Table
of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☒
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Preliminary Proxy Statement
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☐
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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☐
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Definitive Proxy Statement
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☐
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Definitive Additional Materials
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☐
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Soliciting Material Pursuant to §240.14a-12
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BYRNA TECHNOLOGIES INC.
(Name of Registrant as specified in its Charter)
(Name of Person(s) Filing Proxy Statement), if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
☐
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Fee paid previously with preliminary materials.
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☐
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Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a-6(i)(1) and 0-11
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BYRNA TECHNOLOGIES INC.
100 Burtt Road, Suite 115
Andover, MA 01810
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are cordially invited to attend the 2022 Annual Meeting of
Stockholders (the “Annual Meeting”) of Byrna Technologies Inc., a
Delaware corporation (the “Company” or “Byrna”), to be held at 9:00
a.m., Eastern Standard Time, on Friday, June 17, 2022 at the
offices of Burns & Levinson LLP, 125 High Street, Boston,
Massachusetts 02110. At the meeting, we will be voting on the
matters described in the accompanying Proxy Statement.
Items of Business
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1.
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To elect five (5) directors named in the company’s proxy statement
to serve until the next Annual Meeting of Stockholders or until
their respective successors are qualified and elected (the
“Election of Directors Proposal”);
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2.
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To ratify the appointment of EisnerAmper LLP as Byrna’s independent
registered public accountants for the fiscal year ending November
30, 2022 (the “Auditor Ratification Proposal”);
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3.
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To approve an amendment to our Certificate of Incorporation to
reduce the shares of common stock authorized from 300,000,000
shares to 50,000,000 shares (the “Reduction in Authorized Shares
Proposal”), the form of which amendment is attached as Annex A to
this proxy statement
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4.
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To approve the Byrna Technologies Inc. Amended and Restated 2020
Equity Incentive Plan (the “Plan Proposal”), the form of which is
attached as Annex B to this proxy statement;
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5.
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To approve, by non-binding vote, the Company’s executive
compensation (“say on pay”);
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6.
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To approve, by non-binding vote, the preferred frequency of
stockholder advisory votes on executive compensation, (“say on
frequency”); and
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7.
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To transact such other business as may properly come before the
meeting.
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Voting
Only stockholders of record as shown in the books of our transfer
agent at the close of business on April 21, 2022 are entitled to
notice of, and to vote at, the Annual Meeting. At least ten days
prior to the meeting, a complete list of stockholders entitled to
vote will be available for inspection by any stockholder for any
purpose germane to the meeting, during ordinary business hours, at
the Company’s corporate headquarters, 100 Burtt Road, Suite 115,
Andover, MA 01810.
On or about May 6, 2022, a Notice of Internet Availability of Proxy
Materials and Notice of Annual Meeting of Stockholders (the
“Notice”) is first being mailed to our stockholders of record as of
the Record Date and our proxy materials are first being posted on
the website referenced in the Notice (www.proxyvote.com). We
are using the Internet as our primary means of furnishing the proxy
materials to our stockholders because it expedites the delivery of
proxy materials, keeps them easily accessible to stockholders, and
provides stockholders with clear instructions for accessing
materials and voting.
In addition, the Notice of Internet Availability of Proxy Materials
contains instructions on how you may (i) receive a paper copy
of the Proxy Statement and the Company’s Annual Report on Form 10-K
for the fiscal year ended November 30, 2021 and the amendment
thereto on Form 10-K/A (collectively, the “Annual Report”), if you
received only a Notice of Internet Availability of Proxy Materials
this year, or (ii) elect to receive your Proxy Statement and Annual
Report only over the Internet in the future, if you received them
by mail this year.
Regardless of whether you expect to attend the meeting, please vote
in advance of the meeting by using one of the methods described in
the Company’s proxy statement (the “Proxy Statement”). As a
stockholder of record, you may vote your shares (1) at the meeting,
(2) by telephone, (3) through the Internet, or (4) by completing
and mailing a proxy card if you receive your proxy materials by
mail. Specific instructions for voting by telephone or through the
Internet are included in the Notice and in the Proxy Statement. If
you attend and vote at the meeting, your vote at the meeting will
replace any earlier vote you cast.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting to be Held on Friday, June 17, 2022: The
Proxy Statement and the Annual Report are available
at www.proxyvote.com. The Annual
Report, however, is not part of the proxy solicitation
material.
By Order of the Board of Directors
/s/ Lisa Wager
Chief Governance Officer and Corporate Secretary
100 Burtt Road, Suite 115
Andover MA 01810
May 6, 2022
Even though you may plan to attend the meeting, please vote by
telephone, through the Internet, or, if you receive your proxy
materials by mail, execute the enclosed proxy card and mail it
promptly in the accompanying postage-free return envelope.
Stockholders who received proxy materials in the mail are also
welcome to vote by telephone or through the internet by following
the instructions on the proxy card. Should you attend the meeting,
you may revoke your proxy and vote at the meeting if you wish to
change your vote.
BYRNA TECHNOLOGIES INC.
100 Burtt Road, Suite 115
Andover, MA 01810
2022 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
PROXY
STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Byrna
Technologies Inc. (“Byrna”, the “Company,” “we,” “us,” or “our”) to
be voted at our 2022 Annual Meeting of Stockholders (the “Annual
Meeting”). On or about May 6, 2022, a Notice of Internet
Availability of Proxy Materials and Notice of Annual Meeting of
Stockholders (the “Notice”) is first being mailed to our
stockholders of record as of April 21, 2022, the Record Date, and
our notice of annual meeting, proxy materials, and 2021 Annual
Report are first being posted on the website referenced in the
Notice (www.proxyvote.com). All website addresses given in
this document are for informational purposes only and are not
intended to be an active link or to incorporate any website
information into this document.
Stockholders as of the Record Date are invited to attend our annual
meeting which will take place on Friday June 17, 2022, beginning
at 9:00 a.m. Eastern Time at the offices of Burns &
Levinson LLP, 125 High Street, Boston, Massachusetts 02110, and any
adjournments or postponements thereof. You may obtain directions to
the Annual Meeting at www.proxyvote.com.
Whether or not you are able to attend the annual meeting, you are
urged to vote your proxy, either by mail (if you receive your proxy
materials by mail), telephone or on the Internet. Specific
instructions for voting by telephone or through the Internet are
included in the Notice and in this Proxy Statement. If you attend
and vote at the meeting, your vote at the meeting will replace any
earlier vote you cast. Proxies also may be voted at any adjournment
or postponement of the Annual Meeting.
BYRNA TECHNOLOGIES INC.
PROXY STATEMENT FOR THE
2022 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF
CONTENTS
2022 PROXY
SUMMARY
This summary highlights selected information contained in this
Proxy Statement. Please review the entire Proxy Statement and our
2021 Annual Report before voting your shares.
ANNUAL MEETING OF STOCKHOLDERS
Time and Date: |
9:00 a.m., Eastern Time, Friday, June 17, 2022 |
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Meeting Location: |
Offices of Burns & Levinson LLP, 125 High Street, Boston, MA
02110 |
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Record Date: |
April 21, 2022 |
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Voting: |
Stockholders as of the Record Date are entitled to vote. Each share
of common stock is entitled to vote for each director nominee and
one vote for each of the other proposals to be voted on. |
ANNUAL MEETING AGENDA
Proposal |
Board Recommendation
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More
Information
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1. |
Election of the five directors named in this Proxy Statement
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FOR EACH NOMINEE
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Page 14
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2. |
Ratification of the appointment of EisnerAmper LLP as the Company's
independent registered public accountants for the fiscal year
ending November 30, 2022
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FOR
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Page 42
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3. |
Amendment of the Certificate of Incorporation to reduce the
number of authorized shares of common stock the Company can issue
from 300,000,000 to 50,000,000
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FOR
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Page 43
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4. |
Amendment and Restatement of the 2020 Equity Incentive Plan
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FOR
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Page 45
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5. |
Approval, by non-binding vote, of the Company's executive
compensation ("Say on Pay")
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FOR
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Page 53
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6. |
Approval, by non-binding vote, of the preferred frequency of
stockholder advisory votes on Say on Pay ("Say on Frequency")
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FOR every 1 year
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Page 54
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2021 PERFORMANCE HIGHLIGHTS
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Revenues grew 154% to $42.2 million in 2021 from $16.6 million
in 2020 and less than $1 million in fiscal year 2019.
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Gross profit increased by 204.9% to $22.9 million in 2021 from
$7.5 million in fiscal year 2020.
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Gross margin improved to 54.3% in 2021 from 45.3% in fiscal year
2020
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Cash of $56.4 million at year end 2021 ($0.1 million of which
was restricted) from $9.7 million in fiscal year 2020 ($6.5 million
of which was restricted)
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NOTABLE ACHIEVEMENTS TOWARDS LONG TERM GOALS
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Stock began trading on the Nasdaq, providing stockholders with
greater liquidity
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Introduced the Byrna SD, a second-generation product in the
Byrna personal safety device product line
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Launched sales on Amazon
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Completed strategic asset acquisitions to gain valuable IP,
broaden our product line, and advance our long-term plans for the
law enforcement market and our School Safety initiative
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Addressed continued supply chain challenges by focusing on our
long-term strategies:
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o
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Reduction of dependence on sole suppliers
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In-house manufacture of projectiles
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Development of an all-U.S. network of suppliers for the U.S.
manufacture of our Byrna launchers
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Building out our component and finished goods inventory
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ELECTION OF DIRECTORS: BOARD NOMINEES
Name
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Age
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Director
Since
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Committee Memberships in
Fiscal 2021
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Other Current Public Company
Boards
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Bryan Ganz
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64
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2016
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Herbert Hughes
Independent
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62
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2019
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Audit (Chair)
Compensation (Chair)
Governance
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Chris Lavern Reed
Independent
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53
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2020
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Audit
Compensation
Governance (Chair)
Product Safety
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Emily Rooney
Independent
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72
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2021
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Audit
Product Safety (Chair)
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Leonard Elmore
Independent
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70
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2021
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Governance
Product Safety
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1800Flowers.com
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Board Composition Overview:
Board Composition Highlights:
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Number of Independent Directors: 4 of 5 (80%)
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Number of Gender or Ethnically Diverse Directors: 4 of 5 (80%)
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Number of Women Chairing Standing Committees: 1 of 4 (25%)
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100% of our Committee Chairs Are Independent and Gender or
Ethnically Diverse
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None of our Non-Employee Directors Serve as an Executive Officer of
a Public Company
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None of our Directors Serve on more than one other Public Company
Board
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Our Board has diverse and varied experiences, backgrounds and
strengths. Our four independent directors, led by Herbert Hughes,
who has the longest tenure with the Company of any of our
directors, play a vital role in oversight of risk areas and
strategic guidance. Assuming that he is reelected, the Board has
elected Mr. Hughes to success Mr. Ganz as Chair effective upon
conclusion of the Annual Meeting. We believe it is in the best
interests of the Company and its stockholders that the roles of
Chair and CEO be bifurcated now that we have an independent
director with sufficient familiarity with the Company and depth of
experience to assume the Chairmanship.
ADVISORY VOTE: INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
We are asking stockholders to vote FOR the ratification of
the selection of EisnerAmper LLP as our independent registered
public accountants for the fiscal year ending November 30,
2022.
AMENDMENT OF CERTIFICATE OF INCORPORATION TO REDUCE AUTHORIZED
SHARES
We are proposing to amend our Certificate of Incorporation to
decrease the number of shares of Common Stock that we are
authorized to issue from 300,000,000 shares to 50,000,000 shares.
As a Delaware corporation, we are required annually to make
franchise tax payments to the State of Delaware in an amount
determined, in part, by the total number of shares of capital stock
we are authorized to issue under our Certificate of Incorporation.
Accordingly, by reducing the number of authorized shares of our
Common Stock, we will significantly reduce the amount of our annual
franchise tax obligation, based on current Delaware law.
Additionally, the reduction in the number of authorized shares
would decrease the potential dilution to our stockholders that
could result from future issuances of stock.
AMENDMENT AND RESTATEMENT OF THE 2020 EQUITY INCENTIVE
PLAN
We are proposing to amend and restate our 2020 Equity Incentive
Plan (the “2020 Plan”) to effect the following changes:
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Addition of 1,300,000 shares to be authorized for issuance pursuant
to awards under the 2020 Plan
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Addition of a one-year minimum vesting requirement
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Addition of a clawback provision upon a financial restatement and
certain other circumstances
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Prohibition of the payment of dividends on unvested restricted
stock awards and restricted stock units
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We are proposing to replenish the shares authorized for issuance
under the 2020 Plan because we have largely depleted the existing
share reserve under the 2020 Plan, and equity compensation is a
vital component of our compensation philosophy, playing a pivotal
role in our continued ability to attract, retain, and motivate key
employees, our non-employee directors, and other service providers.
The 2020 Plan does not include an “evergreen” feature that
automatically adds authorized shares to the 2020 Plan each year.
Increasing the shares authorized for issuance under the 2020 Plan
enables us to continue to align our directors’ and employees’
interests with those of our stockholders. If this proposal is not
approved, we believe we would be at a competitive disadvantage in
recruiting, retaining, and motivating individuals who are critical
to our success and could be forced to increase cash compensation,
reducing resources better put to other business needs and strategic
purposes.
ADVISORY VOTE: APPROVAL OF EXECUTIVE COMPENSATION: NAMED
EXECUTIVE OFFICERS
Our named executive officers for our 2021 fiscal year were:
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Bryan Ganz, Chief Executive Officer
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David North, Chief Financial Officer
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Lisa Wager, Chief Legal Officer and Corporate Secretary
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We are asking our stockholders to approve on an advisory basis the
Company’s executive compensation. Our Board recommends a FOR
vote because we believe our compensation program aligns the
interests of our named executive officers with those of our
stockholders and achieves our compensation objective of rewarding
management based upon individual and Company performance and the
creation of stockholder value over the long term. Although
stockholder votes on executive compensation are non-binding, the
Board and the Compensation Committee consider the results when
reviewing whether any changes should be made to our compensation
program and policies.
ADVISORY VOTE: APPROVAL OF FREQUENCY OF ADVISORY VOTE ON
EXECUTIVE COMPENSATION
Under the Dodd-Frank Act companies must give stockholders a
non-binding vote on the frequency of say-on-pay votes (“Say on
Frequency”) at least once every six years. The Board has
recommended that stockholders conduct a say-on-pay vote every
year.
ABOUT THE
MEETING
Why did I receive this Proxy Statement?
Our Board is soliciting your proxy to vote on your behalf at the
meeting because you were a stockholder of our Company as of April
21, 2022, the Record Date, and entitled to vote.
This Proxy Statement summarizes the information you need to know in
order to cast your votes at the meeting.
What Is the Effect of Signing the Proxy Card?
The Proxy Card appoints Bryan Ganz, our Chief Executive Officer, or
in his absence David North, our Chief Financial Officer, and Lisa
Wager, our Chief Governance Officer and Corporate Secretary, or
either of them, as your representative at the Annual Meeting. As
your representatives, they will vote your shares of common stock at
the Annual Meeting (or any adjournments or postponements) in
accordance with your instructions on your proxy card. You may
appoint a different person as proxy if you prefer but they will
only be able to vote if they attend the meeting. If you want to
appoint some other person to represent you at the Annual Meeting,
you may do so either by inserting such person’s name in the blank
space provided in the form of proxy or by providing another form of
proxy.
What am I voting on?
You are voting on six items:
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Election of directors named in this Proxy Statement (see page
14);
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Ratification of the appointment of EisnerAmper LLP as our
independent registered public accountants for 2022 (see page
42);
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Amendment of the Certificate of Incorporation to reduce the number
of authorized shares of common stock the Company can issue from
300,000,000 to 50,000,000 (see page 43);
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Amendment and Restatement of our 2020 Equity Incentive Plan (see
page 45);
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Approval, by non-binding vote, of the Company’s executive
compensation (see page 54); and
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Approval, by non-binding vote, of the preferred frequency of
stockholder advisory votes on executive compensation.
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How do I vote?
Stockholders of record |
Street name holders |
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Stockholders of record, have four ways to vote: |
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Vote on the Internet
www.proxyvote.com
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If your shares are held in an account at a brokerage firm, bank or
other agent, then you are the beneficial owner of shares held in
“street name” and not a stockholder of record. |
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Vote by Phone
1-800-690-6903
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As a beneficial owner, you may direct your broker, bank or other
agent on how to vote the shares in your account by following voting
instructions that they provide, or you may obtain a proxy issued in
your name from them. |
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Vote by Mail
Complete, sign and mail your proxy b
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Beneficial owners who do not obtain a proxy from their broker may
also attend the meeting (with appropriate identification and
subject to any limits that may be placed by the Corporate Secretary
on attendance by non- record holders and in the interests of the
safety of attendees). |
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Vote at the Meeting |
Voting by telephone and on the internet will close at 11:59 p.m.
Eastern Daylight Time on Thursday, June 16, 2022. |
Has the Board of Directors made any recommendations on
voting?
Yes. The Board recommendations are as follows:
Proposal |
Board Recommendation
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1. |
Election of the five directors named in this Proxy Statement
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FOR EACH NOMINEE
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2. |
Ratification of the appointment of EisnerAmper LLP as the Company's
independent registered public accountants for the fiscal year
ending November 30, 2022
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FOR
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3. |
Amendment of Certificate of Incorporation to reduce authorized
shares of common stock from 300,000,000 to 50,000,000
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FOR
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4. |
Amendment and Restatement of the 2020 Equity Incentive Plan
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FOR
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5. |
Approval, by non-binding vote, of the Company's executive
compensation ("Say on Pay")
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FOR
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6. |
Approval, by non-binding vote, of the preferred frequency of
stockholder advisory votes on Say on Pay ("Say on Frequency")
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FOR every 1 year
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Will any other matters be voted on?
We are not aware of any other matters that will be brought before
the stockholders for a vote at the Annual meeting. If any other
matter is properly brought before the meeting, your proxy card
gives authority to Bryan Ganz, and in his absence David North and
Lisa Wager, or either of them, to vote your shares at their
discretion on such other matters.
How many voting stockholders do you need to hold the Annual
Meeting?
To conduct the Annual Meeting, we must have a quorum, which means
that one third (1/3) of our outstanding voting shares as of the
record date must be present, in person or by proxy, at the Annual
Meeting. If you vote or abstain on any matter your shares will be
part of the quorum. If you hold your shares in street name and do
not provide voting instructions to your broker, bank, trustee or
other nominee, but your broker, bank, trustee, or other nominee has
and exercises discretionary authority to vote on at least one
matter, your shares will be counted in determining the quorum for
all matters to be voted on at the meeting. Brokers have
discretionary authority relating to the ratification of independent
public accountants.
Why should I submit a proxy if I intend to attend the Annual
Meeting?
Even if you plan to attend the Annual Meeting, it is a good idea to
complete, sign and return your proxy card in case your plans
change. We also ask that you vote by proxy even if you intend to
attend the meeting so that we will know as soon as possible that we
have a quorum. This also saves us the additional costs of having to
solicit proxies to ensure a quorum.
Your shares of Common Stock represented by the proxy will be voted
or withheld from voting in accordance with your instructions and if
you specify a choice with respect to any matter to be acted upon,
your shares of Common Stock will be voted accordingly.
Who can vote at the Annual Meeting?
Only stockholders of record at the close of business on April 21,
2022, the record date for the Annual Meeting, are entitled to
receive notice of and to vote at the meeting. If you were a
stockholder of record on the Record Date you can vote all shares
that you held on that date at the meeting or at any postponement or
adjournment of the meeting.
If I submit a Proxy without indicating my vote on all
matters, will it be voted?
A properly executed proxy that does not include instructions to
vote on one or more matters will be voted as follows:
FOR each director nominee named in the proxy materials;
FOR ratification of EisnerAmper LLP as our independent
registered public accountants for the fiscal year ending November
30, 2022;
FOR the amendment of the Certificate of Incorporation to
reduce the authorized shares the Company may issue from 300,000,000
to 50,000,000;
FOR the amendment and restatement of our 2020 Equity
Incentive Plan;
FOR the approval, by non-binding vote, of the Company’s
executive compensation; and
FOR the approval by non-binding vote, of the preferred
frequency of the Say on Pay non-binding vote by stockholders.
What if I abstain from voting?
Abstentions with respect to a proposal are counted for the purposes
of establishing a quorum. If a quorum is present, abstentions will
not be included in vote totals.
Since our bylaws provide that approval of a proposal at an Annual
Meeting of the stockholders is generally by the affirmative vote of
a majority of the voting shares present, in person or by proxy, at
an Annual Meeting of the stockholders and entitled to vote on the
applicable matter, a properly executed proxy card marked
ABSTAIN with respect to a proposal will have the same effect
as voting AGAINST that proposal. However, election of
Directors is by a majority of the votes cast at the Annual Meeting.
A properly executed proxy card marked WITHHELD with respect
to the election of Directors will not be voted and will not count
FOR any of the Nominees for which the vote was withheld.
Why haven’t I received a physical copy of the
Proxy Statement or Annual Report?
The Securities and Exchange Commission rules allow companies to
save on printing and mailing expenses by furnishing proxy materials
via the Internet to stockholders who prefer to review the materials
online. If you received a Notice of Internet Availability of Proxy
Materials by mail, you will not receive a printed copy of the proxy
materials in the mail unless you submit a specific request.
Instructions are included in the Notice to make such a request for
printed materials if you so desire. It also provides instructions
on how to access all the materials and how to submit your proxy
over the internet.
How many votes do I have?
You have one vote for each share of common stock you owned at the
close of business on the Record Date.
How many shares can be voted at the Annual Meeting in
total?
As of the Record Date, we had 72 stockholders of record and
22,915,288 shares outstanding, each of which is entitled to one
vote at the meeting. Cumulative voting is not permitted.
What number of votes is required to elect each of the
directors?
Assuming a quorum is present, each director nominee named in Proxy
Matter 1, the election of the directors, must be elected by the
affirmative vote of a majority of the votes cast in an uncontested
election. In other words, each director will be elected if more
shares are voted FOR his or her election than are voted against his
or her election. Any share that does not cast a vote for a director
(including abstentions and broker non-votes, explained below) does
not count as a vote against the director. Under Delaware law, any
incumbent director who does not receive the affirmative vote of a
majority of the votes cast at the Annual Meeting will continue to
serve on the Board as a “holdover director.” In accordance with our
by-laws, each of our standing directors has tendered a resignation
from the Board, conditioned on the incumbent director’s failure to
receive a majority of the votes cast. If an incumbent director does
not receive a majority of the votes cast, our Nominating and
Governance Committee will make a recommendation to the Board of
Directors on whether to accept or reject the resignation or take
any other action. The Board of Directors will act on the
committee’s recommendation and publicly disclose its decision and
the rationale behind it within 90 days from the date of the
certification of our election results.
What number of votes is required on proxy matters other than
the election of directors?
Other than the election of directors, all other proxy matters shall
be decided by the affirmative vote of the majority of shares
present or represented by proxy at the meeting and entitled to vote
on the applicable matter, assuming a quorum is present, except for
the proposal to amend our Certificate of Incorporation to reduce
the authorized shares the Company may issue from 300,000,000 to
50,000,000, which requires the affirmative vote of a majority of
our outstanding shares of common stock entitled to vote at the
Annual Meeting.
Can I change my vote or revoke my proxy after I submit my
vote?
Yes. If you vote prior to the meeting, you may change your vote or
revoke your proxy at any time before the votes are cast at the
Annual Meeting by sending in a new proxy card with a later date, or
by casting a new vote by telephone or on the Internet (not later
than 11:59 p.m. Eastern Daylight Time on Thursday, June 16, 2022,
or by sending a written notice of revocation to our Corporate
Secretary at our corporate headquarters, 100 Burt Rd Suite 115,
Andover, MA 01810. You also may automatically revoke your proxy by
attending the Annual Meeting and voting there if you are a record
stockholder. Attending the Annual Meeting without voting at such
meeting will not in and of itself constitute revocation of a
proxy.
If you are a beneficial stockholder but not a stockholder of
record, then to revoke your voting instructions, you may submit new
voting instructions to your broker, trustee or nominee or you can
obtain an individual proxy from your nominee and attend the meeting
to vote.
What is a broker non-vote and what effect does it
have?
Brokers and other intermediaries who hold shares of Common Stock in
street name for their customers, generally are required to vote the
shares of Common Stock in the manner directed by their customers.
If their customers do not give any direction, brokers may vote the
shares of Common Stock on routine matters, but not on non-routine
matters (a “broker non-vote”). The only matter that brokers will be
able vote on without specific direction at the Annual Meeting is
Proposal 2, ratification of EisnerAmper LLP as our independent
registered public accountants.
Any shares of Common Stock represented at the Annual Meeting but
not voted (whether by abstention, broker non-vote or otherwise)
will have no impact in the election of directors except to the
extent that the failure to vote for an individual results in
another individual receiving a larger proportion of votes cast. Any
broker non-votes with respect to all proposals other than the
election of directors will not have any effective on the approval
of such proposal, except for the proposal to amend our Certificate
of Incorporation to reduce the authorized shares the Company may
issue from 300,000,000 to 50,000,000, in which case broker
non-votes will have the same effect as a vote against such
proposal. In recognition of our desire to have every stockholder
vote count, we encourage our stockholders to instruct their brokers
to vote their shares.
Where can I find the voting results of the Annual
Meeting?
We will publish the final results in a current report filing on
Form 8-K with the United States Securities and Exchange Commission
(the “SEC”) within four business days of the Annual Meeting.
Who will pay for the costs of soliciting proxies?
We will pay the entire expense of soliciting proxies for the Annual
Meeting. In addition to solicitations by mail, certain of our
directors, officers and employees (who will receive no compensation
for their services other than their regular compensation) may
solicit proxies by telephone, telegram, personal interview,
facsimile, e-mail or other means of electronic communication.
Banks, brokerage houses, custodians, nominees, and other
fiduciaries have been requested to forward proxy materials to the
beneficial owners of shares of common stock held of record by them
as of the Record Date, and such custodians will be reimbursed for
their expenses.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting to be Held on Friday, June 17, 2022: The
Proxy Statement and the Annual Report are available
at www.proxyvote.com. The Annual
Report, however, is not part of the proxy solicitation
material.
PROPOSAL 1: ELECTION OF DIRECTORS |
PROPOSAL 1:
ELECTION OF DIRECTOR NOMINEES
The Board of Directors of the Company currently consists of five
members. Once elected, directors serve for one-year terms with all
directors being elected by our stockholders at each annual meeting
to succeed the directors whose terms are then expiring. Each
nominee elected as a director will continue in office until his or
her successor has been duly elected and qualified or until his or
her earlier resignation or removal.
At the Annual Meeting, five directors, nominated by the Board of
Directors, will stand for election to serve until the 2023 annual
meeting of stockholders. At the recommendation of the Nominating
and Governance Committee, the Board of Directors has nominated
Bryan Ganz, Herbert Hughes, Chris Lavern Reed, Emily Rooney, and
Leonard Elmore for election as the directors of the Company. The
nominees have agreed to stand for election and, if elected, to
serve as directors. However, if any person nominated by the Board
of Directors is unable to serve or will not serve, the proxies will
be voted for the election of such other person or persons as the
Nominating and Governance Committee and the Board of Directors may
recommend.
Vote Required
The affirmative vote of a plurality of the votes cast by holders of
shares of common stock present or represented by proxy and entitled
to vote on the matter at the Annual Meeting is required for the
election of the director nominees as directors of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR EACH OF THE NOMINEES.
PROPOSAL 1: ELECTION OF DIRECTORS |
OUR BOARD AND
ITS COMMITTEES
Director Biographies: Summary
Name
|
Age
|
Director
Since
|
Committee Memberships
|
Other Current Public
Company Boards
|
Bryan Ganz
|
64
|
2016
|
|
|
Herbert Hughes Independent
|
62
|
2019
|
Audit (Chair)
Compensation (Chair)
Nominating and Governance
Ad Hoc (Chair)
|
|
Chris Lavern Reed Independent
|
53
|
2020
|
Audit
Compensation
Nominating and Governance
(Chair)
Product Safety
|
|
Emily Rooney Independent
|
72
|
2021
|
Audit
Ad Hoc
Product Safety (Chair)
|
|
Leonard Elmore Independent
|
70
|
2021
|
Nominating and Governance
Product Safety
Ad Hoc
|
1800Flowers.com
|
PROPOSAL 1: ELECTION OF DIRECTORS |
Director Nominee Biographies
Below are the biographies of our Director nominees, all of whom are
incumbent directors.
|
Bryan Scott Ganz became the Company’s President effective
July 13, 2018, Chief Executive Officer and Chairman of the Board
effective April 1, 2019, and has been a director since June 2016.
Prior to that he was engaged by the Company, beginning in May 2016,
in a consulting capacity to assist in a restructuring of
operations, evaluation of management, identify sources of capital,
and provide strategic advice. Mr. Ganz brings more than 30 years of
global business experience in sales management, manufacturing, new
product design and development, and supply chain management, and
mergers and acquisitions as well as experience as a director of
other publicly held companies. Previously, Mr. Ganz founded Maine
Industrial Tire LLC, an industrial tire company sold to a unit of
Trelleborg AB in 2012. From 1991 to 2009 Mr. Ganz held several
roles culminating with CEO of GPX International, Inc. and its
predecessor Galaxy Tire Inc. Mr. Ganz started his career at
Paramount Capital Group where he was a partner from 1985 to 1991.
Mr. Ganz is the founder and majority shareholder of Northeast
Industrial Partners LLC, a holding company that owns and operates
privately held businesses. In addition, he is a principal in
Scudder Bay Capital LLC, a captive private REIT. Mr. Ganz received
a J.D. from Columbia Law School and a B.S. in Business
Administration from Georgetown University. |
We believe that Mr. Ganz’s six year history with the Company, his
demonstrated work ethic, his decades of broader manufacturing,
supply chain, product development, M&A, and sales-related
experience, his deep understanding of the Company’s strategic
business goals, and his proven leadership in steering the Company
from product development stages to generating over $40 million in
annual sales in its most recent fiscal year, provide the Board with
invaluable insight into the business and its challenges. We believe
these experiences, qualifications, attributes, and skills qualify
him to serve as a member of our Board of Directors.
|
Herbert Hughes has been a director since July 9, 2019. He
was appointed Lead Independent Director in December 2021 and will
be appointed as Chairman following the Annual Meeting, assuming his
re-election. Mr. Hughes is Chair of the Audit Committee, a member
of the Compensation Committee (serving as Chair since December
2021), a member of the Nominating and Governance Committee since
September 2021 and is Chair of the Ad Hoc Committee. Mr.
Hughes has over 30 years of experience in finance, risk management,
operational management, and derivatives modeling as an advisor and
leader of a diverse range of businesses and is an “audit committee
financial expert,” as such term is defined in Item 407(d)(5) of
Regulation S-K. Since March 2017, Mr. Hughes has been Chief
Financial Officer of Wormhole Labs, a metaverse emerging technology
company using mixed and augmented applications in enterprise and
consumer markets, and has served on its board of directors. At
Wormhole Mr. Hughes is responsible for financial reporting, capital
structure and formation, and SAAS and ecommerce negotiations, and
has worked with the Chief Technology Officer on issues related
development of Wormhole’s cybersecurity program. Mr. Hughes has
held executive level positions in a number of industries including
technology, hospitality, asset management, oil and gas exploration
and production, and oil industry services. From March 2015 to June
2019, Mr. Hughes was Chief Executive Officer of Domino Sands, an
oil service business. Mr. Hughes also served as the Head of
Derivatives and Capital Allocation at Bass Brothers Investments
from 1995 to 2003, Portfolio Manager at Weston Capital of Paloma
Partners from 1991 to 1995, Partner at Paramount Capital Group from
1985 to 1991, and was a trader at Kidder Peabody from 1982 to 1985.
Mr. Hughes received a B.A. from Harvard University. Mr. Hughes is a
member of the Minnesota Chippewa tribe and the National
Congress of American Indians. |
We believe that Mr. Hughes’ tenure on the Board, his demonstrated
work ethic, his understanding of the capital markets, his decades
of business and financial experience, his financial expertise
developed through his executive positions as CEO and CFO of other
companies and through his professional investment and advisory
positions, his experience with some of the unique challenges
related to leadership and growth of an early stage technology
business, and his familiarity with developing topics related to
cybersecurity bring important skills to the Board and qualify him
to serve. Further, Mr. Hughes is one of three directors on our
board who has self-identified as belonging to an underrepresented
racial, ethnic, or other minority group, which diversity we believe
adds to the quality, depth and perspective of the Board.
PROPOSAL 1: ELECTION OF DIRECTORS |
|
Chris Lavern Reed has been a Director since September 1,
2020 and, since April 2012, has been the managing partner of Garcia
Reed Investments, LLC, a real estate management entity. Mr. Reed is
the Chair of the Nominating and Governance Committee and is a
member of the Audit, Compensation, and Product Safety Committees.
Mr. Reed has over 32 years of experience in global law enforcement.
Since October 2018, he has served as a rehired annuitant for the
U.S. Department of State, overseeing classified
investigations. From December 2016 to July 2018, Mr. Reed served as
the Special Agent in Charge and Director at the U.S. Agency
for International Development Office of Inspector General
(USAID OIG). Prior to his leadership role with USAID, Mr. Reed
served in numerous leadership roles within the U.S. Department of
Justice, Bureau of Alcohol, Tobacco, Firearms and
Explosives (“BATF”). Through his work, Mr. Reed has
established professional qualifications and training in leadership,
security, and financial crime investigations and has strategic and
operational experience related to financial risk and fraud matters.
Mr. Reed has served as an instructor for the U.S. Department of
State Foreign Service Institute and has spoken internationally on
the topics of fraud, corruption, and a host of investigative
topics. He has served as a subject matter expert in the U.S. Senate
on law enforcement, homeland security and fraud issues. Through his
government work, Mr. Reed has developed an understanding of complex
public policy matters, the government contracting process, and has
extensive experience in crisis management and global law
enforcement training. He has completed continuing education
coursework related to cybercrime, online fraud and business
identity theft, among other cybersecurity topics, is a member of
the Police Executive Research Forum, the Association of Certified
Fraud Examiners and has been a Certified Fraud Examiner since April
2018. Mr. Reed also is a graduate of Georgetown University’s
Congressional Fellow Program and has completed Columbia Business
School’s Executive Development and Management Programs. A veteran
of the U.S. Marine Corps., he received an M.B.A. from Champlain
College, an M.A. from Northern Arizona University, and a B.A. from
Indiana University.
|
We believe Mr. Reed’s advanced business degree, professional
certifications, 10 years of business experience in the private
sector, 32 years of experience in relevant global and federal law
enforcement, BATF experience, military service, and his broad legal
and technical knowledge base including expertise related to
money-laundering, bribery, financial fraud corruption and internal
conflict of interest schemes designed to hide illicit proceeds
qualify him to serve on the Board. His education, experience and
training bring the Board critical oversight and investigative
skills, important subject matter expertise, and a high degree of
financial literacy. Further, Mr. Reed is African American and one
of three directors on our board who has self-identified as
belonging to an underrepresented racial, ethnic, or other minority
group, which diversity we believe adds to the quality, depth, and
perspective of the Board.
Emily Rooney has been a director and a member of the Audit
Committee since October 1, 2021. She also chairs the Company’s new
Product Safety Committee and served on an Ad Hoc Committee of the
Board. Ms. Rooney has over 40 years of experience as a journalist.
Since October 1, 2021, she has been working with Muddhouse Media
producing a bi-monthly podcast entitled “Beat the Press” which can
be heard through Spotify and Apple Music. From December 1998
through September 2021, she was Executive Editor and host for
WGBH’s Emmy Award winning television show Beat the Press,
examining media coverage of current events. From January 1997 to
December 2014, she was also the creator, Executive Editor, and host
of the television show Greater Boston with Emily Rooney.
Previously she was the political director for Fox News in New York
and Executive Producer of World News Tonight with Peter Jennings,
positions in which she oversaw multimillion-dollar budgets. Ms.
Rooney’s deep understanding and discerning examination of media,
politics, and culture, and her writing and speaking skills, have
earned her numerous awards, including the National Press Club’s
Arthur Rowse Award for Press Criticism, a series of New England
Emmy Awards, and Associated Press recognition for Best News/Talk
Show. Through her programming, Ms. Rooney has developed a large
network of media contacts and firm grasp on the current social and
political climate in the United States and worldwide. She is a
skilled interviewer and analyst who has examined such company
relevant topics as media coverage, financial fraud, police use of
lethal force, social justice initiatives, and legislative
initiatives related to gun control. Through her work as well as her
personal investments, we also believe Ms. Rooney has a high degree
of financial literacy. Ms. Rooney received a B.A. from The American
University, Washington D.C.
PROPOSAL 1: ELECTION OF DIRECTORS |
We believe Ms. Rooney’s professional experiences, business and
industry related knowledge, investigative and analytic skills, and
deep understanding politics, culture, the media and public
sentiment, developed through her 40 years as an investigative
journalist and television producer, including her in depth
understanding of current topics relevant to the Company’s business
strategy, will be valuable to the Board and its committees in their
exercise of oversight and in facilitating, overseeing, and finding
resources for strategic planning. As a woman she also adds to the
Board’s diversity, which diversity we believe adds to the quality,
depth, and perspective of the Board.
|
Leonard Elmore has been a director since December 2021 and
is a member of the Nominating and Governance, Ad Hoc, and Product
Safety committees. Mr. Elmore is a retired attorney and business
leader, a television sports personality, and an educator. He has a
wide spectrum of experience in the private and public sectors, and,
through his Co-Chairmanship of the John and James L. Knight
Foundation’s Knight Commission on Intercollegiate Athletics, is
involved in public interest initiatives directed at promoting
diversity, inclusion, and reform in college athletics. A former
collegiate basketball All American at the University of Maryland at
College Park and a ten-year professional player in both the ABA and
NBA, Mr. Elmore has been a Broadcast Analyst for the BIG Ten
Network since November 2020. Since August 2018, Mr. Elmore has
served as Senior Lecturer in Discipline at the Columbia University
School of Professional Studies Sports Management Program. Mr.
Elmore’s prior business experience includes serving as Chief
Executive Officer of iHoops, the official youth basketball
initiative of the NCAA and NBA, and as the President of Test
University, a leading provider of internet-delivered learning
solutions for pre-college students. As a practicing attorney, Mr.
Elmore was a Partner with the law firm of Dreier LLP and, before
that, Senior Counsel with LeBoeuf, Lamb, et. al. (subsequently,
Dewey & LeBoeuf). He began his legal career as an Assistant
District Attorney with the King’s County (Brooklyn) District
Attorney in New York City. Mr. Elmore has extensive public and
private Board experience. Since October 2020, Mr. Elmore has been a
member of the Board of Directors of 1800Flowers.com (Nasdaq: FLWS),
a leading online and telephonic gift and flower retailer, and he
currently chairs its Nominating and Corporate Governance Committee.
From 2007 until February 2020, Mr. Elmore served as a Director on
the Board of Directors of Lee Enterprises, Inc. (Nasdaq: LEE), a
newspaper publishing company, where he served on the Audit
Committee. He also sat on the Board of iHoops from its foundation.
Mr. Elmore has been involved for over a decade in public interest
endeavors of the John and James L. Knight Foundation’s Knight
Commission on Intercollegiate Athletics, whose focus is to develop,
promote and lead transformational change that prioritizes the
education, health, safety and success of college athletes, and
currently serves as one of the Commission’s Co-Chairs. He chairs
the Commission’s Racial Equity Task Force and is a member of its
Leadership Committee. He also is on the Board of Advisors of the
Shirley Povich Center for Sports Journalism at the University of
Maryland College Park Merrill School of Journalism. He received a
J.D. from Harvard Law School and a B.A. from the University of
Maryland. |
We believe Mr. Elmore’s legal education and professional
experience, experience as an executive in the public and private
sectors, experience on the Boards and on the Nominating and
Governance and Audit Committees of other public companies,
demonstrated commitment to social justice, safety and promotion of
diversity, and his experience as a professional athlete and
television commentator, qualify him to serve on our Board and also
bring the board important leadership qualities and a high degree of
financial literacy. Mr. Elmore is African-American and is one of
three directors on our board who has self-identified as belonging
to an underrepresented racial, ethnic, or other minority group,
which diversity we believe adds to the quality, depth, and
perspective of the Board.
PROPOSAL 1: ELECTION OF DIRECTORS |
Board Diversity Matrix (As of April 22, 2022)
Total Number of Directors
|
5
|
Part I. Gender Identity
|
Female
|
Male
|
Non-Binary
|
Did Not Disclose Gender
|
Directors
|
1
|
4
|
-
|
-
|
Part II. Demographic Background
|
|
|
|
|
African American or Black
|
-
|
2
|
-
|
-
|
Alaskan Native or Native American
|
-
|
1
|
-
|
-
|
Asian
|
-
|
-
|
-
|
-
|
Hispanic or Latinx
|
-
|
-
|
-
|
-
|
Native Hawaiian or Pacific Islander
|
-
|
-
|
-
|
-
|
White
|
1
|
2
|
-
|
-
|
Two or More Races or Ethnicities
|
-
|
1*
|
-
|
-
|
LGBTQ+
|
-
|
-
|
-
|
-
|
Did Not Disclose Demographic Background
|
-
|
-
|
-
|
-
|
*One director self-identifies as White and Native American so he is
identified under both of those categories as well as under “Two or
More Races or Ethnicities.”
Board Composition
Our current Board is composed of five Directors, each of whom are
standing for reelection at the Annual Meeting. Except for Bryan
Ganz, our CEO and President, all of our directors are independent.
None of our directors is an executive officer of any other public
Company or serve on the boards of more than one other public
company. All Directors serve one-year terms until their successors
are elected and qualified at the next annual meeting of our
stockholders. Directors are elected by a majority of the votes
present in person or represented by proxy and entitled to vote at
the Annual Meeting, except in the event that there are more
nominees running than positions open.
PROPOSAL 1: ELECTION OF DIRECTORS |
Criteria for Board Membership and Board Refreshment
The Nominating and Governance Committee Charter provides that the
committee will consider such factors as it deems relevant in
evaluating and recommending director candidates, including, without
limitation, skill, diversity, integrity, experience with comparable
businesses and other organizations, experience relevant to the
needs of the Company, leadership qualities, and the extent to which
a candidate would be a desirable addition to the Board. Because the
current board is relatively small in size by choice to contain
costs, we also seek directors who are not committed as executive
officers of other public companies or on more than two other
boards, to ensure that our directors can commit the time needed to
guide the Company and provide effective oversight of our strategy
and business plans. Finally, we seek to refresh the board
thoughtfully so that we may have a mix of perspectives of longer
serving directors and those who recently joined the Board.
We recognize the value of seeking out directors from various
backgrounds and professions and diverse in age, gender, race and
ethnicity so that the Board as a whole can draw on its breadth and
depth to inform its decisions. Our five board nominees bring
diversity in ethnicity, gender, professional experience and tenure.
Our Board has varied experiences, backgrounds, and strengths. Our
four independent directors, led by Herbert Hughes as Lead
Independent Director, who has the longest tenure with the Company
of any of our directors, play a vital role in oversight of risk
areas and strategic guidance.
Leadership Structure of the Board of Directors
Mr. Ganz, our President and Chief Executive Officer, has been the
Chair of the Board since April 2019. Since December 2021, Mr.
Hughes, our longest-tenured independent director, has served as
Lead Independent Director. At the present time, we believe that
having a non-executive Chair will serve the best interests of the
Company and our stockholders. Accordingly, effective and
conditional upon his reelection to the Board at the Annual Meeting,
Mr. Hughes has been elected to succeed Mr. Ganz as Chair. Ms.
Wager, who was our Chief Legal Officer, has transitioned from
management of the Company’s day-to-day legal matters to support Mr.
Hughes and the Board in her new role as Chief Governance
Officer.
The separation of the Chair from the Chief Executive Officer is
intended to assure the independence and effectiveness of the Board
in its oversight role of evaluating the Chief Executive Officer and
senior management. It also will allow Mr. Ganz to focus on managing
the Company’s business and operations and allow Mr. Hughes to focus
on Board matters.
Role of Board in Risk Oversight Process
Our Board of Directors has responsibility for the oversight of the
company’s risk management processes and, either as a whole or
through its committees, regularly discusses with management our
major risk exposures, their potential impact on our business and
the steps we take to manage them. The risk oversight process
includes receiving regular reports from Board committees and
members of senior management to enable our Board to understand the
Company’s risk identification, risk management and risk mitigation
strategies with respect to areas of potential material risk,
including operations, finance, legal, regulatory, strategic and
reputational risk.
The Audit Committee reviews information regarding liquidity and
operations, and oversees our management of financial risks.
Periodically, the Audit Committee reviews our policies with respect
to risk assessment, risk management, cybersecurity risk, and
regulatory compliance. Oversight by the Audit Committee includes
direct communication with our external auditors, and discussions
with management regarding significant risk exposures and the
actions management has taken to limit, monitor or control such
exposures. The Compensation Committee is responsible for assessing
whether any of our compensation policies or programs has the
potential to encourage excessive risk-taking. The Nominating and
Governance Committee manages risks associated with the independence
of the Board, corporate disclosure practices, and potential
conflicts of interest. The Product Safety Committee manages risks
associated with the products we manufacture and distribute. While
each committee is responsible for evaluating certain risks and
overseeing the management of such risks, the entire board is
regularly informed through committee reports about such risks.
Matters of significant strategic risk are considered by our board
as a whole.
PROPOSAL 1: ELECTION OF DIRECTORS |
Board Committees
Below is a summary of our committees’ responsibilities and
membership during and until the Annual Meeting. Assuming that each
of the director nominees is reelected, the Nominating and
Governance Committee has recommended and the Board has voted that
the committees effective after the Annual Meeting will be as
follows:
Audit Committee
Herbert Hughes (Chair and Financial Expert)
Chris Lavern Reed
Leonard Elmore
Compensation Committee
Chris Lavern Reed (Chair-elect)
Herbert Hughes
Nominating and Governance Committee
Leonard Elmore (Chair-elect)
Chris Lavern Reed
Emily Rooney
Herbert Hughes
Product Safety Committee
Emily Rooney (Chair)
Chris Lavern Reed
Audit Committee
Our Audit Committee is established in accordance with Section
3(a)(58)(A) of the Exchange Act and Rule 5605(c) of the Marketplace
Rules of Nasdaq. It exercises sole authority with respect to the
selection, appointment, oversight of and, where appropriate,
replacement of the Company’s independent registered public
accounting firm and the terms of its engagement including
compensation; reviews the policies and procedures of the Company
and management with respect to maintaining the Company’s books and
records and cybersecurity; reviews with the independent registered
public accounting firm, upon the completion of its audit, the
results of the auditing engagement and any other recommendations
the independent registered public accounting firm may have with
respect to the Company’s financial, accounting or auditing systems;
and reviews with the independent registered public accounting firm,
upon the completion of its quarterly review of the Company’s
financial statements, the results of the quarterly review and any
other recommendations the independent registered public accounting
firm may have in connection with such quarterly reviews. Our Audit
Committee also is responsible for, among other things, assisting
our Board of Directors with oversight of: (1) the integrity of our
financial statements; (2) legal, ethical and risk management
compliance programs; (3) our systems of internal accounting and
financial reporting control. The Audit Committee meets periodically
with selected members of management, including the CFO, CEO, COO
and others to discuss risk topics, including cybersecurity
procedures, material weaknesses if any, and any risks identified to
it by management or by the Company’s independent registered public
accounting firm. The Committee also receives whistleblower reports
and oversees compliance with the Company’s insider trading program
among other things.
Our Audit Committee members are Herbert Hughes (Chair), Chris
Lavern Reed, and Emily Rooney. From December 1, 2020 until his
retirement in September 2021, Clive Denis Bode was a member of the
Audit Committee. Following his retirement, Ms. Rooney was appointed
to complete Mr. Bode’s remaining Board term and to serve on the
Audit Committee. Each of these present and former Committee members
is “independent” within the meaning of Rule 10A-3 under the
Exchange Act and Rule 5605(a)(2) of the Marketplace Rules of
Nasdaq. Our Audit Committee has been 100% independent pursuant to
the applicable Nasdaq rules since July 2019. Our Nominating and
Governance Committee and the Board have determined that Herbert
Hughes is an “audit committee financial expert,” as such term is
defined in Item 407(d)(5) of Regulation S-K and that each of the
other committee members has the level of “financial literacy”
required by the applicable rules and regulations of the SEC.
Herbert Hughes serves as Chairman of our Audit Committee. During
fiscal year 2021, each current member of the Audit Committee was
present at 100% of the Audit Committee meetings held during such
director's tenure as a member of the Audit Committee.
PROPOSAL 1: ELECTION OF DIRECTORS |
Compensation Committee
Our Compensation Committee is responsible for, among other things,
reviewing and recommending to our Board of Directors: (1)
compensation levels of our Chief Executive Officer and other
executive officers, including salaries, participation in incentive
compensation plans and other forms of compensation; (2) the
corporate goals and objectives with respect to compensation for our
executive officers; and (3) the compensation of our outside
directors. The Compensation Committee also administers our equity
incentive plan.
Many key compensation decisions are made during the first quarter
of the fiscal year as the Compensation Committee meets to: review
performance for the prior year, determine awards under our
incentive plans, and set compensation targets and objectives for
the coming year. However, our Compensation Committee also views
compensation as an ongoing process and may convene special meetings
in addition to its regularly scheduled meetings throughout the year
for purposes of evaluation, planning and appropriate action. The
Compensation Committee meets with the Chief People Officer on
topics related to Human Capital Resources including employee
turnover, retention or recruitment challenges, diversity, employee
satisfaction, and new benefits under consideration. In response to
the challenges to recruitment and retention of key personnel posed
by the current work force shortage, the Committee recently engaged
Frederic W. Cook & Co., Inc. (“FW Cook”), an independent
compensation consultant to review and make recommendations to
support retention and recruitment.
The members of our Compensation Committee are Herbert Hughes and
Chris Lavern Reed. From December 1, 2020 until his retirement in
September 2021, Clive Denis Bode was Chair of the Compensation
Committee. Following Mr. Bode’s resignation, Mr. Reed was appointed
to the Committee and Mr. Hughes, its senior remaining member, was
appointed to Chair the Committee. Each of these Committee members
is “independent” within the meaning of Rule 10A-3 under the
Exchange Act. In addition, each member of our Compensation
Committee qualifies as a “non-employee director” under Rule 16b-3
of the Exchange Act and is “independent” as defined by Rule
5605(a)(2) of the Marketplace Rules of Nasdaq. Our Compensation
Committee has been 100% independent pursuant to the applicable
Nasdaq rules since July 2019. During fiscal year 2021, each member
of the Compensation Committee was present at 100% of the
Compensation Committee meetings held during such director's tenure
as a member of the Compensation Committee.
Nominating and Governance Committee
Our Nominating and Governance Committee is responsible for
assisting our Board of Directors by: (1) identifying individuals
qualified to become members of our Board of Directors and its
committees; (2) recommending to our Board of Directors nominees for
election to the Board at the annual meeting of stockholders; and
(3) assisting our Board of Directors in assessing director
performance and the effectiveness of the Board of Directors as a
whole. The Committee annually reviews the Board’s and each
Committee’s charter and composition in terms of the to evaluate the
breadth and depth of its substantive knowledge on topics related to
general financial risk management, risks specific to the Company,
strategic direction and other matters related to its oversight and
guidance of management, as well as in view of developments in the
business and the legal and regulatory environment and makes
recommendations to Committees and the Board to improve oversight
and strengthen its resources. While the Board currently consists of
one member of management and four independent directors, the board
evaluates candidates brought to its attention on a rolling basis
and may recommend additional Board members to provide relevant
expertise and experience. Diversity of background, experience,
gender, and racial and ethnic identity are considered by the
Committee in board recruitment. The board’s five current members
include individuals with diverse backgrounds in manufacturing,
finance, business, law, public service, the media, and law
enforcement. Four individuals add racial, ethnic or gender
diversity: one woman, two men who identify as African American, and
one man who is a member of a Native American tribe. During the
previous fiscal year ended November 30, 2020, the Board had two
female directors, Ms. Mitchell and Ms. Bowling. During the fiscal
years ended November 30, 2016 through November 30, 2019, Ms.
Bowling was the sole female director.
PROPOSAL 1: ELECTION OF DIRECTORS |
The members of our Nominating and Governance Committee are Chris
Lavern Reed (Chair) and Herbert Hughes and Leonard Elmore. Until
his retirement effective November 30, 2021, Paul Jensen (who was an
officer of the Company until April 1, 2020) was Chair of the
Committee. Mr. Elmore was appointed to the Committee upon joining
the Board in December 2021 and Mr. Reed was appointed Chair to
succeed Mr. Jensen upon his retirement. Mr. Bode was a member of
the Committee until his retirement in September 2021, following
which Mr. Hughes was appointed to complete Mr. Bode’s term. All
current members of the Nominating and Governance Committee are
“independent” as defined by Rule 5605(a)(2) of the Marketplace
Rules of Nasdaq. Prior to December 1, 2021, the Nominating and
Governance Committee was 100% independent pursuant to SEC standards
but not pursuant to applicable Nasdaq standards because the Board
had found it in the Company’s best interests, when it began trading
on the Nasdaq, for Mr. Jensen to remain on the Nominating and
Governance Committee until the end of the fiscal year because the
other committee members at the time, Mr. Bode and Mr. Reed, had
served on the Board for less than a year. The current committee, as
noted above, is 100% independent.
Codes of Business Conduct and Ethics; Insider Trading Policy;
Hedging Prohibition
Our Board has adopted a Code of Business Conduct and Ethics and an
Insider Trading Policy that apply to our directors, consultants,
and employees, including our Chief Executive Officer and Chief
Financial Officer. A copy of our Code of Business Conduct and
Ethics is available free of charge on our website at
ir.byrna.com and is provided to all employees upon
commencement of employment. We intend to disclose any amendment to
or waiver from a provision of our Code of Business Conduct and
Ethics that requires disclosure on our website at
ir.byrna.com. The Company also has a formal Whistleblower
Policy and Whistleblower Hotline. The Audit Committee reviews any
information left on the Whistleblower Hotline. Our Insider Trading
Policy, which applies to all employees, consultants, and directors,
prohibits disclosure of or trading in the Company’s securities on
the basis of material non-public information. It also prohibits
short sales, trading in derivative securities, hedging, using
Company securities as collateral for loans without prior written
approval, holding Company securities in margin accounts, and
placing open orders except in accordance with an approved 10b5-1
plan. Pursuant to the policy, all covered persons are required to
pre-clear all trades in our securities and entry into any 10b5-1
plans and are subject to regular quarterly blackout periods as well
as special blackout periods when appropriate. All employees sign an
acknowledgement of receipt of the Insider Trading Policy upon
commencement of employment, as well as a Business Protection
Agreement regarding the Company’s confidential and proprietary
information, trade secrets, and intellectual property.
Director Independence
Our Board of Directors is comprised of a majority of independent
directors as defined in Rule 5605(a)(2) of the Marketplace Rules of
Nasdaq and has had a majority of independent directors since July
2019. Four out of our five directors are independent. Our Board of
Directors has reviewed the independence of our directors under the
applicable standards of Nasdaq. Based on this review, our Board of
Directors determined that each of the following directors is
independent under those standards: Herbert Hughes, Chris Lavern
Reed, Leonard Elmore, and Emily Rooney. Clive Dennis Bode also was
independent under applicable standards during his tenure on the
Board. Each Board Committee is 100% comprised of independent
directors. In December 2021 Herbert Hughes was appointed as Lead
Independent Director.
Compensation Committee Interlocks and Insider
Participation
None of the members of our Compensation Committee is or has in the
past served as an officer or employee of our Company. None of our
executive officers currently serves, or in the past year has
served, as a member of the board of directors or compensation
committee of any entity that has one or more executive officers
serving on our Board of Directors or Compensation Committee.
Director Engagement
Our Board of Directors met nine times during fiscal year ended
November 30, 2021 and also acted by unanimous written consent.
Other than Ms. Rooney, who joined the Board effective October 1,
2021, each director was present at least 75% of the Board of
Directors meetings. Executive sessions or meetings of outside
(non-management) directors without management present are included
on the agenda for each regularly scheduled Board of Directors
meeting for a general discussion of relevant subjects. During
fiscal year 2021, the independent directors held four executive
sessions without management present, three of which included
meeting with the Company’s independent auditors. The Compensation
Committee also meets in executive sessions on compensation related
matters with its outside advisors, in addition to regularly
scheduled meetings.
PROPOSAL 1: ELECTION OF DIRECTORS |
During the fiscal year ended November 30, 2021, the Board had the
following standing committees: an Audit Committee, a Compensation
Committee, and a Nominating and Governance Committee. During the
fiscal year ended November 30, 2021, the Audit Committee met five
times, the Compensation Committee met four times, and the
Nominating and Governance Committee met three times as a committee,
and also conducted individual and committee interviews of board
candidates. Since December 1, 2022, the Board also has established
an Ad Hoc Committee of Independent Directors that oversaw the
establishment and procedures related to the Company’s Stock
Repurchase Program, and a Product Safety Committee.
Submission of Stockholder Recommendations for Director
Candidates
The Nominating and Governance Committee has established procedures
for stockholders to recommend director candidates. All stockholder
recommendations for director candidates must be submitted in
writing to our Corporate Secretary at 100 Burtt Road, Suite 115,
Andover, MA 01810, who will forward all recommendations to the
Nominating and Governance Committee. All stockholder
recommendations for director candidates must be submitted to the
Company not less than 120 calendar days prior to the anniversary of
the date on which our proxy statement was released to stockholders
in connection with the previous year’s annual meeting. All
stockholder recommendations for director candidates must
include:
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the name and address of record of the stockholder;
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a representation that the stockholder is a record holder of our
securities, or if the stockholder is not a record holder, evidence
of ownership in accordance with Rule 14a-8(b)(2) of the Securities
Exchange Act of 1934;
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the name, age, business and residential address, educational
background, public company directorships, current principal
occupation or employment, and principal occupation or employment
for the preceding five full fiscal years of the proposed director
candidate;
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a description of the qualifications and background of the proposed
director candidate which addresses the minimum qualifications and
other criteria for Board membership approved by the Board of
Directors and set forth in the Nominating and Governance Committee
charter;
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a description of all arrangements or understandings between the
stockholder and the proposed director candidate;
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the consent of the proposed director candidate to be named in the
proxy statement, to have all required information regarding such
director candidate included in the proxy statement, and to serve as
a director if elected; and
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any other information regarding the proposed director candidate
that is required to be included in a proxy statement filed pursuant
to the rules of the SEC.
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The Nominating and Governance Committee will evaluate all such
proposed director candidates, including those recommended by
stockholders, in compliance with the procedures established by the
Nominating and Governance Committee, in the same manner, with no
regard to the source of the initial recommendation of such proposed
Director candidate. When considering a potential candidate for
membership on the Board of Directors, the Nominating and Governance
Committee may consider, in addition to the minimum qualifications
and other criteria for Board membership approved by the Board of
Directors, all facts and circumstances that the Nominating and
Governance Committee deems appropriate or advisable, including,
among other things, the skills of the proposed director candidate,
his or her availability, depth and breadth of business experience
or other background characteristics, his or her independence and
the needs of the Board of Directors. At a minimum, each candidate
must have high personal and professional integrity, have
demonstrated ability and judgment, and be effective, in conjunction
with the other directors and candidates, in collectively serving
the long-term interests of the stockholders. In addition, the
Nominating and Governance Committee will recommend that the Board
select candidates for nomination to help ensure that a majority of
the Board shall be “independent” in accordance with Nasdaq rules
and that each of its Audit, Compensation and Nominating and
Governance Committees shall be comprised entirely of independent
Directors, subject to certain exceptions under the Nasdaq rules to
such requirement. Although there is no specific policy regarding
the consideration of diversity in identifying Director candidates,
the Nominating and Governance Committee may consider whether the
candidate, if elected, assists in achieving a mix of Board members
that represents a diversity of background and experience. The
Nominating and Governance Committee also may consider whether the
candidate has direct experience in the industries or in the markets
in which the Company operates. The Company does not pay any fees to
third parties to identify or evaluate potential nominees.
PROPOSAL 1: ELECTION OF DIRECTORS |
Stockholder Communications with the Board of Directors
Stockholders and other interested parties wishing to communicate
with the Board of Directors may do so by sending a written
communication to any director at the following address: Corporate
Secretary, Byrna Technologies Inc., 100 Burtt Road, Suite 115,
Andover, MA 01810. The mailing envelope should contain a notation
indicating that the enclosed letter is a “Board Communication.” All
such letters should clearly state whether the intended recipients
are all members of the Board of Directors or certain specified
individual directors. Our Corporate Secretary or her designee will
make a copy of any such communication so received and promptly
forward it to the director or directors to whom it is
addressed.
Committee Charters
The Board has adopted, and may amend from time to time, a written
charter for each of the Audit Committee and Compensation Committee.
Byrna maintains a website at www.byrna.com. Byrna makes
available on its website, free of charge, copies of each of these
charters.
CORPORATE
GOVERNANCE
Our Corporate Citizenship
We have experienced enormous growth over a relatively short period
as we rapidly progressed from what was primarily a research and
development stage company with a narrow focus on a highly regulated
product to a consumer and public safety focused technology company
with operations on two continents, multiple products, and an
exciting product pipeline. We take pride in what we have achieved
but believe we remain in our infancy relative to the potential
growth in our future.
We are committed to exceeding the expectations of you, our
stockholders, our employees, and the communities in which we live
and work. Every day we strive as a team to develop and deliver
innovative tools and educational and training programs to
facilitate safer policing, safer schools, safer communities, and
safer living. Our goal is simple: to reduce the lethal consequences
that result from deployment of lethal weapons by developing simple,
effective and affordable tools and training for personal safety,
community safety, and criminal apprehension.
We have not yet adopted any formal objectives for environmental
sustainability. However, in 2021 we have undertaken several
projects directed at environmental sustainability and employee and
public health and safety including introduction of our water
soluble eco-kinetic round (the first environmentally friendly less
lethal round, intended to reduce our contribution to the
environmental challenge presented by the build-up of
non-biodegradable plastic debris. In response to the COVID-19
pandemic we initiated various facility-related operational and
cleaning protocols and policies and provided our employees with PPE
and covid testing. We added Sezzle® as a payment option to
facilitate access to our products to people who might not otherwise
be able to afford them. We also initiated a program to support
causes we care about by contributing a portion of the proceeds from
a limited time product bundle to a charitable foundation in support
of its mission to save lives, and recently announced a plan to
donate 10% of the revenue from our school safety initiative to
Meadow’s Movement to deter school gun violence.
Our Team: Human Capital Management
Talent Acquisition, Engagement, and Retention
Our team is critical to the Company’s ability to meet its strategic
goals including growing revenues, improving margins and simplifying
day-to-day processes to maximize efficiency. Our Board and our
Human Resources Department, led by our Chief People Officer, Sandra
Driscoll work to further our key human capital management
priorities: talent acquisition and retention, diversity and
inclusion, engagement and collaboration, and development. We use a
variety of recruiting and retention tools to engage and retain our
human capital including recruiters, employee referrals, short and
long-term incentive programs, a full suite of health benefits, and
a comfortable workplace with various amenities and features to
encourage collaboration and collegiality. In the U.S., in addition
to initiatives related to compensation and the physical work
environment, we seek to support our employees by providing
benefits, services and, in some cases, flexible work arrangements
to support our employees with personal or work-related issues. Our
benefit programs include a range of support services related to
mental and emotional well-being.
We are currently engaged in efforts to provide opportunities and
awards to improve the Company’s recruitment and retention of
critical talent globally. In February 2022, our Compensation
Committee retained FW Cook, an independent compensation consultant,
to make recommendations to support retention and recruitment. We
have updated our incentive program to provide better motivational
and retention tools in the medium and short range as a result of FW
Cook’s recommendations, and the proposed amendment and restatement
of the 2020 Equity Incentive Plan in Proposal 4 to be voted on at
the Annual Meeting will allow further implementation of those
recommendations. Over the next 12 months we expect to undertake or
complete several key projects to support and incentivize our
people, including moving our Fort Wayne manufacturing and customer
support teams to a new, state of the art facility with better
workplace amenities, implementation of company-wide, cloud-based
systems to improve safety and security, and new software and
hardware to facilitate management of inventory, production and
shipping operations. These systems are expected to greatly improve
employees’ day to day experience and productivity by easing record
keeping and facilitating information access across departments and
functions.
In 2021, we launched our online learning platform, which currently
offers over 3 dozen self-guided courses of study designed to
facilitate the personal and professional development of our
employees. These include programs on stress management, workplace
conflict management, intergenerational communication skills,
collaboration and teambuilding, time management, planning and
organizing, listening skills, negotiating skills, presentation
skills and e-mail best practices, as well as modules specifically
for managers and supervisors.
Diversity and Inclusion
Byrna embraces diversity and equal opportunity. We view diversity
in our team as an important contributor to innovation and seek to
encourage all team members to offer bring their background,
experience, diverse skills, and perspective to the workplace. Our
Human Resources department is in the process of building out
programs designed to make all employees comfortable in expressing
their views and collaborating so that they can develop and thrive
in the workplace. In the last 12 months, all employees participated
in training directed at preventing discrimination and harassment
and understanding bias, with special training for managers on
leadership’s role in preventing discrimination. With under 100
employees in the United States, the Company does not report metrics
to the EEOC.
REPORT OF THE AUDIT COMMITTEE |
REPORT OF THE
AUDIT COMMITTEE
Notwithstanding anything to the contrary set forth in any of the
Company’s previous or future filings under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, that might incorporate this Proxy Statement or any future
filing with the Securities and Exchange Commission, in whole or in
part, the following report shall not be deemed incorporated by
reference into any such filing.
The undersigned members of the Audit Committee of the Board of
Directors of the Company submit this report in connection with the
committee’s review of the financial reports of the Company for the
fiscal year ended November 30, 2021 as follows:
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1.
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The Audit Committee has reviewed and discussed with management the
audited financial statements of the Company for the fiscal year
ended November 30, 2021.
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2.
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The Audit Committee has discussed with representatives of
EisnerAmper LLP the matters required to be discussed with them by
applicable requirements of Public Company Accounting Oversight
Board Auditing Standard No. 16.
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3.
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The Audit Committee has received the written disclosures and the
letter from the independent accountant required by the Public
Company Accounting Oversight Board regarding the independent
accountant’s communications with the Audit Committee concerning
independence and has discussed with the independent accountant the
independent accountant’s independence.
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4.
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Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in the Company’s Annual Report on
Form 10-K for the fiscal year ended November 30, 2021 for filing
with the Securities and Exchange Commission.
|
Submitted by the Audit Committee:
Herbert Hughes, Chairman of the Audit Committee
Chris Reed
Emily Rooney*
*Ms. Rooney joined the Audit Committee effective October 1,
2021.
EXECUTIVE
COMPENSATION
Our Executive Officers
In addition to Mr. Ganz, our current executive officers include
David North, Luan Pham, Lisa Wager, and Michael Wager. Information
concerning our executive officers, other than Mr. Ganz,
follows:
David North has been Chief Financial Officer since August
2020. He previously served as Vice President and Corporate
Controller, from October 2017 to January 2020, at Velcro Group
Corp., a multinational manufacturer with operations in North
America, South America, Asia and Europe. From July 2011 to October
2017, Mr. North served as Corporate Controller for the L.S.
Starrett Company (NYSE:SCX), a manufacturer of measurement tools
with operations in North America, Brazil, China and Europe. Mr.
North did not have any other employment during the past two years.
He began his career at Deloitte and Touche. Mr. North is a
Certified Public Accountant registered in the state of New York. He
received a M.S. in Accounting from New York University, and a B.A.
from Dartmouth College.
Lisa Wager has been Corporate Secretary since April 2019 and
our Chief Governance Officer since December 2021. She previously
served as the Company’s Chief Legal Officer from October 2018 to
December 2021. Ms. Wager did not have any other employment
subsequent to February 2017. Previously, Ms. Wager was in private
practice for over 20 years, most recently as a Partner with the law
firm of Morgan Lewis. Ms. Wager was as a law clerk to Hon. John F.
Keenan, United States District Judge for the Southern District of
New York. She received a J.D. from Columbia Law School and a B.S.
from Union College.
Luan Pham has been Chief Revenue and Marketing Officer since
April 2021, and joined the Company as Chief Marketing Officer in
January 2021. He previously served as Chief Revenue and Marketing
Officer, from June 2017 to December 2020, of Laird Superfood, Inc.,
a creator of plant-based food products. Immediately before joining
Laird, and since January 2012, Mr. Pham was Head of Marketing for
Condé Nast's Golf Digest. Previously, Mr. Pham was Senior Director
of Marketing for Golf and Tennis at Ralph Lauren. Mr. Pham received
a B.A. from California State University, Fullerton.
Michael Wager has been Chief Strategy Officer since June 28,
2021 and, since January 2018, Mr. Wager has served as Senior
Counsel to Taft Stettinius & Hollister LLP (Partner 2011-2017),
outside counsel to the Company from October 2020 to December 2021.
Since 2011 Mr. Wager has been an adjunct faculty member in the
department of Political Science at Case Western Reserve University
College of Arts and Sciences. Prior to joining the Taft law firm,
Mr. Wager was a Partner at the law firm of Squire Patton &
Boggs LLP. Since October 2021, he has been a member of the Board of
Directors of SPAR Group, Inc (Nasdaq: SGRP) and its Governance and
Audit Committees. Since 1988, Mr. Wager has served on the board of
Michael Anthony Holdings Inc. (formerly Michael Anthony Jewelers
Inc. (Nasdaq: MAJJ), and he previously was on the board of Cascal
N.V. a Dutch-based NYSE listed private utility company. Mr. Wager
also has been a member and Chair of the Board of Directors of a
Cleveland-based private equity firm, a member and Chair of the
Board of Directors of the Cleveland-Cuyahoga County Port Authority,
and a member of the White House Business Council. Mr. Wager
recieved a J.D. from New York University School of Law, an M.A.
from Columbia University, and a B.A. from The American University,
Washington, D.C.
Compensation Discussion and Analysis
Our Compensation Philosophy
Our compensation philosophy is to compensate all employees
(including our named executive officers) at a level sufficient to
attract, motivate, and retain the talent we need to achieve or
surpass our short-term and long-term goals for our business,
without promoting irresponsible behavior. Guided by this
philosophy, the pay and benefits practices of the Company reflect
our vision and values, and the general condition of the economy,
and are built on a framework of pay-for-performance, comprehensive
position evaluations, and market-competitiveness. Executive
management, with approval of our Board of Directors, fulfills our
responsibility to promote the best interests of the Company through
the execution of sensible compensation principles and
practices.
Compensation Process
Our Compensation Committee is independent and involved. Each member
of the committee is an independent director and is a non-employee
director under the applicable rules of Nasdaq and the SEC,
respectively. In fulfilling its duties and responsibilities, the
Compensation Committee may consult with members of management and
hire independent consultants. In addition, our Chief Executive
Officer works with our Compensation Committee in making
recommendations regarding our overall compensation policies and
plans as well as specific compensation levels for our other
officers and key employees, other than the Chief Executive Officer.
Executives are not present for discussion of or decisions on their
own compensation.
During fiscal year 2020, the Compensation Committee engaged
compensation consultant Korn Ferry to advise the Compensation
Committee regarding incentive plan design, performance measurement,
design and use of equity compensation and relevant market practices
and trends with respect to the compensation of our executive
officers and senior management, as well as head hunting services.
Korn Ferry prepared reports, delivered presentations and engaged in
discussions with the Compensation Committee on executive
compensation matters. Korn Ferry also reviewed and provided
recommendations regarding director compensation. Korn Ferry’s work
included a review of a peer group with similar business models to
Byrna. The Compensation Committee considered the recommendations
from Korn Ferry when reviewing and determining compensation matters
to recommend to the full board. No compensation consultant was
engaged during fiscal year 2021.
In early 2022, the Compensation Committee and the Audit Committee
each met with the Chief People Officer and the Chief Executive
Officer to assess human capital risks, including recruiting and
retention challenges in the current environment. The Compensation
Committee engaged independent compensation consultant FW Cook to
provide it with independent advice as to the reasonableness of
management and board compensation relative to peers and on the
appropriateness of the compensation structure to meet the Company’s
business strategy and human resources objectives, including to make
recommendations to ensure the long-term incentive program is
meaningful and motivating to participants. The Compensation
Committee assessed the independence of FW Cook in accordance with
SEC rules and regulations and concluded that no conflict of
interest exists that prevented them from being independent
consultants to the Compensation Committee. In March 2022, FW Cook
and the Compensation Committee recommended, and the Board approved,
certain adjustments to the long-term incentive design to create an
opportunity to better motivate participants and address retention
concerns. See “Long-Term Incentive” below.
Compensation Components
We utilize three general forms of compensation for our named
executive officers: base salary, short-term incentive compensation,
and long-term incentive compensation. We deliver compensation at
various levels of the organization in different ways.
Base salary
We pay base salaries to attract and retain talented employees,
including our named executive officers. Base salary increases are
driven primarily by demonstrated value to our organization and are
reviewed annually and adjusted from time to time, based on a review
of market data and an assessment of Company, business unit and
individual performance and experience. Merit increases are awarded
based on the performance of the employee.
Short-Term Incentives
We pay annual cash incentive compensation to our executive officers
related to individual performance targets. We balance the security
provided by a base salary with the “at-risk” feature of annual
incentive compensation to attract and retain top quality employees
and provide proper incentive to enhance the value of the Company’s
common stock for its stockholders.
Long-Term Incentives
We link compensation levels with performance results to motivate,
incent and retain employees and to seek to ensure sustained
alignment with stockholder interests by providing equity-based
awards to our executive officers under our 2020 Equity Incentive
Plan (the “Plan”). We believe equity awards provide an important
recruitment, motivational, and retention tool for our executive
officers and other key employees, particularly in the extremely
competitive current market. Long-term incentives available under
the 2020 Plan include consist of equity-based awards, including
restricted stock, restricted share units, stock appreciation rights
and stock options. The Compensation Committee implements multi-year
performance periods and time and performance-based vesting
conditions to seek to facilitate the motivation and retention of
key employees.
Our long-term incentive program implemented in October 2020
consists of front-loaded restricted stock unit grants to the CEO,
other senior management, and key employees, with a three-year term.
All awards to the CEO, and two-thirds of the awards to all other
grantees, are subject to preset stock price performance triggers
that must be met for the relevant tranche to be eligible to vest at
the end of the three-year period. No awards will vest if the
grantee does not remain employed until the end of the three-year
period, nor can they vest if the price thresholds are not satisfied
during the three-year period. The CEO grant was part of Mr. Ganz’s
3-year employment contract, and his grants were intended to be
conditional upon his fulfilling that contract. An additional period
of up to 12 months, but not beyond three years from grant, to meet
price thresholds was included in the event the CEO resigned for
good reason or was fired without cause during the agreement term
and before the price performance conditions were satisfied. Only
the first price trigger for the CEO, set at $20 sustained for 20
trading days, has been satisfied. None of the performance triggers
built into two-thirds of the awards for other employees (at $30 and
$40 per share, in each case for 20 trading days) or the other
two-thirds of the CEO’s grant have been met.
The intent of Mr. Ganz’s contract and related RSU grant were to
retain and motivate him for a full three-year period by granting
incentive compensation for that period up front, with vesting tied
directly to the performance of the Company’s stock, thereby
aligning his interests with stockholders, and no vesting until the
end of the three-year term. There was no intent to grant additional
equity compensation to the CEO during the 3-year term of his
employment contract, nor was any additional equity compensation
granted to him in the fiscal year ended November 30, 2021.
Similarly, RSU grants to other key employees that were structured
based on the award to Mr. Ganz were intended to be up-front grants
to generally cover the three-year period following each grant. As
discussed above, during the Compensation Committee’s review process
following the end of fiscal year 2021, FW Cook recommended and the
Board adopted certain changes to the long-term incentive program to
address changes in the employment market and the Company’s stock
performance that had materially reduced the incentive value of the
up-front RSU grants.
Fluctuations in our stock price have significantly depressed the
motivational value of the RSU awards. Accordingly, in March of
2022, FW Cook recommended and the Board approved of the following
adjustment: cancellation of 50% of the original RSU grants
consisting of all of the portion of the RSU awards subject to a $40
stock price target and half of the portion of the RSU awards
subject to a $30 stock tranche, and reissuance of the cancelled
shares as time-based stock options with a ten-year term,
exercisable at the fair market value on grant date. One third of
the stock options will vest on the first anniversary of the grant,
and the balance will vest in even quarterly increments over the
following two years. These new option grants have no net impact on
the overall number of shares reserved for issuance to the grantees
and no additional dilutive impact on shareholders as a whole.
Implementation of these changes to our long-term compensation is
intended to provide more effective, ongoing long-term incentives to
facilitate retention, while maintaining stock price
performance-based units as a substantial part of the incentive
equity package and maintaining alignment with shareholder
experience.
Summary Compensation Table
The following table sets forth all compensation paid to our named
executive officers at the end of the fiscal years ended November
30, 2021 and 2020. Individuals we refer to as our “named executive
officers” include our Chief Executive Officer and our two other
most highly compensated executive officers during the fiscal year
ended November 30, 2021 whose salary and bonus for services
rendered in all capacities exceeded $100,000.
Name and
Principal
Position
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Year
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Salary
($)
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Bonus
($)
|
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Stock
Awards
($)(1)
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Total
($)
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Bryan Ganz(2)
- Chief Executive Officer
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2021
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450,000 |
|
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337,500 |
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— |
|
|
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787,500 |
|
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2020
|
|
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345,000 |
|
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|
362,500 |
|
|
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3,347,529 |
|
|
|
4,055,029 |
|
David North(3)
- Chief Financial Officer
|
2021
|
|
|
250,000 |
|
|
|
80,000 |
|
|
|
— |
|
|
|
330,000 |
|
|
2020
|
|
|
62,500 |
|
|
|
25,288 |
|
|
|
375,519 |
|
|
|
463,307 |
|
Lisa Wager(4)
- Chief Legal Officer
|
2021
|
|
|
225,000 |
|
|
|
75,000 |
|
|
|
|
|
|
|
300,000 |
|
|
2020
|
|
|
202,078 |
|
|
|
45,000 |
|
|
|
1,023,949 |
|
|
|
1,271,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1)
|
All stock-based awards reported for the years ended November 30,
2021 and November 30, 2020 were restricted stock units that have
not vested and will not vest unless the employee continues to be
employed by the Company on a future date specified as detailed
below with respect to each employee, in addition to other
performance conditions and subject to the terms of the governing
plan, the grant, and related grant agreements. The grant date fair
value of these stock- based awards was determined using Monte-Carlo
simulation model.
|
(2)
|
The stock-based award to Mr. Ganz reported for the year ended
November 30, 2020 was a term of his employment agreement effective
August 31, 2020, subject to stockholder approval, the terms of
which employment agreement were approved by 99.533% of the
stockholders voting at the Annual Meeting held on November 19,
2020. The restricted stock units have not vested and will not vest
unless he continues to be employed by the Company through August
31, 2023 in addition to other performance conditions, and subject
to the terms of the grant agreement.
|
(3)
|
David North became the Company’s Chief Financial Officer on August
31, 2020 and his 2020 salary reported is pro-rated for such period
of time. His stock-based awards have not vested and will not vest
unless he continues to be employed by the Company through December
1, 2023 in addition to other performance conditions, and subject to
the terms of the grant agreement.
|
(4)
|
The stock-based award to Ms. Wager reported for the year ended
November 30, 2020 was a grant of restricted stock units that have
not vested and will not vest unless she continues to be employed by
the Company through August 31, 2023 in addition to other
performance conditions, and subject to the terms of the grant
agreement.
|
Employment Agreements
Bryan Ganz
The Board of Directors and, on November 19, 2020 the stockholders
of the Company approved, an employment with Bryan Ganz effective
August 31, 2020 (the “Ganz Agreement”). The Ganz Agreement provides
that Mr. Ganz will be paid an annual salary for $450,000, and a
target bonus of 100%, of his base salary, subject to his
achievement of criteria established by the Compensation Committee.
In addition, in consideration of Mr. Ganz’ rendering of services
thereunder, Byrna issued to Mr. Ganz 900,000 RSUs, (on a
post-reverse split basis) under the 2020 Plan, which RSUs will vest
on the third anniversary of grant, but only as to (i) one-third if
Byrna’s stock trades above $20.00 on a 20-day closing volume
weighted average price (“VWAP”) during the performance period,
one-third if Byrna’s stock trades above $30.00 on a 20-day VWAP
during the performance period, and (iii) one-third if Byrna’s stock
trades above $40.00 on a 20-day VWAP during the performance period
(all stock price triggers have and shall be adjusted to account for
stock splits and reverse stock splits); provided, that Mr. Ganz
must remain employed by Byrna for three years from the effective
date of the Ganz Agreement (subject to certain terms therein) for
any of the units to vest. Mr. Ganz is also entitled to participate
in any employee benefit plans maintained by Byrna on behalf of its
employees. The Ganz Agreement has a three-year term, with optional
renewal by mutual agreement of the Company and Mr. Ganz.
In connection with the Ganz Agreement, Byrna and Mr. Ganz entered
into a Non-competition and Non-solicitation Agreement, covering
period of 12 months from the date of termination of Mr. Ganz’
employment.
David North
Effective August 31, 2020, Mr. North was appointed by the Board of
Directors as Chief Financial Officer. In connection with Mr.
North’s appointment as the Company’s Chief Financial Officer, he
accepted an offer letter from the Company (the “Offer Letter”). The
Offer Letter provides that Mr. North will be paid an annual base
salary of $250,000 and may be eligible for a discretionary bonus.
It further provided that Mr. North was expected to receive 600,000
restricted stock units (60,000 on a post-reverse split basis) that
will vest based upon his time at the Company and the Company’s
stock price appreciation. The offer letter also included an offer
of employee benefits, including health insurance.
Lisa Wager
Ms. Wager has served pursuant to appointment by the Board of
Directors as the Company’s Chief Legal Officer since October 2018
and since April 1, 2019 as Corporate Secretary. Effective December
1, 2022, Ms. Wager’s title and responsibilities changed from Chief
Legal Officer to Chief Governance Officer. She continues to serve
as Corporate Secretary.
Potential Payments upon Termination or Change of Control
In the event of termination of the Employment Agreement by Mr. Ganz
for good reason or by Byrna without cause, Mr. Ganz will be
entitled to receive (subject to his execution of a release): (a)
the accrued amounts (i.e. any accrued but unpaid base salary and
accrued by unused vacation, reimbursement for business expenses
properly incurred, and employee benefits to which Mr. Ganz is
entitled under employee benefit plans as of the termination date);
(b) twelve months base salary plus an amount equal to the target
bonus amount; (c) a period of up to 12 months, but in no event
beyond August 31, 2023 (the end of the original three-year RSU
term) to satisfy the price vesting triggers on the RSUs; and (d)
reimbursement for monthly COBRA premiums paid by Mr. Ganz until the
earliest of (i) the twelve month anniversary of the termination,
(ii) termination of COBRA eligibility; and (iii) the date on which
Mr. Ganz becomes eligible to receive substantially similar coverage
from another source. In addition, Mr. Ganz would be able to
exercise any vested options outstanding as of the date of such
termination for the full original term of such options.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning the
outstanding equity awards of each of our 2021 Named Executive
Officers as of November 30, 2021:
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
Name
(a)
|
|
Number of
securities
underlying
unexercised
options (#)
exercisable
(b)
|
|
|
Number of
securities
underlying
unexercised
options (#)
unexercisable
(c)
|
|
|
Equity
incentive
plan
awards:
number of
securities
underlying
unexercised
unearned
options (#)
(d)
|
|
|
Option
exercise
price ($)
(e)
|
|
|
Option
expiration
date
(f)
|
|
|
Number of
shares or
units of
stock that
have not
vested
(#)
(g)
|
|
|
Market value
of shares
or units
of stock
that have not
vested(1)
($)
(h)
|
|
|
Equity incentive
plan awards: number of unearned
shares, units or other rights that have not vested
(#)
(i)
|
|
|
Equity incentive
plan awards: market or payout
value of unearned shares, units or
other rights that have not vested
($)
(j)
|
|
Bryan Ganz
|
|
|
60,000 |
|
|
|
— |
|
|
|
— |
|
|
|
1.90 |
|
|
12/30/2024
|
|
|
|
300,000 |
|
|
|
4,416,000 |
|
|
|
600,000 |
|
|
|
8,832,000 |
|
David North
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20,000 |
|
|
|
294,400 |
|
|
|
40,000 |
|
|
|
588,800 |
|
Lisa Wager
|
|
|
51,000 |
|
|
|
— |
|
|
|
— |
|
|
|
1.90 |
|
|
12/30/2024
|
|
|
|
50,000 |
|
|
|
736,000 |
|
|
|
100,000 |
|
|
|
1,472,000 |
|
|
(1)
|
All unvested stock-based awards listed are restricted stock units
that will not vest until the third anniversary of the grant and
only if certain performance triggers have been satisfied. See notes
to the Summary Compensation Table above for vesting terms of the
unvested restricted stock units held by Messrs. Ganz and North and
Ms. Wager and changes to those awards made subsequent to November
30, 2021.
|
Pension Plan Benefits and Defined Contribution Plans
The Company does not have a pension plan or defined benefit plan
that provides for payments or benefits to the Named Executive
Officers at, following, or in connection with retirement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
DIRECTOR
COMPENSATION
The following table summarizes the director compensation of our
non-employee directors for fiscal year 2021:
Name(1)
|
|
Fees
earned or
paid in
cash
($)
|
|
|
Stock-
based
Awards
($)(2)(3)
|
|
|
Total
($)
|
|
Paul Jensen
|
|
|
60,000 |
|
|
|
57,075 |
|
|
|
117,075 |
|
Herbert Hughes
|
|
|
65,000 |
|
|
|
57,075 |
|
|
|
122,075 |
|
Chris Lavern Reed
|
|
|
55,000 |
|
|
|
57,075 |
|
|
|
112,075 |
|
Clive Bode
|
|
|
48,177 |
|
|
|
57,075 |
|
|
|
105,252 |
|
Emily Rooney
|
|
|
9,167 |
|
|
|
— |
|
|
|
9,167 |
|
Leonard Elmore(4)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(1)
|
Bryan Ganz, our Chairman and Chief Executive Officer, is not
included in this table because Mr. Ganz is our employee, and thus
received no compensation for his service as a director. The
compensation received by Mr. Ganz as an employee of the Company is
shown in the Summary Compensation Table on page 32.
|
|
(2)
|
All stock-based awards were restricted stock units valued here as
of the grant date.
|
|
|
|
|
(3)
|
The number of option awards outstanding at our 2021 fiscal year end
and held by the non-employee directors as of that date were as
follows: 8,750 for Paul Jensen; 17,500 for Herbert Hughes; and zero
for Chris Lavern Reed, Clive Bode and Emily Rooney. The number of
restricted stock unit awards outstanding at our 2021 fiscal year
end and held by the non-employee directors as of the that date were
as follows: 3,873 vested for Paul Jensen; 3,873 unvested for
Herbert Hughes; 3,873 unvested for Chris Lavern Reed; zero for
Clive Bode; and zero for Emily Rooney.
|
|
(4)
|
Mr. Elmore was not a director during fiscal 2021.
|
During the fiscal year ended November 30, 2021, stock and cash
compensation granted to each non-employee member of the Board of
Directors was determined by the Compensation Committee based on
certain criteria set in the 2020 fiscal year following consultation
with the former compensation consultant including peer data and
goals including incentive and retention. Each director who served a
full year received 3,873 restricted stock units and $55,000, and
each director who served less than a full year, but served as a
director through the end of the fiscal year, received a pro-rated
portion of the same. Mr. Bode, who resigned before the completion
of his term of service, received a prorated portion of the $55,000
cash compensation and the same restricted stock units as the other
directors listed above but subsequently forfeited those restricted
stock units. Ms. Rooney, who joined the Board effective October 1,
2021, received a pro-rated award of cash and stock-based awards.
Her stock-based award of 626 restricted stock units, valued at
$14,348, is not reflected in the table above because it was not
granted until after the end of the fiscal year. In addition, fixed
cash amounts were granted to the chairs of the board committees
and, where chairs departed during the fiscal year, such amount was
awarded pro rata based on months served. The full-year stipend
amounts for fiscal year 2021 were $10,000 for service as the chair
of the Audit Committee, $7,500 for service as the chair of the
Compensation Committee, and $5,000 for service as the chair of the
Nominating and Governance Committee. The Lead Independent Director
is entitled to a cash fee of $25,000 per annum starting with fiscal
year 2022 for services in that position.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 11, 2022, information
regarding beneficial ownership of our capital stock by:
|
●
|
each person, or group of affiliated persons, known by us to
beneficially own more than 5% of our common stock;
|
|
●
|
each of our named executive officers;
|
|
●
|
each of our directors; and
|
|
●
|
all our current executive officers and directors as a group.
|
Beneficial ownership is determined according to the rules of the
SEC and generally means that a person has beneficial ownership of a
security if he, she or it possesses sole or shared voting or
investment power of the applicable security, including options that
are currently exercisable or exercisable within 60 days of April
11, 2022. Except as indicated by the footnotes below, we believe,
based on the information furnished to us, that the persons named in
the table below have sole voting and investment power with respect
to all shares of common stock shown that they beneficially own,
subject to community property laws where applicable.
Our calculation of the percentage of beneficial ownership is based
on 22,915,288 shares of our common stock issued and outstanding as
of April 11, 2022. Common stock subject to stock options currently
exercisable or exercisable within 60 days of April 11, 2022 are
deemed to be outstanding for computing the percentage ownership of
the person holding these securities and the percentage ownership of
any group of which the holder is a member but are not deemed
outstanding for computing the percentage of any other
person.
Names and Address(1)
|
|
Common Stock
|
|
|
Percent of Class
|
|
Greater Than 5% Stockholders
|
|
|
|
|
|
|
|
|
Pierre Lapeyre Jr.
c/o Riverstone Holdings LLC
712 Fifth Avenue, 36th Floor
New York, NY 10019
|
|
|
2,891,943
|
|
|
|
12.62
|
%
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
Bryan Scott Ganz(2)
|
|
|
1,077,050
|
|
|
|
4.70
|
%
|
Lisa Wager(3)
|
|
|
231,389
|
|
|
|
1.01
|
%
|
David North
|
|
|
2,381
|
|
|
|
*
|
|
Non-employee Directors
|
|
|
|
|
|
|
|
|
Leonard Elmore
|
|
|
—
|
|
|
|
*
|
|
Herbert Hughes(4)
|
|
|
126,241
|
|
|
|
*
|
|
Chris Lavern Reed
|
|
|
3,751
|
|
|
|
*
|
|
Emily Rooney
|
|
|
—
|
|
|
|
*
|
|
All Executive Officers and Directors as a group
|
|
|
1,464,677
|
|
|
|
6.39
|
%
|
* Less than 1%
|
(1)
|
Unless otherwise indicated, the address of each beneficial owner
listed in the table below is c/o Byrna Technologies Inc., 100 Burtt
Road, Suite 115, Andover, Massachusetts 01810.
|
|
(2)
|
Consists of (i) 525,638 shares of common stock owned by Mr. Ganz in
his individual capacity, (ii) 478,059 shares of common stock owned
by Northeast Industrial Partners LLC, of which Mr. Ganz is the
majority holder, and (iii) 70,753 and 2,600 shares of common stock
owned by the Judith Ganz Trust and the David Ganz Trust,
respectively, of which Mr. Ganz is the trustee.
|
|
(3)
|
Consists of (i) 197,758 shares of our common stock owned by Ms.
Wager, and (ii) options exercisable into 33,631 shares of our
common stock within 60 days of March 24, 2022.
|
|
(4)
|
Consists of (i) 108,741 shares of our common stock owned by Mr.
Hughes, and (ii) options exercisable into 17,500 shares of our
common stock within 60 days of March 24, 2022.
|
Changes in Control
We are not aware of any arrangements that may result in “changes in
control” as that term is defined by the provisions of Item 403(c)
of Regulation S-K
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Transactions
On April 13, 2018, the Company entered into a Purchase and Sale
Agreement (the “Purchase and Sale Agreement”) with André Buys
pursuant to which the Company purchased certain intellectual
property from Mr. Buys for consideration to consist of a first
payment of cash at the closing and a second payment of $500,000
cash or $750,000 in Company’s common stock (the “Second Payment”),
and engaged him as its Chief Technology Officer (“CTO”). Under the
Purchase and Sale Agreement, the Company is prohibited from
terminating Mr. Buys without cause prior to April 13, 2021. On
December 19, 2019, the Company and Buys entered into an amendment
to the Agreement (the “Amendment”) which provided, among other
things, that in lieu of the Second Payment the Company would issue
to Mr. Buys (and/or his designees) shares of restricted common
stock of the Company valued at $630,000 as soon after the effective
date of the Amendment as it is approved by the Company's Board. The
Company also agreed to make an additional cash payment of $80,000
to Mr. Buys, which has been paid. Under the Amendment the number of
shares to be issued was to be calculated based on the average
closing price of the Company's stock for the 20 days before the
Amendment was signed and approved by the Board, both of which
occurred on December 19, 2019. The Amendment also terminated Mr.
Buys' security interest in and reversionary rights to the
intellectual property covered by the Agreement, modified certain
terms of the Purchase and Sale Agreement relating to royalties,
raised Mr. Buys' compensation as CTO to $12,500 per month and
provided that, upon Mr. Buy's relocation to Boston, he would become
a full-time employee of the Company and earn a salary of $14,000
per month plus certain benefits. The Company expensed $389,992 and
$204,813 and $8,333 for royalties due to Mr. Buys during the years
ended November 30, 2021, 2020, and 2019 respectively. The Company
also recorded stock-based compensation expense of $6,341, $16,909,
and $16,909 during the years ended November 30, 2021, 2020, and
2019 respectively, related to stock options granted to Buys in 2018
to acquire 1,500,000 shares of common stock (150,000 shares on a
post-reverse split basis).
The Company leased office premises at Wakefield, Massachusetts for
rent, utilities and maintenance charge of approximately $2,476 per
month from a corporation owned and controlled by the Company’s
President and, effective April 1, 2019, CEO of the Company. This
lease was terminated on June 30, 2020. The Company expensed $19,810
for these items during the year ended November 30, 2020. The
Company subleased office premises at its Massachusetts headquarters
to a corporation owned and controlled by the same individual
beginning July 1, 2020. Sublease payments received were $12,040 and
$0 for the years ended November 30, 2021 and November 30, 2020,
respectively.
Related Person Transactions Policy and Procedure
The Audit Committee must review and approve any related person
transaction we propose to enter into. The Audit Committee is
responsible for overseeing the policies and procedures relating to
transactions that may present actual, potential or perceived
conflicts of interest and may raise questions as to whether such
transactions are consistent with the best interest of our company
and our stockholders. In addition, the Audit Committee will keep
the Company’s independent auditors informed of the Committee’s
understanding of the Company’s relationships and transactions with
related parties that are significant to the company.
Any potential related party transaction that is brought to the
audit committee's attention will be analyzed by the Audit
Committee, in consultation with outside counsel or members of
management, as appropriate, to determine whether the transaction or
relationship does, in fact, constitute a related party transaction.
At its meetings, the Audit Committee will be provided with the
details of each new, existing or proposed related party
transaction, including the terms of the transaction, the business
purpose of the transaction and the benefits to us and to the
relevant related party.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
Limitation of Liability and Indemnification of Directors and
Officers
We are incorporated under the laws of the State of Delaware.
Section 145 of the Delaware General Corporation Law (“DGCL”)
provides that a Delaware corporation may indemnify any persons who
are, or are threatened to be made, parties to any threatened,
pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by
or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee, or agent of
such corporation, or is or was serving at the request of such
corporation as an officer, director, employee, or agent of another
corporation or enterprise. The indemnity may include expenses
(including attorneys’ fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit, or proceeding, provided that
such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation’s
best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his or her
conduct was illegal. A Delaware corporation may indemnify any
persons who are, or are threatened to be made, parties to any
threatened, pending, or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of
the fact that such person is or was a director, officer, employee,
or agent of such corporation, or is or was serving at the request
of such corporation as a director, officer, employee, or agent of
another corporation or enterprise. The indemnity may
include expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection with the defense
or settlement of such action or suit, provided that such person
acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the corporation’s best interests, except
that no indemnification is permitted without judicial approval if
such person is adjudged to be liable to the corporation. To the
extent that a present or former officer or director is successful
on the merits or otherwise in the defense of any action, suit, or
proceeding referred to above, or in the defense of any claim,
issue, or matter therein, the corporation must indemnify him or her
against the expenses (including attorneys’ fees) that such officer
or director has actually and reasonably incurred. Our Certificate
of Incorporation, as amended, provides that our directors will not
be personally liable to the company or our stockholders except for
liability (i) for any breach of the director’s duty of loyalty to
the company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for
any transaction from which the director derived improper personal
benefit. In addition, our Bylaws, as amended, provides for the
indemnification of our directors and officers to the fullest extent
permitted by law.
Section 102(b)(7) of the DGCL permits a corporation to provide
in its Certificate of Incorporation, as amended, that a director of
the corporation shall not be personally liable to the corporation
or its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability for any:
|
•
|
breach of a director’s duty of loyalty to the corporation or its
stockholders;
|
|
•
|
act or omission not in good faith or that involves intentional
misconduct or a knowing violation of law;
|
|
•
|
unlawful payment of dividends or redemption of shares; or
|
|
•
|
transaction from which the director derives an improper personal
benefit.
|
Our Bylaws, as amended, provide that expenses incurred by any
director in defending any such action, suit or proceeding in
advance of its final disposition shall be paid by us, provided such
director must repay amounts in excess of the indemnification such
director is ultimately entitled to.
We have entered into indemnification agreements with our directors,
executive officers and certain other officers and agents pursuant
to which they are provided indemnification rights that are broader
than the specific indemnification provisions contained in the
DGCL.
Section 174 of the DGCL provides, among other things, that a
director who willfully or negligently approves of an unlawful
payment of dividends or an unlawful stock purchase or redemption
may be held liable for such actions. A director who was either
absent when the unlawful actions were approved, or dissented at the
time, may avoid liability by causing his or her dissent to such
actions to be entered on the books containing the minutes of the
meetings of the board of directors at the time such action occurred
or immediately after such director receives notice of the unlawful
actions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
Arrangements between Directors and Officers
To our knowledge, there is no arrangement or understanding between
any of our officers or directors and any other person pursuant to
which the officer or Director was selected to serve or was elected,
respectively.
Family Relationships
There are no family relationships between any of our officers or
directors except that Lisa Wager, our Chief Governance Officer and
Corporate Secretary, and Michael Wager, our Chief Strategy Officer,
are cousins by marriage.
Delinquent Section 16 Reports
The Company became subject to Section 16(a) of the Exchange Act
when its stock was listed for trading on Nasdaq effective May 28,
2021. Our executive officers, directors and beneficial owners of
more than 10% of our Common Stock are required under Section 16(a)
of the Securities Exchange Act of 1934 to file reports of ownership
and changes in ownership with the Securities and Exchange
Commission. Copies of those reports must also be furnished to
us.
Based solely on a review of the copies of the reports furnished to
us, and written representations from certain reporting persons that
no other reports were required, we believe that during the year
ended November 30, 2021, the reporting persons complied on a timely
basis with all Section 16(a) filing requirements applicable to
them, other than: (i) the initial forms 3’s filed by or on behalf
of Bryan Ganz, Herbert Hughes, Paul Jensen, Clive Bode, David
North, Lisa Wager, Michael Wager, Michael Gillespie, Emily Rooney,
Luan Pham and Pierre Lapeyre Jr.; (ii) the forms 4 filed on August
4, 2021 on behalf of Michael Wager, Bryan Ganz, David North, Chris
Lavern Reed, and Lisa Wager; and (iii) the form 4 filed on or on
behalf of Herbert Hughes on March 2, 2022.
PRINCIPAL ACCOUNTING FEES AND SERVICES |
PRINCIPAL
ACCOUNTING FEES AND SERVICES
The following table sets forth the aggregate fees billed for each
of the last two fiscal years for professional services rendered by
EisnerAmper LLP, the principal accountant for the audit of the
Company's financial statements and review of financial statements
included in the Company's reports for the fiscal years ended
November 30, 2021 and November 30, 2020.
|
|
2021
|
|
|
2020
|
|
Audit Fees
|
|
$ |
443,040 |
|
|
$ |
218,547 |
|
Audit-Related Fees
|
|
|
— |
|
|
|
— |
|
Tax Fees
|
|
|
— |
|
|
|
— |
|
All Other Fees
|
|
|
96,435 |
|
|
|
20,384 |
|
TOTAL
|
|
$ |
539,475 |
|
|
$ |
238,931 |
|
Notes
|
(1)
|
Audit Fees include fees for services rendered for the
audit of our annual consolidated financial statements, the review
of financial statements included in our quarterly reports on Form
10-Q, review of our 2021 S-1 filings and assistance with and review
of documents filed with the SEC and consents and other services
normally provided in connection with statutory and regulatory
filings or engagements.
|
|
(2)
|
Audit-Related Fees would principally include fees
incurred for due diligence in connection with potential
transactions and accounting consultations. There were no
audited-related fees incurred with EisnerAmper LLP in the fiscal
years ended November 30, 2021 and 2020.
|
|
(3)
|
Tax Fees would include fees for services rendered for
tax compliance, tax advice, and tax planning. There were no tax
fees incurred with EisnerAmper LLP in the fiscal years ended
November 30, 2021 and 2020.
|
|
(4)
|
All Other Fees include professional services rendered
by EisnerAmper LLP, for compliance with state and local sales taxes
and an analysis of the impact of Internal Revenue Code section 382
on the availability of the Company’s past net operating losses for
application against future income taxes.
|
All of the services performed in the fiscal years ended
November 30, 2021 and 2020 were pre-approved by the Audit
Committee. It is the Audit Committee’s policy to pre-approve all
audit and permitted non-audit services to be provided to us by the
independent registered public accounting firm. The Audit
Committee’s authority to pre-approve non-audit services may be
delegated to one or more members of the Audit Committee, who shall
present all decisions to pre-approve an activity to the full audit
committee at its first meeting following such decision. In
addition, the Audit Committee has considered whether the provision
of the non-audit services above is compatible with maintaining the
independent registered public accounting firm’s independence.
CHANGE IN ACCOUNTING FIRM |
CHANGE IN
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
By letter dated June 9, 2020, the Company’s former independent
registered public accounting firm, Mayer Hoffman McCann CPAs, the
New York Practice of Mayer Hoffman McCann P.C. (“MHM”), voluntarily
resigned, effective June 8, 2020.
MHM’s report on the Company’s financial statements for the fiscal
year ended November 30, 2019, the only fiscal year MHM was the
Company’s independent registered public accounting firm, contained
no adverse opinion or disclaimer of opinion and was not qualified
or modified as to audit scope or accounting principles, except that
the report contained a paragraph stating that there was substantial
doubt about the Company's ability to continue as a going
concern.
For the fiscal year ended November 30, 2019 and during the
subsequent interim periods through June 15, 2020, there were no
disagreements (as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K) between the Company and MHM on any matter of
accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of MHM, would have caused MHM to make
reference to the subject matter of the disagreements in connection
with MHM’s report on the Company’s financial statements for such
fiscal year.
For the fiscal year ended November 30, 2019 and during the
subsequent interim period ended February 29, 2020, the Company had
reportable events related to material weaknesses in the Company’s
internal control over financial reporting (as defined in Item
304(a)(1)(v) of Regulation S-K). The material weakness in internal
control over financial reporting resulted from (a) small accounting
department where segregation of duties cannot be completely
accomplished at this stage in our corporate lifecycle, (b) employee
turnover and new personnel processing financial information, and
(c) not having adequate personnel to evaluate the accounting for
complex, non-routine transactions which resulted in an error in the
accounting for our 2018 convertible notes.
The Company provided MHM with a copy of the disclosures required by
Item 304(a) contained in our Report on Form 8-K prior to its filing
with the SEC and requested that MHM provide the Company with a
letter addressed to the SEC stating whether MHM agrees with the
statements made by the Company in response to Item 304(a) of
Regulation S-K. A copy of that letter, dated June 15, 2020,
furnished by MHM in response to that request, is filed as Exhibit
16.1 to our Current Report on Form 8-K, filed with the SEC on June
15, 2020.
Effective June 15, 2020, the Company’s Board of Directors appointed
EisnerAmper LLP (“EisnerAmper”) as the Company’s new independent
registered public accounting firm.
For the fiscal years ended November 30, 2018 and November 30, 2019
and during the subsequent interim periods through June 15, 2020,
neither the Company nor anyone acting on behalf of the Company had
consulted EisnerAmper regarding either: (i) the application of
accounting principles to a specified transaction, either completed
or proposed, or the type of audit opinion that might be rendered on
the Company’s financial statements, nor did EisnerAmper provide a
written report or oral advice to the Company that EisnerAmper
concluded was an important factor considered by the Company in
reaching a decision as to the accounting, auditing or financial
reporting issues; or (ii) any matter that was either the subject of
a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K
and the related instructions) or a reportable event (as described
in Item 304(a)(1)(v) of Regulation S-K).
PROPOSAL 2: RATIFICATION OF ACCOUNTING FIRM |
PROPOSAL 2:
RATIFICATION OF ENGAGEMENT OF INDEPENDENT REGISTERED ACCOUNTING
FIRM
The Audit Committee of the Board of Directors has appointed
EisnerAmper LLP as our independent registered public accounting
firm for the fiscal year ending November 30, 2022. EisnerAmper LLP
has served as our independent registered public accounting firm
since June 15, 2020. The Audit Committee is responsible for the
appointment, retention, termination, compensation and oversight of
the work of our independent registered public accounting firm for
the purpose of preparing or issuing an audit report or related
work. To execute this responsibility, the Audit Committee engages
in a comprehensive annual evaluation of the independent auditor’s
qualifications, performance and independence and whether the
independent registered public accounting firm should be rotated,
and considers the advisability and potential impact of selecting a
different independent registered public accounting firm.
Although ratification of the appointment of our independent
registered public accounting firm is not required by our By-laws or
otherwise, the Board is submitting the appointment of EisnerAmper
LLP to our stockholders for ratification because we value the views
of our stockholders. In the event that our stockholders fail to
ratify the appointment of EisnerAmper LLP, the Audit Committee will
reconsider the appointment of EisnerAmper LLP. Even if the
appointment is ratified, the ratification is not binding and the
Audit Committee may in its discretion select a different
independent registered public accounting firm at any time during
the year if it determines that such a change would be in the best
interests of the Company and our stockholders. .
Vote Required
The affirmative vote of a majority of the votes cast by holders of
shares of Common Stock present or represented by proxy and entitled
to vote on the matter at the Annual Meeting is required for the
ratification of the appointment of EisnerAmper LLP as our
independent registered public accounting firm for the fiscal year
ending November 30, 2022.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THE RATIFICATION OF THE APPOINTMENT OF EISNERAMPER
LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING NOVEMBER 30, 2022.
PROPOSAL 3: AMENDMENT OF CERTIFICATE OF INCORPORATION |
PROPOSAL 3:
APPROVAL OF THE AMENDMENT OF CERTIFICATE OF INCORPORATION
Our Certificate of Incorporation currently authorizes the issuance
of 300,000,000 shares of Common Stock, par value $0.001 per share.
On April 26, 2022, our Board of Directors approved a proposal to
amend our Certificate of Incorporation to decrease the number of
shares of Common Stock that we are authorized to issue from
300,000,000 shares to 50,000,000 shares, subject to stockholder
approval.
As of April 22, 2022, of 300,000,000 currently authorized shares of
Common Stock, 22,915,288 were issued and outstanding. Additionally,
59,304 shares remained available for issuance under our 2020 Equity
Incentive Plan.
Purpose of the Amendment
As a Delaware corporation, we are required annually to make
franchise tax payments to the State of Delaware in an amount
determined, in part, by the total number of shares of capital stock
we are authorized to issue under our Certificate of Incorporation.
Accordingly, by reducing the number of authorized shares of our
Common Stock, we will significantly reduce the amount of our annual
franchise tax obligation, based on current Delaware law.
Additionally, the reduction in the number of authorized shares
would decrease the potential dilution to our stockholders that
could result from future issuances of stock.
Our Board of Directors believes the proposed amendment to be
advisable and in the best interests of the Company and our
stockholders and is accordingly submitting the proposed amendment
to be voted on by the stockholders in order to preserve capital,
minimize franchise tax obligations to the State of Delaware, and
reduce potential dilution. If the authorization of a decrease in
the available Common Stock is not approved, the Company will
continue to incur higher than desired franchise taxes owed to the
State of Delaware.
Text of the Amendment
Our Board of Directors proposes to amend Article 4, Paragraph 4.A
of our Certificate of Incorporation so that it would read in its
entirety as follows:
“The authorized capital stock of the Corporation shall consist of
50,000,000 shares of common stock, $0.001 par value, and 5,000,000
shares of preferred stock, $0.001 par value.”
The Certificate of Amendment attached hereto as Appendix A reflects
the changes that will be implemented to our Certificate of
Incorporation if this Proposal No. 3 is approved by the
stockholders.
Potential Adverse Effects of Amendment
The proposed decrease in the number of authorized shares of our
Common Stock could adversely affect us. We will have less
flexibility to issue shares of Common Stock, including in
connection with a potential merger or acquisition, stock dividend
or equity offering. In the event that our Board of Directors
determines that it would be in our best interest and the best
interest of our stockholders to issue a number of shares of Common
Stock in excess of the number of then authorized but unissued and
unreserved shares of Common Stock, we would be required to seek the
approval of our stockholders to increase the number of shares of
authorized Common Stock, as applicable. If we are not able to
obtain the approval of our stockholders for such an increase in a
timely fashion, we may be unable to take advantage of opportunities
that might otherwise be advantageous to us and our stockholders.
However, our Board of Directors believes that these potential risks
are outweighed by the anticipated benefits of reducing our Delaware
franchise tax obligations.
PROPOSAL 3: AMENDMENT OF CERTIFICATE OF INCORPORATION |
Effectiveness of Amendment
If the proposed amendment is adopted, the number of authorized
shares of our Common Stock will be decreased from 300,000,000 to
50,000,000. The proposed preferred stock amendment will not change
the par value of the shares of our Common Stock, affect the number
of shares of our Common Stock that are outstanding, or affect the
rights or privileges of holders of shares of our Common Stock. If
the proposed amendment is adopted, it will become effective upon
the filing of a certificate of amendment to our Certificate of
Incorporation with the Secretary of State of the State of Delaware,
which the Company expects to file promptly after the Annual
Meeting. If the proposed amendment is not approved by the Company’s
Stockholders, the number of authorized shares of Common Stock will
remain unchanged.
Vote Required
The affirmative vote of a majority of our outstanding shares of
common stock entitled to vote at the Annual Meeting is required for
the amendment to the Certificate of Incorporation to reduce the
authorized shares of common stock.
THE BOARD OF DIRECTORS UANIMOUSLY RECOMMENDS A VOTE
FOR THE AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO REDUCE THE AUTHORIZED SHARES OF COMMON
STOCK.
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
PROPOSAL 4:
AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN
General
On October 23, 2020, our Board adopted the Byrna Technologies Inc.
2020 Equity Incentive Plan (the “2020 Plan”). The 2020 Plan was
approved by the stockholders at our 2020 Annual Meeting of
Stockholders on November 19, 2020. Our Board approved the 2020
Plan, as amended and restated as described below, on April 26,
2022, subject to, and to be effective upon, the approval of this
Proposal 4 by our stockholders at the Annual Meeting. The
proposal is to increase the authorized share reserve by 1,300,000
shares, as well as to enhance certain governance provisions within
the 2020 Plan.
The general purpose of the 2020 Plan is to provide a means whereby
directors, officers, managers, employees, consultants and advisors
of Byrna and its subsidiaries by providing a means for them to
acquire and maintain an equity interest in Byrna, or be paid
incentive compensation, which may be measured by reference to the
value of Common Stock, thereby strengthening their commitment to
the welfare of the Company and its subsidiaries and aligning their
interests with those of the Company’s stockholders.
Our Board believes that the granting of stock options, restricted
stock awards, unrestricted stock awards and similar kinds of
equity-based compensation promotes continuity of management and
increases incentive and personal interest in the welfare of our
Company by those who are primarily responsible for shaping and
carrying out our long range plans and securing our growth and
financial success.
As of April 22, 2022, there are only 59,304 remaining shares of our
common stock available for issuance under the 2020 Plan. If the
2020 Plan, as amended and restated, is not approved, we may be
unable to continue to offer competitive equity-based compensation
and would need to consider other compensation alternatives. The
increase in the number of shares available under the 2020 Plan as
described below will allow us to continue to provide equity
incentive awards as part of our compensation objectives to attract
and retain talented employees and provide them with the right
incentives to execute our strategic objectives while maximizing our
stockholders’ investment in our company. Our Board believes that
the 2020 Plan plays an essential role in providing long-term,
performance-based incentives aligned with stockholder
interests.
Based solely on the closing price of our common stock as reported
on The NASDAQ Capital Market on April 22, 2022, the maximum
aggregate market value of the 1,300,000 additional shares that
could potentially be issued under the 2020 Plan, as amended and
restated, is approximately $8,944,000. The shares available for
issuance by us under the 2020 Plan will be authorized but unissued
shares.
The following tables detail our outstanding equity awards as of
April 22, 2022, our equity grants:
Outstanding Equity Details
|
|
11/30/2021
|
|
|
4/22/2022
|
|
Stock Options outstanding*
|
|
|
586,783 |
|
|
|
1,297,194 |
|
Weighted Average Exercise Price
|
|
$ |
3.48 |
|
|
$ |
7.74 |
|
Weighted Average Remaining Term
|
|
|
3.07 |
|
|
|
7.81 |
|
RSUs + PSUs (non-vested)
|
|
|
1,594,120 |
|
|
|
787,122 |
|
Shares available
|
|
|
199,931 |
|
|
|
59,304 |
|
Common shares outstanding
|
|
|
23,754,096 |
|
|
|
22,915,288 |
|
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
The table below illustrates our equity use, including
performance-based awards earned, in each of the past three fiscal
years:
Equity Plan Burn Rate Details
|
Fiscal Year
|
|
|
2019
|
2020
|
2021
|
|
A: Stock options granted
|
12,000
|
453,550
|
62,000
|
|
B: RSUs granted (time-vested only)
|
0
|
224,500
|
74,493
|
|
PSUs granted (performance-vested)
|
0
|
1,349,000
|
100,000
|
|
C: PSUs vested or earned |
0 |
0 |
0 |
|
D: Weighted-average common shares outstanding
|
10,354,383
|
12,678,747
|
19,610,039
|
|
Burn rate (A + B + C)/D
|
0.1%
|
5.3%
|
0.7%
|
3 yr avg = 2.1%
|
All numbers reflect the 10:1 reverse stock split effected on
April 27, 2021
Background Related to Proposed Amendments to the 2020
Plan
We are asking stockholders to approve the amendment and restatement
of the 2020 Plan to increase the shares available for issuance
pursuant to awards granted under the 2020 Plan by 1,300,000, which
results in a total plan size of 3,800,000 shares. Additionally, the
amendment and restatement would add features designed to provide
protection for stockholders as further described below. While our
Board and the Compensation Committee believe that equity and
equity-based awards are an important component of our overall
compensation program, the Compensation Committee prioritizes
stockholder interests in evaluating the awards to be granted to
executives and other employees in its administration of the Equity
Plan. The 2020 Plan, if stockholders approve the amendment
and restatement, will include the following provisions:
•
|
No Dividends on Unvested Restricted Shares or RSUs. Holders
of unvested Restricted Stock or Restricted Stock Units will not
have any rights to receive dividends with respect to such
Awards.
|
•
|
Minimum Vesting Period. Generally, all awards will have a
minimum vesting period of at least one year, subject to an
exception of 5% of the aggregate shares authorized for grant under
the 2020 Plan and certain other limited exceptions as described
below and in the 2020 Plan.
|
•
|
Awards Subject to Forfeiture or Clawback. Awards under the
2020 Plan will be subject to clawback in certain circumstances as
well as any other forfeiture and penalty conditions determined by
the Compensation Committee in the Company’s clawback policy.
|
Description of the Amended and Restated 2020 Equity Incentive
Plan
The following is summary of the material features that will be
present in the 2020 Plan, as amended and restated, if approved by
stockholders. This is a summary only and is qualified in its
entirety by reference to the complete text of the 2020 Plan, as
amended and restated, which is attached as Annex
B hereto.
Administration. In general, the 2020 Plan
is administered by the Compensation Committee of our Board. The
Compensation Committee determines the persons to whom options to
purchase shares of our Common Stock, stock appreciation rights
(“SARs”), restricted stock units (“RSUs”), and restricted or
unrestricted shares of our Common Stock may be granted. The
Compensation Committee may also establish rules and regulations for
the administration of the 2020 Plan and amendments or modifications
of outstanding awards, subject to stockholder approval where
required under applicable laws. The Compensation Committee may
delegate authority to the chief executive officer and/or other
executive officers to grant options and other awards to employees
(other than themselves), subject to applicable law and the 2020
Plan. No options, stock purchase rights or awards may be made under
the 2020 Plan on or after October 23, 2030, but the 2020 Plan will
continue thereafter while previously granted options, SARs or other
awards remain outstanding.
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
Eligibility. Persons eligible to receive
options, SARs or other awards under the 2020 Plan are those
employees, officers, directors, consultants, advisors and other
individual service providers of our Company and our subsidiaries
who, in the opinion of the Compensation Committee, are in a
position to contribute to our success, or any person who is
determined by the Compensation Committee to be a prospective
employee, officer, director, consultant, advisor or other
individual service provider of the Company or any
subsidiary. As awards under the 2020 Plan are within the
discretion of the Compensation Committee, the Company cannot
determine how many individuals in each of the categories described
above will receive awards.
Shares Subject to the 2020 Plan. The
aggregate number of shares of Common Stock available for issuance
in connection with options and other awards granted under the 2020
Plan is 3,800,000.
“Incentive stock
options”, or “ISOs”,
that are intended to meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”) may be
granted under the 2020 Plan with respect to all of the 3,800,000
shares of Common Stock authorized for issuance under the 2020 Plan.
If any option or SAR granted under the 2020 Plan terminates without
having been exercised in full or if any award is forfeited, or is
settled in cash, the number of shares of Common Stock as to which
such option or award was forfeited, withheld or paid, will be
available for future grants under the 2020 Plan.
The number of shares authorized for issuance under the 2020 Plan
and the foregoing share limitations are subject to customary
adjustments for stock splits, stock dividends or similar
transactions.
Terms and Conditions of
Options. The Compensation Committee will
determine the exercise price of options granted under the 2020
Plan. The exercise price of stock options may not be less than the
fair market value per share of our Common Stock on the date of
grant (or 110% of fair market value in the case of ISOs granted to
a ten-percent stockholder).
If on the date of grant the Common Stock is listed on a stock
exchange or is quoted on the automated quotation system of Nasdaq
Capital Market, the fair market value will generally be the closing
sale price on the date of grant (or the last trading day on which
trades were made before the date of grant if no trades occurred on
the date of grant), or if the Common Stock is not listed on a
national securities exchange, the fair market value will be the
mean between the bid and offered prices as quoted by any nationally
recognized interdealer quotation system for such date or, in the
absence of quoted bid and offered prices on such date, the mean
between the bid and offered prices as quoted on the immediately
preceding date on which such amounts were quoted. If no such prices
are available, the fair market value will be determined in good
faith by the Compensation Committee based on the reasonable
application of a reasonable valuation method.
No option may be exercisable for more than ten years (five years in
the case of an ISO granted to a ten-percent stockholder) from the
date of grant. Options granted under the 2020 Plan will be
exercisable at such time or times as the Compensation Committee
prescribes at the time of grant. No employee may receive ISOs that
first become exercisable in any calendar year in an amount
exceeding $100,000. The Compensation Committee may, in its
discretion, permit a holder of an option to exercise the option
before it has otherwise become exercisable, in which case the
shares of our Common Stock issued to the recipient will continue to
be subject to the vesting requirements that applied to the option
before exercise.
Generally, the option price may be paid (a) in cash or cash
equivalent, or (b) by such other means as the Compensation
Committee may accept. The Compensation Committee is also authorized
to establish a cashless exercise program and to permit the exercise
price (or tax withholding obligations) to be satisfied by reducing
from the shares otherwise issuable upon exercise a number of shares
having a fair market value equal to the exercise price.
No option may be transferred other than by will or by the laws of
descent and distribution, and during a recipient’s lifetime an
option may be exercised only by the recipient. However, the
Compensation Committee may permit the holder of an option (other
than an ISO), SAR or other award to transfer the option, right or
other award to immediate family members or a family trust for
estate planning purposes. The Compensation Committee will determine
the extent to which a holder of a stock option may exercise the
option following termination of service with us.
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
Stock Appreciation Rights. The
Compensation Committee may grant SARs, independent of or in
connection with an option. The Compensation Committee will
determine the other terms applicable to SARs. The strike price per
share of a SAR will be determined by the Compensation Committee,
but the strike price may not be less than the fair market value per
share of our Common Stock on the date of grant of the SAR. The
maximum term of any SAR granted under the 2020 Plan is ten years
from the date of grant. Generally, each SAR will entitle a
participant upon exercise to an amount equal to: the number of
shares of Common Stock subject to the SAR that are being exercised
multiplied by the excess, if any, of the fair market value of one
share of Common Stock on the exercise date over the applicable
strike price, less an amount equal to any applicable federal,
state, local and non-U.S. income and employment taxes required to
be withheld. The Company shall pay such amount in cash, in shares
of Common Stock valued at fair market value, or any combination
thereof, as determined by the Committee. Any fractional shares of
Common Stock shall be settled in cash.
Restricted Stock and Restricted Stock Units. The
Compensation Committee may award restricted shares of Common Stock
and/or RSUs under the 2020 Plan. Restricted stock awards consist of
shares of stock that are transferred to a participant subject to
restrictions that may result in forfeiture if specified conditions
are not satisfied. RSUs confer the right to receive shares of our
Common Stock, cash, or a combination of shares and cash, at a
future date upon or following the attainment of certain conditions
specified by the Compensation Committee. The restrictions and
conditions applicable to each award of restricted stock or RSUs may
include performance-based conditions. Holders will not have the
right to receive dividends on any unvested shares of restricted
stock. Unless the Compensation Committee determines otherwise,
holders of restricted stock will have the right to vote the
shares.
Other Stock-Based Awards. The Compensation
Committee may award other types of equity-based awards under the
2020 Plan, including the grant of shares of our Common Stock that
do not have vesting requirements.
Minimum Vesting Requirements. No award will be
granted with a lapse of any vesting obligations earlier than at
least one year following the date of grant. Notwithstanding the
foregoing, the Compensation Committee may grant up to a maximum of
five percent of the aggregate number of shares available for
issuance under the 2020 Plan (subject to certain equitable
adjustments), without regard to this minimum vesting requirement,
and the minimum vesting requirement does not apply to (i) any
substitute awards (as defined in the plan), (ii) awards to
directors that vest on the earlier of the one year anniversary of
the date of grant or the next annual meeting of stockholders which
is at least 50 weeks after the immediately preceding year’s
annual meeting, and (iii) the Compensation Committee’s
discretion to provide for accelerated exercisability or vesting of
any award, including in cases of retirement, death, disability or a
change-in-control, in the terms of the award or otherwise.
Clawback and Recoupment. Awards under the 2020 Plan
will be subject to recovery or “clawback” by the Company if and to
the extent that the vesting of such awards was determined or
calculated based on materially inaccurate financial statements or
any other material inaccurate performance metric criteria, and if
the Company or any of its subsidiaries terminate a participant’s
service relationship due to the grantee’s gross negligence or
willful misconduct, which conduct, directly or indirectly, results
in the Company preparing an accounting restatement. Awards will
also be subject to any clawback policy the Company may have in
effect from time to time.
Effect of Certain Corporate
Transactions. The Compensation Committee may,
at the time of the grant of an award provide for the effect of a
change in control (as defined in the 2020 Plan) on any award,
including (i) accelerating or extending the time periods for
exercising, vesting in, or realizing gain from any award, (ii)
eliminating or modifying the performance or other conditions of an
award, or (iii) providing for the cash settlement of an award for
an equivalent cash value, as determined by the Compensation
Committee. The Compensation Committee may, in its discretion and
without the need for the consent of any recipient of an award, also
take one or more of the following actions contingent upon the
occurrence of a change in control: (a) cause any or all outstanding
options and SARs to become immediately exercisable, in whole or in
part; (b) cause any other awards to become non-forfeitable, in
whole or in part; (c) cancel any option or SAR in exchange for a
substitute option; (d) cancel any award of restricted stock, or
RSUs, in exchange for a similar award of the capital stock of any
successor corporation; (e) cancel or terminate any award for cash
and/or other substitute consideration in exchange for an amount of
cash and/or property equal to the amount, if any, that would have
been attained upon the exercise of such award or realization of the
participant’s rights as of the date of the occurrence of the change
in control, but if the change in control consideration with respect
to any option or SAR does not exceed its exercise price or strike
price, as applicable, the option or SAR may be canceled without
payment of any consideration; or (f) make such other modifications,
adjustments or amendments to outstanding awards as the Compensation
Committee deems necessary or appropriate.
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
Amendment, Termination. Our Board may at
any time amend the 2020 Plan for the purpose of satisfying the
requirements of the Code, or other applicable law or regulation or
for any other legal purpose, provided that, without the consent of
our stockholders, the Board may not (a) increase the number of
shares of Common Stock available under the 2020 Plan, (b) change
the group of individuals eligible to receive options, SARs and/or
other awards, or (c) extend the term of the 2020 Plan.
U.S. Federal Income Tax Consequences
Following is a summary of the U.S. federal income tax consequences
of option and other grants under the 2020 Plan. Optionees and
recipients of other rights and awards granted under the 2020 Plan
are advised to consult their personal tax advisors before
exercising an option or SAR or disposing of any stock received
pursuant to the exercise of an option or SAR or following the
vesting and payment of any award. In addition, the following
summary is based upon an analysis of the Code as currently in
effect, existing laws, judicial decisions, administrative rulings,
regulations and proposed regulations, all of which are subject to
change and does not address state, local, foreign or other tax
laws.
Treatment of Options. The Code treats incentive stock
options and nonstatutory stock options differently. However, as to
both types of options, no income will be recognized to the optionee
at the time of the grant of the options under the 2020 Plan, nor
will our Company be entitled to a tax deduction at that time.
Generally, upon exercise of a nonstatutory stock option (including
an option intended to be an incentive stock option but which has
not continued to so qualify at the time of exercise), an optionee
will recognize ordinary income tax on the excess of the fair market
value of the stock on the exercise date over the exercise price.
Our Company will be entitled to a tax deduction in an amount equal
to the ordinary income recognized by the optionee in the fiscal
year which includes the end of the optionee’s taxable year. We will
be required to satisfy applicable withholding requirements in order
to be entitled to a tax deduction. In general, if an optionee, in
exercising a nonstatutory stock option, tenders shares of our
Common Stock in partial or full payment of the exercise price, no
gain or loss will be recognized on the tender. However, if the
tendered shares were previously acquired upon the exercise of an
incentive stock option and the tender is within two years from the
date of grant or one year after the date of exercise of the
incentive stock option, the tender will be a disqualifying
disposition of the shares acquired upon exercise of the incentive
stock option.
For incentive stock options, there is no taxable income to an
optionee at the time of exercise. However, the excess of the fair
market value of the stock on the date of exercise over the exercise
price will be taken into account in determining whether the
“alternative minimum tax” will apply for the year of exercise. If
the shares acquired upon exercise are held until at least two years
from the date of grant and more than one year from the date of
exercise, any gain or loss upon the sale of such shares, if held as
capital assets, will be long-term capital gain or loss (measured by
the difference between the sales price of the stock and the
exercise price). Under current federal income tax law, a long-term
capital gain will be taxed at a rate which is less than the maximum
rate of tax on ordinary income. If the two-year and one-year
holding period requirements are not met (a “disqualifying
disposition”), an optionee will recognize ordinary income in the
year of disposition in an amount equal to the lesser of (i) the
fair market value of the stock on the date of exercise minus the
exercise price or (ii) the amount realized on disposition minus the
exercise price. The remainder of the gain will be treated as
long-term capital gain, depending upon whether the stock has been
held for more than a year. If an optionee makes a disqualifying
disposition, our Company will be entitled to a tax deduction equal
to the amount of ordinary income recognized by the optionee.
In general, if an optionee, in exercising an incentive stock
option, tenders shares of Common Stock in partial or full payment
of the exercise price, no gain or loss will be recognized on the
tender. However, if the tendered shares were previously acquired
upon the exercise of another incentive stock option and the tender
is within two years from the date of grant or one year after the
date of exercise of the other option, the tender will be a
disqualifying disposition of the shares acquired upon exercise of
the other option.
As noted above, the exercise of an incentive stock option could
subject an optionee to the alternative minimum tax. The application
of the alternative minimum tax to any particular optionee depends
upon the particular facts and circumstances which exist with
respect to the optionee in the year of exercise. However, as a
general rule, the amount by which the fair market value of the
Common Stock on the date of exercise of an option exceeds the
exercise price of the option will constitute an item of
“adjustment” for purposes of determining the alternative minimum
taxable income on which the alternative tax may be imposed. As
such, this item will enter into the tax base on which the
alternative minimum tax is computed, and may therefore cause the
alternative minimum tax to become applicable in any given year.
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
Treatment of Stock Appreciation Rights. Generally,
the recipient of a SAR will not recognize any income upon grant of
the SAR, nor will our Company be entitled to a deduction at that
time. Upon exercise of a SAR, the holder will recognize ordinary
income, and our Company generally will be entitled to a
corresponding deduction, equal to the excess of the fair market
value of our Common Stock on the date of exercise over the strike
price of the SAR.
Treatment of Restricted Stock and RSU Awards.
Generally, absent an election to be taxed currently under Section
83(b) of the Code (a “Section 83(b) Election”), there will be no
federal income tax consequences to either the recipient or our
Company upon the grant of a restricted stock award or award of
performance shares. At the expiration of the restriction period and
the satisfaction of any other restrictions applicable to the
restricted shares, the recipient will recognize ordinary income and
our Company generally will be entitled to a corresponding deduction
equal to the fair market value of the Common Stock at that time. If
a Section 83(b) Election is made within 30 days after the date the
restricted stock award is granted, the recipient will recognize an
amount of ordinary income at the time of the receipt of the
restricted shares, and our Company generally will be entitled to a
corresponding deduction, equal to the fair market value (determined
without regard to applicable restrictions) of the shares at such
time, less any amount paid by the recipient for the shares. If a
Section 83(b) Election is made, no additional income will be
recognized by the recipient upon the lapse of restrictions on the
shares (and prior to the sale of such shares), but, if the shares
are subsequently forfeited, the recipient may not deduct the income
that was recognized pursuant to the Section 83(b) Election at the
time of the receipt of the shares.
The recipient of an unrestricted stock award will recognize
ordinary income, and our Company generally will be entitled to a
corresponding deduction, equal to the fair market value of our
Common Stock that is the subject of the award when the award is
made.
The recipient of a restricted stock unit will recognize ordinary
income as and when the units vest. The amount of the income will be
equal to the fair market value of the shares of our Common Stock
issued at that time, and our Company will be entitled to a
corresponding deduction. The recipient of a restricted stock unit
will not be permitted to make a Section 83(b) Election with respect
to such award.
Parachute Payments. The vesting of any portion of an
option or other award that is accelerated due to the occurrence of
a change of control may cause a portion of the payments with
respect to such accelerated awards to be treated as “parachute
payments” as defined in Section 280G of the Code. Any such
parachute payments may be non-deductible to us, in whole or in
part, and may subject the recipient to a non-deductible 20% federal
excise tax on all or a portion of such payment (in addition to
other taxes ordinarily payable).
Section 409A. If an award under the 2020 Plan is
subject to Section 409A of the Code, but does not comply with the
requirements of Section 409A of the Code, the taxable events as
described above could apply earlier than described, and could
result in the imposition of additional taxes and penalties.
Participants are urged to consult with their tax advisors regarding
the applicability of Section 409A of the Code to their awards.
Tax Withholding. As and when appropriate, we shall
have the right to require each optionee purchasing shares of Common
Stock and each grantee receiving an award of shares of Common Stock
under the 2020 Plan to pay any federal, state or local taxes
required by law to be withheld.
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
New Plan Benefits
The number of shares that may be granted to our Chief Executive
Officer, executive officers, non-employee directors and
non-executive officers under the 2020 Plan, as amended and restated
pursuant to this Proposal 4, is not determinable at this time, as
such grants are subject to the discretion of the Compensation
Committee and the Board. Information about the equity awards
granted to non-employee directors can be found herein under the
heading “Director Compensation.” The following table provides
information with respect to the number of shares granted under the
2020 Plan for the fiscal year ended November 30, 2021 to our
executive officers, directors who are not executive officers, and
employees. Information about the number of shares granted to our
Chief Executive Officer and other named executive officers can be
found herein under the heading “Outstanding Equity Awards at Fiscal
Year-End.”
Name and Position
|
|
Number of
Shares
Underlying
Awards
|
|
Bryan Ganz – Chief Executive Officer
|
|
|
— |
|
David North – Chief Financial Officer
|
|
|
— |
|
Lisa Wager – Chief Legal Officer and Corporate Secretary
|
|
|
— |
|
All executive officers as a group
|
|
|
— |
|
All directors who are not executive officers, as a group
|
|
|
15,492 |
|
Employees as a group (excluding executive officers)
|
|
|
222,000 |
|
Totals
|
|
|
237,492 |
|
PROPOSAL 4: AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN |
Vote Required
The affirmative vote of a majority of the votes cast by holders of
shares of Common Stock present or represented by proxy and entitled
to vote on the matter at the Annual Meeting is required for the
amendment and restatement of the 2020 Equity Incentive Plan.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THE AMENDMENT AND RESTATEMENT OF THE 2020 EQUITY
INCENTIVE PLAN.
EQUITY
COMPENSATION PLAN INFORMATION
The following table sets forth information as of November 30, 2021
concerning the number of shares of Common Stock issuable under our
existing equity compensation plans.
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Restricted Stock
Units, Warrants and
Rights
|
|
|
Weighted Average
Exercise Price of
Outstanding Options,
Warrants, And
Rights
|
|
|
Remaining Available For
Future Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected In Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c) |
|
Equity compensation plans approved by security holders (1)
|
|
|
2,180,903 |
|
|
$ |
3.48 |
|
|
|
199,931 |
|
Equity compensation plans not approved by security holders
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
|
|
|
2,180,903 |
|
|
|
|
|
|
|
199,931 |
|
(1)
|
The number of securities in column (a) for plans approved by
security holders consists of 586,783 outstanding stock options
(includes vested and unvested) and 1,594,120 unvested RSUs and
PSUs, all governed by the 2020 Equity Incentive Plan.
|
PROPOSAL 5: RATIFICATION OF EXECUTIVE COMPENSATION |
PROPOSAL 5:
NON-BINDING RATIFICATION OF EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, the Board
of Directors is asking stockholders to approve an advisory
(non-binding) resolution on the compensation of our named executive
officers. The vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named
executive officers and the philosophy, policies and practices
described in this proxy statement. The text of the resolution is as
follows:
RESOLVED, that the stockholders of Byrna Technologies Inc. approve,
on a non-binding, advisory basis, the compensation of the Company’s
named executive officers as disclosed in the proxy statement for
the Company’s 2022 annual meeting of stockholders pursuant to
Item 402 of Regulation S-K, including the Summary
Compensation Table and related compensation tables and narrative
discussion within the “Executive Compensation” section of the
Company’s proxy statement.
We have designed our compensation and benefits program and
philosophy to attract, retain and incentivize talented, qualified
and committed executive officers that share our philosophy and
desire to work toward our goals. We believe that our executive
compensation program aligns individual compensation with the
short-term and long-term performance of the Company.
The vote regarding the compensation of our named executive officers
described in this Proposal 5, referred to as a “say-on-pay vote,”
is advisory, and is, therefore, not binding on the Company or the
Board of Directors. Although non-binding, the Board of Directors
and the Compensation Committee value the opinions that stockholders
express in their votes and will review the voting results and take
them into consideration as they deem appropriate when making future
decisions regarding our executive compensation program.
Vote Required
The affirmative vote of a majority of the votes cast by holders of
shares of common stock present or represented by proxy and entitled
to vote on the matter at the Annual Meeting is required for the
approval, on a non-binding advisory basis, of the compensation of
our named executive officers as disclosed in this proxy
statement.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THE NON-BINDING APPROVAL OF THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY
STATEMENT.
PROPOSAL 6: FREQUENCY ON ADVISORY VOTES ON EXECUTIVE
COMPENSATION |
PROPOSAL 6:
NON-BINDING VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE
OFFICERS
In accordance with Section 14A of the Exchange Act, the Board
of Directors is asking stockholders to vote on an advisory
(non-binding) resolution regarding the frequency of future
say-on-pay votes. Stockholders may indicate whether they would
prefer an advisory vote on the compensation of our named executive
officers once every one, two or three years. We are required
to solicit stockholder votes on the frequency of future say-on-pay
proposals at least once every six years, although we may seek
stockholder input more frequently. The text of the resolution is as
follows:
RESOLVED, that the stockholders of Byrna Technologies Inc. approve
the submission by the Company of a non-binding, advisory say-on-pay
resolution pursuant to Section 14A of the Exchange Act
every:
At the Annual Meeting, stockholders may cast a vote on the
frequency of a say-on-pay vote by choosing the option of one year,
two years, three years or abstaining from voting.
The Board of Directors believes that, of the three choices,
submitting an advisory (non-binding) say-on-pay resolution to
stockholders every year is the most appropriate choice. We believe
that say-on-pay votes should be conducted every year so that
stockholders may annually express their views on our executive
compensation program, and accordingly, the Board of Directors
recommends that this vote be held every year. It should be noted,
however, that stockholders are not voting to approve or disapprove
the Board of Directors’ recommendation on this matter. The
Compensation Committee, which administers our executive
compensation program, values the opinions expressed by stockholders
in these votes and will continue to consider the outcome of these
votes in making its decisions on executive compensation.
Vote Required
The affirmative vote of a majority of the votes cast by holders of
shares of common stock present or represented by proxy and entitled
to vote on the matter at the Annual Meeting is required for the
approval, on a non-binding advisory basis, of the frequency of
future advisory votes on the compensation of our named executive
officers. However, because stockholders have several voting choices
with respect to the proposal on the frequency of future non-binding
votes on executive compensation, it is possible that no single
choice will receive a majority vote. In light of the foregoing, the
Board of Directors will consider the outcome of the vote when
determining the frequency of future non-binding votes on executive
compensation.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE OF
“1 YEAR” FOR THE NON-BINDING APPROVAL OF THE FREQUENCY OF
FUTURE ADVISORY VOTES ON THE COMPENSATION OF NAMED EXECUTIVE
OFFICERS.
HOUSEHOLDING; STOCKHOLDER PROPOSALS |
HOUSEHOLDING OF
PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries
(e.g., brokers) to satisfy the delivery requirements for the proxy
materials with respect to two or more stockholders sharing the same
address by delivering a single set of proxy materials addressed to
those stockholders, unless the affected stockholder has provided
contrary instructions. This process, which is commonly referred to
as “householding,” potentially means extra convenience for
stockholders and cost savings for companies.
A number of brokers with account holders who are Byrna stockholders
may be “householding” our proxy materials. A single set of proxy
materials will be delivered to multiple stockholders sharing an
address unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your
broker that it will be “householding” communications to your
address, “householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in “householding” and would prefer to
receive a separate set of proxy materials, please notify your
broker or us. Written requests should be directed to Corporate
Secretary, Byrna Technologies Inc., 100 Burtt Road, Suite 115,
Andover, MA 01810. Stockholders who currently receive multiple
copies of the proxy materials at their addresses and would like to
request “householding” of their communications should contact their
brokers.
STOCKHOLDER
PROPOSALS
Any stockholder who desires to submit a proposal for inclusion in
our proxy statement (our “2023 Proxy Statement”) for our 2023
annual meeting (the “2023 Annual Meeting”) in accordance with Rule
14a-8 must submit the proposal in writing to Corporate Secretary,
Byrna Technologies Inc., 100 Burtt Road, Suite 115, Andover, MA
01810. We must receive a proposal by January 6, 2023 (120 days
prior to the anniversary of the mailing date of this proxy
statement, which is approximately May 6, 2022) in order to consider
it for inclusion in our 2023 Proxy Statement.
Stockholder proposals that are not intended to be included in the
proxy materials for our 2023 Annual Meeting, but that are to be
presented by the stockholder are subject to the advance notice
provisions in our Bylaws. According to our Bylaws, in order to be
properly brought before the meeting, such a proposal must include
the information set forth in our Bylaws. To be timely, a proposing
stockholder’s notice for an annual meeting must be delivered to or
mailed and received at our principal executive offices: (x) not
later than the close of business on the 90th day, nor earlier than
the close of business on the 120th day, in advance of the
anniversary of the previous year’s annual meeting if such meeting
is to be held on a day which is not more than 30 days in advance of
the anniversary of the previous year’s annual meeting or not later
than 60 days after the anniversary of the previous year’s annual
meeting; and (y) with respect to any other annual meeting of
stockholders, including in the event that no annual meeting was
held in the previous year, not earlier than the close of business
on the 120th day prior to the annual meeting and not later than the
close of business on the later of: (1) the 90th day prior to the
annual meeting and (2) the close of business on the tenth day
following the first date of Public Disclosure of the date of such
meeting. In no event shall the Public Disclosure of an adjournment
or postponement of an annual meeting commence a new notice time
period (or extend any notice time period). “Public Disclosure”
means a disclosure made in a press release reported by the Dow
Jones News Services, The Associated Press, or a comparable national
news service or in a document filed by the Company with the SEC
pursuant to Section 13, 14, or 15(d) of the Exchange Act.
If the notice does not comply with the requirements set forth in
our Bylaws, the chairman of the meeting may refuse to acknowledge
the matter. If the chairman of the meeting decides to present a
proposal despite its untimeliness, the people named in the proxies
solicited by the Board of Directors for the 2023 Annual Meeting of
Stockholders will have the right to exercise discretionary voting
power with respect to such proposal.
OTHER
MATTERS
Our Directors know of no other matters to be brought before the
Annual Meeting. If any other matters properly come before the
Annual Meeting, including any adjournment or adjournments thereof,
it is intended that proxies received in response to this
solicitation will be voted on such matters in the discretion of the
person or persons named in the accompanying proxy form.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING IN PERSON, PLEASE CAST YOUR VOTE ONLINE, BY
TELEPHONE OR BY COMPLETING, DATING, SIGNING AND PROMPTLY RETURNING
YOUR PROXY CARD OR VOTING INSTRUCTIONS CARD IN THE POSTAGE-PAID
ENVELOPE (WHICH WILL BE PROVIDED TO THOSE STOCKHOLDERS WHO REQUEST
PAPER COPIES OF THESE MATERIALS BY MAIL) BEFORE THE ANNUAL MEETING
SO THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING.
THIS PROXY STATEMENT IS ACCOMPANIED BY THE COMPANY’S
ANNUAL REPORT. THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF
ITS ANNUAL REPORT AND ANY EXHIBITS THERETO TO ANY STOCKHOLDER, UPON
WRITTEN REQUEST TO BYRNA TECHNOLOGIES INC., 100 BURTT ROAD,
SUITE 115, ANDOVER, MA 01810. A LIST OF STOCKHOLDERS
ENTITLED TO VOTE AT THE ANNUAL MEETING WILL BE AVAILABLE FOR
INSPECTION BY STOCKHOLDERS DURING REGULAR BUSINESS HOURS AT OUR
OFFICES AND THE OFFICES OF OUR TRANSFER AGENT DURING THE TEN DAYS
PRIOR TO THE ANNUAL MEETING AS WELL AS AT THE ANNUAL
MEETING.
ANNEX A
FORM OF CERTIFICATE OF AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
Pursuant to Section 242 of the General Corporation
Law of the State of Delaware
Byrna Technologies Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of
Delaware (the “Corporation”), hereby certifies as follows:
FIRST: The name of the Corporation is Byrna
Technologies Inc.
SECOND: The date on which the Certificate
of Incorporation of the Corporation was originally filed with the
Secretary of State of the State of Delaware is March 1, 2005, as
amended by (i) a Certificate of Amendment to the Certificate
of Incorporation filed with the Secretary of State of the State of
Delaware on December 23, 2005 and effective as of that date, (ii) a
Certificate of Amendment to the Certificate of Incorporation filed
with the Secretary of State of the State of Delaware on March 20,
2013 and effective as of that date, (iii) a Certificate of
Amendment to the Certificate of Incorporation filed with the
Secretary of State of the State of Delaware on October 6, 2017 and
effective as of that date, (iv) a Certificate of Amendment to the
Certificate of Incorporation filed with the Secretary of State of
the State of Delaware on March 21, 2019 and effective as of that
date, (v) a Certificate of Amendment to the Certificate of
Incorporation filed with the Secretary of State of the State of
Delaware on February 26, 2020 and effective as of that date, and
(vi) a Certificate of Amendment to the Certificate of Incorporation
filed with the Secretary of State of the State of Delaware on April
28, 2021 and effective as of that date (as amended, the
“Certificate”).
THIRD: The Corporation hereby amends the
Certificate as follows:
Paragraph 4.A of ARTICLE 4 of the Certificate is hereby deleted in
its entirety and amended to read as follows:
“The authorized capital stock of the Corporation shall consist of
50,000,000 shares of common stock, $0.001 par value, and 5,000,000
shares of preferred stock, $0.001 par value.”
FOURTH: This Certificate of Amendment has
been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Byrna Technologies Inc. has caused
this Certificate of Amendment to be signed by its president and
chief executive officer this __ day of June, 2022.
BYRNA TECHNOLOGIES INC.
By:_________________________
Name: Bryan Ganz
Title: President and Chief Executive Officer
ANNEX B
BYRNA TECHNOLOGIES INC.
AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN
(marked to show proposed amendments)
1. Purpose. The
purpose of the Byrna Technologies Inc. 2020 Equity Incentive Plan
is to increase stockholder value and advance the interests of the
Company and its Affiliates by furnishing economic incentives
designed to attract, retain and motivate key personnel and to
provide a means whereby directors, officers, managers, employees,
consultants and advisors of the Company and its Affiliates by
providing a means for them to acquire and maintain an equity
interest in the Company, or be paid incentive compensation, which
may (but need not) be measured by reference to the value of Common
Shares, thereby strengthening their commitment to the welfare of
the Company and its Affiliates and aligning their interests with
those of the Company’s stockholders.
In connection with the termination of the Company’s 2017 Stock
Option Plan (the “Prior Plan”) and consistent with
the Company’s prior administrative practice, each option
certificate evidencing a stock option granted under the Prior Plan
that remains outstanding as of the date of the termination of the
Prior Plan (each such stock option, a “Prior Plan
Option”) shall be cancelled and replaced with an Award
Agreement evidencing an equivalent Award under the Plan with no
change to any of the material provisions of the Prior Plan Option,
including without limitation, the Date of Grant, the Exercise
Price, and the expiration of such Prior Plan Option, and such Prior
Plan Option shall be deemed to be granted under the Plan and shall
become, and be, subject to the provisions of the Plan;
provided, however, that to the extent that (i) the
application of any provision of the Plan to a Participant’s Prior
Plan Option which was intended to be a stock option other than an
“incentive stock option” (within the meaning of Section 422 of the
Code) would be considered a “modification, extension or
substitution” (within the meaning of Section 409A of the Code and
the applicable guidance thereunder) of the Prior Plan Option, or
(ii) the application of any provision of the Plan to a
Participant’s Prior Plan Option which was intended to be an
incentive stock option would be considered a “modification,
extension or renewal” (within the meaning of Section 424(h) of the
Code and applicable guidance thereunder) of the Prior Plan Option,
such provision of the Plan shall not apply to such Prior Plan
Option and the provision of the Prior Plan, if any, shall
apply.
2. Definitions. The
following definitions shall be applicable throughout this Plan:
(a) “Affiliate” means
(i) any person or entity that directly or indirectly controls, is
controlled by or is under common control with the Company and/or
(ii) to the extent provided by the Committee, any person or entity
in which the Company has a significant interest as determined by
the Committee in its discretion. The term “control” (including,
with correlative meaning, the terms “controlled by” and “under
common control with”), as applied to any person or entity, means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person
or entity, whether through the ownership of voting or other
securities, by contract or otherwise.
(b) “Applicable Law” means the
requirements related to or implicated by the administration of the
Plan under applicable state corporate law, United States federal
and state securities laws, the Code, any securities exchange or
inter-dealer quotation system on which the Common Shares are listed
or quoted, and the applicable laws of any foreign country or
jurisdiction where Awards are granted under the Plan or in which
the Common Shares are listed or quoted on a securities exchange or
inter-dealer quotation system.
(c) “Award” means, individually
or collectively, any Incentive Stock Option, Nonqualified Stock
Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit or Stock Bonus Award granted under this Plan.
(d) “Award Agreement” means a
written agreement, contract, certificate or other instrument or
document made and delivered in accordance with Section 14(a)
evidencing the terms and conditions of an Award granted hereunder.
Each Award Agreement shall be subject to the terms and conditions
of the Plan.
(e) “Board” means the Board of
Directors of the Company.
(f) “Cause” means, in the case of
a particular Award, unless the applicable Award Agreement states
otherwise, (i) the Company or an Affiliate having “cause” to
terminate a Participant’s employment or service, as defined in any
employment or consulting agreement or similar document or policy
between the Participant and the Company or an Affiliate in effect
at the time of such termination, or (ii) in the absence of any such
employment or consulting agreement, document or policy (or the
absence of any definition of “Cause” contained therein), (A) a
continuing material breach or material default (including, without
limitation, any material dereliction of duty) by Participant of any
agreement between the Participant and the Company or an Affiliate,
except for any such breach or default which is caused by the
physical disability of the Participant (as determined by a neutral
physician), or a continuing failure by the Participant to follow
the direction of a duly authorized representative of the Company or
an Affiliate; (B) gross negligence, willful misfeasance or breach
of fiduciary duty to the Company or an Affiliate by the
Participant; (C) any material violation of the policies of the
Company or an Affiliate, including, but not limited to, those
relating to sexual harassment or the disclosure or misuse of
confidential information, or those set forth in the manuals or
statements of policy of the Company or an Affiliate; (D) the
commission by the Participant of an act of fraud, embezzlement or
any felony or other crime of dishonesty in connection with the
Participant’s duties to the Company or Affiliate of the Company;
(E) misappropriation by the Participant of any assets or business
opportunities of the Company or an Affiliate; or (F) conviction of
the Participant of a felony or any other crime that would
materially and adversely affect: (I) the business reputation of the
Company or Affiliate of the Company, or (II) the performance of the
Participant’s duties to the Company or an Affiliate of the
Company.
If, subsequent to the termination of a Participant’s employment or
service with the Company or an Affiliate for any reason other than
for Cause, it is discovered that the Participant’s employment or
service could have been terminated for Cause, such Participant’s
employment or service shall, at the discretion of the Committee, be
deemed to have been terminated by the Company or an Affiliate for
Cause for all purposes under the Plan, and the Participant shall be
required to repay to the Company all amounts received by him or her
in respect of any Award following such termination that would have
been forfeited under the Plan had such termination been by for
Cause. Any determination of whether Cause exists shall be made by
the Committee in its sole discretion.
(g) “Change in Control” shall, in the
case of a particular Award, unless the applicable Award Agreement
states otherwise or contains a different definition of “Change in
Control,” be deemed to occur upon:
(i) A tender
offer (or series of related offers) made and consummated for the
ownership of 50% or more of the outstanding voting securities of
the Company, unless as a result of such tender offer more than 50%
of the outstanding voting securities of the surviving or resulting
corporation or entity shall be owned in the aggregate by (A) the
shareholders of the Company (as of the time immediately prior to
the commencement of such offer), or (B) any employee benefit plan
of the Company or its Subsidiaries, and their Affiliates;
(ii) The
merger or consolidation of the Company with another corporation or
entity, unless as a result of such merger or consolidation more
than 50% of the outstanding voting securities of the surviving or
resulting corporation or entity shall be owned in the aggregate by
(A) the shareholders of the Company (as of the time immediately
prior to such transaction); provided, that a merger or
consolidation of the Company with another company which is
controlled by persons owning more than 50% of the outstanding
voting securities of the Company shall constitute a Change in
Control unless the Committee, in its discretion, determines
otherwise, or (B) any employee benefit plan of the Company or its
Subsidiaries, and their Affiliates;
(iii) The sale
of substantially all of the Company’s assets to another entity that
is not wholly owned by the Company, unless as a result of such sale
more than 50% of such assets shall be owned in the aggregate by (A)
the shareholders of the Company (as of the time immediately prior
to such transaction), or (B) any employee benefit plan of the
Company or its Subsidiaries, and their Affiliates;
(iv) The
acquisition by a Person (as defined below) of 50% or more of the
outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation or entity shall be owned in
the aggregate by (A) the shareholders of the Company (as of the
time immediately prior to the first acquisition of such securities
by such Person), or (B) any employee benefit plan of the Company or
its Subsidiaries, and their Affiliates; or
(v) The
cessation of individuals who, as of the Effective Date, constitute
the members of the Board (the “Current Board
Members”), by reason of a financing, merger, combination,
acquisition, takeover or other non-ordinary course transaction
affecting the Company, to constitute at least a majority of the
members of the Board unless such change is approved by the Current
Board Members.
For purposes of this Section 2(g), ownership of voting
securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in
effect on the Effective Date) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”). In addition,
for such purposes, “Person” shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof; provided, however, that “Person”
shall not include (A) the Company or any of its Subsidiaries; (B) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Subsidiaries; (C) an
underwriter temporarily holding securities pursuant to an offering
of such securities; or (D) a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the
same proportion as their ownership of stock of the Company.
(h) “Code” means the Internal Revenue
Code of 1986, as amended, and any successor thereto. References in
this Plan to any section of the Code shall be deemed to include any
regulations or other interpretative guidance of general
applicability issued by any governmental authority under such
section, and any amendments or successor provisions to such
section, regulations or guidance.
(i) “Committee” means a committee of at
least two (2) individuals as the Board may appoint to administer
this Plan or, if no such committee has been appointed by the Board,
the Board. Unless altered by an action of the Board, the Committee
shall be the Compensation Committee of the Board.
(j) “Common Shares” means the common
stock, par value $0.001 per share, of the Company, or such other
securities of the Company as may be designated by the Committee
from time to time in substitution thereof.
(k) “Company” means Byrna Technologies
Inc., a Delaware corporation, and any successor thereto.
(l) “Current Board Members” has the
meaning set forth in Section 2(g).
(m) “Date of Grant” means the date on which the
granting of an Award is authorized, or such other date as may be
specified in such authorization.
(n) “Disability” shall have the meaning
assigned to such term in any individual employment agreement or
Award Agreement with the Participant or, if no such agreement
exists or the agreement does not define “Disability,” Disability
means a “permanent and total” disability incurred by a Participant
while in the employ or service of the Company or an Affiliate. For
this purpose, a permanent and total disability shall mean that the
Participant is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months; provided, however, for purposes of
determining the term of an Incentive Stock Option pursuant to
Section 7(c)(ii), the term “Disability” shall have the
meaning ascribed to it under Section 22(e)(3) of the Code. Except
in situations where the Committee is determining Disability for
purposes of the term of an Incentive Stock Option pursuant to
Section 7(c)(ii) within the meaning of Section 22(e)(3) of
the Code, the Committee may rely on any determination that a
Participant is disabled for purposes of benefits under any
long-term disability plan maintained by the Company or any
Affiliate in which a Participant participates or, in the absence of
Participant’s participation in such a long-term disability plan,
the determination of whether a Participant has incurred a permanent
and total disability shall be made by a physician designated by the
Committee, whose determination shall be final and binding.
(o) “Effective Date” means the date as
of which this Plan is adopted by the Board, subject to Section
3.
(p) “Eligible Director” means an
individual who is a “non-employee director” within the meaning of
Rule 16b-3 under the Exchange Act.
(q) “Eligible Person” means any (i)
individual employed by the Company or an Affiliate;
provided, however, that no such employee covered by a
collective bargaining agreement shall be an Eligible Person unless
and to the extent that such eligibility is set forth in such
collective bargaining agreement or in an agreement or instrument
relating thereto; (ii) director of the Company or an Affiliate; or
(iii) consultant or advisor to the Company or an Affiliate;
provided, that if the Securities Act applies, such persons
must be eligible to be offered securities registrable on Form S-8
under the Securities Act.
(r) “Exchange Act” has the meaning set
forth in Section 2(g), and any reference in this Plan to any
section of (or rule promulgated under) the Exchange Act shall be
deemed to include any rules, regulations or other interpretative
guidance of general applicability issued by any governmental
authority under such section or rule, and any amendments or
successor provisions to such section, rules, regulations or
guidance.
(s) “Exercise Price” has the meaning set
forth in Section 7(b).
(t) “Fair Market Value”, unless
otherwise provided by the Committee in accordance with Applicable
Law, means, on a given date, (i) if the Common Shares are listed on
a national securities exchange, the closing sales price on the
principal exchange of the Common Shares on such date or, in the
absence of reported sales on such date, the closing sales price on
the immediately preceding date on which sales were reported, or
(ii) if the Common Shares are not listed on a national securities
exchange, the mean between the bid and offered prices as quoted by
any nationally recognized interdealer quotation system for such
date or, in the absence of quoted bid and offered prices on such
date, the mean between the bid and offered prices as quoted on the
immediately preceding date on which such amounts were quoted. In
the event that the Common Shares are not listed on a national
securities exchange or quoted on a nationally recognized
interdealer quotation system, Fair Market Value will be determined
by such other method as the Committee determines in good faith to
be reasonable and in compliance with Code Section 409A, if
applicable, and such determination shall be conclusive and binding
on all persons.
(u) “Immediate Family Members” has the
meaning set forth in Section 14(b).
(v) “Incentive Stock Option” means an
Option that is designated by the Committee as an incentive stock
option as described in Section 422 of the Code and otherwise meets
the requirements set forth in this Plan.
(w) “Indemnifiable Person” shall have
the meaning set forth in Section 4(e).
(x) “Nonqualified Stock Option” means an
Option that is not designated by the Committee as an Incentive
Stock Option.
(y) “Option” means an Award granted
under Section 7.
(z) “Option Period” has the meaning set
forth in Section 7(c).
(aa) “Participant” means an Eligible
Person who has been selected by the Committee to participate in
this Plan and to receive an Award pursuant to Section 6.
(bb) “Permitted Transferee” has the
meaning set forth in Section 14(b).
(cc) “Person” has the meaning set forth
in Section 2(g).
(dd) “Plan” means this Byrna
Technologies Inc. 2020 Equity Incentive Plan, as amended from time
to time.
(ee) “Restricted Period” means the period of
time determined by the Committee during which an Award may not be
sold, assigned, transferred or otherwise disposed of, pledged or
hypothecated as collateral for a loan or as security for the
performance of any obligation or for any other purpose, or is
otherwise subject to restrictions or, as applicable, the period of
time within which performance is measured for purposes of
determining whether an Award has been earned.
(ff) “Restricted Stock” means Common Shares,
subject to certain specified restrictions (including, without
limitation, a requirement that the Participant remain continuously
employed or provide continuous services for a specified period of
time), granted under Section 9.
(gg) “Restricted Stock Unit” means an unfunded
and unsecured promise to deliver Common Shares, cash, other
securities or other property, subject to certain specified
restrictions (including, without limitation, a requirement that the
Participant remain continuously employed or provide continuous
services for a specified period of time), granted under Section
9.
(hh) “Retirement” means the fulfillment of each
of the following conditions: (i) the Participant is in good
standing with the Company and/or an Affiliate of the Company as
determined by the Committee; (ii) the voluntary termination by a
Participant of such Participant’s employment or service with the
Company and/or an Affiliate; and (iii) that at the time of such
voluntary termination, the sum of: (A) the Participant’s age
(calculated to the nearest month, with any resulting fraction of a
year being calculated as the number of months in the year divided
by 12), and (B) the Participant’s years of employment or service
with the Company and/or an Affiliate (calculated to the nearest
month, with any resulting fraction of a year being calculated as
the number of months in the year divided by 12) is greater than or
equal to 62; provided that, in any case, the foregoing shall
only be applicable if, at the time of such Retirement, the
Participant shall be at least 55 years of age and shall have been
employed by or served with the Company for no less than five (5)
years.
(ii) “SAR Period” has the meaning
set forth in Section 8(c).
(jj) “Securities Act” means the Securities Act
of 1933, as amended, and any successor thereto. Reference in this
Plan to any section of the Securities Act shall be deemed to
include any rules, regulations or other official interpretative
guidance of general applicability issued by any governmental
authority under such section, and any amendments or successor
provisions to such section, rules, regulations or guidance.
(kk) “Stock Appreciation Right” or
“SAR” means the right pursuant to an Award granted
under Section 8 to receive, upon exercise, an amount payable
in cash or Common Shares equal to the number of Common Shares
subject to the Stock Appreciation Right that is being exercised
multiplied by the excess of (i) the Fair Market Value of a Common
Share on the date the Award is exercised, over (ii) the Strike
Price specified in the Award Agreement and which meets all of the
requirements of Section 1.409A-1(b)(5)(i)(B) of the Treasury
Regulations.
(ll) “Stock Bonus Award” means an
Award granted under Section 10.
(mm) “Strike Price” means, except as otherwise
provided by the Committee in the case of Substitute Awards, (i) in
the case of a SAR granted in tandem with an Option, the Exercise
Price of the related Option, or (ii) in the case of a SAR granted
independent of an Option, the Fair Market Value of a Common Share
on the Date of Grant.
(nn) “Subsidiary” means, with respect to any
specified Person:
(i) any corporation, association or other
business entity of which more than 50% of the total voting power of
shares of voting securities (without regard to the occurrence of
any contingency and after giving effect to any voting agreement or
stockholders’ agreement that effectively transfers voting power) is
at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person (or
a combination thereof); and
(ii) any partnership or limited liability
company (or any comparable foreign entity) (a) the sole general
partner or managing member (or functional equivalent thereof) or
the managing general partner of which is such Person or Subsidiary
of such Person or (b) the only general partners or managing members
(or functional equivalents thereof) of which are that Person or one
or more Subsidiaries of that Person (or any combination
thereof).
(oo) “Substitute Award” has the meaning
set forth in Section 5(f).
(pp) “Treasury Regulations” means any
regulations, whether proposed, temporary or final, promulgated by
the U.S. Department of Treasury under the Code, and any successor
provisions.
3. Effective Date;
Duration. The Plan shall be effective as of the Effective Date,
but no Incentive Stock Options shall be exercised unless and until
this Plan has been approved by the stockholders of the Company,
which approval shall be within 12 months after the date this Plan
is adopted by the Board. The Plan shall terminate automatically on
10th
anniversary of the Effective Date, and no Award shall be granted
pursuant to the Plan after such date; provided,
however, that such termination shall not affect Awards then
outstanding, and the terms and conditions of this Plan shall
continue to apply to such Awards.
4.
Administration.
(a) The Committee shall administer this
Plan. To the extent required to comply with the provisions of Rule
16b-3 promulgated under the Exchange Act (if the Board is not
acting as the Committee under this Plan), each member of the
Committee shall, at the time he takes any action with respect to an
Award under this Plan, be an Eligible Director. However, the fact
that a Committee member shall fail to qualify as an Eligible
Director shall not invalidate any Award granted by the Committee
that is otherwise validly granted under this Plan. The acts of a
majority of the members present at any meeting at which a quorum is
present or acts approved in writing by all of the members of the
Committee without a meeting shall be deemed the acts of the
Committee. Whether a quorum is present shall be determined based on
the Committee’s charter as approved by the Board.
(b) Subject to the provisions of this Plan
and Applicable Law, the Committee shall have the sole and plenary
authority, in addition to other express powers and authorizations
conferred on the Committee by this Plan and its charter, to: (i)
designate Participants; (ii) determine the type or types of Awards
to be granted to a Participant; (iii) determine the number of
Common Shares to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances
Awards may be settled or exercised in cash, Common Shares, other
securities, other Awards or other property, or canceled, forfeited,
or suspended, and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances the
delivery of cash, Common Shares, other securities, other Awards or
other property and other amounts payable with respect to an Award
shall be made; (vii) construe, interpret, administer, reconcile any
inconsistency in, settle any controversy regarding, correct any
defect in and/or complete any omission in this Plan and any
instrument or agreement relating to, or Award granted under, this
Plan; (viii) establish, amend, suspend, or waive any rules and
regulations and appoint such agents as the Committee shall deem
appropriate for the proper administration of this Plan; (ix)
accelerate the vesting or exercisability of, payment for or lapse
of restrictions on, Awards, whether or not in connection with a
Change in Control; (x) authorize any person to execute, on behalf
of the Company, any instrument required to carry out the purposes
of the Plan; and (xi) exercise discretion to make any other
determination and to take any other action that the Committee deems
necessary or desirable for the administration of this Plan. The
Committee’s determinations under the Plan need not be uniform and
may be made by it selectively among persons who are eligible to
receive, or actually receive, Awards. Without limiting the
generality of the foregoing, the Committee shall be entitled to
make non-uniform and selective determinations, amendments and
adjustments, and to enter into non-uniform and selective Award
Agreements.
(c) The Committee may, by resolution,
expressly delegate to a special committee, consisting of one or
more directors or other individuals who may, but need not, be
officers of the Company, the authority, within specified parameters
as to the number and types of Awards, to (i) designate officers
and/or employees of the Company or any of its Affiliates to be
recipients of Awards under this Plan, and (ii) to determine the
number of such Awards to be received by any such Participants;
provided, however, that (A) the resolution so
authorizing such officer or officers shall specify the total number
of Awards such officer or officers may so award and the time period
during which such officer or officers may so award, and (B) such
delegation of duties and responsibilities may not be made with
respect to grants of Awards to persons subject to Section 16 of the
Exchange Act. The acts of such delegates shall be treated as acts
of the Committee, and such delegates shall report regularly to the
Board and the Committee regarding the delegated duties and
responsibilities and any Awards granted. The Committee may not
authorize an officer to designate himself or herself as a recipient
of any such rights or options.
(d) Unless otherwise expressly provided in
this Plan, all designations, determinations, interpretations, and
other decisions under or with respect to this Plan or any Award or
any documents evidencing Awards granted pursuant to this Plan shall
be within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon all persons or
entities, including, without limitation, the Company, any
Affiliate, any Participant, any holder or beneficiary of any Award,
and any stockholder of the Company.
(e) No member of the Board, the Committee,
delegate of the Committee or any employee, advisor or agent of the
Company or the Board or the Committee (each such person, an
“Indemnifiable Person”) shall be liable for any
action taken or omitted to be taken or any determination made in
good faith with respect to this Plan or any Award hereunder. Each
Indemnifiable Person shall be indemnified and held harmless by the
Company against and from (and the Company shall pay or reimburse on
demand for) any loss, cost, liability, or expense (including court
costs and attorneys’ fees) that may be imposed upon or incurred by
such Indemnifiable Person in connection with or resulting from any
action, suit or proceeding to which such Indemnifiable Person may
be a party or in which such Indemnifiable Person may be involved by
reason of any action taken or omitted to be taken under this Plan
or any Award Agreement and against and from any and all amounts
paid by such Indemnifiable Person with the Company’s approval, in
settlement thereof, or paid by such Indemnifiable Person in
satisfaction of any judgment in any such action, suit or proceeding
against such Indemnifiable Person; provided, that the
Company shall have the right, at its own expense, to assume and
defend any such action, suit or proceeding and once the Company
gives notice of its intent to assume the defense, the Company shall
have sole control over such defense with counsel of the Company’s
choice. The foregoing right of indemnification shall not be
available to an Indemnifiable Person to the extent that a final
judgment or other final adjudication (in either case not subject to
further appeal) binding upon such Indemnifiable Person determines
that the acts or omissions of such Indemnifiable Person giving rise
to the indemnification claim resulted from such Indemnifiable
Person’s bad faith, fraud or willful criminal act or omission or
that such right of indemnification is otherwise prohibited by law
or by the Company’s Certificate of Incorporation or Bylaws. The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which any such Indemnifiable
Person may be entitled under the Company’s Certificate of
Incorporation or Bylaws, under the Committee’s charter, as a matter
of law, or otherwise, or any other power that the Company may have
to indemnify such Indemnifiable Persons or hold them harmless.
(f) Notwithstanding anything to the contrary
contained in this Plan, the Board may, in its sole discretion, at
any time and from time to time, grant Awards and administer this
Plan with respect to such Awards. In any such case, the Board shall
have all the authority granted to the Committee under this
Plan.
5. Grant of Awards;
Shares Subject to this Plan; Limitations.
(a) The Committee may, from time to time,
grant Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units and/or Stock Bonus Awards to one or more
Eligible Persons.
(b) Subject to adjustment in accordance with
Section 11, no more than 25,000,000
3,800,000
Common Shares, less the number of Common Shares underlying any
unexercised awards under the Company’s 2013 Stock Option Plan and
the Company’s 2017 Stock Option Plan as of the Effective Date,
shall be available for the grant of Awards under the Plan, all or
any portion of which may be issued pursuant to the exercise of
Incentive Stock Options. Each Common Share subject to an Option or
a Stock Appreciation Right will reduce the number of Common Shares
available for issuance by one share, and each Common Share
underlying an Award of Restricted Stock, Restricted Stock Units,
Stock Bonus Awards and Performance Compensation Awards will reduce
the number of Common Shares available for issuance by one
share.
(c) Common Shares underlying Awards under
this Plan that are forfeited, cancelled, expire unexercised, or are
settled in cash shall be available again for Awards under this Plan
at the same ratio at which they were previously granted.
Notwithstanding the foregoing, the following Common Shares shall
not be available again for Awards under the Plan: (i) shares
tendered or held back upon the exercise of an Option or settlement
of an Award to cover the Exercise Price of an Award; (ii) shares
that are used or withheld to satisfy tax withholding obligations of
the Participant; and (iii) shares subject to a Stock Appreciation
Right that are not issued in connection with the stock settlement
of the SAR upon exercise thereof.
(d) Awards that do not entitle the holder
thereof to receive or purchase Common Shares shall not be counted
against the aggregate number of Common Shares available for Awards
under the Plan.
(e) Common Shares delivered by the Company
in settlement of Awards may be authorized and unissued shares,
shares held in the treasury of the Company, shares purchased on the
open market or by private purchase, or any combination of the
foregoing.
(f) Awards may, in the sole discretion of
the Committee, be granted under the Plan in assumption of, or in
substitution for, outstanding awards previously granted by an
entity acquired by the Company or with which the Company combines
(“Substitute Awards”). Substitute Awards shall not be
counted against the aggregate number of Common Shares available for
Awards under the Plan; provided that, Substitute Awards
issued in connection with the assumption of, or in substitution
for, outstanding options intended to qualify as Incentive Stock
Options shall be counted against the aggregate number of Common
Shares available for Incentive Stock Options under the Plan.
Subject to applicable stock exchange requirements, available shares
under a shareholder-approved plan of an entity directly or
indirectly acquired by the Company or with which the Company
combines (as appropriately adjusted to reflect such acquisition or
transaction) may be used for Awards under the Plan and shall not
count against the aggregate number of Common Shares available for
Awards under the Plan.
6.
Eligibility.
Participation shall be limited to Eligible Persons who have entered
into an Award Agreement or who have received written notification
from the Committee, or from a person designated by the Committee,
that they have been selected to participate in this Plan.
7. Options.
(a) Generally. Each Option
granted under this Plan shall be evidenced by an Award Agreement
(whether in paper or electronic medium (including email or the
posting on a web site maintained by the Company or a third party
under contract with the Company)), which agreements need not be
identical. Each Option so granted shall be subject to the
conditions set forth in this Section 7, and to such other
conditions not inconsistent with this Plan as may be set forth in
the applicable Award Agreement. All Options granted under this Plan
shall be Nonqualified Stock Options unless the applicable Award
Agreement expressly states that the Option is intended to be an
Incentive Stock Option. Notwithstanding any designation of an
Option, to the extent that the aggregate Fair Market Value of
Common Shares with respect to which Options designated as Incentive
Stock Options are exercisable for the first time by any Participant
during any calendar year (under all plans of the Company or any
Subsidiary) exceeds $100,000, such excess Options shall be treated
as Nonqualified Stock Options. Incentive Stock Options shall be
granted only to Eligible Persons who are employees of the Company
and its Affiliates, and no Incentive Stock Option shall be granted
to any Eligible Person who is ineligible to receive an Incentive
Stock Option under the Code. No Option shall be treated as an
Incentive Stock Option unless this Plan has been approved by the
stockholders of the Company in a manner intended to comply with the
stockholder approval requirements of Section 422(b)(1) of the Code;
provided that, any Option intended to be an Incentive Stock
Option shall not fail to be effective solely on account of a
failure to obtain such approval, but rather such Option shall be
treated as a Nonqualified Stock Option unless and until such
approval is obtained. In the case of an Incentive Stock Option, the
terms and conditions of such grant shall be subject to and comply
with such rules as may be prescribed by Section 422 of the Code. If
for any reason an Option intended to be an Incentive Stock Option
(or any portion thereof) shall not qualify as an Incentive Stock
Option, then, to the extent of such nonqualification, such Option
or portion thereof shall be regarded as a Nonqualified Stock Option
appropriately granted under this Plan. Notwithstanding the
foregoing, the Company shall have no liability to any Participant
or any other person if an Option designated as an Incentive Stock
Option fails to qualify as such at any time or if an Option is
determined to constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Code and the terms of
such Option do not satisfy the requirements of Section 409A of the
Code.
(b) Exercise Price. The price
at which a Common Share may be purchased upon the exercise of an
Option (the “Exercise Price”) shall not be less than
100% of the Fair Market Value of such share determined as of the
Date of Grant; provided, however, that in the case of
an Incentive Stock Option granted to an employee who, at the time
of the grant of such Option, owns (or is deemed to own pursuant to
Section 424(d) of the Code) shares representing more than 10% of
the total combined voting power of all classes of shares of the
Company or any Affiliate, the Exercise Price per share shall not be
less than 110% of the Fair Market Value per share on the Date of
Grant; ; provided, further, that the Committee may,
in accordance with Applicable Law (including the applicable
provisions of Section 409A or 424 of the Code) designate an
Exercise Price below Fair Market Value on the Date of Grant if the
Option is granted in substitution for an option previously granted
by an entity that is acquired by or merged with the Company or an
Affiliate; provided, further, that notwithstanding
any provision herein to the contrary, the Exercise Price shall not
be less than the par value per Common Share.
(c) Vesting and Expiration.
Options shall vest and become exercisable in such manner and on
such date or dates determined by the Committee and as set forth in
the applicable Award Agreement, and shall expire after such period,
not to exceed 10 years from the Date of Grant, as may be determined
by the Committee (the “Option Period”);
provided, however, that the Option Period shall not
exceed five (5) years from the Date of Grant in the case of an
Incentive Stock Option granted to a Participant who on the Date of
Grant owns (or is deemed to own pursuant to Section 424(d) of the
Code) shares representing more than 10% of the total combined
voting power of all classes of shares of the Company or any
Affiliate; provided, further, that notwithstanding
any vesting dates set by the Committee, the Committee may, in its
sole discretion, accelerate the exercisability of any Option at any
time and for any reason. Unless otherwise provided by the Committee
in an Award Agreement:
(i) an Option shall vest and become
exercisable with respect to one-third of the Common Shares subject
to such Option on each of the first three (3) anniversaries of the
Date of Grant;
(ii) upon termination of employment or
service of the Participant granted such Option, the unvested
portion of such Option shall expire, and the vested portion of such
Option shall remain exercisable for:
(A) one (1) year following termination of
employment or service by reason of such Participant’s death or
Disability (with the determination of Disability to be made by the
Committee on a case by case basis), but in no event later than the
expiration of the Option Period;
(B) for directors, officers and employees of
the Company only, for three (3) months following termination of
employment or service by reason of such Participant’s Retirement,
but in no event later than the expiration of the Option Period;
(C) three (3) months following termination
of employment or service for any reason other than such
Participant’s death, Disability or Retirement, and other than such
Participant’s termination of employment or service for Cause, but
in no event later than the expiration of the Option Period; and
(iii) both the unvested and the vested
portion of an Option shall immediately expire upon the termination
of the Participant’s employment or service by the Company for
Cause.
Notwithstanding the foregoing provisions of this Section
7(c) and consistent with the requirements of Applicable Law,
the Committee, in its sole discretion, may extend the
post-termination of employment period during which a Participant
may exercise vested Options.
(d) Method of Exercise and Form of
Payment. No Common Shares shall be delivered pursuant to
the exercise of an Option until payment in full of the aggregate
Exercise Price therefor is received by the Company and the
Participant has paid to the Company an amount equal to any
applicable federal, state, local and/or foreign income and
employment taxes required to be withheld. Options that have become
exercisable may be exercised by delivery of written or electronic
notice of exercise to the Company in accordance with the terms of
the Award Agreement accompanied by payment of the aggregate
Exercise Price. The aggregate Exercise Price shall be payable (i)
in cash, by certified or bank check, or cash equivalent; and (ii)
by such other method as the Committee may permit in accordance with
Applicable Law, in its sole discretion, including without
limitation: (A) in other property having a fair market value (as
determined by the Committee in its discretion) on the date of
exercise equal to the aggregate Exercise Price; (B) if there is a
public market for the Common Shares at such time, by means of a
broker-assisted “cashless exercise” pursuant to which the Company
is delivered a copy of irrevocable instructions to a stockbroker to
sell the Common Shares otherwise deliverable upon the exercise of
the Option and to deliver promptly to the Company an amount equal
to the aggregate Exercise Price, (C) by a “net exercise” method
whereby the Company withholds from the delivery of the Common
Shares for which the Option was exercised that number of Common
Shares having a Fair Market Value equal to the aggregate Exercise
Price for the Common Shares for which the Option was exercised, (D)
any combination of the foregoing, or (E) any other form of legal
consideration that may be acceptable to the Committee. Any
fractional Common Shares shall be settled in cash.
(e) Notification upon Disqualifying
Disposition of an Incentive Stock Option. Each Participant
awarded an Incentive Stock Option under this Plan shall notify the
Company in writing immediately after the date he makes a
“disqualifying disposition” (as defined below) of all or any
portion of the Common Shares acquired pursuant to the exercise of
such Incentive Stock Option. A disqualifying disposition is any
“disposition” (within the meaning of Section 424 of the Code and
including, without limitation, any sale) of such Common Shares
before the later of (i) two (2) years after the Date of Grant of
the Incentive Stock Option, or (ii) one (1) year after the date of
exercise of the Incentive Stock Option. Such written notice shall
advise the Company of the occurrence of the disqualifying
disposition and the price realized upon the disposition of such
Common Shares. The Company may, if determined by the Committee and
in accordance with procedures established by the Committee, retain
possession of any Common Shares acquired pursuant to the exercise
of an Incentive Stock Option as agent for the applicable
Participant until the end of the period described in the preceding
sentence.
(f) Compliance with Laws, etc.
Notwithstanding the foregoing, in no event shall a Participant be
permitted to exercise an Option in a manner that the Committee
determines would violate the Sarbanes-Oxley Act of 2002, if
applicable, or any other Applicable Law.
8. Stock Appreciation
Rights.
(a) Generally. Each SAR
granted under this Plan shall be evidenced by an Award Agreement
(whether in paper or electronic medium (including email or the
posting on a web site maintained by the Company or a third party
under contract with the Company)), which agreements need not be
identical. Each SAR so granted shall be subject to the conditions
set forth in this Section 8, and to such other conditions
not inconsistent with this Plan as may be set forth in the
applicable Award Agreement. Any Option granted under this Plan may
include tandem SARs (i.e., SARs granted in conjunction with an
Award of Options under this Plan). The Committee also may award
SARs to Eligible Persons independent of any Option.
(b) Strike Price. The Strike
Price for each SAR granted in conjunction with the Award of an
Option shall be the Exercise Price of the related Option, and the
Strike Price of a SAR granted independent of an Option shall be the
Fair Market Value of a Common Share determined as of the Date of
Grant; provided, however, that the Committee may, in
accordance with Applicable Law (including the applicable provisions
of Section 409A of the Code) designate a Strike Price below Fair
Market Value on the Date of Grant if the SAR is granted in
substitution for an appreciation right previously granted by an
entity that is acquired by or merged with the Company or an
Affiliate.
(c) Vesting and Expiration. A
SAR granted in connection with an Option shall become exercisable
and shall expire according to the same vesting schedule and
expiration provisions as the corresponding Option, and a SAR
granted independent of an Option shall vest and become exercisable
and shall expire in such manner and on such date or dates
determined by the Committee and shall expire after such period, not
to exceed 10 years from the Date of Grant, as may be determined by
the Committee (each, the “SAR Period”);
provided, however, that notwithstanding any vesting
dates set by the Committee, the Committee may, in its sole
discretion, accelerate the exercisability of any SAR at any time
and for any reason. Unless otherwise provided by the Committee in
an Award Agreement:
(i) a SAR shall vest and become exercisable
with respect to one-third of the Common Shares subject to such SAR
on each of the first three (3) anniversaries of the Date of
Grant;
(ii) upon termination of employment or
service of the Participant granted the SAR, the unvested portion of
a SAR shall expire, and the vested portion of such SAR shall remain
exercisable for:
(A) one (1) year following termination of
employment or service by reason of such Participant’s death or
Disability (with the determination of Disability to be made by the
Committee on a case by case basis), but in no event later than the
expiration of the SAR Period;
(B) for directors, officers and employees of
the Company only, for the remainder of the SAR Period following
termination of employment or service by reason of such
Participant’s Retirement;
(C) three (3) months following termination
of employment or service for any reason other than such
Participant’s death, Disability or Retirement, and other than such
Participant’s termination of employment or service for Cause, but
in no event later than the expiration of the SAR Period; and
(iii) both the unvested and the vested
portion of a SAR shall expire immediately upon the termination of
the Participant’s employment or service by the Company for
Cause.
(d) Method of Exercise. SARs
that have become exercisable may be exercised by delivery of
written or electronic notice of exercise to the Company in
accordance with the terms of the Award, specifying the number of
SARs to be exercised and the Date of Grant of the SARs to be
exercised. Notwithstanding the foregoing, if on the last day of the
SAR Period (i) the Fair Market Value exceeds the Strike Price, (ii)
the Participant has not exercised the SAR or the corresponding
Option (if applicable), and (iii) neither the SAR nor the
corresponding Option (if applicable) has expired, such SAR shall be
deemed to have been exercised by the Participant on such last day
of the SAR Period and the Company shall make the appropriate
payment therefor.
(e) Payment. Upon the exercise
of a SAR, the Company shall pay to the Participant an amount equal
to the number of Common Shares subject to the SAR that are being
exercised multiplied by the excess, if any, of the Fair Market
Value of one Common Share on the exercise date over the Strike
Price, less an amount equal to any applicable federal, state, local
and non-U.S. income and employment taxes required to be withheld.
The Company shall pay such amount in cash, in Common Shares valued
at Fair Market Value, or any combination thereof, as determined by
the Committee. Any fractional Common Share shall be settled in
cash.
9. Restricted Stock and Restricted Stock
Units.
(a) Generally. Each grant of
Restricted Stock and Restricted Stock Units shall be evidenced by
an Award Agreement (whether in paper or electronic medium
(including email or the posting on a web site maintained by the
Company or a third party under contract with the Company)), which
agreements need not be identical. Each such grant shall be subject
to the conditions set forth in this Section 9, and to such
other conditions not inconsistent with this Plan as may be set
forth in the applicable Award Agreement. Restricted Stock and
Restricted Stock Units shall be subject to such restrictions on
transferability and other restrictions as the Committee may impose
(including, for example, limitations on the right to vote
Restricted Stock or the right to receive dividends on the
Restricted Stock). These restrictions may lapse separately
or in combination at such times, under such circumstances, in such
installments, upon the satisfaction of Performance Goals or
otherwise, as the Committee determines at the time of the grant of
an Award or thereafter.
(b) Restricted Stock Accounts; Escrow
or Similar Arrangement. Unless otherwise determined by the
Committee, upon the grant of Restricted Stock, a book entry in a
restricted account shall be established in the Participant’s name
at the Company’s transfer agent and, if the Committee determines
that the Restricted Stock shall be held by the Company or in escrow
rather than held in such restricted account pending the release of
the applicable restrictions, the Committee may also require the
Participant to execute and deliver to the Company (i) an escrow
agreement satisfactory to the Committee, if applicable, and (ii)
the appropriate stock power (endorsed in blank) with respect to the
Restricted Stock covered by such agreement. If a Participant shall
fail to execute an Award Agreement evidencing an Award of
Restricted Stock and, if applicable, an escrow agreement and blank
stock power within the amount of time specified by the Committee,
the Award shall be null and void ab initio. Subject to the
restrictions set forth in this Section 9 and the applicable
Award Agreement, the Participant generally shall have the rights
and privileges of a stockholder as to such Restricted Stock,
including without limitation the right to vote such Restricted
Stock and the right to receive dividends, if
applicable,
provided that the Participant shall not have
the right to receive dividends on any unvested shares of Restricted
Stock. To the extent shares of Restricted Stock are
forfeited, any share certificates issued to the Participant
evidencing such shares shall be returned to the Company, and all
rights of the Participant to such shares and as a stockholder with
respect thereto shall terminate without further obligation on the
part of the Company.
(c) Restricted Stock Units.
The terms and conditions of a grant of Restricted Stock Units shall
be reflected in an Award Agreement. No Common Shares shall be
issued at the time a Restricted Stock Unit is granted, and the
Company will not be required to set aside funds for the payment of
any such Award. Except as otherwise provided in an Award Agreement,
a Participant shall have none of the rights of a stockholder
(including, without limitation, voting rights) with respect to
Restricted Stock Units until such time as Common Shares are paid in
settlement of such Awards. The Committee may also grant Restricted
Stock Units with a deferral feature, whereby settlement is deferred
beyond the vesting date until the occurrence of a future payment
date or event set forth in an Award Agreement in a manner
consistent with the applicable requirements of Section 409A of the
Code. At the discretion of the Committee, each Restricted Stock
Unit (representing one Common Share) may be credited with an amount
equal to the cash and stock dividends paid by the Company in
respect of one Common Share (“Dividend Equivalents”).
Dividend Equivalents shall be withheld by the Company and credited
to the Participant’s account, and interest may be credited on the
amount of cash Dividend Equivalents credited to the Participant’s
account at a rate and subject to such terms as determined by the
Committee in its discretion. Dividend Equivalents credited to a
Participant’s account and attributable to any particular Restricted
Stock Unit (and earnings thereon, if applicable) shall be
distributed in cash or, at the discretion of the Committee, in
Common Shares having a Fair Market Value equal to the amount of
such Dividend Equivalents and earnings, if applicable, to the
Participant upon settlement of such Restricted Stock Unit and, if
such Restricted Stock Unit is forfeited, the Participant shall have
no right to such Dividend Equivalents.
(d) Vesting; Acceleration of Lapse of
Restrictions. The Restricted Period with respect to
Restricted Stock and Restricted Stock Units shall lapse pursuant to
the terms and conditions set forth in the applicable Award
Agreement. Unless otherwise provided by the Committee in an Award
Agreement, the unvested portion of Restricted Stock and Restricted
Stock Units shall terminate and be forfeited upon the termination
of employment or service of the Participant granted the applicable
Award.
(e) Delivery of Restricted Stock and
Settlement of Restricted Stock Units. (i) Upon the
expiration of the Restricted Period with respect to any shares of
Restricted Stock, the restrictions set forth in the applicable
Award Agreement shall be of no further force or effect with respect
to such shares, except as set forth in the applicable Award
Agreement. If an escrow arrangement is used, upon such expiration,
the Company shall deliver to the Participant, or his beneficiary,
without charge, the share certificate evidencing the shares of
Restricted Stock that have not then been forfeited and with respect
to which the Restricted Period has expired (rounded down to the
nearest full share). Dividends, if any, that may have been withheld
by the Committee and attributable to any particular share of
Restricted Stock shall be distributed to the Participant in cash
or, at the sole discretion of the Committee, in shares of Common
Stock having a Fair Market Value equal to the amount of such
dividends, upon the release of restrictions on such shares of
Restricted Stock and, if such shares of Restricted Stock are
forfeited, the Participant shall have no right to such dividends
(except as otherwise set forth by the Committee in the applicable
Award Agreement).
(ii) Unless otherwise provided by the
Committee in an Award Agreement, upon the expiration of the
Restricted Period with respect to the outstanding Restricted Stock
Units held by any Participant and no later than March 15th of the
calendar year following the calendar year in which such expiration
occurs, the Company shall deliver a copy of irrevocable
instructions to a stockbroker or other third party agent to (A)
sell a sufficient number of Common Shares on behalf of such
Participant, in order to fully satisfy the Company’s tax
withholding obligations with respect to such Restricted Stock
Units, and (B) hold the remainder of the Participant’s Common
Shares with respect to such Restricted Stock Units in an individual
account with such stockbroker or other third party agent on behalf
of, and for the benefit of, such Participant.
(f) Section 83(b) Election.
Subject to compliance with Section 83 of the Code and applicable
Treasury Regulations, a Participant may file an election under
Section 83(b) of the Code with respect to grants of Restricted
Stock; provided, however, that it shall be the sole
responsibility of such Participant to complete and file such
election in accordance with and in the manner provided by Section
83 of the Code and Treasury Regulation Section 1.83-2.
10. Stock Bonus Awards. The Committee
may issue unrestricted Common Shares, or other Awards denominated
in Common Shares, under this Plan to Eligible Persons, either alone
or in tandem with other Awards, in such amounts as the Committee
shall from time to time in its sole discretion determine. Each
Stock Bonus Award granted under this Plan shall be evidenced by an
Award Agreement (whether in paper or electronic medium (including
email or the posting on a web site maintained by the Company or a
third party under contract with the Company)), which agreements
need not be identical. Each Stock Bonus Award so granted shall be
subject to such conditions not inconsistent with this Plan as may
be set forth in the applicable Award Agreement.
11. Adjustments Upon Changes in Capital
Structure and Similar Events. In the event of changes in the
outstanding Common Shares or in the capital structure of the
Company by reason of any stock or extraordinary cash dividend,
stock split, reverse stock split, an extraordinary corporate
transaction such as any recapitalization, reorganization, merger,
consolidation, combination, exchange, or other relevant change in
capitalization occurring after the Date of Grant of any Award,
Awards granted under the Plan and any Award Agreements, the
Exercise Price of Options and the Strike Price of Stock
Appreciation Rights, the maximum number of Common Shares subject to
all Awards stated in Section 5 shall be equitably adjusted
or substituted, as to the number, price or kind of a Common Share
or other consideration subject to such Awards to the extent
necessary to preserve the economic intent of such Award and to
prevent substantial dilution or enlargement of rights under such
Award. In the case of adjustments made pursuant to this Section
11, unless the Committee specifically determines that such
adjustment is in the best interests of the Company or its
Affiliates, the Committee shall, in the case of Incentive Stock
Options, ensure that any adjustments under this Section 11
will not constitute a modification, extension or renewal of the
Incentive Stock Options within the meaning of Section 424(h)(3) of
the Code and in the case of Nonqualified Stock Options, ensure that
any adjustments under this Section 11 will not constitute a
modification of such Nonqualified Stock Options within the meaning
of Section 409A of the Code. Any adjustments made under this
Section 11 shall be made in a manner which does not
adversely affect the exemption provided pursuant to Rule 16b-3
under the Exchange Act. The Company shall furnish each Participant
written notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.
12. Effect of Change in Control.
Notwithstanding Section 11, except as provided by the
Committee in an Award Agreement or otherwise, in connection with
(i) a merger, amalgamation, or consolidation involving the
Company in which the Company is not the surviving corporation,
(ii) a merger, amalgamation, or consolidation involving the
Company in which the Company is the surviving corporation but the
holders of Common Shares receive securities of another corporation
or other property or cash, (iii) a Change in Control, or
(iv) the reorganization, dissolution or liquidation of the
Company (each, a “Corporate Event”), all Awards
outstanding on the effective date of such Corporate Event shall be
treated in the manner described in the definitive transaction
agreement (or, in the event that the Corporate Event does not
entail a definitive agreement to which the Company is a party, in
the manner determined by the Committee in its sole discretion),
which agreement may provide, without limitation, for one or more of
the following:
(a) The assumption or substitution of any or
all Awards in connection with such Corporate Event, in which case
the Awards shall be subject to the adjustment set forth in
Section 11, and to the extent that such Awards vest subject
to the achievement of performance objectives or criteria, such
objectives or criteria shall be adjusted appropriately to reflect
the Corporate Event;
(b) The acceleration of vesting of any or
all Awards, subject to the consummation of such Corporate
Event;
(c) The cancellation of any or all Awards
(whether vested or unvested) as of the consummation of such
Corporate Event, together with the payment to the Participants
holding vested Awards (including any Awards that would vest upon
the Corporate Event but for such cancellation) so canceled of an
amount in respect of cancellation based upon the per-share
consideration being paid for the Common Shares in connection with
such Corporate Event, less, in the case of Options and SARs, the
Exercise Price or Strike Price, as applicable, (such amounts to be
paid on substantially the same schedule and subject to
substantially the same terms and conditions as the consideration
payable for the Common Shares in connection with the Corporate
Event, unless otherwise determined by the Committee);
provided, however, that Participants holding Options
or SARs shall be entitled to consideration in respect of
cancellation of such Awards only if the per-share consideration
less the Exercise Price or Strike Price, as applicable, is greater
than zero dollars ($0), and to the extent that the per-share
consideration is less than or equal to the Exercise Price or Strike
Price, as applicable, such Awards shall be canceled for no
consideration;
(d) The cancellation of any or all Options
and SARs (whether vested or unvested) as of the consummation of
such Corporate Event; provided, that all Options and SARs to
be so cancelled pursuant to this subsection (d) shall first become
exercisable for a period of at least 10 days prior to such
Corporate Event, with any exercise during such period of any
unvested Options or SARs to be (i) contingent upon and subject
to the occurrence of the Corporate Event, and (ii) effectuated
by such means as are approved by the Committee; and
(e) The replacement of any or all Awards
(other than Awards that are intended to qualify as “stock rights”
that do not provide for a “deferral of compensation” within the
meaning of Section 409A of the Code) with a cash incentive
program that preserves the value of the Awards so replaced
(determined as of the consummation of the Corporate Event), with
subsequent payment of cash incentives subject to the same vesting
conditions as applicable to the Awards so replaced and payment to
be made within 30 days of the applicable vesting date (or such
later date on which the applicable consideration is payable for the
Common Shares in connection with the Corporate Event, unless
otherwise determined by the Committee).
Payments to holders pursuant to Section 12(c) shall be made
in cash or, in the sole discretion of the Committee, in the form of
such other consideration necessary for a Participant to receive
property, cash, or securities (or a combination thereof) as such
Participant would have been entitled to receive upon the occurrence
of the transaction if the Participant had been, immediately prior
to such transaction, the holder of the number of Common Shares
covered by the Award at such time (less any Exercise Price or
Strike Price, as applicable). In addition, in connection with any
Corporate Event, prior to any payment or adjustment contemplated
under this Section 12, the Committee may require a
Participant to (x) represent and warrant as to the
unencumbered title to his or her Awards, (y) bear such
Participant’s pro-rata share of any post-closing indemnity
obligations and be subject to the same post-closing purchase price
adjustments, escrow terms, offset rights, holdback terms, and
similar conditions as the other holders of Common Shares, and
(z) deliver customary transfer documentation as reasonably
determined by the Committee.
The Committee need not take the same action or actions with respect
to all Awards or portions thereof or with respect to all
Participants. The Committee may take different actions with respect
to the vested and unvested portions of an Award.
13. Amendments and Termination.
(a)
Amendment
and Termination of this Plan. The Board may amend, alter,
suspend, discontinue, or terminate this Plan or any portion thereof
at any time; provided, that (i) no amendment to the
definition of Eligible Person in Section 2(q) shall be made
without stockholder approval, and (ii) no such amendment,
alteration, suspension, discontinuation or termination shall be
made without stockholder approval if such approval is necessary to
comply with Applicable Law; provided, further, that
any such amendment, alteration, suspension, discontinuance or
termination that would materially and adversely affect the rights
of any Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective without
the prior written consent of the affected Participant, holder or
beneficiary.
(b) Amendment
of Award Agreements. The Committee may waive any conditions
or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, any Award theretofore granted or
the associated Award Agreement, prospectively or retroactively;
provided, however, that any such waiver, amendment,
alteration, suspension, discontinuance, cancellation or termination
that would materially and adversely affect the rights of the
Participant with respect to such Award shall not to that extent be
effective without the consent of the affected Participant;
provided, further, that without stockholder approval,
except as otherwise permitted under
Section 11, (i) no amendment or
modification may reduce the Exercise Price of any Option or the
Strike Price of any SAR, (ii) the Committee may not cancel any
outstanding Option or SAR and replace it with a new Option or SAR,
another Award or cash or take any action that would have the effect
of treating such Award as a new Award for tax or accounting
purposes, and (iii) the Committee may not take any other
action that is considered a “repricing” for purposes of the
stockholder approval rules of the applicable securities exchange or
inter-dealer quotation system on which the Common Shares are listed
or quoted.
14. General.
(a)
Award
Agreements. Each Award under this Plan shall be evidenced
by an Award Agreement, which shall be delivered to the Participant
(whether in paper or electronic medium (including email or the
posting on a web site maintained by the Company or a third party
under contract with the Company)) and shall specify the terms and
conditions of the Award and any rules applicable thereto, including
without limitation, the effect on such Award of the death,
Disability or termination of employment or service of a
Participant, or of such other events as may be determined by the
Committee. Each Award Agreement shall be subject to the terms and
conditions of the Plan. The Company’s failure to specify any term
of any Award in any particular Award Agreement shall not invalidate
such term, provided such terms was duly adopted by the Board or the
Committee. Award Agreements authorized under the Plan may contain
such other provisions not inconsistent with the Plan, including,
without limitation, restrictions upon the exercise of Awards, as
the Committee may deem advisable.
(b) Nontransferability; Trading
Restrictions.
(i) Each Award shall be exercisable only by
a Participant during the Participant’s lifetime, or, if permissible
under Applicable Law, by the Participant’s legal guardian or
representative. No Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a
Participant other than by will or by the laws of descent and
distribution and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or an Affiliate; provided,
that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.
(ii) Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit Awards (other than
Incentive Stock Options) to be transferred by a Participant, with
or without consideration, subject to such rules as the Committee
may adopt consistent with any applicable Award Agreement to
preserve the purposes of this Plan, to: (A) any person who is a
“family member” of the Participant, as such term is used in the
instructions to Form S-8 under the Securities Act (an
“Immediate Family Member”); (B) a trust solely for
the benefit of the Participant and his or her Immediate Family
Members; (C) a partnership or limited liability company whose only
partners or members are the Participant and his or her Immediate
Family Members; or (D) any other transferee as may be approved
either (I) by the Board or the Committee in its sole discretion, or
(II) as provided in the applicable Award Agreement (each transferee
described in clauses (A), (B), (C) and (D) above is hereinafter
referred to as a “Permitted Transferee”);
provided, that the Participant shall provide the Committee
advance written notice describing the terms and conditions of the
proposed transfer and the Committee shall notify the Participant in
writing that such a transfer would comply with the requirements of
this Plan.
(iii) The terms of any Award transferred in
accordance with Section 14(b)(ii) shall apply to the
Permitted Transferee and any reference in this Plan, or in any
applicable Award Agreement, to a Participant shall be deemed to
refer to the Permitted Transferee, except that (A) Permitted
Transferees shall not be entitled to transfer any Award, other than
by will or the laws of descent and distribution; (B) Permitted
Transferees shall not be entitled to exercise any transferred
Option unless there shall be in effect a registration statement on
an appropriate form covering the Common Shares to be acquired
pursuant to the exercise of such Option if the Committee
determines, consistent with any applicable Award Agreement, that
such a registration statement is necessary or appropriate; (C) the
Committee or the Company shall not be required to provide any
notice to a Permitted Transferee, whether or not such notice is or
would otherwise have been required to be given to the Participant
under this Plan or otherwise; and (D) the consequences of the
termination of the Participant’s employment or service with the
Company or an Affiliate under the terms of this Plan and the
applicable Award Agreement shall continue to be applied with
respect to the Participant, including, without limitation, that an
Option shall be exercisable by the Permitted Transferee only to the
extent, and for the periods, specified in this Plan and the
applicable Award Agreement.
(iv) The Committee shall have the right,
either on an Award-by-Award basis or as a matter of policy for all
Awards or one or more classes of Awards, to condition the delivery
of vested Common Shares received in connection with such Award on
the Participant’s agreement to such restrictions as the Committee
may determine.
(c) Tax Withholding.
(i) A Participant shall be required to pay
to the Company or any Affiliate, or the Company or any Affiliate
shall have the right and is hereby authorized to withhold, from any
cash, Common Shares, other securities or other property deliverable
under any Award or from any compensation or other amounts owing to
a Participant, the amount (in cash, Common Shares, other securities
or other property) of any required withholding taxes in respect of
an Award, its exercise, or any payment or transfer under an Award
or under this Plan and to take such other action as may be
necessary in the opinion of the Committee or the Company to satisfy
all obligations for the payment of such withholding taxes. In
addition, the Committee, in its discretion, may make arrangements
with a stockbroker or other third party agent for the Participant
to facilitate the payment of applicable income and self-employment
taxes.
(ii) Without limiting the generality of
Section 14(c)(i), the Committee may, in its sole discretion,
permit a Participant to satisfy, in whole or in part, the foregoing
withholding obligations by (A) tendering a cash payment, (B) the
delivery of Common Shares (which are not subject to any pledge or
other security interest) owned by the Participant having an
aggregate Fair Market Value equal to the amount of such withholding
obligations, or (C) authorizing the Company to withhold from the
number of Common Shares otherwise issuable or deliverable pursuant
to the exercise or settlement of the Award a number of Common
Shares with an aggregate Fair Market Value equal to the amount of
such withholding obligation (but no more than the maximum
individual statutory rate for the applicable tax jurisdiction).
(d) No Claim to Awards; No Rights to
Continued Employment; Waiver. No employee of the Company or
an Affiliate, or other person, shall have any claim or right to be
granted an Award under this Plan or, having been selected for the
grant of an Award, to be selected for a grant of any other Award.
There is no obligation for uniformity of treatment of Participants
or holders or beneficiaries of Awards. The terms and conditions of
Awards and the Committee’s determinations and interpretations with
respect thereto need not be the same with respect to each
Participant and may be made selectively among Participants, whether
or not such Participants are similarly situated. Neither this Plan
nor any action taken hereunder shall be construed as giving any
Participant any right to be retained in the employ or service of
the Company or an Affiliate, nor shall it be construed as giving
any Participant any rights to continued service on the Board. The
Company or any of its Affiliates may at any time dismiss a
Participant from employment or discontinue any consulting
relationship, free from any liability or any claim under this Plan,
unless otherwise expressly provided in this Plan or any Award
Agreement. By accepting an Award under this Plan, a Participant
shall thereby be deemed to have waived any claim to continued
exercise or vesting of an Award or to damages or severance
entitlement related to non-continuation of the Award beyond the
period provided under this Plan or any Award Agreement,
notwithstanding any provision to the contrary in any written
employment or other agreement between the Company or its Affiliates
and the Participant, whether any such agreement is executed before,
on or after the Date of Grant.
(e) International
Participants. With respect to Participants who reside or
work outside of the United States of America, the Committee may in
its sole discretion amend the terms of this Plan or outstanding
Awards (or establish a sub-plan) with respect to such Participants
in order to conform such terms with the requirements of local law
or to obtain more favorable tax or other treatment for such
Participants, the Company or its Affiliates.
(f) Designation and Change of
Beneficiary. Unless otherwise provided by the Committee in
an Award Agreement, each Participant may file with the Committee a
written designation of one or more persons as the beneficiary(ies)
who shall be entitled to receive the amounts payable with respect
to an Award, if any, due under this Plan upon his or her death. A
Participant may, from time to time, revoke or change his or her
beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee. The
last such designation filed with the Committee shall be
controlling; provided, however, that no designation,
or change or revocation thereof, shall be effective unless received
by the Committee prior to the Participant’s death, and in no event
shall it be effective as of a date prior to such receipt. If no
beneficiary designation is filed by a Participant, the beneficiary
shall be deemed to be his or her spouse or, if the Participant is
unmarried at the time of death, his or her estate.
(g) Termination of
Employment/Service. Unless determined otherwise by the
Committee at any point following such event: (i) neither a
temporary absence from employment or service due to illness,
vacation or leave of absence nor a transfer from employment or
service with the Company to employment or service with an Affiliate
(or vice-versa) shall be considered a termination of employment or
service with the Company or an Affiliate; and (ii) if a
Participant’s employment with the Company and its Affiliates
terminates, but such Participant continues to provide services to
the Company and its Affiliates in a non-employee capacity (or
vice-versa), such change in status shall not be considered a
termination of employment with the Company or an Affiliate for
purposes of this Plan unless the Committee, in its discretion,
determines otherwise.
(h) No Rights as a
Stockholder. Except as otherwise specifically provided in
this Plan or any Award Agreement, no person shall be entitled to
the privileges of ownership in respect of Common Shares that are
subject to Awards hereunder until such shares have been issued or
delivered to that person.
(i) Government and Other
Regulations.
(i) The obligation of the Company to settle
Awards in Common Shares or other consideration shall be subject to
Applicable Law and to such approvals by governmental agencies as
may be required. Notwithstanding any terms or conditions of any
Award to the contrary, the Company shall be under no obligation to
offer to sell or to sell, and shall be prohibited from offering to
sell or selling, any Common Shares pursuant to an Award unless such
shares have been properly registered for sale pursuant to the
Securities Act with the Securities and Exchange Commission or other
Applicable Law or unless the Company has received an opinion of
counsel, satisfactory to the Company, that such shares may be
offered or sold without such registration pursuant to an available
exemption therefrom and the terms and conditions of such exemption
have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act any of the
Common Shares to be offered or sold under this Plan. The Committee
shall have the authority to provide that all certificates for
Common Shares or other securities of the Company or any Affiliate
delivered under this Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable
under this Plan, the applicable Award Agreement, the federal
securities laws, or the rules, regulations and other requirements
of the Securities and Exchange Commission, any securities exchange
or inter-dealer quotation system upon which such shares or other
securities are then listed or quoted and any other Applicable Law,
and, without limiting the generality of Section 9, the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
Notwithstanding any provision in this Plan to the contrary, the
Committee reserves the right to add any terms or provisions to any
Award granted under this Plan that it deems necessary or advisable
in its sole discretion in order that such Award complies with the
legal requirements of any governmental entity to whose jurisdiction
the Award is subject.
(ii) The Committee may cancel an Award or
any portion thereof if it determines, in its sole discretion, that
legal or contractual restrictions and/or blockage and/or other
market considerations would make the Company’s acquisition of
Common Shares from the public markets, the Company’s issuance of
Common Shares to the Participant, the Participant’s acquisition of
Common Shares from the Company and/or the Participant’s sale of
Common Shares to the public markets, illegal, impracticable or
inadvisable. If the Committee determines to cancel all or any
portion of an Award in accordance with the foregoing, unless doing
so would violate Section 409A of the Code, the Company shall pay to
the Participant an amount equal to the excess of (A) the aggregate
Fair Market Value of the Common Shares subject to such Award or
portion thereof canceled (determined as of the applicable exercise
date, or the date that the shares would have been vested or
delivered, as applicable), over (B) the aggregate Exercise Price or
Strike Price (in the case of an Option or SAR, respectively) or any
amount payable as a condition of delivery of Common Shares (in the
case of any other Award). Such amount shall be delivered to the
Participant as soon as practicable following the cancellation of
such Award or portion thereof. The Committee shall have the
discretion to consider and take action to mitigate the tax
consequence to the Participant in cancelling an Award in accordance
with this clause.
(j) Payments to Persons Other Than
Participants. If the Committee shall find that any person
to whom any amount is payable under this Plan is unable to care for
his affairs because of illness or accident, or is a minor, or has
died, then any payment due to such person or his estate (unless a
prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so directs the Company, be
paid to his spouse, child, relative, an institution maintaining or
having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Committee and the Company
therefor.
(k) Nonexclusivity of this
Plan. Neither the adoption of this Plan by the Board nor
the submission of this Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the granting of
stock options or other equity-based awards otherwise than under
this Plan, and such arrangements may be either applicable generally
or only in specific cases.
(l) No Trust or Fund Created.
Neither this Plan nor any Award granted hereunder shall create or
be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate, on the
one hand, and a Participant or other person or entity, on the other
hand. No provision of this Plan or any Award Agreement shall
require the Company, for the purpose of satisfying any obligations
under this Plan, to purchase assets or place any assets in a trust
or other entity to which contributions are made or otherwise to
segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a
segregated or separately maintained or administered fund for such
purposes. Participants shall have no rights under this Plan other
than as general unsecured creditors of the Company, except that
insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same
rights as other employees under Applicable Law.
(m) Reliance on Reports. Each
member of the Committee and each member of the Board shall be fully
justified in acting or failing to act, as the case may be, and
shall not be liable for having so acted or failed to act in good
faith, in reliance upon any report made by the independent public
accountant of the Company and/or its Affiliates and/or any other
information furnished in connection with this Plan by any agent of
the Company or the Committee or the Board, other than himself.
(n) Relationship to Other
Benefits. No payment under this Plan shall be taken into
account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the
Company except as otherwise specifically provided in such other
plan.
(o) Governing Law. The Plan
shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without giving effect to the
conflict of laws provisions.
(p) Severability. If any
provision of this Plan or any Award or Award Agreement is or
becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction or as to any person or entity or Award, or would
disqualify this Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed
amended to conform to Applicable Law in the manner that most
closely reflects the original intent of the Award or the Plan, or
if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of
this Plan or the Award, such provision shall be construed or deemed
stricken as to such jurisdiction, person or entity or Award and the
remainder of this Plan and any such Award shall remain in full
force and effect.
(q) Obligations Binding on
Successors. The obligations of the Company under this Plan
shall be binding upon any successor corporation or organization
resulting from the merger, amalgamation, consolidation or other
reorganization of the Company, or upon any successor corporation or
organization succeeding to substantially all of the assets and
business of the Company.
(r) Expenses; Gender; Titles and
Headings. The expenses of administering this Plan shall be
borne by the Company and its Affiliates. Masculine pronouns and
other words of masculine gender shall refer to both men and women.
The titles and headings of the sections in this Plan are for
convenience of reference only, and in the event of any conflict,
the text of this Plan, rather than such titles or headings shall
control.
(s) Other Agreements.
Notwithstanding the above, the Committee may require, as a
condition to the grant of and/or the receipt of Common Shares under
an Award, that the Participant execute lock-up, stockholder or
other agreements, as it may determine in its sole and absolute
discretion.
(t) Section 409A. The
Plan and all Awards granted hereunder are intended to comply with,
or otherwise be exempt from, the requirements of Section 409A of
the Code. The Plan and all Awards granted under this Plan shall be
administered, interpreted, and construed in a manner consistent
with Section 409A of the Code to the extent necessary to avoid the
imposition of additional taxes under Section 409A(a)(1)(B) of the
Code. Notwithstanding anything in this Plan to the contrary, in no
event shall the Committee exercise its discretion to accelerate the
payment or settlement of an Award where such payment or settlement
constitutes deferred compensation within the meaning of Section
409A of the Code unless, and solely to the extent that, such
accelerated payment or settlement is permissible under Section
1.409A-3(j)(4) of the Treasury Regulations. If a Participant is a
“specified employee” (within the meaning of Section 1.409A-1(i) of
the Treasury Regulations) at any time during the 12-month period
ending on the date of his termination of employment, and any Award
hereunder subject to the requirements of Section 409A of the Code
is to be satisfied on account of the Participant’s termination of
employment, satisfaction of such Award shall be suspended until the
date that is six (6) months after the date of such termination of
employment. While the Awards granted hereunder are intended to be
structured in a manner to avoid the imposition of any penalty taxes
under Section 409A of the Code, in no event whatsoever shall the
Company or any Affiliate be liable for any additional tax,
interest, or penalties that may be imposed on a Participant as a
result of Section 409A of the Code or any damages for failing
to comply with Section 409A of the Code or any similar state
or local laws (other than for withholding obligations or other
obligations applicable to employers, if any, under
Section 409A of the Code).
(u) Section 16. It is the
intent of the Company that the Plan satisfy, and be interpreted in
a manner that satisfies, the applicable requirements of Rule 16b-3
as promulgated under Section 16 of the Exchange Act so that
Participants will be entitled to the benefit of Rule 16b-3, or any
other rule promulgated under Section 16 of the Exchange Act, and
will not be subject to short-swing liability under Section 16 of
the Exchange Act. Accordingly, if the operation of any provision of
the Plan would conflict with the intent expressed in this
Section 14(u), such provision to the extent possible shall
be interpreted and/or deemed amended so as to avoid such
conflict.
(v) Payments.
Participants shall be required to pay, to the extent required by
Applicable Law, any amounts required to receive Common Shares under
any Award made under this Plan.
(w) Minimum
Vesting. No Award shall be granted
with terms providing for any right of exercise or lapse of any
vesting obligations earlier than a date that is at least one year
following the date of grant. Notwithstanding the foregoing, the
Committee may grant up to a maximum of five percent (5%) of the
aggregate number of shares of Common Shares available for issuance
under this Plan (subject to adjustment under Section 11), without
regard for any limitations or other requirements for exercise or
vesting as set forth in this Section 14(w), and the minimum vesting
requirement does not apply to (A) any Substitute Awards,
(B) Awards to directors that vest on the earlier of the
one year anniversary of the date of grant or the next annual
meeting of stockholders which is at least 50 weeks after the
immediately preceding year’s annual meeting, and (C) the
Committee’s discretion to provide for accelerated
exercisability or vesting of any Award, including in cases of
retirement, death, disability or a Change in Control, in the terms
of the Award or otherwise.
(x) Clawback. Awards under the
Plan shall be subject to the Company’s clawback policy, as in
effect from time to time. If there shall be no such clawback policy
in effect, (1) awards under the Plan and any Common Shares issued
pursuant to Awards under the Plan (and any gains thereon) shall be
subject to recovery or “clawback” by the Company if
and to the extent that the vesting of such Awards was determined or
calculated based on materially inaccurate financial statements or
any other material inaccurate performance metric criteria; and (2)
if the Company or its subsidiaries terminate a Participant’s
service relationship due to the Participant’s gross
negligence or willful misconduct (whether or not such actions also
constitute “cause” under an Award Agreement), which
conduct, directly or indirectly, results in the Company preparing
an accounting restatement, any Awards under the Plan, whether or
not vested, as well as any Common Shares issued pursuant to Awards
under this Plan (and any gains thereon) shall be subject to
forfeiture, recovery and “clawback.”
As adopted by the Board of Directors of Byrna Technologies Inc. on
October 23, 2020.
As approved by the shareholders of Byrna Technologies Inc. on
November 19, 2020.
As amended by the Board of Directors of Byrna Technologies, Inc. on
February 24, 2021.
Amendment and
restatement approved by the Board of Directors of Byrna
Technologies Inc. on April 26, 2022.
Amendment and
restatement approved by the shareholders of Byrna Technologies Inc.
on
, 2022.