PROXY STATEMENT
Annual Meeting of Stockholders
To Be Held on September 12, 2018
GENERAL INFORMATION
This
proxy statement is being furnished to the stockholders of Liberated
Syndication Inc. (libsyn), a Nevada corporation, in connection with
the solicitation of proxies on behalf of the Board of Directors of
libsyn for use at libsyn’s Annual Meeting of Stockholders and
any and all adjournments or continuations of the annual meeting, to
be held Wednesday, September 12, 2018, starting at 10:30 a.m.,
Eastern Daylight Time, at Liberated Syndication’s Pair
office, 2403 Sidney Street, Suite 210, Pittsburgh, PA 15203, for
the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. These materials will be first mailed to
stockholders on or about July 30, 2018.
When we
use “libsyn,” “Liberated Syndication,”
“we,” “us,” “our” or the
“Company,” we are referring to Liberated Syndication
Inc.
This
Proxy Statement is also available at:
www.proxyvote.com
.
QUESTIONS AND ANSWERS ABOUT THE
ANNUAL MEETING
What is the purpose of the annual meeting?
At the
annual meeting, our stockholders will act upon the matters
described in this proxy statement. These actions include: (i) the
election of four directors to serve a one year term from the date
of the Annual Meeting of Stockholders, or until their prior
resignation or termination and the election and qualification of
their successors; (ii) the ratification of Sadler, Gibb &
Associates, LLC as independent auditors of Liberated Syndication
Inc. for the fiscal year ending December 31, 2018; (iii) to approve
the 2018 Omnibus Equity Incentive Plan; and (iv) to amend Liberated
Syndication’s articles of incorporation to effect a reverse
stock split of Liberated Syndication’s Common Stock within a
range of one-for-two to one-for-ten, with the exact amount to be
determine by the Board of Directors. An additional purpose of the
Annual Meeting is to transact any other business that may properly
come before the Annual Meeting and any and all adjournments or
postponements thereof.
Who can attend the annual meeting?
All
stockholders of record at the close of business on the record date,
or their duly appointed proxies, may attend the annual meeting. Our
Board of Directors has chosen the close of business on July 16,
2018, as the record date for determining the stockholders entitled
to notice of, and to vote at, the Annual Meeting. Only
stockholders of record as of the record date are entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or
postponements thereof.
What proposals will be voted on at the annual meeting?
Stockholders
will vote on four proposals at the annual meeting:
●
the election of
four directors to serve a one year term from the date of the Annual
Meeting, or until their prior resignation or termination and the
election and qualification of their successors;
●
the ratification of
Sadler, Gibb & Associates, LLC as independent auditors of
Liberated Syndication Inc. for the fiscal year ending
December 31, 2018;
●
To approve the
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan;
●
To amend Liberated
Syndication’s articles of incorporation to effect a reverse
stock split of Liberated Syndication’s issued and outstanding
Common Stock within the range of one-for-two to one-for-ten, only
to be used for the purpose of up-listing to NASDAQ or NYSE. (with
the exact amount to be determined by Liberated Syndication’s
board of directors.)
What is the reverse stock split and why is it
necessary?
Following the
effective date of the reverse stock split, each Liberated
Syndication stockholder will own a reduced number of shares of
Liberated Syndication common stock. The reverse stock split will
affect all of the Liberated Syndication stockholders uniformly and
will not, in and of itself, affect any Liberated Syndication
stockholder’s percentage ownership interests in Liberated
Syndication, except to the extent that the reverse stock split
results in any of the Liberated Syndication stockholders owning a
fractional share.
It is
expected that immediately prior to the effective time of an initial
listing with NASDAQ, the Company will effect a reverse stock split.
The NASDAQ Stock Market LLC requires the company to comply with the
initial listing standards of the applicable NASDAQ market to be
listed on such market. The NASDAQ Capital Market’s initial
listing standards require a company to have, among other things, a
$4.00 per share minimum bid price. Because the current per share
price of Liberated Syndication’s common stock is less than
$4.00, the reverse stock split is necessary to meet the minimum bid
listing requirement.
What are the Board’s recommendations?
Our
Board recommends that you vote:
●
FOR
the election of four nominated
directors;
●
FOR
the ratification of Sadler, Gibb
& Associates, LLC as independent auditors of Liberated
Syndication Inc. for the fiscal year ending December 31,
2018;
●
FOR
The approval of the 2018 Omnibus
Equity Incentive Plan;
●
FOR
the amendment of Liberated
Syndication’s articles of incorporation to effect a reverse
stock split, only to be used for the purpose of up-listing to
NASDAQ or NYSE, with the exact amount to be determined by the Board
of Directors.
Will
there be any other business on the agenda?
The
Board knows of no other matters that are likely to be brought
before the Annual Meeting. If any other matters properly come
before the Annual Meeting, however, the persons named in the
enclosed proxy, or their duly appointed substitute acting at the
Annual Meeting, will be authorized to vote or otherwise act on
those matters in accordance with their judgment.
Who is entitled to vote?
Only
stockholders of record at the close of business on July 16, 2018,
which we refer to as the “record date,” are entitled to
notice of, and to vote at, the Annual Meeting. As of the
record date, there were 29,776,974 shares of our common stock
outstanding. Holders of common stock as of the record date are
entitled to one vote for each share held for each of the
proposals.
What is the difference between holding shares as a stockholder of
record and as a beneficial owner?
Stockholder of Record.
If
your shares are registered directly in your name with our transfer
agent, Issuer Direct Corp, you are considered, with respect to
those shares, the “stockholder of record.” The proxy
statement and proxy card have been sent directly to you by
us.
Beneficial Owner.
If your shares
are held in a stock brokerage account or by a bank or other
nominee, you are considered the “beneficial owner” of
shares held in street name. The proxy statement has been forwarded
to you by your broker, bank or nominee who is considered, with
respect to those shares, the stockholder of record. As the
beneficial owner, you have the right to direct your broker, bank or
nominee how to vote your shares by using the voting instruction
form included in the mailing.
How do I vote my shares?
All
stockholders who receive proxy materials will receive instructions
for voting by mail, telephone, or by using the
Internet.
What constitutes a quorum?
A
quorum is the presence, in person or by proxy, of the holders of
one-third of the shares of the common stock entitled to
vote. Under Nevada law, an abstaining vote and a broker
“non-vote” are counted as present and are, therefore,
included for purposes of determining whether a quorum of shares is
present at the Annual Meeting.
What is a broker “non-vote” and what is its effect on
voting?
A
broker “non-vote” occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal
because the nominee does not have the discretionary voting
authority with respect to that item and has not received
instructions from the beneficial owner. Generally, shares held by
brokers who do not have discretionary authority to vote on a
particular matter and have not received voting instructions from
their customers are not counted or deemed to be present or
represented for purposes of determining whether stockholders have
approved that matter. More specifically, broker
“non-votes” are not included in the tabulation of the
voting results on the election of directors or issues requiring
approval of a majority of the shares present or represented by
proxy and entitled to vote at the Annual Meeting and, therefore, do
not have an effect on the outcome of any of the
proposals.
What is required to approve each item?
●
For Proposal 1
(election of directors), a plurality of the votes duly cast is
required for the election of directors (that is, the nominees
receiving the greatest number of votes will be elected).
Abstentions are not counted for purposes of the election of
directors.
●
For Proposal 2
(ratification of the selection of the independent auditors), the
affirmative vote of the holders of a majority of the
stockholders’ shares present in person or represented by
proxy at the meeting and entitled to vote, is
required.
●
For Proposal 3
(2018 Omnibus Equity Incentive Plan) the affirmative vote of the
holders of a majority of the stockholders’ shares present in
person or represented by proxy at the meeting and entitled to vote,
is required.
●
For Proposal 4
(amendment of the Company’s articles of incorporation to
effect a reverse stock split of the Company’s Common Stock)
the affirmative vote of the holders of a majority of the
stockholders’ shares present in person or represented by
proxy at the meeting and entitled to vote, is
required.
●
For any other
matters (other than the election of directors) on which
stockholders of libsyn are entitled to vote, the affirmative vote
of the holders of a majority of the stockholders’ shares
present in person or represented by proxy at the meeting and
entitled to vote, is required.
For the
purpose of determining whether the stockholders have approved
matters other than the election of directors, abstentions are
treated as shares present or represented and voting, so abstaining
has the same effect as a negative vote. If stockholders hold
their shares through a broker, bank or other nominee and do not
instruct them how to vote, the broker may have authority to vote
the shares.
How will shares of common stock represented by properly executed
proxies be voted?
All
shares of common stock represented by properly executed proxies
will, unless such proxies have previously been revoked, be voted in
accordance with the instructions indicated in such proxies. If
you do not provide voting instructions, your shares will be voted
in accordance with the Board’s recommendations on the items
listed in the Notice of Annual Meeting. In addition, if any other
matters properly come before the Annual Meeting, the persons named
in the enclosed proxy, or their duly appointed substitute acting at
the Annual Meeting, will be authorized to vote or otherwise act on
those matters in accordance with their judgment.
Can I change my vote or revoke my proxy?
Any
stockholder executing a proxy has the power to revoke such proxy at
any time prior to its exercise. You may revoke your proxy
prior to exercise by:
●
filing with us a
written notice of revocation of your proxy,
●
submitting a
properly signed proxy card bearing a later date,
●
voting in person at
the annual meeting.
What does it mean if I receive more than one proxy
card?
If your
shares are registered under different names or are in more than one
account, you will receive more than one proxy card. To ensure that
all your shares are voted, please sign and return all proxy cards,
or if you choose, vote by telephone or through the Internet using
the personal identification number printed on each proxy card. We
encourage you to have all accounts registered in the same name and
address (whenever possible). You can accomplish this by contacting
our transfer agent, Issuer Direct Corp.
Who paid for this proxy solicitation?
This
proxy solicitation is made by the Company. The cost of preparing,
printing, assembling and mailing this proxy statement and other
material furnished to stockholders in connection with the
solicitation of proxies will be borne by us.
How are proxies solicited?
In
addition to the mail solicitation of proxies, our officers,
directors, employees and agents may solicit proxies by written
communication, telephone or personal call. These persons will
receive no special compensation for any solicitation activities. We
will reimburse banks, brokers and other persons holding common
stock for their expenses in forwarding proxy solicitation materials
to beneficial owners of our common stock.
What is “householding?”
“Householding”
means that we deliver a single set of proxy materials to households
with multiple stockholders, provided certain conditions are met.
Householding reduces our printing and mailing costs.
If you
or another stockholder of record sharing your address would like to
receive an additional copy of this Proxy Statement, we will
promptly deliver it to you upon your request in one of the
following manners:
●
by sending a
written request by mail to:
Liberated
Syndication Inc.
Attn:
Chief Financial Officer
5001
Baum Blvd, Suite 770
Pittsburgh,
PA 15213
●
by calling our
Chief Financial Officer, at (412) 621-0902.
If you would
like to opt out of householding in future mailings, or if you are
currently receiving multiple mailings at one address and would like
to request household mailings, you may do so by contacting the
Chief Financial Officer, at (412) 621-0902.
Can I receive future stockholder communications electronically
through the Internet?
Yes.
You may elect to receive future notices of meetings and proxy
materials electronically through the Internet. To consent to
electronic delivery, you must vote your shares using the Internet.
At the end of the Internet voting procedure, the on-screen Internet
voting instructions will tell you how to request future stockholder
communications be sent to you electronically.
Once
you consent to electronic delivery, you must vote your shares using
the Internet and your consent will remain in effect until
withdrawn. You may withdraw this consent at any time and resume
receiving stockholder communications in print form.
What are the requirements for presenting stockholder
proposals?
Stockholders
may submit proposals on matters appropriate for stockholder action
at our annual meeting, including the submission of nominees for
election to the Board of Directors, consistent with regulations
adopted by the Securities and Exchange Commission (the
“SEC”) and our Bylaws. For such proposals to be
considered for inclusion in the proxy statement and form of proxy
relating to the 2019 annual meeting, we must receive them not later
than January 2, 2019, or such later date as we may specify in our
SEC filings. Your proposals should be addressed to Liberated
Syndication Inc at 5001 Baum Blvd, Suite 770, Pittsburgh, PA 15213,
Attn: Corporate Secretary.
We
anticipate that proxies solicited in connection with our 2018
Annual Meeting will confer discretionary authority to vote on
matters, among others, of which we do not receive notice prior to
March 1, 2018.
Am I entitled to dissenter’s rights?
Under
Nevada law, stockholders are not entitled to dissenter’s
rights in connection with any of the matters described in this
proxy statement.
What are the interests of the Company’s directors and
officers in the matters to be acted upon?
Except
as indicated below, none of our directors, executive officers, or
any of their associates has any substantial interest, direct or
indirect, by security holdings or otherwise, in any of the matters
to be acted upon.
Whom may I contact for further assistance?
If you
have any questions about giving your proxy or require any
assistance, please contact our Chief Financial
Officer:
Liberated
Syndication Inc.
Attn:
Chief Financial Officer
5001
Baum Blvd, Suite 770
Pittsburgh,
PA 15213
●
by telephone, at
(412) 621-0902
EMERGING GROWTH COMPANY STATUS
We are
an “emerging growth company” under applicable federal
securities laws and therefore are permitted to take advantage of
certain reduced public company reporting requirements. As an
emerging growth company, we provide in this 2018 Proxy Statement
the scaled disclosure permitted under the Jumpstart Our Business
Startups Act of 2012 and rules of the SEC, including the scaled
executive compensation disclosure. In addition, as an emerging
growth company, we are not required to conduct votes seeking
approval, on an advisory basis, of the compensation of our Named
Executive Officers (as defined herein) or the frequency with which
such votes must be conducted. We will remain an emerging growth
company until the earliest of (1) the last day of the fiscal year
in which we have total annual gross revenues of $1 billion or more,
(2) December 31, 2021, (3) the date on which we have issued more
than $1 billion in nonconvertible debt during the previous three
years, or (4) the date on which we are deemed to be a large
accelerated filer under the rules of the SEC.
EXECUTIVE
OFFICERS
The
following table sets forth:
●
the
names of our current executive officers,
●
their ages as of
the record date for the annual meeting and
●
the
capacities in which they currently serve libsyn:
Name
|
|
Age
|
|
Position(s)
|
|
Officer Since
|
Christopher
J. Spencer
|
|
49
|
|
Chief
Executive Officer and Director
|
|
2012
|
John
Busshaus
|
|
55
|
|
Chief
Financial Officer
|
|
2012
|
See
“Proposal No. 1 — Election of Directors” for
biographical information regarding Mr. Spencer and each of our
other current directors.
John Busshaus
has served Chief Financial Officer of the
Company since its inceptions on September 29, 2015. Mr. Busshaus
has served as Chief Financial Officer of Future Healthcare of
America since June 22, 2012. Mr. Busshaus has served as the Chief
Financial Officer of FAB Universal Corp. since January 29, 2007.
From 2004 to 2006, Mr. Busshaus was an independent business
consultant. Mr. Busshaus’ efforts were assisting
organizations with the implementation of Sarbanes Oxley, filing of
SEC reports, and taking a company through an IPO. Mr. Busshaus
worked for Talanga International from 2001 to 2004, where he was
the Chief Financial Officer for the company. From 1999 to 2000, Mr.
Busshaus worked for Mellon Bank as Controller and Vice President
and was responsible for strategic planning and managing the annual
and monthly budgeting within Global Security Services. From 1994 to
1998, Mr. Busshaus worked for PepsiCo as Senior Business Planner,
and was responsible for annual and quarterly budgets planning, as
well as weekly, monthly, and quarterly reporting of results. As a
member of management, Mr. Busshaus' efforts contributed to the
revenue growth and market share increases in a market that was
categorized as saturated.
CORPORATE
GOVERNANCE
We
uphold a set of basic values to guide our actions and are committed
to maintaining the highest standards of business conduct and
corporate governance. We have adopted a Code of Business Conduct
and Ethics for directors, officers (including our principal
executive officer and principal financial officer) and employees,
which, in conjunction with our Articles of Incorporation, Bylaws
and Board of Directors committee charters, form the framework for
governance of libsyn. The Code of Ethics and Business Conduct can
be found on our website at: investor.libsyn.com. Also, the Code of
Ethics and Business Conduct, Board of Directors committee charters,
Bylaws and Articles of Incorporation are available at our corporate
offices. Stockholders may request free printed copies of these
documents from:
Liberated
Syndication Inc.
Attn:
Secretary
5001
Baum Blvd., Suite 770
Pittsburgh, PA
15213
(412)
621-0902
Board
Leadership Structure and Risk Oversight
Our
company is led by Mr. Christopher Spencer, who has served as chief
executive officer and member of the Board of Directors since
inception of the Company. Our Board of Directors is comprised of
Mr. Spencer and three independent directors. The Board has four
standing independent committees—the audit, compensation,
nominating, and corporate governance and risk committees. Each of
the Board committees is comprised solely of independent directors.
Our risk committee is responsible for overseeing risk management,
and our full Board regularly engages in discussions of risk
management. Each of our other Board committees also considers the
risk within its area of responsibilities. Our corporate governance
guidelines provide that our non-management directors will meet in
executive session at each Board meeting.
Our
corporate leadership structure is commonly utilized by other public
companies in the United States, and we believe that this leadership
structure has been effective for the Company. We believe that
having the roles of Chairman and CEO as one person, and only
independent Board members for each of our Board committees,
provides the right form of leadership for our Company. We believe
that our Chairman and CEO, together with the risk committee, the
audit committee and the full Board of Directors, provide effective
oversight of the risk management function.
Committees of the Board of Directors
The
Board of Directors has adopted written charters for two standing
committees: the Nominating Committee and the Audit Committee. The
Board has determined that all members of the Nominating and Audit
Committees are independent and satisfy the relevant SEC
independence requirements for members of such
committees.
Nominating
Committee
. The Nominating Committee
currently consists of Mr. Polinsky as chair,
Mr. Yevstifeyev, and Mr. Smith. This committee
provides assistance to the Board in identifies individuals
qualified to become members of the Board of Directors consistent
with Board criteria. The committee also oversees the
evaluation of the Board of Directors and management.
Audit
Committee
. The Audit Committee
currently consists of Mr. Yevstifeyev, as chair, Mr. Polinsky
and Mr. Smith. Mr. Yevstifeyev, the Board of Directors has
determined, is an “audit committee financial expert” as
defined under SEC rules. This committee oversees the integrity
of our financial statements, disclosure controls and procedures,
the systems of internal accounting and financial controls,
compliance with legal and regulatory requirements, the
qualifications and independence of the independent auditors and the
performance of our internal audit function and independent
auditors, and the quarterly reviews and annual independent audit of
our financial statements. The Audit Committee’s report
appears hereafter. Our independent auditors report directly to
the Audit Committee.
We will
provide a free printed copy of any of the charters of any Board
committee to any stockholder on request.
Compensation
Committee
. The Compensation Committee
currently consists of Mr. Smith, as chair, Mr. Yevstifeyev,
and Mr. Polinsky. This committee provides assistance to the
Board of Directors in overseeing our compensation policies and
practices. It reviews and approves the compensation levels and
policies for the Board of Directors; reviews and approves corporate
goals and objectives with respect to CEO compensation and, based
upon these evaluations, determines and approves the CEO’s
compensation. The Compensation Committee also has the
responsibility to provide the report to stockholders on executive
officer compensation.
Communicating Concerns to Directors
The
non-employee directors have established procedures to enable anyone
wishing to communicate with our Board of Directors in the following
way:
Writing to the
directors, at the following address:
Board
of Directors
Liberated
Syndication Inc.
c/o
Corporate Secretary
5001
Baum Blvd
Suite
770
Pittsburgh, PA
15213
The
Audit Committee has established procedures for employees who have a
concern about our accounting, internal accounting controls or
auditing matters, to communicate that concern directly to the Audit
Committee in one of the following ways:
●
Calling the
whistle blowing hotline @ (877) 350-0004
●
Writing to the
Audit Committee, at the following address:
Chair
of the libsyn Audit Committee
5001
Baum Blvd
Suite
770
Pittsburgh PA
15213
The
Hotline service will forward any communications related to our
accounting, internal accounting controls, or auditing matters to
the Chair of the Audit Committee. Communications may be
anonymous.
Board and Committee Meetings
We
encourage but do not require Board member attendance at our Annual
Meeting. The Audit Committee held four meeting in fiscal 2017.
Each director attended at least 75% of the aggregate of the
total number of board and applicable committee
meetings.
Nominating Committee Report
The
Nominating Committee provides assistance to the Board in evaluating
and selecting director nominees of the Company to be considered for
election at the annual meeting of stockholders and takes such other
actions within the scope of its charter as the committee deems
necessary or appropriate.
The
Nominating Committee has responsibility for identifying and
evaluating new nominees to the Board. In evaluating director
nominees, the committee will, as described in the committee’s
charter, consider various criteria, including relevant industry
experience, general business experience, relevant financial
experience, and compliance with independence and other
qualifications necessary to comply with any applicable tax and
securities laws. In addition, directors must have time
available to devote to Board activities and to enhance their
knowledge of our business. We therefore seek to attract and
retain qualified directors who have sufficient time to devote to
their responsibilities and duties to us and our
stockholders.
Between
annual meetings of stockholders, the Board may elect directors to
serve until the next annual meeting. Nominees for directorship
will be selected by the Nominating Committee, in accordance with
the policies and principles in its charter, and nominated by the
Board for stockholder elections. To date, we have not engaged third
parties to identify or evaluate or assist in identifying potential
director nominees, although we may do so in the
future.
To
date, we have not received any recommendations from stockholders
requesting the Board or any of its committees to consider a nominee
for inclusion among the Board’s slate of nominees in our
proxy statement for our annual meeting. However, our
stockholders may recommend director nominees, and the committee
will consider nominees recommended by stockholders. A stockholder
wishing to submit such a recommendation should send a letter to the
Corporate Secretary at our principal executive offices in
accordance with the provisions of our Bylaws and the provisions set
forth in the Questions and Answers about the Annual Meeting section
under the question, “What are the requirements for presenting
stockholder proposals?” The mailing envelope must contain a
clear notation indicating that the enclosed letter is a
“Director Nominee Recommendation.” The letter must
identify the author as a stockholder and provide a brief summary of
the nominee’s qualifications, including such information
about the nominee as would have been required to be included in a
proxy statement filed pursuant to the rules of the SEC had such
nominee been nominated by the Board, as well as contact information
for both the nominee and the stockholder. Nominees should at a
minimum have relevant business and financial experience and must be
able to read and understand fundamental financial
statements. We anticipate that nominees recommended by
stockholders will be evaluated in the same manner as nominees
recommended by anyone else, although, the committee may prefer
nominees who are personally known to the existing directors and
whose reputations are highly regarded. The committee will
consider all relevant qualifications as well as our needs in terms
of compliance with listing standards and SEC rules.
All of
the nominees for directors being voted upon at the annual meeting
are directors standing for reelection.
The
Nominating and Corporate Governance Committee assisted the Board
and each of its committees in conducting self-evaluations of their
functioning and effectiveness.
|
Nominating Committee
Douglas
Polinsky
Denis
Yevstifeyev
J. Greg
Smith
|
Audit
Committee
. The Audit Committee
currently consists of Denis Yevstifeyev as chair,
Douglas Polinsky, and J. Gregory Smith. Mr. Yevstifeyev,
the Board of Directors has determined, is an “audit committee
financial expert” as defined under SEC rules. This
committee oversees the integrity of our financial statements,
disclosure controls and procedures, the systems of internal
accounting and financial controls, compliance with legal and
regulatory requirements, the qualifications and independence of the
independent auditors and the performance of our internal audit
function and independent auditors, and the quarterly reviews and
annual independent audit of our financial statements. The Audit
Committee’s report appears hereafter. Our independent
auditors report directly to the Audit Committee.
The
Board of Directors has determined that each of J. Gregory Smith,
Denis Yevstifeyev and Douglas Polinsky has no material relationship
with us (either directly or as a partner, stockholder or officer of
an organization that has a relationship with us) and satisfies the
independence requirements required by the SEC.
PROPOSAL
NO. 4 – TO AMEND LIBERATED SYNDICATION’S ARTICLES OF
INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF LIBERATED
SYNDICATION’S ISSUED AND OUTSTANDING COMMON STOCK WITHIN THE
RANGE OF ONE-FOR-TWO TO ONE-FOR TEN TO BE USED ONLY FOR THE PURPOSE
OF UP-LISTING TO NASDAQ OR NYSE (WITH THE EXACT AMOUNT TO BE
DETERMINE BY LIBERATED SYNDICATION’S BOARD OF
DIRECTORS).
The
Board of Directors has unanimously adopted a resolution declaring
advisable and recommending to the stockholders for their approval a
proposal to amend the Company’s articles of incorporation, to
effect a reverse stock split of Liberated Syndication’s
issued and outstanding common stock at any whole number ratio
between, and inclusive of, one-for-two and one-for-ten, to be used
only for the purpose of up-listing to NASDAQ or NYSE (the
“Reverse Stock Split”). Approval of this Proposal
Number 4 would grant Liberated Syndication’s Board the
authority, without further action by the stockholders, to carry out
the Reverse Stock Split, at any time within eighteen months after
the date stockholder approval for the Reverse Stock Split is
obtained from the stockholders, with the exact exchange ratio and
timing of the Reverse Stock Split (if at all) to be determined at
Liberated Syndication’s Board’s discretion. The
Board’s decision whether or not (and when) to effect a
Reverse Stock Split (and at what whole number ratio to effect the
Reverse Stock Split) will be based on a number of factors,
including market conditions, existing and anticipated trading
prices for our common stock and the continued listing requirements
of the NASDAQ Capital Market.
As
explained below, we are asking our stockholders to approve this
Proposal Number 4 because we believe a Reverse Stock Split would
result in a higher price per share for Liberated Syndications
outstanding shares of our common stock, which should enable us to
become listed on NASDAQ and allow the Company to meet the initial
listing standards of the NASDAQ Capital Market.
What to Expect from a Reverse Stock Split
If
approved by libsyn’s stockholders, the Reverse Stock Split
would be implemented simultaneously for all of libsyn’s
outstanding common stock and would affect all libsyn’s
stockholders uniformly and would not affect any stockholder’s
percentage ownership interests in libsyn, except to the extent that
the Reverse Stock Split results in any of our stockholders owning a
fractional share, because fractional shares would be rounded down
to the nearest whole share.
Reasons for the Reverse Stock Split
The
Board of Directors of Liberated Syndication approved the proposal
authorizing the reverse stock split because it believes that a
reverse stock split will allow the company to satisfy the initial
listing requirements of the NASDAQ Capital Market, and the Board of
Directors of Liberated Syndication also believes that the increased
market price of Liberated Syndication common stock expected to
result from the implementation of a reverse stock split may improve
the marketability and liquidity of Liberated Syndication’s
common stock.
NASDAQ Requirements for Listing on the NASDAQ Capital
Market
Liberated
Syndication common stock is currently quoted on the OTCQB Markets.
The initial listing standards of the NASDAQ Capital Market require,
among other things, a $4.00 per share minimum bid price. As of the
date of the mailing of this proxy statement, Liberated Syndication
does not meet the initial listing application requirements for the
NASDAQ Capital Market.
The
Board of Directors of Liberated Syndication expects that a reverse
stock split of Liberated Syndication’s common stock will
increase the market price of Liberated Syndication’s common
stock so that the company is able to achieve the initial listing
requirements for the NASDAQ Capital Market and thereafter maintain
compliance with the NASDAQ minimum bid price listing standard of
$1.00 per share. In determining the exact ratio for the reverse
stock split, Liberated Syndication intends to use a ratio from
within the range of one-for-two to one-for-ten that would result in
a per share price of greater than $4.00 per share following the
reverse stock split. Notwithstanding the foregoing, there can be no
assurance that the market price per share following the reverse
stock split will remain in excess of the minimum bid price for a
sustained period of time. In addition, there can be no assurance
that the Liberated Syndication’s common stock will not be
delisted due to a failure to meet other continued listing
requirements even if the market price per share of Liberated
Syndication’s common stock on a post-reverse-stock-split
basis remains in excess of the minimum bid
requirement.
Additionally, the
Board of Directors of Liberated Syndication believes that a listing
on the NASDAQ Capital Market for the shares of common stock of the
Company may provide a broader market for the common stock of the
Company and facilitate the use of the common stock of the Company
in financing and other transactions.
Effects of the Reverse Stock Split
Following the
effective date of the reverse stock split, each Liberated
Syndication stockholder will own a reduced number of shares of
Liberated Syndication common stock. The reverse stock split will
affect all of the Liberated Syndication stockholders uniformly and
will not, in and of itself, affect any Liberated Syndication
stockholder’s percentage ownership interests in Liberated
Syndication, except to the extent that the reverse stock split
results in any of the Liberated Syndication stockholders owning a
fractional share. Voting rights and other rights and preferences of
the Liberated Syndication stockholders will not be affected by the
reverse stock split, in and of itself, except to the extent that
the reverse stock split results in any of the Liberated Syndication
stockholders owning a fractional share. For example, a holder of 2%
of the voting power of the outstanding shares of Liberated
Syndication common stock immediately prior to the reverse stock
split will continue to hold 2% of the voting power of the
outstanding shares of Liberated Syndication common stock
immediately following the reverse stock split. The number of
Liberated Syndication stockholders of record will not be affected
by the reverse stock split.
The
amendment to the Liberated Syndication articles of incorporation to
effect the reverse stock split, in and of itself, will not change
the number of authorized shares of Liberated Syndication common
stock. As a result, one of the effects of the reverse stock split
will be to effectively increase the proportion of authorized shares
of Liberated Syndication common stock which are unissued relative
to those which are issued. This could result in Liberated
Syndication having the ability to issue more shares without further
stockholder approval. Liberated Syndication does not have any
current plan, commitment, arrangement, understanding, or agreement,
written or oral, to issue shares of Liberated Syndication common
stock, other than in connection with any grants under the 2018
Omnibus Equity Incentive Plan.
The
reverse stock split will reduce the number of shares of Liberated
Syndication common stock available for issuance under Liberated
Syndication’s equity incentive plan in proportion to the
reverse stock split ratio selected within the range set forth in
this proposal. Under the terms of the Liberated Syndication 2018
Omnibus Equity Incentive Plan, the reverse stock split will effect
a reduction in the number of shares of Liberated Syndication common
stock issuable upon exercise of such outstanding awards in
proportion to the reverse stock split ratio and will effect a
proportionate increase in the exercise price of such outstanding
awards. In connection with the reverse stock split, the number of
shares of Liberated Syndication common stock issuable upon exercise
of outstanding Liberated Syndication stock grants will be rounded
down to the nearest whole share and no cash payment will be made in
lieu of any fractional shares of Liberated Syndication common stock
that would otherwise be issuable pursuant to such awards. The
reverse stock split will not in and of itself change the value of a
Liberated Syndication awards.
Liberated
Syndication common stock is currently registered under
Section 12(b) of the Exchange Act, and Liberated Syndication
is subject to the periodic reporting and other requirements of the
Exchange Act. The reverse stock split will not affect the
registration of Liberated Syndication common stock under the
Exchange Act. If the reverse stock split is implemented, and the
company’s initial listing application with the NASDAQ Capital
Market is approved, Liberated Syndication common stock will be
reported on the NASDAQ Capital Market under the symbol
“LSYN”.
The
following table provides estimates of the number of shares of
Liberated Syndication common stock authorized, issued and
outstanding, reserved for issuance, and authorized but neither
issued nor reserved for issuance at the following
times:
●
prior to the
reverse stock split;
●
giving effect to a
one-for-two reverse stock split; and
●
giving effect to a
one-for-ten reverse stock split.
|
|
Shares Issued
and Outstanding(1)
|
Shares
Reserved for Issuance(1)
|
Number of
Shares Authorized but Neither Issued nor Reserved for Issuance
(1)
|
Prior to the reverse stock split
|
200,000,000
|
29,776,974
|
3,000,000
|
167,223,026
|
Giving effect to a one-for-two reverse stock split
|
200,000,000
|
14,888,487
|
1,500,000
|
183,611,487
|
Giving
effect to a one-for-ten] reverse stock split
|
200,000,000
|
2,977,697
|
300,000
|
196,722,303
|
(1
)
These estimates
are based upon the number of shares of Liberated Syndication common
stock issued and outstanding as of June 30, 2018.
As of
July 15, 2018, the last practicable date before the printing of
this proxy statement, 29,776,974 shares of Liberated Syndication
common stock were outstanding calculated on a fully diluted basis.
After the effect of the reverse stock split, assuming it had been
completed as of July 15, 2018, assuming a reverse stock split ratio
of one-for-four, each share of Liberated common stock would have
been exchanged for 7,444,243 shares of Liberated Syndication common
stock.
Effective Date
The
reverse stock split will become effective on the date of filing of
the articles of amendment to the Liberated Syndication articles of
incorporation with the office of the Secretary of the State of
Nevada. Except as explained below with respect to fractional
shares, on the effective date of the reverse stock split, shares of
Liberated Syndication common stock issued and outstanding
immediately prior to such effective date will be converted,
automatically and without any action on the part of the Liberated
Syndication stockholders.
No Payment for Fractional Shares
No
fractional shares will be issued in connection with the reverse
stock split. Liberated Syndication stockholders of record who
otherwise would be entitled to receive fractional shares, will
experience a rounding down of their fractional share to the nearest
whole share.
Exchange of Stock Certificates
As soon
as practicable following the effective date of the reverse stock
split, Liberated Syndication stockholders will be notified that the
reverse stock split has been effected. Liberated
Syndication’s transfer agent will act as exchange agent for
purposes of implementing the exchange of stock certificates.
Holders of pre-reverse stock split shares will be
asked
to surrender to the exchange agent
certificates representing pre-reverse stock split shares in
exchange for certificates representing post-reverse stock split
shares in accordance with the procedures to be set forth in a
letter of transmittal to be sent by the exchange agent. No new
certificates will be issued to a Liberated Syndication stockholder
until such stockholder has surrendered such stockholder’s
outstanding certificate(s), together with the properly completed
and executed letter of transmittal to the exchange agent.
Liberated Syndication stockholders
should not destroy any Liberated Syndication stock certificates and
should not submit any such certificates until requested to do
so.
Accounting Consequences
The par
value per share of Liberated Syndication common stock will remain
unchanged at $0.001 per share following the reverse stock split. As
a result, on the effective date of the reverse stock split, the
stated capital on Liberated Syndication’s balance sheet
attributable to Liberated Syndication common stock will be reduced
proportionally, based on the reverse stock split ratio, from its
present amount, and the additional paid-in capital account shall be
credited with the amount by which the stated capital is reduced.
The per share common stock net income or loss and net book value
will be increased because there will be fewer shares of Liberated
Syndication common stock outstanding. Liberated Syndication does
not anticipate that any other accounting consequences will arise as
a result of the reverse stock split.
Material U.S. Federal Income Tax Consequences of the Reverse Stock
Split
The
following discussion summarizes the anticipated material U.S.
federal income tax consequences of the reverse stock split. This
summary is based upon current provisions of the Internal Revenue
Code of 1986, as amended (the “Code”), existing
Treasury Regulations, and current administrative rulings and court
decisions, all of which are subject to change and to differing
interpretations, possibly with retroactive effect. Any such change
could alter the tax consequences to Liberated Syndication or the
Liberated Syndication stockholders, as described in this summary.
This summary is not binding on the IRS, and there can be no
assurance that the IRS (or a court, in the event of an IRS
challenge) will agree with the conclusions stated herein. No ruling
has been or will be requested from the IRS in connection with the
reverse stock split.
This
discussion is not intended to be a complete analysis or description
of all potential U.S. federal income tax consequences of the
reverse stock split. In addition, the discussion set forth below
does not address any U.S. federal non-income tax or any state,
local or foreign tax consequences of the reverse stock split and
does not address the tax consequences of any fractional shares or
any transaction other than the reverse stock split. Moreover, this
discussion does not address U.S. federal income tax consequences of
the reverse stock split that may vary with individual circumstances
or that are relevant to Liberated Syndication stockholders that are
subject to particular rules, including, without limitation, persons
whose functional currency is not the U.S. dollar; persons
holding Liberated Syndication common stock as part of a hedge,
straddle, or other risk reduction strategy or as part of a
conversion transaction or other integrated investment; persons
who are not U.S. Holders (as defined below); persons holding
Liberated Syndication common stock through non-U.S. brokers or
other non-U.S. intermediaries; banks, insurance companies, and
other financial institutions; real estate investment trusts or
regulated investment companies; brokers, dealers, or traders
in securities; partnerships or other entities or arrangements
treated as partnerships or pass-through entities for U.S. federal
income tax purposes (and investors therein); tax-exempt or
governmental entities or organizations; persons deemed to sell
Liberated Syndication common stock under the constructive sale
provisions of the Code; persons who hold or receive Liberated
Syndication common stock pursuant to the exercise of any employee
stock options or otherwise as compensation; persons who hold their
Liberated Syndication common stock other than as a “capital
asset” within the meaning of Section 1221 of the Code
(generally, property held for investment); and individual
retirement accounts or other tax-deferred accounts or tax-qualified
retirement plans.
This
discussion is limited to holders of Liberated Syndication common
stock that are U.S. Holders. For the purposes of this discussion, a
“U.S. Holder” is a beneficial owner of Liberated
Syndication common stock that, for U.S. federal income tax
purposes, is or is treated as:
●
an individual who
is a citizen or resident of the United States, including without
limitation an alien individual who is a lawful permanent resident
of the United States or who meets the “substantial
presence” test under Section 7701(b) of the
Code;
●
a corporation (or
other entity taxable as a corporation for U.S. federal income tax
purposes) created or organized (or treated as created or organized)
under the laws of the United States, any state thereof, or the
District of Columbia;
●
an estate, the
income of which is subject to U.S. federal income tax regardless of
its source; or
●
a trust if either a
court within the United States is able to exercise primary
supervision over the administration of such trust and one or more
United States persons (within the meaning of
Section 7701(a)(30) of the Code) have the authority to control
all substantial decisions of such trust, or the trust has a valid
election in effect under applicable Treasury Regulations to be
treated as a United States person for U.S. federal income tax
purposes.
If an entity treated as a partnership for U.S. federal
income tax purposes holds Liberated Syndication common stock, the
tax treatment of a partner in the partnership will depend on the
status of the partner, the activities of the partnership and
certain determinations made at the partner level.
The
Reverse Stock Split is expected to qualify as a
“recapitalization” within the meaning of
Section 368(a) of the Code. Assuming the reverse stock split
so qualifies, the following consequences will result:
●
no gain or loss
will be recognized by Liberated Syndication as a result of the
reverse stock split;
●
a Liberated
Syndication stockholder generally will recognize no gain or loss
upon the receipt (or exchange) of Liberated Syndication common
stock in the reverse stock split;
●
a Liberated
Syndication stockholder’s aggregate tax basis in the
post-reverse stock split shares of Liberated Syndication common
stock received (or deemed received) in the reverse stock split will
be equal to the aggregate tax basis of the pre-reverse stock split
shares of Liberated Syndication common stock exchanged (or deemed
exchanged) therefor; and
●
a Liberated
Syndication stockholder’s holding period of the post-reverse
stock split shares of Liberated Syndication common stock received
(or deemed received) in the reverse stock split will include such
stockholder’s holding period of the pre-reverse stock split
shares exchanged (or deemed exchanged) therefor.
U.S.
Holders of Liberated Syndication common stock that acquired their
shares on different dates and/or at different prices should consult
their tax advisors regarding the proper allocation of the tax basis
and holding periods of such shares.
Liberated
Syndication stockholders are advised and expected to consult their
own tax advisors regarding the U.S. federal income tax consequences
of the reverse stock split in light of their personal circumstances
and the consequences of the reverse stock split under U.S. federal
non-income tax laws and state, local, and foreign tax
laws.
No Appraisal Rights
Liberated
Syndication stockholders are not entitled to appraisal rights with
respect to the proposed amendment to the Liberated Syndication
articles of incorporation to effect the reverse stock split and
Liberated Syndication will not independently provide the Liberated
Syndication stockholders with any such rights.
Your
Board of Directors unanimously recommends a vote FOR ratification
of the approval of the reverse stock split.
YOUR VOTE IS IMPORTANT. WE URGE YOU TO SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY CARD SO THAT YOUR SHARES MAY BE VOTED IN
ACCORDANCE WITH YOUR WISHES AND THAT THE PRESENCE OF A QUORUM MAY
BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY CARD, REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD, WILL AID US IN AVOIDING THE
EXPENSE OF ADDITIONAL PROXY SOLICITATIONS. GIVING YOUR PROXY DOES
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON AT THE MEETING OR YOUR
RIGHT TO RESUBMIT LATER DATED PROXY CARDS.
|
Liberated
Syndication Inc.
By
Order of the Board of Directors,
/s/ Christopher J.
Spencer
Christopher J.
Spencer
Chief Executive Officer
|
LIBERATED
SYNDICATION INC.
2018 OMNIBUS
EQUITY INCENTIVE PLAN
LIBERATED
SYNDICATION INC.
2018 OMNIBUS EQUITY INCENTIVE
PLAN
ARTICLE
I
PURPOSE
The purpose of this Liberated
Syndication Inc. 2018 Omnibus Equity Incentive Plan (the
“
Plan
”) is to benefit
Liberated Syndication Inc., a Nevada corporation (the
“
Company
”) and its
stockholders, by assisting the Company and its subsidiaries to
attract, retain and provide incentives to employees, directors, and
consultants of the Company and its Affiliates, and to align the
interests of such service providers with those of the
Company’s stockholders. Accordingly, the Plan provides for
the granting of Non-qualified Stock Options, Incentive Stock
Options, Restricted Stock Awards, Restricted Stock Unit Awards,
Performance Stock Awards, Performance Unit Awards, Unrestricted
Stock Awards, or any combination of the
foregoing.
ARTICLE
II
DEFINITIONS
The following definitions shall
be applicable throughout the Plan unless the context otherwise
requires:
2.1
“
Affiliate
” shall mean
any corporation which, with respect to the Company, is a
“subsidiary corporation” within the meaning of Section
424(f) of the Code or other entity in which the Company has a
controlling interest in such entity or another entity which is part
of a chain of entities in which the Company or each entity has a
controlling interest in another entity in the unbroken chain of
entities ending with the applicable entity.
2.2
“
Award
” shall mean,
individually or collectively, any Option, Restricted Stock Award,
Restricted Stock Unit Award, Performance Stock Award, Performance
Unit Award, or Unrestricted Stock Award.
2.3
“
Award Agreement
” shall
mean a written agreement between the Company and the Holder with
respect to an Award, setting forth the terms and conditions of the
Award, as amended.
2.4
“
Board
” shall mean the
Board of Directors of the Company.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
2.5
“
Cause
” shall mean
(i) if the Holder is a party to an employment or service
agreement with the Company or an Affiliate which agreement defines
“Cause” (or a similar term), “
Cause
” shall have the
same meaning as provided for in such agreement, or (ii) for a
Holder who is not a party to such an agreement, “
Cause
” shall mean
termination by the Company or an Affiliate of the employment (or
other service relationship) of the Holder by reason of the
Holder’s (A) intentional failure to perform reasonably
assigned duties, (B) dishonesty or willful misconduct in the
performance of the Holder’s duties, (C) involvement in a
transaction which is materially adverse to the Company or an
Affiliate, (D) breach of fiduciary duty involving personal profit,
(E) willful violation of any law, rule, regulation or court order
(other than misdemeanor traffic violations and misdemeanors not
involving misuse or misappropriation of money or property), (F)
commission of an act of fraud or intentional misappropriation or
conversion of any asset or opportunity of the Company or an
Affiliate, or (G) material breach of any provision of the Plan or
the Holder’s Award Agreement or any other written agreement
between the Holder and the Company or an Affiliate, in each case as
determined in good faith by the Board, the determination of which
shall be final, conclusive and binding on all
parties.
2.6
“
Change of Control
” shall
mean: (i) for a Holder who is a party to an employment or
consulting agreement with the Company or an Affiliate which
agreement defines “Change of Control” (or a similar
term), “
Change of
Control
” shall have the same meaning as provided for
in such agreement, or (ii) for a Holder who is not a party to such
an agreement, “
Change of Control
” shall
mean the satisfaction of any one or more of the following
conditions (and the “Change of Control” shall be deemed
to have occurred as of the first day that any one or more of the
following conditions shall have been
satisfied):
(a)
Any person (as
such term is used in paragraphs 13(d) and 14(d)(2) of the Exchange
Act, hereinafter in this definition, “
Person
”), other than the
Company or an Affiliate or an employee benefit plan of the Company
or an Affiliate, becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then
outstanding securities;
(b)
The closing of
a merger, consolidation or other business combination (a
“
Business
Combination
”) other than a Business Combination in
which holders of the Shares immediately prior to the Business
Combination have substantially the same proportionate ownership of
the common stock or ordinary shares, as applicable, of the
surviving corporation immediately after the Business Combination as
immediately before;
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
(c)
The closing of
an agreement for the sale or disposition of all or substantially
all of the Company’s assets to any entity that is not an
Affiliate;
(d)
The approval
by the holders of shares of a plan of complete liquidation of the
Company, other than a merger of the Company into any subsidiary or
a liquidation as a result of which persons who were stockholders of
the Company immediately prior to such liquidation have
substantially the same proportionate ownership of shares of common
stock or ordinary shares, as applicable, of the surviving
corporation immediately after such liquidation as immediately
before; or
(e)
Within any
twenty-four (24) month period, the Incumbent Directors shall cease
to constitute at least a majority of the Board or the board of
directors of any successor to the Company;
provided
,
however
, that any director
elected to the Board, or nominated for election, by a majority of
the Incumbent Directors then still in office, shall be deemed to be
an Incumbent Director for purposes of this paragraph (e), but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of an individual, entity or
“group” other than the Board (including, but not
limited to, any such assumption that results from paragraphs (a),
(b), (c), or (d) of this definition).
2.7
“
Code
” shall mean the
United States of America Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to any section and
any regulation under such section.
2.8
“
Committee
” shall mean a
committee comprised of two (2) or more members of the Board who are
selected by the Board as provided in Section
4.1.
2.9
“
Company
” shall have the
meaning given to such term in the introductory paragraph, including
any successor thereto.
2.10
“
Consultant
” shall mean
any non-Employee (individual or entity) advisor to the Company or
an Affiliate who or which has contracted directly with the Company
or an Affiliate to render bona fide consulting or advisory services
thereto.
2.11
“
Director
” shall mean a
member of the Board or a member of the board of directors of an
Affiliate, in either case, who is not an
Employee.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
2.12
“
Effective Date
” shall
mean May 1, 2018.
2.13
“
Employee
” shall mean any
employee, including any officer, of the Company or an
Affiliate.
2.14
“
Exchange Act
” shall mean
the United States of America Securities Exchange Act of 1934, as
amended.
2.15
“
Fair Market Value
” shall
mean, as of any specified date, the closing sales price of the
Shares for such date (or, in the event that the Shares are not
traded on such date, on the immediately preceding trading date) on
the NASDAQ Stock Market (“NASDAQ”), as reported by
NASDAQ, or such other domestic or foreign national securities
exchange, including OTC Markets (OTCQB, OTCQX), on which the Shares
may be listed. If the Shares are not listed on NASDAQ or on a
national securities exchange, but are quoted on the OTC Bulletin
Board or by the National Quotation Bureau, the Fair Market Value of
the Shares shall be the mean of the highest bid and lowest asked
prices per Share for such date. If the Shares are not quoted or
listed as set forth above, Fair Market Value shall be determined by
the Board in good faith by any fair and reasonable means (which
means may be set forth with greater specificity in the applicable
Award Agreement). The Fair Market Value of property other than
Shares shall be determined by the Board in good faith by any fair
and reasonable means consistent with the requirements of applicable
law.
2.16
“
Family Member
” of an
individual shall mean any child, stepchild, grandchild, parent,
stepparent, 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 of the Holder), a trust in which such persons
have more than fifty percent (50%) of the beneficial interest, a
foundation in which such persons (or the Holder) control the
management of assets, and any other entity in which such persons
(or the Holder) own more than fifty percent (50%) of the voting
interests.
2.17
“
Holder
” shall mean an
Employee, Director or Consultant who has been granted an Award or
any such individual’s beneficiary, estate or representative,
who has acquired such Award in accordance with the terms of the
Plan, as applicable.
2.18
“
Incentive
Stock Option
” shall mean an Option which is intended
by the Committee to constitute an “incentive stock
option” and conforms to the applicable provisions of Section
422 of the Code.
2.19
“
Incumbent Director
”
shall mean, with respect to any period of time specified under the
Plan for purposes of determining whether or not a Change of Control
has occurred, the individuals who were members of the Board at the
beginning of such period.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
2.20
“
Non-qualified
Stock Option
” shall mean an Option which is not an
Incentive Stock Option or which is designated as an Incentive Stock
Option but does not meet the applicable requirements of Section 422
of the Code.
2.21
“
Option
”
shall mean an Award granted under Article VII of the Plan of an
option to purchase Shares and shall include both Incentive Stock
Options and Non-qualified Stock Options.
2.22
“
Option Agreement
” shall
mean a written agreement between the Company and a Holder with
respect to an Option.
2.23
“
Performance Criteria
”
shall mean the criteria selected by the Committee for purposes of
establishing the Performance Goal(s) for a Holder for a Performance
Period.
2.24
“
Performance Goals
” shall
mean, for a Performance Period, the written goal or goals
established by the Committee for the Performance Period based upon
the Performance Criteria, which may be related to the performance
of the Holder, the Company or an Affiliate.
2.25
“
Performance Period
”
shall mean one or more periods of time, which may be of varying and
overlapping durations, selected by the Committee, over which the
attainment of the Performance Goals shall be measured for purposes
of determining a Holder’s right to, and the payment of, a
Performance Stock Award or a Performance Unit
Award.
2.26
“
Performance Stock Award
”
or “
Performance
Stock
” shall mean an Award granted under Article XII
of the Plan under which, upon the satisfaction of predetermined
Performance Goals, Shares are paid to the
Holder.
2.27
“
Performance Stock
Agreement
” shall mean a written agreement between the
Company and a Holder with respect to a Performance Stock
Award.
2.28
“
Performance Unit
” shall
mean a Unit awarded to a Holder pursuant to a Performance Unit
Award.
2.29
“
Performance Unit Award
”
shall mean an Award granted under Article XI of the Plan under
which, upon the satisfaction of predetermined Performance Goals, a
cash payment shall be made to the Holder, based on the number of
Units awarded to the Holder.
2.30
“
Performance Unit
Agreement
” shall mean a written agreement between the
Company and a Holder with respect to a Performance Unit
Award.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
2.31
“
Plan
”
shall mean this Liberated Syndication Inc. 2018 Omnibus Equity
Incentive Plan, as amended from time to time, together with each of
the Award Agreements utilized hereunder.
2.32
“
Restricted Stock Award
”
and “
Restricted
Stock
” shall mean an Award granted under Article VIII
of the Plan of Shares, the transferability of which by the Holder
is subject to Restrictions.
2.33
“
Restricted Stock
Agreement
” shall mean a written agreement between the
Company and a Holder with respect to a Restricted Stock
Award.
2.34
“
Restricted Stock Unit
Award
” and “
RSUs
” shall refer to an
Award granted under Article X of the Plan under which, upon the
satisfaction of predetermined individual service-related vesting
requirements, a cash payment shall be made to the Holder, based on
the number of Units awarded to the Holder.
2.35
“
Restricted Stock Unit
Agreement
” shall mean a written agreement between the
Company and a Holder with respect to a Restricted Stock
Award.
2.36
“
Restriction Period
”
shall mean the period of time for which Shares subject to a
Restricted Stock Award shall be subject to Restrictions, as set
forth in the applicable Restricted Stock
Agreement.
2.37
“
Restrictions
” shall mean
the forfeiture, transfer and/or other restrictions applicable to
Shares awarded to an Employee, Director or Consultant under the
Plan pursuant to a Restricted Stock Award and set forth in a
Restricted Stock Agreement.
2.38
“
Rule 16b-3
” shall mean
Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Exchange Act, as such may be amended from time to time,
and any successor rule, regulation or statute fulfilling the same
or a substantially similar function.
2.39
“
Shares
” or
“
Stock
” shall mean the
common stock of the Company, par value $0.001 per
share.
2.40
“
Ten
Percent Stockholder
” shall mean an Employee who, at
the time an Option is granted to him or her, owns shares possessing
more than ten percent (10%) of the total combined voting power of
all classes of shares of the Company or of any parent corporation
or subsidiary corporation thereof (both as defined in Section 424
of the Code), within the meaning of Section 422(b)(6) of the
Code.
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2.41
“
Termination
of Service
” shall mean a termination of a
Holder’s employment with, or status as a Director or
Consultant of, the Company or an Affiliate, as applicable, for any
reason, including, without limitation, Total and Permanent
Disability or death, except as provided in Section 6.4. In the
event Termination of Service shall constitute a payment event with
respect to any Award subject to Code Section 409A, Termination of
Service shall only be deemed to occur upon a “separation from
service” as such term is defined under Code Section 409A and
applicable authorities.
2.42
“
Total and Permanent
Disability
” of an individual shall mean the inability
of such individual to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve
(12) months, within the meaning of Section 22(e)(3) of the
Code.
2.43
“
Unit
” shall mean a
bookkeeping unit, which represents such monetary amount as shall be
designated by the Committee in each Performance Unit Agreement, or
represents one Share for purposes of each Restricted Stock Unit
Award.
2.44
“
Unrestricted Stock
Award
” shall mean an Award granted under Article IX of
the Plan of Shares which are not subject to
Restrictions.
2.45
“
Unrestricted Stock
Agreement
” shall mean a written agreement between the
Company and a Holder with respect to an Unrestricted Stock
Award.
ARTICLE
III
EFFECTIVE DATE OF
PLAN
The Plan shall be effective as of
the Effective Date.
ARTICLE
IV
ADMINISTRATION
4.1
Composition
of Committee
.
The Plan shall be administered by the Committee, which shall be
appointed by the Board. If necessary, in the Board’s
discretion, to comply with Rule 16b-3 under the Exchange Act or
relevant securities exchange or inter-dealer quotation service, the
Committee shall consist solely of two (2) or more Directors who are
each (i) “non-employee directors” within the meaning of
Rule 16b-3 and (ii) “independent” for purposes of any
applicable listing requirements. If a member of the Committee shall
be eligible to receive an Award under the Plan, such Committee
member shall have no authority hereunder with respect to his or her
own Award.
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4.2
Powers
.
Subject to the other provisions of the Plan, the Committee shall
have the sole authority, in its discretion, to make all
determinations under the Plan, including but not limited to (i)
determining which Employees, Directors or Consultants shall receive
an Award, (ii) the time or times when an Award shall be made (the
date of grant of an Award shall be the date on which the Award is
awarded by the Committee), (iii) what type of Award shall be
granted, (iv) the term of an Award, (v) the date or dates on which
an Award vests, (vi) the form of any payment to be made pursuant to
an Award, (vii) the terms and conditions of an Award (including the
forfeiture of the Award, and/or any financial gain, if the Holder
of the Award violates any applicable restrictive covenant thereof),
(viii) the Restrictions under a Restricted Stock Award, (ix) the
number of Shares which may be issued under an Award, (x)
Performance Goals applicable to any Award and certification of the
achievement of such goals, and (xi) the waiver of any Restrictions
or Performance Goals, subject in all cases to compliance with
applicable laws. In making such determinations the Committee may
take into account the nature of the services rendered by the
respective Employees, Directors and Consultants, their present and
potential contribution to the Company’s (or the
Affiliate’s) success and such other factors as the Committee
in its discretion may deem relevant.
4.3
Additional
Powers
. The Committee shall have such
additional powers as are delegated to it under the other provisions
of the Plan. Subject to the express provisions of the Plan, the
Committee is authorized to construe the Plan and the respective
Award Agreements executed hereunder, to prescribe such rules and
regulations relating to the Plan as it may deem advisable to carry
out the intent of the Plan, to determine the terms, restrictions
and provisions of each Award and to make all other determinations
necessary or advisable for administering the Plan. The Committee
may correct any defect or supply any omission or reconcile any
inconsistency in any Award Agreement in the manner and to the
extent the Committee shall deem necessary, appropriate or expedient
to carry it into effect. The determinations of the Committee on the
matters referred to in this Article IV shall be conclusive and
binding on the Company and all Holders.
4.4
Committee
Action
. Subject to compliance with all
applicable laws, action by the Committee shall require the consent
of a majority of the members of the Committee, expressed either
orally at a meeting of the Committee or in writing in the absence
of a meeting. No member of the Committee shall have any liability
for any good faith action, inaction or determination in connection
with the Plan.
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ARTICLE
V
SHARES SUBJECT TO PLAN AND
LIMITATIONS THEREON
5.1
Authorized
Shares and Award Limits
.
The Committee may from time to time grant Awards to one or more
Employees, Directors and/or Consultants determined by it to be
eligible for participation in the Plan in accordance with the
provisions of Article VI. Subject to Article XIII, the
aggregate number of Shares that may be issued under the Plan shall
not exceed 3,000,000 Shares. Shares shall be deemed to have been
issued under the Plan solely to the extent actually issued and
delivered pursuant to an Award. To the extent that an Award lapses,
expires, is canceled, is terminated unexercised or ceases to be
exercisable for any reason, or the rights of its Holder terminate,
any Shares subject to such Award shall again be available for the
grant of a new Award. Notwithstanding any provision in the Plan to
the contrary, the maximum number of Shares that may be subject to
Awards of Options under Article VII granted to any one person
during any calendar year, shall be Three Hundred Thousand (300,000)
Shares (subject to adjustment in the same manner as provided in
Article XIII with respect to Shares subject to Awards then
outstanding).
5.2
Types
of Shares
. The Shares to be issued
pursuant to the grant or exercise of an Award may consist of
authorized but unissued Shares, Shares purchased on the open market
or Shares previously issued and outstanding and reacquired by the
Company.
ARTICLE
VI
ELIGIBILITY AND TERMINATION OF
SERVICE
6.1
Eligibility
.
Awards made under the Plan may be granted solely to individuals or
entities who, at the time of grant, are Employees, Directors or
Consultants. An Award may be granted on more than one occasion to
the same Employee, Director or Consultant, and, subject to the
limitations set forth in the Plan, such Award may include, a
Non-qualified Stock Option, a Restricted Stock Award, a Restricted
Stock Unit Award, an Unrestricted Stock Award, a Performance Stock
Award, a Performance Unit Award, or any combination thereof, and
solely for Employees, an Incentive Stock
Option.
6.2
Termination
of Service
. Except to the extent
inconsistent with the terms of the applicable Award Agreement
and/or the provisions of Section 6.3 or 6.4, the following terms
and conditions shall apply with respect to a Holder’s
Termination of Service with the Company or an Affiliate, as
applicable:
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(a)
The
Holder’s rights, if any, to exercise any then exercisable
Options shall terminate:
(i)
If such
termination is for a reason other than the Holder’s Total and
Permanent Disability or death, ninety (90) days after the date of
such Termination of Service;
(ii)
If such
termination is on account of the Holder’s Total and Permanent
Disability, one (1) year after the date of such Termination of
Service; or
(iii)
If such
termination is on account of the Holder’s death, one (1) year
after the date of the Holder’s death.
Upon such applicable date the
Holder (and such Holder’s estate, designated beneficiary or
other legal representative) shall forfeit any rights or interests
in or with respect to any such Options. Notwithstanding the
foregoing, the Committee, in its sole discretion, may provide for a
different time period in the Award Agreement, or may extend the
time period, following a Termination of Service, during which the
Holder has the right to exercise any vested Non-qualified Stock
Option, which time period may not extend beyond the expiration date
of the Award term.
(b)
In the event
of a Holder’s Termination of Service for any reason prior to
the actual or deemed satisfaction and/or lapse of the Restrictions,
vesting requirements, terms and conditions applicable to a
Restricted Stock Award and/or Restricted Stock Unit Award, such
Restricted Stock and/or RSUs shall immediately be canceled, and the
Holder (and such Holder’s estate, designated beneficiary or
other legal representative) shall forfeit any rights or interests
in and with respect to any such Restricted Stock and/or RSUs.
Notwithstanding the immediately preceding sentence, the Committee,
in its sole discretion, may determine, prior to or within thirty
(30) days after the date of such Termination of Service that all or
a portion of any such Holder’s Restricted Stock and/or RSUs
shall not be so canceled and forfeited.
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6.3
Special
Termination Rule
.
Except to the extent inconsistent with the terms of the applicable
Award Agreement, and notwithstanding anything to the contrary
contained in this Article VI, if a Holder’s employment with,
or status as a Director of, the Company or an Affiliate shall
terminate, and if, within ninety (90) days of such termination,
such Holder shall become a Consultant, such Holder’s rights
with respect to any Award or portion thereof granted thereto prior
to the date of such termination may be preserved, if and to the
extent determined by the Committee in its sole discretion, as if
such Holder had been a Consultant for the entire period during
which such Award or portion thereof had been outstanding. Should
the Committee effect such determination with respect to such
Holder, for all purposes of the Plan, such Holder shall not be
treated as if his or her employment or Director status had
terminated until such time as his or her Consultant status shall
terminate, in which case his or her Award, as it may have been
reduced in connection with the Holder’s becoming a
Consultant, shall be treated pursuant to the provisions of Section
6.2, provided, however, that any such Award which is intended to be
an Incentive Stock Option shall, upon the Holder’s no longer
being an Employee, automatically convert to a Non-qualified Stock
Option. Should a Holder’s status as a Consultant terminate,
and if, within ninety (90) days of such termination, such Holder
shall become an Employee or a Director, such Holder’s rights
with respect to any Award or portion thereof granted thereto prior
to the date of such termination may be preserved, if and to the
extent determined by the Committee in its sole discretion, as if
such Holder had been an Employee or a Director, as applicable, for
the entire period during which such Award or portion thereof had
been outstanding, and, should the Committee effect such
determination with respect to such Holder, for all purposes of the
Plan, such Holder shall not be treated as if his or her Consultant
status had terminated until such time as his or her employment with
the Company or an Affiliate, or his or her Director status, as
applicable, shall terminate, in which case his or her Award shall
be treated pursuant to the provisions of Section
6.2.
6.4
Termination
of Service for Cause
.
Notwithstanding anything in this Article VI or elsewhere in
the Plan to the contrary, and unless a Holder’s Award
Agreement specifically provides otherwise, in the event of a
Holder’s Termination of Service for Cause, all of such
Holder’s then outstanding Awards shall expire immediately and
be forfeited in their entirety upon such Termination of
Service.
ARTICLE
VII
OPTIONS
7.1
Option
Period
. The term of each Option shall be as specified in the
Option Agreement;
provided
,
however
, that except as set
forth in Section 7.3, no Option shall be exercisable after the
expiration of ten (10) years from the date of its
grant.
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7.2
Limitations
on Exercise of Option
. An Option shall be exercisable in
whole or in such installments and at such times as specified in the
Option Agreement.
7.3
Special
Limitations on Incentive Stock Options
. To the extent that
the aggregate Fair Market Value (determined at the time the
respective Incentive Stock Option is granted) of Shares with
respect to which Incentive Stock Options are exercisable for the
first time by an individual during any calendar year under all
plans of the Company and any parent corporation or subsidiary
corporation thereof (both as defined in Section 424 of the Code)
which provide for the grant of Incentive Stock Options exceeds One
Hundred Thousand Dollars ($100,000) (or such other individual limit
as may be in effect under the Code on the date of grant), the
portion of such Incentive Stock Options that exceeds such threshold
shall be treated as Non-qualified Stock Options. The Committee
shall determine, in accordance with applicable provisions of the
Code, Treasury Regulations and other administrative pronouncements,
which of a Holder’s Options, which were intended by the
Committee to be Incentive Stock Options when granted to the Holder,
will not constitute Incentive Stock Options because of such
limitation, and shall notify the Holder of such determination as
soon as practicable after such determination. No Incentive Stock
Option shall be granted to an Employee if, at the time the
Incentive Stock Option is granted, such Employee is a Ten Percent
Stockholder, unless (i) at the time such Incentive Stock Option is
granted the Option price is at least one hundred ten percent (110%)
of the Fair Market Value of the Shares subject to the Incentive
Stock Option, and (ii) such Incentive Stock Option by its terms is
not exercisable after the expiration of five (5) years from the
date of grant. No Incentive Stock Option shall be granted more than
ten (10) years from the earlier of the Effective Date or date on
which the Plan is approved by the Company’s stockholders. The
designation by the Committee of an Option as an Incentive Stock
Option shall not guarantee the Holder that the Option will satisfy
the applicable requirements for “incentive stock
option” status under Section 422 of the
Code.
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7.4
Option
Agreement
. Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not
inconsistent with the other provisions of the Plan as the Committee
from time to time shall approve, including, but not limited to,
provisions intended to qualify an Option as an Incentive Stock
Option. An Option Agreement may provide for the payment of the
Option price, in whole or in part, by the delivery of a number of
Shares (plus cash if necessary) that have been owned by the Holder
for at least six (6) months and having a Fair Market Value equal to
such Option price, or such other forms or methods as the Committee
may determine from time to time, in each case, subject to such
rules and regulations as may be adopted by the Committee. Each
Option Agreement shall, solely to the extent inconsistent with the
provisions of Sections 6.2, 6.3, and 6.4, as applicable, specify
the effect of Termination of Service on the exercisability of the
Option. Moreover, without limiting the generality of the foregoing,
a Non-qualified Stock Option Agreement may provide for a
“cashless exercise” of the Option, in whole or in part,
by (a) establishing procedures whereby the Holder, by a
properly-executed written notice, directs (i) an immediate
market sale or margin loan as to all or a part of Shares to which
he is entitled to receive upon exercise of the Option, pursuant to
an extension of credit by the Company to the Holder of the Option
price, (ii) the delivery of the Shares from the Company
directly to a brokerage firm and (iii) the delivery of the
Option price from sale or margin loan proceeds from the brokerage
firm directly to the Company, or (b) reducing the number of
Shares to be issued upon exercise of the Option by the number of
such Shares having an aggregate Fair Market Value equal to the
Option price (or portion thereof to be so paid) as of the date of
the Option’s exercise. An Option Agreement may also include
provisions relating to: (i) subject to the provisions hereof,
accelerated vesting of Options, including but not limited to, upon
the occurrence of a Change of Control, (ii) tax matters (including
provisions covering any applicable Employee wage withholding
requirements and requiring additional “gross-up”
payments to Holders to meet any excise taxes or other additional
income tax liability imposed as a result of a payment made upon a
Change of Control resulting from the operation of the Plan or of
such Option Agreement) and (iii) any other matters not inconsistent
with the terms and provisions of the Plan that the Committee shall
in its sole discretion determine. The terms and conditions of the
respective Option Agreements need not be
identical.
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7.5
Option
Price and Payment
.
The price at which an Share may be purchased upon exercise of an
Option shall be determined by the Committee;
provided
,
however
, that such Option
price (i) shall not be less than the Fair Market Value of an
Share on the date such Option is granted (or 110% of Fair Market
Value for an Incentive Stock Option held by Ten Percent
Stockholder, as provided in Section 7.3), and (ii) shall be
subject to adjustment as provided in Article XIII. The Option or
portion thereof may be exercised by delivery of an irrevocable
notice of exercise to the Company. The Option price for the Option
or portion thereof shall be paid in full in the manner prescribed
by the Committee as set forth in the Plan and the applicable Option
Agreement, which manner, with the consent of the Committee, may
include the withholding of Shares otherwise issuable in connection
with the exercise of the Option. Separate share certificates shall
be issued by the Company for those Shares acquired pursuant to the
exercise of an Incentive Stock Option and for those Shares acquired
pursuant to the exercise of a Non-qualified Stock
Option.
7.6
Stockholder
Rights and Privileges
.
The Holder of an Option shall be entitled to all the privileges and
rights of a stockholder of the Company solely with respect to such
Shares as have been purchased under the Option and for which share
certificates have been registered in the Holder’s
name.
7.7
Options
and Rights in Substitution for Stock or Options Granted by Other
Corporations
.
Options may be granted under the Plan from time to time in
substitution for stock options held by individuals employed by
entities who become Employees, Directors or Consultants as a result
of a merger or consolidation of the employing entity with the
Company or any Affiliate, or the acquisition by the Company or an
Affiliate of the assets of the employing entity, or the acquisition
by the Company or an Affiliate of stock or shares of the employing
entity with the result that such employing entity becomes an
Affiliate.
ARTICLE
VIII
RESTRICTED STOCK
AWARDS
8.1
Award
.
A Restricted Stock Award shall constitute an Award of Shares to the
Holder as of the date of the Award which are subject to a
“substantial risk of forfeiture” as defined under
Section 83 of the Code during the specified Restriction Period. At
the time a Restricted Stock Award is made, the Committee shall
establish the Restriction Period applicable to such Award. Each
Restricted Stock Award may have a different Restriction Period, in
the discretion of the Committee. The Restriction Period applicable
to a particular Restricted Stock Award shall not be changed except
as permitted by Section 8.2.
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8.2
Terms
and Conditions
.
At the time any Award is made under this Article VIII, the Company
and the Holder shall enter into a Restricted Stock Agreement
setting forth each of the matters contemplated thereby and such
other matters as the Committee may determine to be appropriate. The
Company shall cause the Shares to be issued in the name of Holder,
either by book-entry registration or issuance of one or more stock
certificates evidencing the Shares, which Shares or certificates
shall be held by the Company or the stock transfer agent or
brokerage service selected by the Company to provide services for
the Plan. The Shares shall be restricted from transfer and shall be
subject to an appropriate stop-transfer order, and if any
certificate is issued, such certificate shall bear an appropriate
legend referring to the restrictions applicable to the Shares.
After any Shares vest, the Company shall deliver the vested Shares,
in book-entry or certificated form in the Company’s sole
discretion, registered in the name of Holder or his or her legal
representatives, beneficiaries or heirs, as the case may be, less
any Shares withheld to pay withholding taxes. If provided for under
the Restricted Stock Agreement, the Holder shall have the right to
vote Shares subject thereto and to enjoy all other stockholder
rights, including the entitlement to receive dividends on the
Shares during the Restriction Period. At the time of such Award,
the Committee may, in its sole discretion, prescribe additional
terms and conditions or restrictions relating to Restricted Stock
Awards, including, but not limited to, rules pertaining to the
effect of Termination of Service prior to expiration of the
Restriction Period. Such additional terms, conditions or
restrictions shall, to the extent inconsistent with the provisions
of Sections 6.2, 6.3 and 6.4, as applicable, be set forth in a
Restricted Stock Agreement made in conjunction with the Award. Such
Restricted Stock Agreement may also include provisions relating to:
(i) subject to the provisions hereof, accelerated vesting of
Awards, including but not limited to accelerated vesting upon the
occurrence of a Change of Control, (ii) tax matters (including
provisions covering any applicable Employee wage withholding
requirements and requiring additional “gross-up”
payments to Holders to meet any excise taxes or other additional
income tax liability imposed as a result of a payment made in
connection with a Change of Control resulting from the operation of
the Plan or of such Restricted Stock Agreement) and (iii) any
other matters not inconsistent with the terms and provisions of the
Plan that the Committee shall in its sole discretion determine. The
terms and conditions of the respective Restricted Stock Agreements
need not be identical. All Shares delivered to a Holder as part of
a Restricted Stock Award shall be delivered and reported by the
Company or the Affiliate, as applicable, to the Holder at the time
of vesting.
8.3
Payment
for Restricted Stock
.
The Committee shall determine the amount and form of any payment
from a Holder for Shares received pursuant to a Restricted Stock
Award, if any, provided that in the absence of such a
determination, a Holder shall not be required to make any payment
for Shares received pursuant to a Restricted Stock Award, except to
the extent otherwise required by law.
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ARTICLE
IX
UNRESTRICTED STOCK
AWARDS
9.1
Award
.
Shares may be awarded (or sold) to Employees, Directors or
Consultants under the Plan which are not subject to Restrictions of
any kind, in consideration for past services rendered thereby to
the Company or an Affiliate or for other valid
consideration.
9.2
Terms
and Conditions.
At the time any Award
is made under this Article IX, the Company and the Holder shall
enter into an Unrestricted Stock Agreement setting forth each of
the matters contemplated hereby and such other matters as the
Committee may determine to be appropriate.
9.3
Payment
for Unrestricted Stock
.
The Committee shall determine the amount and form of any payment
from a Holder for Shares received pursuant to an Unrestricted Stock
Award, if any, provided that in the absence of such a
determination, a Holder shall not be required to make any payment
for Shares received pursuant to an Unrestricted Stock Award, except
to the extent otherwise required by law.
ARTICLE
X
RESTRICTED STOCK UNIT
AWARDS
10.1
Award
.
A Restricted Stock Unit Award shall constitute a promise to grant
Shares (or cash equal to the Fair Market Value of Shares) to the
Holder at the end of a specified Restriction Period. At the time a
Restricted Stock Unit Award is made, the Committee shall establish
the Restriction Period applicable to such Award. Each Restricted
Stock Unit Award may have a different Restriction Period, in the
discretion of the Committee. A Restricted Stock Unit shall not
constitute an equity interest in the Company and shall not entitle
the Holder to voting rights, dividends or any other rights
associated with ownership of Shares prior to the time the Holder
shall receive a distribution of Shares pursuant to Section
10.3.
10.2
Terms
and Conditions
.
At the time any Award is made under this Article X, the Company and
the Holder shall enter into a Restricted Stock Unit Agreement
setting forth each of the matters contemplated thereby and such
other matters as the Committee may determine to be appropriate. The
Restricted Stock Unit Agreement shall set forth the individual
service-based vesting requirement which the Holder would be
required to satisfy before the Holder would become entitled to
distribution pursuant to Section 10.3 and the number of Units
awarded to the Holder. Such conditions shall be sufficient to
constitute a “substantial risk of forfeiture” as such
term is defined under Section 409A of the Code. At the time of such
Award, the Committee may, in its sole discretion, prescribe
additional terms and conditions or restrictions relating to
Restricted Stock Unit Awards in the Restricted Stock Unit
Agreement, including, but not limited to, rules pertaining to the
effect of Termination of Service prior to expiration of the
applicable vesting period. The terms and conditions of the
respective Restricted Stock Unit Agreements need not be
identical.
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10.3
Distributions
of Shares
. The Holder of a Restricted
Stock Unit shall be entitled to receive a cash payment equal to the
Fair Market Value of an Share, or one Share, as determined in the
sole discretion of the Committee and as set forth in the Restricted
Stock Unit Agreement, for each Restricted Stock Unit subject to
such Restricted Stock Unit Award, if the Holder satisfies the
applicable vesting requirement. Such distribution shall be made no
later than by the fifteenth (15
th
) day of the third
(3
rd
)
calendar month next following the end of the calendar year in which
the Restricted Stock Unit first becomes vested (i.e., no longer
subject to a “substantial risk of
forfeiture”).
ARTICLE
XI
PERFORMANCE UNIT
AWARDS
11.1
Award
.
A Performance Unit Award shall constitute an Award under which,
upon the satisfaction of predetermined individual and/or Company
(and/or Affiliate) Performance Goals based on selected Performance
Criteria, a cash payment shall be made to the Holder, based on the
number of Units awarded to the Holder. At the time a Performance
Unit Award is made, the Committee shall establish the Performance
Period and applicable Performance Goals. Each Performance Unit
Award may have different Performance Goals, in the discretion of
the Committee. A Performance Unit Award shall not constitute an
equity interest in the Company and shall not entitle the Holder to
voting rights, dividends or any other rights associated with
ownership of Shares.
11.2
Terms
and Conditions
.
At the time any Award is made under this Article XI, the Company
and the Holder shall enter into a Performance Unit Agreement
setting forth each of the matters contemplated thereby and such
other matters as the Committee may determine to be appropriate. The
Committee shall set forth in the applicable Performance Unit
Agreement the Performance Period, Performance Criteria and
Performance Goals which the Holder and/or the Company would be
required to satisfy before the Holder would become entitled to
payment pursuant to Section 11.3, the number of Units awarded to
the Holder and the dollar value or formula assigned to each such
Unit. Such payment shall be subject to a “substantial risk of
forfeiture” under Section 409A of the Code. At the time of
such Award, the Committee may, in its sole discretion, prescribe
additional terms and conditions or restrictions relating to
Performance Unit Awards, including, but not limited to, rules
pertaining to the effect of Termination of Service prior to
expiration of the applicable performance period. The terms and
conditions of the respective Performance Unit Agreements need not
be identical.
11.3
Payments
.
The Holder of a Performance Unit shall be entitled to receive a
cash payment equal to the dollar value assigned to such Unit under
the applicable Performance Unit Agreement if the Holder and/or the
Company satisfy (or partially satisfy, if applicable under the
applicable Performance Unit Agreement) the Performance Goals set
forth in such Performance Unit Agreement. All payments shall be
made no later than by the fifteenth (15
th
) day of the third
(3
rd
)
calendar month next following the end of the Company’s fiscal
year to which such performance goals and objectives
relate.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
ARTICLE
XII
PERFORMANCE STOCK
AWARDS
12.1
Award
.
A Performance Stock Award shall constitute a promise to grant
Shares (or cash equal to the Fair Market Value of Shares) to the
Holder at the end of a specified Performance Period subject to
achievement of specified Performance Goals. At the time a
Performance Stock Award is made, the Committee shall establish the
Performance Period and applicable Performance Goals based on
selected Performance Criteria. Each Performance Stock Award may
have different Performance Goals, in the discretion of the
Committee. A Performance Stock Award shall not constitute an equity
interest in the Company and shall not entitle the Holder to voting
rights, dividends or any other rights associated with ownership of
Shares unless and until the Holder shall receive a distribution of
Shares pursuant to Section 11.3.
12.2
Terms
and Conditions
.
At the time any Award is made under this Article XII, the Company
and the Holder shall enter into a Performance Stock Agreement
setting forth each of the matters contemplated thereby and such
other matters as the Committee may determine to be appropriate. The
Committee shall set forth in the applicable Performance Stock
Agreement the Performance Period, selected Performance Criteria and
Performance Goals which the Holder and/or the Company would be
required to satisfy before the Holder would become entitled to the
receipt of Shares pursuant to such Holder’s Performance Stock
Award and the number of Shares subject to such Performance Stock
Award. Such distribution shall be subject to a “substantial
risk of forfeiture” under Section 409A of the Code. If such
Performance Goals are achieved, the distribution of Shares (or the
payment of cash, as determined in the sole discretion of the
Committee), shall be made no later than by the fifteenth
(15
th
) day
of the third (3
rd
) calendar month
next following the end of the Company’s fiscal year to which
such goals and objectives relate. At the time of such Award, the
Committee may, in its sole discretion, prescribe additional terms
and conditions or restrictions relating to Performance Stock
Awards, including, but not limited to, rules pertaining to the
effect of the Holder’s Termination of Service prior to the
expiration of the applicable performance period. The terms and
conditions of the respective Performance Stock Agreements need not
be identical.
12.3
Distributions
of Shares
. The Holder of a Performance
Stock Award shall be entitled to receive a cash payment equal to
the Fair Market Value of a Share, or one Share, as determined in
the sole discretion of the Committee, for each Performance Stock
Award subject to such Performance Stock Agreement, if the Holder
satisfies the applicable vesting requirement. Such distribution
shall be made no later than by the fifteenth (15
th
) day of the third
(3
rd
)
calendar month next following the end of the Company’s fiscal
year to which such performance goals and objectives
relate.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
ARTICLE
XIII
RECAPITALIZATION OR
REORGANIZATION
13.1
Adjustments
to Shares
. The shares with respect to
which Awards may be granted under the Plan are Shares as presently
constituted;
provided
,
however
, that if, and
whenever, prior to the expiration or distribution to the Holder of
Shares underlying an Award theretofore granted, the Company shall
effect a subdivision or consolidation of the Shares or the payment
of an Share dividend on Shares without receipt of consideration by
the Company, the number of Shares with respect to which such Award
may thereafter be exercised or satisfied, as applicable,
(i) in the event of an increase in the number of outstanding
Shares, shall be proportionately increased, and the purchase price
per Share shall be proportionately reduced, and (ii) in the
event of a reduction in the number of outstanding Shares, shall be
proportionately reduced, and the purchase price per Share shall be
proportionately increased. Notwithstanding the foregoing or any
other provision of this Article XIII, any adjustment made with
respect to an Award (x) which is an Incentive Stock Option, shall
comply with the requirements of Section 424(a) of the Code, and in
no event shall any adjustment be made which would render any
Incentive Stock Option granted under the Plan to be other than an
“incentive stock option” for purposes of Section 422 of
the Code, and (y) which is a Non-qualified Stock Option, shall
comply with the requirements of Section 409A of the Code, and in no
event shall any adjustment be made which would render any
Non-qualified Stock Option granted under the Plan to become subject
to Section 409A of the Code.
13.2
Recapitalization
.
If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise or satisfaction, as
applicable, of a previously granted Award, the Holder shall be
entitled to receive (or entitled to purchase, if applicable) under
such Award, in lieu of the number of Shares then covered by such
Award, the number and class of shares and securities to which the
Holder would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization,
the Holder had been the holder of record of the number of Shares
then covered by such Award.
13.3
Other
Events.
In
the event of changes to the outstanding Shares by reason of an
extraordinary cash dividend, reorganization, merger, consolidation,
combination, split-up, spin-off, exchange or other relevant change
in capitalization occurring after the date of the grant of any
Award and not otherwise provided for under this Article XIII, any
outstanding Awards and any Award Agreements evidencing such Awards
shall be adjusted by the Board in its discretion in such manner as
the Board shall deem equitable or appropriate taking into
consideration the applicable accounting and tax consequences, as to
the number and price of Shares or other consideration subject to
such Awards. In the event of any adjustment pursuant to Sections
13.1, 13.2 or this Section 13.3, the aggregate number of Shares
available under the Plan pursuant to Section 5.1 may be
appropriately adjusted by the Board, the determination of which
shall be conclusive. In addition, the Committee may make provision
for a cash payment to a Holder or a person who has an outstanding
Award.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
13.5
Change
of Control
. The Committee may, in its sole discretion, at
the time an Award is made or at any time prior to, coincident with
or after the time of a Change of Control, cause any Award either
(i) to be canceled in consideration of a payment in cash or other
consideration in amount per share equal to the excess, if any, of
the price or implied price per Share in the Change of Control over
the per Share exercise, base or purchase price of such Award, which
may be paid immediately or over the vesting schedule of the Award;
(ii) to be assumed, or new rights substituted therefore, by the
surviving corporation or a parent or subsidiary of such surviving
corporation following such Change of Control; (iii) accelerate any
time periods, or waive any other conditions, relating to the
vesting, exercise, payment or distribution of an Award so that any
Award to a Holder whose employment has been terminated as a result
of a Change of Control may be vested, exercised, paid or
distributed in full on or before a date fixed by the Committee;
(iv) to be purchased from a Holder whose employment has been
terminated as a result of a Change of Control, upon the
Holder’s request, for an amount of cash equal to the amount
that could have been obtained upon the exercise, payment or
distribution of such rights had such Award been currently
exercisable or payable; or (v) terminate any then outstanding Award
or make any other adjustment to the Awards then outstanding as the
Committee deems necessary or appropriate to reflect such
transaction or change. The number of Shares subject to any Award
shall be rounded to the nearest whole number.
13.6
Powers
Not Affected
.
The existence of the Plan and the Awards granted hereunder shall
not affect in any way the right or power of the Board or of the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change of the
Company’s capital structure or business, any merger or
consolidation of the Company, any issue of debt or equity
securities ahead of or affecting Shares or the rights thereof, the
dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or
business or any other corporate act or
proceeding.
13.7
No
Adjustment for Certain Awards
.
Except as hereinabove expressly provided, the issuance by the
Company of shares of any class or securities convertible into
shares of any class, for cash, property, labor or services, upon
direct sale, upon the exercise of rights or warrants to subscribe
therefor or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case
whether or not for fair value, shall not affect previously granted
Awards, and no adjustment by reason thereof shall be made with
respect to the number of Shares subject to Awards theretofore
granted or the purchase price per Share, if
applicable.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
ARTICLE
XIV
AMENDMENT AND TERMINATION OF
PLAN
The Plan shall continue in
effect, unless sooner terminated pursuant to this Article XIV,
until the tenth (10
th
) anniversary of the
date on which it is adopted by the Board (except as to Awards
outstanding on that date). The Board in its discretion may
terminate the Plan at any time with respect to any shares for which
Awards have not theretofore been granted;
provided
,
however
, that the Plan’s
termination shall not materially and adversely impair the rights of
a Holder with respect to any Award theretofore granted without the
consent of the Holder. The Board shall have the right to alter or
amend the Plan or any part hereof from time to time;
provided
,
however
, that without the
approval by a majority of the votes cast at a meeting of
stockholders at which a quorum representing a majority of the
shares of the Company entitled to vote generally in the election of
directors is present in person or by proxy, no amendment or
modification of the Plan may (i) materially increase the
benefits accruing to Holders, (ii) except as otherwise
expressly provided in Article XIII, materially increase the number
of Shares subject to the Plan or the individual Award Agreements
specified in Article V, (iii) materially modify the
requirements for participation in the Plan, or (iv) amend,
modify or suspend this Article XIV. In addition, no change in any
Award theretofore granted may be made which would materially and
adversely impair the rights of a Holder with respect to such Award
without the consent of the Holder (unless such change is required
in order to exempt the Plan or any Award from Section 409A of the
Code).
ARTICLE
XV
MISCELLANEOUS
15.1
No
Right to Award
.
Neither the adoption of the Plan by the Company nor any action of
the Board or the Committee shall be deemed to give an Employee,
Director or Consultant any right to an Award except as may be
evidenced by an Award Agreement duly executed on behalf of the
Company, and then solely to the extent and on the terms and
conditions expressly set forth therein.
15.2
No
Rights Conferred
.
Nothing contained in the Plan shall (i) confer upon any
Employee any right with respect to continuation of employment with
the Company or any Affiliate, (ii) interfere in any way with
any right of the Company or any Affiliate to terminate the
employment of an Employee at any time, (iii) confer upon any
Director any right with respect to continuation of such
Director’s membership on the Board, (iv) interfere in
any way with any right of the Company or an Affiliate to terminate
a Director’s membership on the Board at any time,
(v) confer upon any Consultant any right with respect to
continuation of his or her consulting engagement with the Company
or any Affiliate, or (vi) interfere in any way with any right
of the Company or an Affiliate to terminate a Consultant’s
consulting engagement with the Company or an Affiliate at any
time.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
15.3
Other
Laws; No Fractional Shares; Withholding
.
The Company shall not be obligated by virtue of any provision of
the Plan to recognize the exercise of any Award or to otherwise
sell or issue Shares in violation of any laws, rules or
regulations, and any postponement of the exercise or settlement of
any Award under this provision shall not extend the term of such
Award. Neither the Company nor its directors or officers shall have
any obligation or liability to a Holder with respect to any Award
(or Shares issuable thereunder) (i) that shall lapse because
of such postponement, or (ii) for any failure to comply with
the requirements of any applicable law, rules or regulations,
including but not limited to any failure to comply with the
requirements of Section 409A of this Code. No fractional Shares
shall be delivered, nor shall any cash in lieu of fractional Shares
be paid. The Company shall have the right to deduct in cash
(whether under this Plan or otherwise) in connection with all
Awards any taxes required by law to be withheld and to require any
payments required to enable it to satisfy its withholding
obligations. In the case of any Award satisfied in the form of
Shares, no Shares shall be issued unless and until arrangements
satisfactory to the Company shall have been made to satisfy any tax
withholding obligations applicable with respect to such Award.
Subject to such terms and conditions as the Committee may impose,
the Company shall have the right to retain, or the Committee may,
subject to such terms and conditions as it may establish from time
to time, permit Holders to elect to tender, Shares (including
Shares issuable in respect of an Award) to satisfy, in whole or in
part, the amount required to be withheld.
15.4
No
Restriction on Corporate Action
.
Nothing contained in the Plan shall be construed to prevent the
Company or any Affiliate from taking any corporate action which is
deemed by the Company or such Affiliate to be appropriate or in its
best interest, whether or not such action would have an adverse
effect on the Plan or any Award made under the Plan. No Employee,
Director, Consultant, beneficiary or other person shall have any
claim against the Company or any Affiliate as a result of any such
action.
15.5
Restrictions
on Transfer
. No Award under the Plan or any
Award Agreement and no rights or interests herein or therein, shall
or may be assigned, transferred, sold, exchanged, encumbered,
pledged or otherwise hypothecated or disposed of by a Holder except
(i) by will or by the laws of descent and distribution, or
(ii) where permitted under applicable tax rules, by gift to
any Family Member of the Holder, subject to compliance with
applicable laws. An Award may be exercisable during the lifetime of
the Holder only by such Holder or by the Holder’s guardian or
legal representative unless it has been transferred by gift to a
Family Member of the Holder, in which case it shall be exercisable
solely by such transferee. Notwithstanding any such transfer, the
Holder shall continue to be subject to the withholding requirements
provided for under Section 15.3 hereof.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
15.6
Beneficiary
Designations
.
Each Holder may, from time to time, name a beneficiary or
beneficiaries (who may be contingent or successive beneficiaries)
for purposes of receiving any amount which is payable in connection
with an Award under the Plan upon or subsequent to the
Holder’s death. Each such beneficiary designation shall serve
to revoke all prior beneficiary designations, be in a form
prescribed by the Company and be effective solely when filed by the
Holder in writing with the Company during the Holder’s
lifetime. In the absence of any such written beneficiary
designation, for purposes of the Plan, a Holder’s beneficiary
shall be the Holder’s estate.
15.7
Rule
16b-3
. It is intended that the Plan
and any Award made to a person subject to Section 16 of the
Exchange Act shall meet all of the requirements of Rule 16b-3.
If any provision of the Plan or of any such Award would disqualify
the Plan or such Award under, or would otherwise not comply with
the requirements of, Rule 16b-3, such provision or Award shall
be construed or deemed to have been amended as necessary to conform
to the requirements of Rule 16b-3.
15.8
Clawback
Policy
. Notwithstanding any contained herein or in any
incentive “performance based” Awards under the Plan
shall be subject to reduction, forfeiture or repayment by reason of
a correction or restatement of the Company’s financial
information if and to the extent such reduction or repayment is
required by any applicable law.
15.9
Section
409A
. Notwithstanding any other
provision of the Plan, the Committee shall have no authority to
issue an Award under the Plan with terms and/or conditions which
would cause such Award to constitute non-qualified “deferred
compensation” under Section 409A of the Code unless such
Award shall be structured to be exempt from or comply with all
requirements of Code Section 409A. The Plan and all Award
Agreements are intended to comply with the requirements of
Section 409A of the Code (or to be exempt therefrom) and shall
be so interpreted and construed and no amount shall be paid or
distributed from the Plan unless and until such payment complies
with all requirements of Code Section 409A. It is the intent of the
Company that the provisions of this Agreement and all other plans
and programs sponsored by the Company be interpreted to comply in
all respects with Code Section 409A, however, the Company shall
have no liability to the Holder, or any successor or beneficiary
thereof, in the event taxes, penalties or excise taxes may
ultimately be determined to be applicable to any payment or benefit
received by the Holder or any successor or beneficiary
thereof.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
15.10
Indemnification
.
Each person who is or shall have been a member of the Committee or
of the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred thereby in connection with or
resulting from any claim, action, suit, or proceeding to which such
person may be made a party or may be involved by reason of any
action taken or failure to act under the Plan and against and from
any and all amounts paid thereby in settlement thereof, with the
Company’s approval, or paid thereby in satisfaction of any
judgment in any such action, suit, or proceeding against such
person;
provided
,
however
, that such
person shall give the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive and shall be independent of
any other rights of indemnification to which such persons may be
entitled under the Company’s Articles of Incorporation or
By-laws, by contract, as a matter of law, or
otherwise.
15.11
Other
Benefit Plans
.
No Award, payment or amount received hereunder shall be taken into
account in computing an Employee’s salary or compensation for
the purposes of determining any benefits under any pension,
retirement, life insurance or other benefit plan of the Company or
any Affiliate, unless such other plan specifically provides for the
inclusion of such Award, payment or amount received. Nothing in the
Plan shall be construed to limit the right of the Company to
establish other plans or to pay compensation to its employees, in
cash or property, in a manner which is not expressly authorized
under the Plan.
15.12
Limits
of Liability
.
Any liability of the Company with respect to an Award shall be
based solely upon the contractual obligations created under the
Plan and the Award Agreement. None of the Company, any member of
the Board nor any member of the Committee shall have any liability
to any party for any action taken or not taken, in good faith, in
connection with or under the Plan.
15.13
Governing
Law
. Except as otherwise provided
herein, the Plan shall be construed in accordance with the laws of
the State of Nevada, without regard to principles of conflicts of
law.
15.14
Severability
of Provisions
.
If any provision of the Plan is held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision
of the Plan, and the Plan shall be construed and enforced as if
such invalid or unenforceable provision had not been included in
the Plan.
Liberated Syndication Inc. 2018 Omnibus Equity Incentive
Plan
15.15
No
Funding
. The Plan shall be unfunded. The
Company shall not be required to establish any special or separate
fund or to make any other segregation of funds or assets to ensure
the payment of any Award. Prior to receipt of Shares or a cash
distribution pursuant to the terms of an Award, such Award shall
represent an unfunded unsecured contractual obligation of the
Company and the Holder shall have no greater claim to the Shares
underlying such Award or any other assets of the Company or
Affiliate than any other unsecured general
creditor.
15.16
Headings
.
Headings used throughout the Plan are for convenience only and
shall not be given legal significance.