under the Plan or any other
Person with respect to any penalties or taxes under Section 409A
that are, or may be, imposed with respect to any Award. It is the
intent of the Board that payments and benefits under the Plan
comply with or be exempt from Section 409A and the regulations and
guidance promulgated thereunder and, accordingly, to the maximum
extent permitted the Plan shall be interpreted to be in compliance
therewith or exempt therefrom. In no event whatsoever shall the
Company be liable for any additional tax, interest or penalty that
may be imposed upon a Participant by Section 409A or damages to a
Participant for failing to comply with Section 409A.
SECTION 13. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the
Committee may, at any time, amend or cancel any outstanding Award
for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the consent of the holder of
the Award. The Committee may exercise its discretion to reduce the
exercise price of outstanding Stock Options or effect repricing
through cancellation of outstanding Stock Options and by granting
such holders new Awards in replacement of the cancelled Stock
Options. To the extent determined by the Committee to be required
either by the Code to ensure that Incentive Stock Options granted
under the Plan are qualified under Section 422 of the Code or
otherwise, Plan amendments shall be subject to approval by the
Company stockholders entitled to vote at a meeting of stockholders.
Nothing in this Section 12 shall limit the Board’s or Committee’s
authority to take any action permitted pursuant to Section 3(c).
The Board reserves the right to amend the Plan and/or the terms of
any outstanding Stock Options to the extent reasonably necessary to
comply with the requirements of the exemption pursuant to Rule
12h-1 of the Exchange Act.
SECTION 14. STATUS OF PLAN
With respect to the portion of any Award that has not been
exercised and any payments in cash, Stock or other consideration
not received by a grantee, a grantee shall have no rights greater
than those of a general creditor of the Company unless the
Committee shall otherwise expressly so determine in connection with
any Award.
SECTION 15. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal
Requirements. The Committee may require each person acquiring
Shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the Shares without
a view to distribution thereof. No Shares shall be issued pursuant
to an Award until all applicable securities law and other legal and
stock exchange or similar requirements have been satisfied. The
Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards, as it
deems appropriate.
(b) Delivery of Stock Certificates. Stock certificates
to grantees under the Plan shall be deemed delivered for all
purposes when the Company or a stock transfer agent of the Company
shall have mailed such certificates in the United States mail,
addressed to the grantee, at the grantee’s last known address on
file with the Company; provided that stock certificates to be held
in escrow pursuant to Section 9 of the Plan shall be deemed
delivered when the Company shall have recorded the issuance in its
records. Uncertificated Stock shall be deemed delivered for all
purposes when the Company or a stock transfer agent of the Company
shall have given to the grantee by electronic mail (with proof of
receipt) or by United States mail, addressed to the grantee, at the
grantee’s last known address on file with the Company, notice of
issuance and recorded the issuance in its records (which may
include electronic “book entry” records).
(c) No Employment Rights. The adoption of the Plan and
the grant of Awards do not confer upon any Person any right to
continued employment or Service Relationship with the Company or
any Subsidiary.
(d) Trading Policy Restrictions. Option exercises and
other Awards under the Plan shall be subject to the Company’s
insider trading policy-related restrictions, terms and conditions
as may be established by the Committee, or in accordance with
policies set by the Committee, from time to time.
(e) Designation of Beneficiary. Each grantee to whom an
Award has been made under the Plan may designate a beneficiary or
beneficiaries to exercise any Award on or after the grantee’s death
or receive any payment under any Award payable on or after the
grantee’s death. Any such designation shall be on a form provided
for that purpose by the Committee and shall not be effective until
received by the Committee. If no beneficiary has been designated by
a deceased grantee, or if the designated beneficiaries have
predeceased the grantee, the beneficiary shall be the grantee’s
estate.
(f) Legend. Any certificate(s) representing the Shares
shall carry substantially the following legend (and with respect to
uncertificated Stock, the book entries evidencing such shares shall
contain the following notation):
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including repurchase and restrictions against transfers
contained in the Plan and any agreements entered into thereunder by
and between the company and the holder of this certificate (a copy
of which is available at the offices of the company for
examination).
(g) Information to Holders of Options. In the event the
Company is relying on the exemption from the registration
requirements of Section 12(g) of the Exchange Act contained in
paragraph (f)(1) of Rule 12h-1 of the Exchange Act, the Company
shall provide the information described in Rule 701(e)(3), (4) and
(5) of the Securities Act to all holders of Options in accordance
with the requirements thereunder. The foregoing notwithstanding,
the Company shall not be required to provide such information
unless the option holder has agreed in writing, on a form
prescribed by the Company, to keep such information
confidential.
SECTION 16. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board and
shall be approved by stockholders in accordance with applicable
state law and the Company’s articles of incorporation and bylaws
within 12 months thereafter. If the stockholders fail to approve
the Plan within 12 months after its adoption by the Board of
Directors, then any Awards granted or sold under the Plan shall be
rescinded and no additional grants or sales shall thereafter be
made under the Plan. Subject to such approval by stockholders and
to the requirement that no Shares may be issued hereunder prior to
such approval, Stock Options and other Awards may be granted
hereunder on and after adoption of the Plan by the Board. No grants
of Stock Options and other Awards may be made hereunder after the
tenth anniversary of the date the Plan is adopted by the Board or
the date the Plan is approved by the Company’s stockholders,
whichever is earlier.
SECTION 17. GOVERNING LAW
This Plan, all Awards and any controversy arising out of or
relating to this Plan and all Awards shall be governed by and
construed in accordance with the laws of the State of Delaware as
to matters within the scope thereof, without regard to conflict of
law principles that would result in the application of any law
other than the law of the State of Delaware.
DATE ADOPTED BY THE BOARD OF DIRECTORS:
|
November 26, 2019
|
DATE ADOPTED BY THE
SHAREHOLDERS: .
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