RECRUITER.COM GROUP, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule
14a-101)
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No.)
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Filed
by Registrant
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Filed
by Party other than Registrant
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission
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Only
(as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Materials Pursuant to §240.14a-12
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Recruiter.com Group, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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No fee
required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was
determined):
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$_____
per share as determined under Rule 0-11 under the Exchange
Act.
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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Recruiter.com Group, Inc.
500 Seventh Avenue
New York, New York 10018
(855) 931-1500
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the
stockholders of Recruiter.com Group, Inc.:
We are
pleased to invite you to attend our Special Meeting of the
Stockholders (the “Special Meeting”) of Recruiter.com
Group, Inc., a Nevada corporation (the “Company”),
which will be held at 11:00 a.m. local time on August 18, 2021 at
the Company’s New York office located at 500 Seventh Avenue,
New York, NY 10018, for the following purposes:
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1.
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To
approve the Recruiter.com Group, Inc. 2021 Equity Incentive Plan
(the “2021 Plan”); and
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2.
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Approve
the adjournment of the Special Meeting to a later date or time, if
necessary, to permit further solicitation and vote of proxies if,
based upon the tabulated vote at the time of the Special Meeting,
there are not sufficient votes to approve the 2021
Plan.
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The
Company’s board of directors (the “Board”) has
fixed the close of business on July 12, 2021 as the date (the
“Record Date”) for a determination of stockholders
entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof.
This
Notice of Special Meeting and the accompanying proxy statement and
form of proxy are first being mailed on or about July 29, 2021 to
our stockholders of record entitled to vote at the Special
Meeting.
If You Plan to Attend
Please
note that space limitations make it necessary to limit attendance
to stockholders. Registration and seating will begin at 10:00 a.m.
local time. Shares can be voted at the meeting only if the holder
is present in person or is represented by valid proxy.
For
admission to the meeting, each stockholder may be asked to present
valid picture identification, such as a driver’s license or
passport, and proof of stock ownership as of the Record Date, such
as the enclosed proxy card or a brokerage statement reflecting
stock ownership. Cameras, recording devices and other electronic
devices will not be permitted at the meeting.
If you
do not plan on attending the meeting, please vote your shares via
the internet, by phone or by signing and dating the enclosed proxy
and return it in the business envelope provided. Your vote is very
important.
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By the
Order of the Board of Directors
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/s/ Evan Sohn
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Evan
Sohn
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Executive
Chairman
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Dated:
July 28, 2021
Whether
or not you expect to attend in person, we urge you to vote your
shares at your earliest convenience. This will ensure the presence
of a quorum at the meeting. Promptly voting your shares via the
Internet, by phone or by signing, dating, and returning the
enclosed proxy card will save us the expenses and extra work of
additional solicitation. An addressed envelope for which no postage
is required if mailed in the United States is enclosed if you wish
to vote by mail. Submitting your proxy now will not prevent you
from voting your shares at the meeting if you desire to do so, as
your proxy is revocable at your option. Your vote is important, so
please act today!
Table of Contents
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R
ecruiter.com Group, Inc.
500 Seventh Avenue
New York, New York 10018
(855) 931-1500
SPECIAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
This
proxy statement (the “Proxy Statement”) is being sent
to the holders of shares of voting stock of Recruiter.com Group,
Inc., a Nevada corporation (the “Company”) in
connection with the solicitation of proxies by our Board of
Directors (the “Board”) for use at the Special Meeting
of Stockholders of the Company which will be held at 11:00 a.m.
local time on August 18, 2021 at the Company’s New York
office located at 500 Seventh Avenue, New York, NY 10018 (the
“Special Meeting”). The Notice of Special Meeting and
this Proxy Statement and form of proxy are first being mailed on or
about on or about July 29, 2021 to our stockholders of record
entitled to vote at the Special Meeting.
Who is entitled to vote at the Special Meeting?
The
Board has fixed the close of business on July 12, 2021 as the
record date (the “Record Date”) for a determination of
the stockholders entitled to notice of, and to vote at, the Special
Meeting. As of the Record Date, there were (i) 13,551,878 shares of
common stock, par value $0.0001 per share (“Common
Stock”) of the Company and (ii) 86,000 shares of Series E
Convertible Preferred Stock, par value $0.0001 per share (the
“Preferred Stock”) of the Company, outstanding. Each
share of the Company’s Common Stock represents one vote that
may be voted on each matter that may come before the Special
Meeting. The holders of Preferred Stock are entitled to vote on all
matters submitted to stockholders of the Company and are entitled
to the number of votes for each share of Preferred Stock owned as
of the Record Date equal to the number of shares of Common Stock
such shares of Preferred Stock are convertible into at such time,
subject to the limitation on the beneficial ownership set forth in
the Certificate of Designation of Preferred Stock of 4.99% or
9.99%, to the extent the 4.99% limitation has been waived by the
holder. As of the Record Date, the Preferred Stock equals 430,000
votes. As of the Record Date, there are a total of 13,981,878 votes
that may be voted on each matter that may come before the Special
Meeting.
All
references to our Common Stock, share data, per share data and
related information have been adjusted to reflect the reverse stock
split ratio of 1-for-2.5 (“Reverse Stock Split”). The
Reverse Stock Split, combined each two and one-half (2.5) shares of
our outstanding Common Stock into one (1) share of Common Stock,
without any change in the par value per share.
The
Reverse Stock Split was effected June 18, 2021 via the filing of a
certificate of change with the Nevada Secretary of State pursuant
to Nevada Revised Statutes Section 78.209 to (i) decrease the
number of authorized shares of the Common Stock from 250,000,000 to
100,000,000 shares and (ii) effectuate the Reverse Stock Split. No
fractional shares were issued in connection with the Reverse Stock
Split and all such fractional interests were rounded up to the
nearest whole number of shares of Common Stock. The conversion or
exercise prices of our issued and outstanding convertible
securities, stock options and warrants were adjusted accordingly.
The number of authorized shares of Preferred Stock remains
10,000,000 following the effectuation of the Reverse
Split.
What matters will be voted on at the Special Meeting?
The two
proposals that are scheduled to be considered and voted on at the
Special Meeting are as follows:
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1.
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To
approve the Recruiter.com Group, Inc. 2021 Equity Incentive Plan
(the “2021 Plan”).
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2.
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Approve
the adjournment of the Special Meeting to a later date or time, if
necessary, to permit further solicitation and vote of proxies if,
based upon the tabulated vote at the time of the Special Meeting,
there are not sufficient votes to approve the the 2021 Plan (the
“Adjournment”).
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1
Why are we seeking stockholder approval for these
proposals?
Proposal No.
1
: The Listing Rules of the
Nasdaq Stock Market requires shareholder approval of equity plans
and the Internal Revenue Code, as amended, requires shareholder
approval of equity plans as one of the conditions for allowing the
Company to issue incentive stock options pursuant to the
2021 Plan
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Proposal No.
2
: To provide the Company
additional opportunities to receive approval for Proposal Number 1
if necessary.
What are the Board’s voting recommendations?
The
Board of Directors recommends that you vote “FOR” the
2021 Plan and “FOR” the Adjournment.
What is the difference between holding shares as a record holder
and as a beneficial owner?
If your
shares are registered in your name with the Company’s
transfer agent, Philadelphia Stock Transfer, you are the
“record holder” of those shares. If you are a record
holder, these proxy materials have been provided directly to you by
the Company.
If your
shares are held in a stock brokerage account, a bank or other
holder of record, you are considered the “beneficial
owner” of those shares held in “street name.” If
your shares are held in street name, these proxy materials have
been forwarded to you by that organization. As the beneficial
owner, you have the right to instruct this organization on how to
vote your shares.
Who may attend the Special Meeting?
Record
holders and beneficial owners may attend the Special Meeting. If
your shares are held in street name, you will need to bring a copy
of a brokerage statement or other documentation reflecting your
stock ownership as of the Record Date. Please see below for
instructions on how to vote at the Special Meeting if your shares
are held in street name.
How do I vote?
If you
are a stockholder of record, you may:
1.
Vote
by Internet. The website address for Internet voting is on your
proxy card.
2.
Vote
by phone. The phone number for phone voting is on your proxy
card.
3.
Vote
by fax. The fax number for fax voting is on your proxy
card.
4.
Vote
by mail. Mark, date, sign and mail promptly the enclosed proxy
card.
5.
Vote
in person. Attend and vote at the Special Meeting.
If you
vote by phone, fax or internet, please DO NOT mail your proxy
card.
If you
are a beneficial owner, you must follow the voting procedures of
your nominee included with your proxy materials. If your shares are
held by a nominee and you intend to vote at the
Special
Meeting, please bring with you
evidence of your ownership as of the record date (such as a letter
from your nominee confirming your ownership or a bank or brokerage
firm account statement) and a legal proxy from your nominee
authorizing you to vote your shares.
2
What constitutes a quorum?
To
carry on the business of the
Special
Meeting, we must have a quorum. A
quorum is present when one-third of the voting power of the issued
and outstanding capital stock of the Company, as of the Record
Date, or are represented in person or by proxy. Shares owned by the
Company are not considered outstanding or considered to be present
at the
Special
Meeting.
Abstentions are counted as present for the purpose of determining
the existence of a quorum. As there are no
“routine” matters being voted on there will not be any
broker non-votes. As of the Record Date, there are a total of
13,981,878 votes that may be voted on each matter that may come
before the Special Meeting. The quorum is therefore 4,660,627
votes.
What happens if the Company is unable to obtain a
quorum?
If a
quorum is not present to transact business at the Special Meeting
or if we do not receive sufficient votes in favor of the proposals
by the date of the Special Meeting, the persons named as proxies
may propose one or more adjournments of the Special Meeting to
permit solicitation of proxies.
What is a “broker non-vote”?
Broker
non-votes occur with respect to shares held in “street
name,” in cases where the record owner (for instance, the
brokerage firm or bank) does not receive voting instructions from
the beneficial owner and the record owner does not have the
authority to vote those shares.
Various
national and regional securities exchanges applicable to brokers,
banks, and other holders of record determine whether the record
owner (for instance, the brokerage firm, or bank) is able to vote
on a proposal if the record owner does not receive voting
instructions from the beneficial owner. The record owner may vote
on proposals that are determined to be routine under these rules
and may not vote on proposals that are determined to be non-routine
under these rules. If a proposal is determined to be routine, your
broker, bank, or other holder of record is permitted to vote on the
proposal without receiving voting instructions from
you.
Each
proposal to be voted upon, namely, the proposal to approve the 2021
Plan (Proposal 1) and the proposal to approve the Adjournment
(Proposal 2) are non-routine and the record owner may not vote your
shares on any of these proposals if it does not get instructions
from you. Therefore, there will not be any broker
non-votes.
How many votes are needed for each proposal to pass?
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Proposals
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Vote
Required
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(1)
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Approve
the 2021 Plan
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Majority
of the voting power present
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(2)
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Approve
the Adjournment.
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Majority
of the voting power present
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What constitutes outstanding shares entitled to vote?
At the
close of business on the Record Date, there were 13,981,878 shares
outstanding and entitled to vote, including: (i) 13,551,878 shares
of Common Stock and (ii) 430,000 votes as a result of the shares of
Preferred Stock outstanding as of the Record Date which were
convertible into shares of Common Stock as of such date, after
giving effect to the limitation on the beneficial ownership set
forth in the Certificate of Designation of Preferred Stock of 4.99%
or 9.99%, to the extent the 4.99% limitation has been waived by the
holder.
As
there are no “routine” matters being voted on at the
Special Meeting, broker discretionary voting is not
allowed.
What is an Abstention?
3
An
abstention is a stockholder’s affirmative choice to decline
to vote on a proposal. Under Nevada law, abstentions are counted as
shares present and entitled to vote at the Special Meeting.
Generally, unless provided otherwise by applicable law, our Bylaws
provide that an action of our stockholders (other than the election
of directors) is approved if a majority of the number of shares of
stock entitled to vote thereon and present (either in person or by
proxy) vote in favor of such action. A vote marked as
“ABSTAIN” is not considered a vote cast and will,
therefore, not affect the outcome in Proposals No. 1 and
2.
What are the voting procedures?
You may
vote in favor of each proposal or against each proposal, or in
favor of some proposals and against others, or you may abstain from
voting on any of these proposals. You should specify your
respective choices on the accompanying proxy card or your voting
instruction form.
Is my proxy revocable?
You may
revoke your proxy and reclaim your right to vote up to and
including the day of the Special Meeting by giving written notice
to the Corporate Secretary of the Company, by delivering a proxy
card dated after the date of the proxy or by voting in person at
the Special Meeting. All written notices of revocation and other
communications with respect to revocations of proxies should be
addressed to: Recruiter.com Group, Inc., 500 Seventh Avenue, New
York, New York 10018, Attention: Corporate Secretary.
Who is paying for the expenses involved in preparing and mailing
this proxy statement?
All of
the expenses involved in preparing, assembling and mailing these
proxy materials and all costs of soliciting proxies will be paid by
the Company. In addition to the solicitation by mail, proxies may
be solicited by the Company’s officers and regular employees
by telephone or in person. Such persons will receive no
compensation for their services other than their regular salaries.
Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of the shares held of record by
such persons, and we may reimburse such persons for reasonable out
of pocket expenses incurred by them in so doing. We may hire an
independent proxy solicitation firm.
Could other matters be decided at the Special Meeting?
Other
than the 2021 Plan and the Adjournment proposal, no other matters
will be presented for action by the stockholders at the Special
Meeting.
What is “householding” and how does it affect
me?
Record
holders who have the same address and last name will receive only
one copy of their proxy materials, unless we are notified that one
or more of these record holders wishes to continue receiving
individual copies. This procedure will reduce the Company’s
printing costs and postage fees. Stockholders who participate in
householding will continue to receive separate proxy
cards.
If you
are eligible for householding, but you and other record holders
with whom you share an address, receive multiple copies of these
proxy materials, or if you hold the Company’s Common Stock in
more than one account, and in either case you wish to receive only
a single copy of each of these documents for your household, please
contact the Company’s Corporate Secretary at: Recruiter.com
Group, Inc., 500 Seventh Avenue, New York 10018, Attention:
Corporate Secretary.
If you
participate in householding and wish to receive a separate copy of
these proxy materials, or if you do not wish to continue to
participate in householding and prefer to receive separate copies
of these documents in the future, please contact the
Company’s Corporate Secretary as indicated above. Beneficial
owners can request information about householding from their
brokers, banks or other holders of record.
Do I have dissenters’ (appraisal) rights?
Appraisal rights
are not available to the Company’s stockholders with any of
the proposals brought before the Special Meeting.
Interest of Officers and Directors in Matters to Be Acted
Upon
None of
the officers or directors have any interest in any of the matters
to be acted upon at the Special Meeting.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “
FOR
” PROPOSALS 1 AND
2.
4
P
ROPOSAL 1. APPROVAL OF THE 2021
PLAN
On July
27, 2021, the Compensation Committee of the Board and the Board
authorized the 2021 Plan. This followed the Company nearly fully
utilizing the Recruiter.com Group, Inc. 2017 Equity Incentive Plan
(the “2017 Plan”).
As of
the Record Date, the following awards were outstanding under the
2017 Plan:
● 867,666 shares of Common Stock issuable upon exercise of
outstanding stock options, with a weighted-average exercise price
of $8.09 per share; and
● 193,900 shares of shares of Common Stock subject to
Restricted Stock Units.
As of the Record Date there were 103,372 shares of Common Stock
available to be issued pursuant to the 2017 Plan.
The
following is a summary of the principal purposes and provisions of
the 2021 Plan, which is qualified in its entirety by reference to
the complete text of the 2021 Plan, a copy of which is attached as
Annex A to this Proxy Statement. To the extent the description
below differs from the text of the 2021 Plan set forth in Annex A,
the text of the 2021 Plan controls.
The
purpose of the 2021 Plan is to advance the interests of the Company
and our related corporations by enhancing the ability of the
Company to attract and retain qualified employees, consultants,
officers, and directors, by creating incentives and rewards for
their contributions to the success of the Company and its related
corporations. The 2021 Plan is administered by our Board or by the
Compensation Committee. The following awards may be granted under
the 2021 Plan:
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incentive
stock options (“ISOs”)
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non-qualified
options (“NSOs”)
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awards
of our restricted common stock
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stock
appreciation rights (“SARs”)
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restricted
stock units (“RSUs”)
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The
aggregate number of shares of Common Stock which may be issued
pursuant to the 2021 Plan, subject to adjustment as provided in
Section 14 of the 2021 Plan, is the sum of (i) 2,700,000 plus (ii)
an annual increase on the first day of each calendar year beginning
January 1, 2022 and ending on and including January 1, 2030 equal
to the lesser of (A) five percent (5%) of the shares of Common
Stock outstanding on the final day of the immediately preceding
calendar year, and (B) such smaller number of shares of Common
Stock as determined by the Board.
The
Board may terminate the 2021 Plan at any time. Unless sooner
terminated, the 2021 Plan shall terminate on July 23,
2031.
Any
option granted under the 2021 Plan must provide for an exercise
price of not less than 100% of the fair market value of the
underlying shares on the date of grant, but the exercise price of
any ISO granted to an eligible employee owning more than 10% of our
outstanding common stock must not be less than 110% of fair market
value on the date of the grant. The plans further provide that with
respect to ISOs the aggregate fair market value of the common stock
underlying the options which are exercisable by any option holder
during any calendar year cannot exceed $100,000. The exercise price
of any NSO granted under the 2021 Plan is determined by the Board
at the time of grant, but must be at least equal to fair market
value on the date of grant. The term of each plan option and the
manner in which it may be exercised is determined by the Board or
the Compensation Committee, provided that no option may be
exercisable more than 10 years after the date of its grant and, in
the case of an incentive option granted to an eligible employee
owning more than 10% of the common stock, no more than five years
after the date of the grant. The terms of any other type of award
under the 2021 Plan is determined by the Board at the time of
grant. Subject to the limitation on the aggregate number of shares
issuable under the plans, there is no maximum or minimum number of
shares as to which a stock grant or plan option may be granted to
any person.
5
In the
event of a Change of Control (as defined in the 2021 Plan) each
outstanding ISO, NSO, restricted common stock awarded pursuant to
the 2021 Plan, SAR, and RSU (collectively, “Stock
Rights”) shall be assumed (as defined in the 2021 Plan) or an
equivalent option or right substituted by the successor corporation
or a parent or subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or
substitute for the Stock Rights, the participants shall fully vest
in and have the right to exercise their Stock Rights as to which it
would not otherwise be vested or exercisable. If a Stock Right
becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board
or Compensation Committee shall notify the participant in writing
or electronically that the Stock Right shall be fully vested and
exercisable for a period of at least 15 days from the date of such
notice, and any ISO, NSO or SARs shall terminate one minute prior
to the closing of the merger or sale of assets
The Board unanimously recommends that you vote FOR approval of the
2021 Plan. The Board believes that it is in the best interests of
the Company and our stockholders to approve the 2021 Plan in order
to ensure the Company’s ability to continue our equity-based
compensation program and continue to motivate our employees,
consultants, and non-employee directors.
Vote Required
The
affirmative vote of a majority of the voting power present or
represented by proxy is required to approve the 2021 Plan.
Abstentions represent the voting power present under the
Company’s bylaws, and accordingly will have the same effect
as a vote “against” on the outcome of this Proposal
1.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
“
FOR
”
THIS
PROPOSAL 1.
6
P
ROPOSAL 2. APPROVAL OF THE ADJOURNMENT
General
The
Company is asking stockholders to approve, if necessary,
adjournment of the Special Meeting to solicit additional proxies in
favor of the 2021 Plan. Any adjournment of the Special Meeting for
the purpose of soliciting additional proxies will allow
stockholders who have already sent in their proxies to revoke them
at any time prior to the time that the proxies are
used.
Vote
Required
The
affirmative vote of a majority of the voting power present or
represented by proxy is required to approve the Adjournment
proposal. Abstentions represent the voting power present under the
Company’s bylaws, and accordingly will have the same effect
as a vote ‘against” on the outcome of this Proposal
2.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
“
FOR
”
THIS
PROPOSAL 2.
7
S
ECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Except
as specifically noted, the following table sets forth information
with respect to the beneficial ownership of our Common Stock as of
the Record Date of:
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each of
our directors and executive officers; and
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each
person known to us to beneficially own more than 5% of our Common
Stock on an as-converted basis.
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Beneficial
ownership is determined in accordance with the rules and
regulations of the SEC. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, we have included shares that the person has the right to
acquire within 60 days, including through the exercise of any
option, warrant or other right or the conversion of any other
security. These shares, however, are not included in the
computation of the percentage ownership of any other
person.
Unless
otherwise indicated, the address for each beneficial owner listed
in the table below is c/o Recruiter.com Group, Inc., 500 Seventh
Avenue, New York, New York 10018.
8
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Title of Class
(1)
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Beneficial
Owner
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Amount of
Beneficial
Ownership
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Percent
Beneficially
Owned
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Named
Executive Officers:
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|
|
|
Common
Stock
|
|
Miles Jennings
(2)
|
1,011,812
|
7.46
%
|
|
Common
Stock
|
|
Evan Sohn
(3)
|
437,970
|
3.23
%
|
|
Common
Stock
|
|
Ashley Saddul
(4)
|
859,587
|
6.34
%
|
|
Common
Stock
|
|
Judy Krandel
(5)
|
10,435
|
*
|
|
Directors:
|
|
|
|
|
|
Common
Stock
|
|
Deborah Leff
(6)
|
7,500
|
*
|
|
Common
Stock
|
|
Tim O’Rourke
(7)
|
314,550
|
2.32
%
|
|
Common
Stock
|
|
Douglas Roth
(6)
|
17,712
|
*
|
|
Common
Stock
|
|
Wallace Ruiz
(6)
|
17,712
|
*
|
|
Common
Stock
|
|
Robert Heath
(6)
|
1,667
|
*
|
|
Common
Stock
|
|
Steve Pemberton
(6)
|
1,667
|
*
|
|
Officers
and Directors as a group (10 persons) (8)
|
|
|
2,589,945
|
18.98
%
|
|
5% Stockholders:
(9)
|
|
|
|
|
|
Common
Stock
|
|
Cavalry Fund I L.P.
(10)
|
1,355,187
|
9.99
%
|
|
Common
Stock
|
|
L1 Capital Global
Opportunities Master Fund (11)
|
1,338,704
|
9.79
%
|
|
Common
Stock
|
|
Michael Woloshin
(12)
|
1,353,833
|
9.99
%
|
|
*
|
Less
than 1%.
|
|
(1)
|
Does
not include information regarding the holders of more than 5% of
shares of the Preferred Stock as a separate class. The holders of
Preferred Stock vote together with the holders of Common Stock on
all matters on an as converted basis, subject to the 4.99% or 9.99%
beneficial ownership limitation, as applicable.
|
|
(2)
|
Miles
Jennings is the Chief Operating Officer of the Company. Includes
16,119 shares issuable upon exercise of stock options that are
vested or vesting within 60 days from the Record Date.
|
|
|
|
|
(3)
|
Mr.
Sohn is the Executive Chairman and Chief Executive Officer of the
Company. Includes 208,053 shares of our Common Stock issuable upon
exercise of vested stock options.
|
|
|
|
|
(4)
|
Mr.
Saddul was the Chief Technology Officer of the Company as of the
Record Date. As of July 15, 2021, Mr. Saddul while still employed
by the Company, is no longer the Chief Technology Officer. Includes
6,810 shares issuable upon exercise of stock options that are
vested or vesting within 60 days from the Record Date.
|
|
|
|
|
(5)
|
Ms.
Krandel is the Chief Financial Officer of the Company. Includes
10,435 shares of our Common Stock issuable upon exercise of vested
stock options.
|
|
(6)
|
Represents
vested stock options.
|
|
(7)
|
Includes
12,712 shares of our Common Stock issuable upon exercise of vested
stock options. Mr. O’Rourke disclaims beneficial ownership of
the shares beneficially owned by Icon Information Consultants, LP,
except to the extent of his pecuniary interest
therein.
|
|
|
|
|
(8)
|
Includes
92,334 shares of Common Stock issuable upon exercise of stock
options that have vested or are vesting within 60 days from the
Record Date.
|
|
|
|
|
(9)
|
To our
knowledge, except as noted in the table above, no person or entity
is the beneficial owner of more than 5% of the voting power of our
capital stock.
|
|
|
|
|
(10)
|
Includes
(i)846,753 shares of Common Stock and (ii) 564,000 shares of Common
Stock issuable upon exercise of warrants. Address is 61
Kinderkamack Road, Woodcliff Lake, NJ 07677. Thomas Walsh, the
Manager of Cavalry Fund I Management LLC, the General Partner of
Cavalry Fund I L.P. has the sole voting and investment power with
respect to these shares.
|
|
|
|
|
(11)
|
Includes
(i) 119,473 shares of Common Stock issuable upon exercise of
warrants. Address is 135 East 57th Street, New York, NY 10022.
David Feldman, Director of the L1 Capital Global Opportunities
Master Fund, has the sole voting and investment power with respect
to these shares.
|
|
|
|
|
(12)
|
Includes
(i) 76,329 shares of Common Stock beneficially owned by Cicero
Consulting Group LLC, which Mr. Woloshin controls together with Mr.
Joe Abrams (ii) 4,473 shares of Common Stock owned by Caesar
Capital Group LLC; (iii) 1,273,031 shares of Common Stock
beneficially owned by Mr. Woloshin and (iv) 400,000 shares of our
Common Stock issuable upon conversion of the Preferred Stock owned
by Mr. Woloshin subject to the 9.99% beneficial ownership
limitation. Mr. Woloshin has shared voting and dispositive power
with respect to the shares discussed in (i) of this footnote, and
the sole voting and dispositive power with respect to the shares
discussed in of the other portions of this footnote. Address is
1858 Pleasantville Road Suite 110, Briarcliff Manor NY
10510.
|
9
E
XECUTIVE AND DIRECTOR COMPENSATION
The
following information is related to the compensation paid,
distributed or accrued by us for the years ended December 31, 2020
and December 31, 2019 for our Chief Executive Officer (principal
executive officer) serving during the years ended December 31, 2020
and December 31, 2019 and the two other most highly compensated
executive officers serving at December 31, 2020 and December 31,
2019 whose total compensation exceeded $100,000 (the “Named
Executive Officers”). At December 31, 2019, our Chief
Executive Officer was Miles Jennings and our two other most highly
compensated executive officers were Evan Sohn and Ashey Saddul. At
December 31, 2020, our Chief Executive Officer was Evan Sohn and
our two other most highly compensated executive officers were Judy
Krandel and Rick Roberts.
Summary Compensation Table
|
Name and
Principal Position
|
Year
|
Salary($)
|
Stock Awards
($)(1)
|
Option Awards
($)(1)
|
Non-Equity
Incentive Plan Compensation ($)
|
All Other
Compensation ($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
Miles Jennings
|
2020
|
171,231
(2)
|
-
|
-
|
-
|
18,416
(3)
|
189,647
|
|
Chief Operating Officer
(4)
|
2019
|
158,356
|
-
|
73,892
|
9,375
(2)
|
14,072
(3)
|
255,695
|
|
|
|
|
|
|
|
|
|
|
Evan Sohn
|
2020
|
175,090
|
1,662,000
|
-
|
-
|
10,329
(3)
|
1,847,419
|
|
Chief Executive Officer
(5)
|
2019
|
95,000
|
2,858,999
|
2,423,101
|
-
|
-
|
5,377,100
|
|
|
|
|
|
|
|
|
|
|
Judy Krandel
|
2020
|
43,350
|
-
|
1,143,209
|
-
|
-
|
1,186,559
|
|
Chief Financial Officer
(9)
|
2019
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Rick Roberts
|
2020
|
201,539
|
-
|
-
|
25,000
(2)
|
18,688
(3)
|
245,227
|
|
President of Subsidiary
(6)
|
2019
|
151,539
|
-
|
55,419
|
-
|
16,271
(3)
|
223,229
|
|
|
|
|
|
|
|
|
|
|
Ashley Saddul
|
2020
|
235,444
(8)
|
-
|
-
|
-
|
-
|
235,444
|
|
Chief Technology Officer
(7)
|
2019
|
196,400
(8)
|
-
|
36,946
|
9,375
(2)
|
-
|
242,721
|
|
(1)
|
The
amounts in this column represent the fair value of each award as of
the grant date as computed in accordance with FASB ASC Topic 718
and the SEC disclosure rules. Pursuant to SEC rules, the amounts
shown disregard the impact of estimated forfeitures related to
service-based vesting conditions. Does not reflect the actual
economic value realized by the Named Executive Officer. The
assumptions used in calculating the grant date fair value of stock
awards and option awards may be found in Note 1 to our audited
financial statements included in this Prospectus.
|
|
(2)
|
For Mr.
Jennings and Mr. Saddul, this represents the amount earned upon
achievement in 2019 of the network growth performance objective of
20,000 recruiters under the executive cash incentive program
approved by the Board in December 2019. For Mr. Roberts, this
represents the amount earned upon achievement in 2020 for meeting
certain operational and customer growth milestones. See
“Executive Incentive Program—Performance
Bonuses”.
|
10
|
(3)
|
Represents
the cost of health insurance not generally available on a
non-discriminatory basis to all employees.
|
|
(4)
|
Mr.
Jennings served as our Chief Executive Officer from October 31,
2017 through June 18, 2020. Mr. Jennings became Chief Operating
Officer on June 18, 2020. Mr. Jennings salary was $79,539 for the
period January 1, 2020 to June 18, 2020 and was $91,692
thereafter.
|
|
(5)
|
Mr.
Sohn has served as our Executive Chairman since March 31, 2019. Mr.
Sohn became Chief Executive Officer on June 18, 2020. Mr.
Sohn’s salary was $68,167 through June 18, 2020 and $106,923
thereafter. Mr. Sohn’s stock award was granted upon his
appointment to Chief Executive Officer.
|
|
(6)
|
Mr.
Roberts served as the President of Recruiting Solutions from March
31, 2019 through and including June 30, 2021. Mr. Roberts is longer
an employee of the Company or its subsidiaries.
|
|
(7)
|
Mr.
Saddul served as the Company’s Chief Technology Officer from
April 2019 through July 15, 2021. Mr. Saddul remains an employee of
the Company.
|
|
(8)
|
Includes
$235,444 and $181,400 paid to Recruiter.com (Mauritius) Ltd. For
the years 2020 and 2019, respectively, of which Mr. Saddul is an
employee. See “Named Executive Officer Employment and
Consulting Agreements – Software Development and Maintenance
Agreement” for more information. For 2020, out of $235,444
paid to Recruiter.com (Mauritius) Ltd., Mr. Saddul received
approximately $148,617 (the equivalent of MUR 2,923,631 based on
the exchange rate as of December 31, 2020 of MUR 39.35 per one
Dollar plus $74.319). For 2019, out of $181,400 paid to
Recruiter.com (Mauritius) Ltd., Mr. Saddul received approximately
$93,725 (the equivalent of MUR 3,406,820 based on the exchange rate
as of December 31, 2019 of MUR 36.349 per one Dollar).
|
|
(9)
|
Ms.
Krandel has served as the Company’s Chief Financial Officer
since June 2020.
|
Named Executive Officer Employment Agreements
Jennings Agreement
We
entered into an employment agreement with Miles Jennings, our
former Chief Executive Officer and current Chief Operating Officer,
effective October 31, 2017 (the “Jennings Agreement”).
The Jennings Agreement provides that he will serve as the Chief
Executive Officer of the Company for a period of one year, subject
to an automatic renewal for successive one-year terms unless prior
notice of non-renewal is given by either party. Effective December
1, 2019, the Jennings Agreement was amended to increase Mr.
Jennings’ annual base salary from $150,000 to
$200,000.
Under
the Jennings Agreement, Mr. Jennings is entitled to severance in
case of termination of employment. The termination provisions are
intended to comply with Section 409A of the Internal Revenue Code
of 1986 (the “Code”) and the rules and regulations
thereunder.
In the
event of termination by the Company without “cause” or
resignation for “good reason,” Mr. Jennings is entitled
to receive three months’ base salary, will have six months
from the date of termination to exercise his outstanding stock
options and continued benefits for 12 months.
In case
of termination or change in title upon a change of control event,
Mr. Jennings is entitled to receive six months’ base salary,
immediate vesting of unvested equity awards, which he will have the
right to exercise within six months from the date of termination,
and continued benefits for 12 months.
“Change
of Control” is defined in the Jennings Agreement the same way
it is defined under Section 409A of the Code. Generally,
“good reason” is defined as a material diminution in
Mr. Jennings’ authority, duties or responsibilities due to no
fault of his own (unless he has agreed to such diminution); or (ii)
any other action or inaction that constitutes a material breach by
the Company under the Jennings Agreement; or (iii) generally a
relocation of the principal place of employment to a location
outside of New York metropolitan area.
11
Under
the terms of his Jennings Agreement, Mr. Jennings is subject to
non-competition and non-solicitation covenants during the term of
his employment and during one year following termination of
employment with the Company. The Jennings Agreement also contains
customary confidentiality and non-disparagement
covenants.
Sohn Agreement
On June
18, 2020, the Board appointed Mr. Evan Sohn as the Chief Executive
Officer of the Company, effective on such date. Mr. Sohn is also
Executive Chairman. In connection with his appointment, on June 18,
2020 the Company entered into a one-year employment agreement (the
“Sohn Agreement”) with Mr. Sohn. Pursuant to the Sohn
Agreement, Mr. Sohn will be paid an annual base salary of $200,000
and is entitled to earn a bonus of up to $200,000, $150,000 of
which is based on the Company meeting the following milestones: (i)
$50,000 upon the listing of the Common Stock on the Nasdaq Capital
Market or NYSE American, or any successor thereof (the
“Uplisting”); (ii) $50,000 upon a financing resulting
in gross proceeds of at least $5,000,000; and (iii) $50,000 upon
the Company first achieving profitability on a quarterly basis
during the term of the Employment Agreement. The remaining $50,000
of Mr. Sohn’s bonus under the Sohn Agreement will be subject
to the determination of the Board in its discretion.
In
connection with his appointment, the Board approved a grant to Mr.
Sohn pursuant to the Sohn Agreement of 221,600 restricted stock
units (the “RSUs”), subject to and issuable upon the
Uplisting. The RSUs will vest in equal quarterly installments over
a two-year period from the date of the Uplisting, subject to Mr.
Sohn serving as an executive officer of the Company on each
applicable vesting date. The RSUs will be issued under the 2017
Plan.
Krandel Consulting Agreement
In
connection with her appointment, the Company entered into a
Consulting Agreement (the “Consulting Agreement”) with
Ms. Krandel, effective June 1, 2020. The initial term of the
Consulting Agreement is six months, subject to a 12-month extension
in the Company’s discretion. Pursuant to the Agreement, as
compensation for her services Ms. Krandel will receive a fixed fee
of $5,000 per month. The Company also issued to Ms. Krandel on the
effective date of her appointment, five-year non-qualified options
to purchase 10,435 shares of the Common Stock at an exercise price
per share at least equal to the closing price of the Common Stock
on OTCQB as of the trading day immediately preceding the effective
date of her appointment (the “Initial Term Options”).
The Initial Term Options vest in six equal monthly installments on
the last calendar day of each calendar month, with the first
portion vesting on May 31, 2020, subject to Ms. Krandel serving as
the Chief Financial Officer of the Company on each applicable
vesting date. The Initial Term Options will vest in full upon the
listing of the Company’s securities on NYSE American or the
Nasdaq Capital Market. The Company also agreed to issue to Ms.
Krandel five-year non-qualified options to purchase 172,501 shares
of the Company’s common stock at an exercise price per share
at least equal to the closing price of the Company’s common
stock on OTCQB as of the trading day immediately preceding the
effective date of her appointment (the “Uplist
Options”). The Uplist Options will vest over a two-year
period in equal quarterly installments on the last day of each
calendar quarter, with the first portion vesting on the last day of
the calendar quarter during which the Company’s securities
begin trading on NYSE American or the Nasdaq Capital Market,
subject to Ms. Krandel serving as the Chief Financial Officer of
the Company on each applicable vesting date. The Initial Term
Options and the Uplist Options are to be issued under the 2017
Plan.
The
Krandel Consulting Agreement was amended on January 7, 2021. The
Consulting Agreement was extended for another 6 months from
December 1, 2020 until May 31, 2021 unless sooner terminated as a
result of the uplist (resulting in entering into an Employment
Agreement) to a national exchange such as Nasdaq or NYSE. The
monthly compensation was increased to $13,350, the additional
monthly compensation of $8,350 will be accrued and paid upon a
successful uplist.
12
Software Development and Maintenance Agreement
On
January 17, 2020, we entered into a Technology Services Agreement
(the “Services Agreement”) with Recruiter.com
(Mauritius) Ltd., a Mauritius private company (“Recruiter.com
Mauritius”) and a related party, for the provision of certain
services to the Company, including software development and
maintenance related to the Company’s website and platform on
an independent contractor basis. Recruiter.com Mauritius had been
providing software development services to Pre-Merger Recruiter.com
since August 25, 2014 pursuant to an oral agreement. Our Chief
Technology Officer is an employee of, and exercises control over,
Recruiter.com Mauritius. Recruiter.com Mauritius was formed solely
for the purpose of performing services to us and has no other
clients.
Pursuant
to the Services Agreement, the Company has agreed to pay
Recruiter.com Mauritius fees in the amount equal to the actualized
documented costs incurred by Recruiter.com Mauritius in rendering
the services pursuant to the Services Agreement. We paid
Recruiter.com Mauritius $235,444 in fees from January 1 through
December 31, 2020 and $181,400 for 2019. As of December 31, 2020,
we did not owe Recruiter.com Mauritius any fees.
The
initial term of the Services Agreement is five years, whereupon it
shall automatically renew for additional successive 12-month terms
until terminated by either party by submitting a 90-day prior
written notice of non-renewal. The Services Agreement may be
terminated without cause by either party upon prior written notice,
which shall be a 15-day prior written notice if given by the
Company and a 90-day prior written notice if given by the Service
Provider.
Executive Incentive Program
Performance Bonuses
Effective
December 1, 2019, the Board approved an executive cash incentive
program for the 2019 and 2020 performance periods. Pursuant to the
terms of the program, for each performance period beginning January
1 and ending December 31, 2019 and 2020 (each a “Performance
Period”), each of our executive officers is eligible to earn
a cash bonus in the amount of up to 100% of the maximum amount,
such maximum amount ranging from $25,000 to $150,000, determined by
the Compensation Committee for each such executive officer and
respective performance period. The actual amount of the cash
incentive award to be received by each executive officer is
determined by the Compensation Committee based on the achievement
by such executive officer of certain performance objectives set by
the Compensation Committee, including the Company achieving certain
revenue thresholds, EBITDA, and the number on recruiters on our
Platform. The actual amount of the cash incentive award that each
executive officer is entitled to receive is to be determined as a
percentage of their respective maximum amounts as
follows:
|
(i)
|
Performance
Objective #1 – 45% of the maximum amount;
|
|
(ii)
|
Performance
Objective #2 – 30% of the maximum amount; and
|
|
(iii)
|
Performance
Objective #3 – 25% of the maximum amount.
|
The
Compensation Committee has approved the performance objectives for
our executive officers for the 2019 and 2020 performance periods.
Pursuant to the terms of the Cash Incentive Program, (i) Mr.
Jennings is eligible to receive up to $37,500 for the 2019
Performance Period and up to $50,000 for the 2020 Performance
Period if the Company reaches certain capital raising, revenue and
network growth milestones; (ii) Mr. Sohn is eligible to receive up
to $37,500 for the 2019 Performance Period and up to $50,000 for
the 2020 Performance Period if the Company reaches certain capital
raising milestones; (iii) Mr. Scherne is eligible to receive for
each Performance Period up to $25,000 if the Company meets certain
financial reporting and audit milestones; (iv) Mr. Saddul is
eligible to receive up to $37,500 for the 2019 Performance Period
and up to up to $50,000 for the 2020 Performance Period if the
Company meets certain operational, network growth, and
technological milestones; and (v) Mr. Roberts is eligible to
receive up to $112,500 for the 2019 Performance Period and up to
$150,000 for the 2020 Performance Period if the Company meets
certain revenue, operational and customer growth milestones. The
Company has met the network growth objective for the 2019
Performance Period, which entitled each of Miles Jennings and
Ashley Saddul to receive a cash award of $9,375. In 2020, the
Company met financial reporting and audit milestones and Mr.
Scherne earned a bonus of $25,000. Mr. Roberts hit certain levels
of his milestones and earned a bonus of $25,000.
Discretionary Equity Awards
The
Compensation Committee has the authority to grant discretionary
equity awards to our executive officers, including our NSOs, under
the 2017 Plan.
13
On May
14, 2020, the Compensation Committee approved the following grants
to Judy Krandel. 10,435 stock options to purchase shares of Common
Stock, of the Company, at an exercise price of $6.25. One-sixth of
the stock options were vested upon grant and the balance vested in
equal installments over the next 5 months. Judy Krandel also
received a grant of 172,501 stock options which vest over a 2 year
period in equal quarterly installments on the last day of each
calendar quarter, with the first portion vesting on the last day of
the calendar quarter during which the Company’s securities
begin trading on NYSE American or the NASDAQ Capital Market,
subject to the Consultant serving as the Chief Financial Officer of
the Company on each applicable vesting date. The stock options were
granted under the 2017 Plan.
On June
17, 2020, the Compensation Committee approved a grant of 221,600
Restricted Stock Units to Evan Sohn subject to and issuable upon
the listing of the Common Stock on the NYSE American or the NASDAQ
Capital Market. The RSUs vest over a 2 year period from the date of
the Uplisting in equal quarterly installments on the last day of
the calendar quarter during which the Uplisting takes place,
subject to Mr. Sohn serving as an executive officer of the Company
on each applicable vesting date, provided that the RSUs shall vest
in full immediately upon the termination of Mr. Sohn’s
employment by the Company without cause (as defined in the
employment agreement).
Outstanding Equity Awards at December 31, 2020
Listed
below is information with respect to unexercised options that have
not vested, and equity incentive plan awards for each Named
Executive Officer outstanding as of December 31, 2020:
Outstanding Equity Awards At Fiscal Year-End
|
|
Option
Awards
|
Stock
Award
|
||||
|
Name
|
Number of
Securities Underlying Unexercised Options (#)
Exercisable
|
Number of
Securities Underlying Unexercised Options (#)
Unexercisable
|
Option Exercise
Price($)
|
Option
Expiration
Date
|
Number of Shares
of Stock That Have Not Vested (#)
|
Market Value of
Shares of Stock That Have Not Vested ($)
|
|
|
|
|
|
|
|
|
|
Miles
Jennings
|
2,500
|
-
|
16.00
|
2/11/2023
|
-
|
-
|
|
|
13,620
|
6,810
(1)
|
3.625
|
12/23/2022
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Evan
Sohn
|
17,370
|
-
|
8.80
|
2/4/2024
|
221,600
(6)
|
1,828,200
(7)
|
|
|
180,468
|
-
|
16.00
|
5/14/2024
|
-
|
-
|
|
|
10,215
|
5,108
(2)
|
3.625
|
12/23/2022
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Rick
Roberts
|
10,215
|
5,108
(3)
|
3.625
|
12/23/2022
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Ashley
Saddul
|
6,810
|
3,405
(4)
|
3.625
|
12/23/2022
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Judy
Krandel
|
10,435
|
-
|
6.25
|
5/14/2025
|
-
|
-
|
|
|
-
|
172,501
(5)
|
6.25
|
|
-
|
-
|
|
(1)
|
The
remainder vests on December 23, 2021.
|
|
(2)
|
The
remainder vests on December 23, 2021.
|
|
(3)
|
The
remainder vests on December 23, 2021.
|
|
(4)
|
The
remainder vests on December 23, 2021.
|
|
(5)
|
Vest
over a two-year period in equal quarterly installments on the last
day of each calendar quarter, with the first portion vesting on the
last day of the calendar quarter during which the Company’s
securities begin trading on NYSE American or the Nasdaq Capital
Market, subject to Ms. Krandel serving as the Chief Financial
Officer of the Company on each applicable vesting
date.
|
|
(6)
|
Will be
issued upon the listing of the Common Stock on the NASDAQ Capital
Market or NYSE, American, or other successor of the foregoing, and
vest over a two-year period from the date of the Uplisting in equal
quarterly installments.
|
|
(7)
|
Based
on $8.25 per share, the closing price of the Company’s Common
Stock as of December 31, 2020.
|
14
Compensation of Non-Employee Directors
We do
not compensate employees for serving as members of our Board. Our
non-employee directors receive compensation for their service as
directors and members of committees of the Board, consisting of
cash and equity awards. In December 2019, our Compensation
Committee approved an annual retainer to be paid to each
non-employee director in the amount of $20,000 in cash. Directors
are reimbursed for reasonable expenses incurred in attending
meetings and carrying out duties as board and committee members.
Under the 2017 Plan, our non-employee directors receive grants of
stock options as compensation for their services on the
Board.
On
August 28, 2020, the Compensation Committee approved an annual
retainer in the amount of $20,000 cash and a grant of three-year
stock options to Deborah Leff to purchase 20,000 shares of our
Common Stock at an exercise price of $5.00 per share for serving on
the Board. The options shall vest in equal quarterly amounts
beginning on the Effective Date and ending on the third anniversary
of the Effective Date. On December 23, 2019, the Compensation
Committee approved a grant to each of Timothy O’Rourke,
Douglas Roth, and Wallace D. Ruiz, our non-employee directors, of
three-year stock options to purchase 19,068 shares of our Common
Stock at an exercise price of $3.625 per share for serving on the
Board. One-third of the stock options were vested upon grant and
the balance vest in equal annual installments on December 23, 2020
and December 23, 2021, subject to continued service as members of
the Board on each applicable vesting date. The stock options were
granted under the 2017 Plan.
In consideration of Mr. Pemberton’s agreement to join the
Board, Mr. Pemberton entered into a Director Agreement (the
“Pemberton Agreement”) and shall receive an annual cash
stipend of $20,000, payable in equal quarterly installments of
$5,000. In addition, Mr. Pemberton shall receive a grant of 20,000
options to purchase the Company’s common stock, par value
$0.0001 (“Common Stock”) with an exercise price of
$8.125 and which shall vest in equal amounts over a period of three
years from the Effective Date, as shall be determined by the Board,
subject to his continued service on the Board through such vesting
date (the “Pemberton Shares”). Upon the occurrence of a
Change in Control (as defined in the 2017 Plan), any un-vested
options shall vest immediately, provided Mr. Pemberton serves on
the Board as of the date of such Change in Control. The Pemberton
Shares will be issued under the 2017 Plan.
In consideration of Mr. Heath’s agreement to join the Board,
Mr. Heath entered into a Director Agreement (the “Heath
Agreement”) and shall receive an annual cash stipend of
$20,000, payable in equal quarterly installments of $5,000. In
addition, Mr. Heath shall receive a grant of 20,000 options to
purchase Common Stock, with an exercise price of $6.75 and which
shall vest in equal amounts over a period of three years from the
Effective Date, as shall be determined by the Board, subject to his
continued service on the Board through such vesting date. Upon the
occurrence of a Change in Control, any un-vested options shall vest
immediately, provided Mr. Heath serves on the Board as of the date
of such Change in Control. The Heath Shares will be issued under
the Plan.
15
For the
year ended 2020, our non-employee directors were compensated as
follows:
|
Name
(1)
|
Year
|
Fees Earned or
Paid in Cash ($)
|
Option Awards
($)(2)
|
All Other
Compensation ($)
|
Total
($)
|
|
Deborah Leff
(3)
|
2020
|
5,000
|
79,990
|
-
|
84,990
|
|
|
|
|
|
|
|
|
Timothy
O’Rourke (4)
|
2020
|
20,000
|
-
|
-
|
20,000
|
|
|
|
|
|
|
|
|
Douglas Roth
(5)
|
2020
|
20,000
|
-
|
-
|
20,000
|
|
|
|
|
|
|
|
|
Wallace D. Ruiz
(6)
|
2020
|
20,000
|
-
|
-
|
20,000
|
|
(1)
|
Because
our employees do not receive additional compensation for their
service on the Board, Messrs. Sohn and Jennings are omitted from
this table. Compensation of Messrs. Sohn and Jennings is fully
reflected in the Summary Compensation Table.
|
|
(2)
|
Amounts
reported represent the aggregate grant date fair value of awards
granted without regards to forfeitures granted to the independent
members of our Board for the year ended December 31, 2020, computed
in accordance with ASC 718. This amount does not reflect the actual
economic value realized by the director.
|
The
table below sets forth the unexercised stock options held by each
of our non-employee directors outstanding as of December 31,
2020:
|
Name
|
Aggregate Number
of Unexercised Option Awards Outstanding at December
31,2020
|
|
|
|
|
Deborah
Leff
|
20,000
|
|
Timothy
O’Rourke
|
19,068
|
|
Douglas
Roth
|
24,068
|
|
Wallace D.
Ruiz
|
24,068
|
|
(3)
|
Ms.
Leff has served as a director since October 1,
2020.
|
||||
|
(4)
|
Mr.
O’Rourke has served as a director since March 31,
2019.
|
|
(5)
|
Mr.
Roth has served as a director since May 24, 2018.
|
|
(6)
|
Mr.
Ruiz has served as a director since May 24, 2018.
|
16
Securities Authorized for Issuance under Equity Compensation
Plans
The
following table sets forth information as of December 31, 2020 with
respect to our compensation plans under which equity securities may
be issued.
|
Plan
Category
|
Number of
Securities to be Issued upon Exercise of Outstanding Options,
Warrants and Rights
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and
Rights
|
Number of
Securities Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding Securities Reflected in Column
(a))
|
|
|
(a)
|
(b)
|
(c)
|
|
Equity compensation
plans approved by security holders:
|
|
|
|
|
2014 Equity
Compensation Plan
|
-
|
-
|
2,554
|
|
2017 Equity
Incentive Plan (1)
|
478,466
|
5.525
|
482,934
|
|
Equity compensation
plans not approved by security holders
|
|
|
|
|
Total
|
478,466
|
5.525
|
485,488
|
|
(1)
|
In
October 2017, our Board authorized the 2017 Plan covering 190,000
shares of Common Stock. In December 2019, the number of shares
authorized under the 2017 Plan was increased to 439,584 shares. In
June 2020, the number of shares authorized under the 2017 Plan was
increased to 1,108,000. In December 2020, the plan was increased
again to 1,308,000. The purpose of the 2017 Plan is to advance the
interests of the Company and our related corporations by enhancing
the ability of the Company to attract and retain qualified
employees, consultants, officers, and directors, by creating
incentives and rewards for their contributions to the success of
the Company and its related corporations. The 2017 Plan is
administered by the Board. Incentive stock options, non-qualified
options, awards of restricted common stock, stock appreciation
rights, and restricted stock units may be granted under the 2017
Plan. Any option granted under the 2017 Plan must provide for an
exercise price of not less than 100% of the fair market value of
the underlying shares on the date of grant and not less than $4.00
per share. The term of each plan option and the manner in which it
may be exercised is determined by the Board, provided that no
option may be exercisable more than 10 years after the date of its
grant and, in the case of an incentive option granted to an
eligible employee owning more than 10% of the Common Stock, no more
than five years after the date of the grant. As of December 31,
2020, 478,466 options were outstanding under the 2017 Plan. Also as
of December 31, 2020, 221,600 RSUs and 125,000 shares of common
stock have been issued under the 2017 plan. From January 1, 2021
through April 29, 2021, 20,000 shares of common stock and 198,800
options have been issued under the 2017 Plan.
|
17
O
THER MATTERS
The
Company has no knowledge of any other matters that may come before
the Special Meeting and does not intend to present any other
matters.
If you
do not plan to attend the Special Meeting, in order that your
shares may be represented and in order to assure the required
quorum, please sign, date and return your proxy promptly. In the
event you are able to attend the Special Meeting, at your request,
the Company will cancel your previously submitted
proxy.
Where You Can Find More Information
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. Such filings are made available on
our Internet website,
www.recruiter.com
,
as soon as reasonably practicable after they are filed with, or
furnished to, the SEC. The information on our website is not, and
shall not be deemed to be, a part of this Proxy Statement or
incorporated into any other filings we make with the SEC. The SEC
maintains an Internet site,
www.sec.gov
,
which contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the
SEC, including the Company.
|
By Order of the Board of Directors,
|
|
|
|
|
|
|
/s/ Evan Sohn
|
|
Name:
|
Evan Sohn
|
|
Title:
|
Chief Executive Officer and Executive Chairman
|
July 28, 2021
18
ANNEX
A
RECRUITER.COM GROUP, INC. 2021 EQUITY INCENTIVE PLAN
1.
Scope of Plan;
Definitions
.
(a)
This 2021 Equity Incentive Plan (the “Plan”) is
intended to advance the interests of Recruiter.com Group, Inc. (the
“Company”) and its Related Corporations by enhancing
the ability of the Company to attract and retain qualified
employees, consultants, Officers, and directors, by creating
incentives and rewards for their contributions to the success of
the Company and its Related Corporations. This Plan will provide to
(a) Officers and other employees of the Company and its Related
Corporations opportunities to purchase common stock, par value
$0.0001 (“Common Stock”) of the Company pursuant to
Options granted hereunder which qualify as incentive stock options
(“ISOs”) under Section 422(b) of the Internal Revenue
Code of 1986 (the “Code”), (b) directors, Officers,
employees, and consultants of the Company and Related Corporations
opportunities to purchase Common Stock in the Company pursuant to
options granted hereunder which do not qualify as ISOs
(“Non-Qualified Options”); (c) directors, Officers,
employees, and consultants of the Company and Related Corporations
opportunities to receive shares of Common Stock of the Company
which normally are subject to restrictions on sale
(“Restricted Stock”); (d) directors, Officers,
employees, and consultants of the Company and Related Corporations
opportunities to receive grants of stock appreciation rights
(“SARs”); and (e) directors, Officers, employees, and
consultants of the Company and Related Corporations opportunities
to receive grants of restricted stock units (“RSUs”).
ISOs and Non-Qualified Options are referred to hereafter as
(“Options”). Options, Restricted Stock, SARs, and RSUs
are sometimes referred to hereafter collectively as (“Stock
Rights”). Any of the Options and/or Stock Rights may in the
Compensation Committee’s discretion be issued in tandem to
one or more other Options and/or Stock Rights to the extent
permitted by law.
(b) For
purposes of the Plan, capitalized words and terms shall have the
following meaning:
“Board”
means the board of directors of the Company.
“Change of
Control” means the occurrence of any of the following events:
(i) the consummation of the sale or disposition by the Company of
all or substantially all of the Company’s assets in a
transaction which requires shareholder approval under applicable
state law; or (ii) the consummation of a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at
least 50% of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent
outstanding immediately after such merger or
consolidation.
“Code”
has the meaning given to it in Section 1(a).
“Common
Stock” has the meaning given to it in Section
1(a).
“Company”
has the meaning given to it in Section 1(a).
“Compensation
Committee” means the compensation committee of the Board, if
any, which shall consist of two or more members of the Board, each
of whom shall be a Non-Employee Director. All references in this
Plan to the Compensation Committee shall mean the Board when (i)
there is no Compensation Committee or (ii) the Board has retained
the power to administer this Plan.
“Director”
means a member of the Board.
“Disability”
means “permanent and total disability” as defined in
Section 22(e)(3) of the Code or successor statute.
A-1
“Disqualifying
Disposition” means any disposition (including any sale) of
Common Stock underlying an ISO before the later of (i) two years
after the date of employee was granted the ISO or (ii) one year
after the date the employee acquired Common Stock by exercising the
ISO.
“Exchange
Act” means the Securities Exchange Act of 1934.
“Fair Market
Value” shall be determined as of the last Trading Day before
the date a Stock Right is granted and shall mean:
(1) the
closing price on the principal market if the Common Stock is listed
on a national securities exchange or the OTCQB or
OTCQX.
(2) if
the Company’s shares are not listed on a national securities
exchange or the OTCQB or OTCQX, then the closing price if reported
or the average bid and asked price for the Company’s shares
as quoted by OTC Pink;
(3) if
there are no prices available under clauses (1) or (2), then Fair
Market Value shall be based upon the average closing bid and asked
price as determined following a polling of all dealers making a
market in the Company’s Common Stock; or
(4) if
there is no regularly established trading market for the
Company’s Common Stock or if the Company’s Common Stock
is listed, quoted, or reported under clauses (1) or (2) but it
trades sporadically rather than every day, the Fair Market Value
shall be established by the Board or the Compensation Committee
taking into consideration all relevant factors including the most
recent price at which the Company’s Common Stock was
sold.
“ISO”
has the meaning given to it in Section 1(a).
“Non-Employee
Director” means a Director who is a "non-employee director"
within the meaning of Rule 16b-3.
“Non-Qualified
Options” has the meaning given to it in Section
1(a).
“Officer”
means a person who is an executive officer of the Company and is
required to file ownership reports under Section 16(a) of the
Exchange Act.
“Option”
has the meaning given to it in Section 1(a).
“Plan”
has the meaning given to it in Section 1(a).
“Related
Corporation” means a corporation which is a subsidiary
corporation with respect to the Company within the meaning of
Section 424(f) of the Code.
“Restricted
Stock” has the meaning given to it in Section
1(a).
“RSU”
has the meaning given to it in Section 1(a).
“Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to
time.
“SAR”
has the meaning given to it in Section 1(a).
“Securities
Act” means the Securities Act of 1933.
“Stock
Rights” has the meaning given to it in Section
1(a).
A-2
“Trading
Day” means a day on which the New York Stock Exchange is open
for business.
This
Plan is intended to comply in all respects with Rule 16b-3 and its
successor rules as promulgated under Section 16(b) of the Exchange
Act for participants who are subject to Section 16 of the Exchange
Act. To the extent any provision of the Plan or action by the Plan
administrators fails to so comply, it shall be deemed null and void
to the extent permitted by law and deemed advisable by the Plan
administrators.
Provided
,
however
, such exercise of
discretion by the Plan administrators shall not interfere with the
contract rights of any grantee. In the event that any
interpretation or construction of the Plan is required, it shall be
interpreted and construed in order to ensure, to the maximum extent
permissible by law, that such grantee does not violate the
short-swing profit provisions of Section 16(b) of the Exchange Act
and that any exemption available under Rule 16b-3 or other rule is
available.
2.
Administration of the
Plan
.
(a) The
Plan may be administered by the entire Board or by the Compensation
Committee. Once appointed, the Compensation Committee shall
continue to serve until otherwise directed by the Board. A majority
of the members of the Compensation Committee shall constitute a
quorum, and all determinations of the Compensation Committee shall
be made by the majority of its members present at a meeting. Any
determination of the Compensation Committee under the Plan may be
made without notice or meeting of the Compensation Committee by a
writing signed by all of the Compensation Committee members.
Subject to ratification of the grant of each Stock Right by the
Board (but only if so required by applicable state law), and
subject to the terms of the Plan, the Compensation Committee shall
have the authority to (i) determine the employees of the Company
and Related Corporations (from among the class of employees
eligible under Section 3 to receive ISOs) to whom ISOs may be
granted, and to determine (from among the class of individuals and
entities eligible under Section 3 to receive Non-Qualified Options,
Restricted Stock, RSUs and SARs) to whom Non-Qualified Options,
Restricted Stock, RSUs and SARs may be granted; (ii) determine when
Stock Rights may be granted; (iii) determine the exercise prices of
Stock Rights other than Restricted Stock and RSUs, which shall not
be less than the Fair Market Value; (iv) determine whether each
Option granted shall be an ISO or a Non-Qualified Option; (v)
determine when Stock Rights shall become exercisable, the duration
of the exercise period, and when each Stock Right shall vest; (vi)
determine whether restrictions such as repurchase options are to be
imposed on shares subject to or issued in connection with Stock
Rights, and the nature of such restrictions, if any, and (vii)
interpret the Plan and promulgate and rescind rules and regulations
relating to it. The interpretation and construction by the
Compensation Committee of any provisions of the Plan or of any
Stock Right granted under it shall be final, binding, and
conclusive unless otherwise determined by the Board. The
Compensation Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem
best.
No
members of the Compensation Committee or the Board shall be liable
for any action or determination made in good faith with respect to
the Plan or any Stock Right granted under it. No member of the
Compensation Committee or the Board shall be liable for any act or
omission of any other member of the Compensation Committee or the
Board or for any act or omission on his own part, including but not
limited to the exercise of any power and discretion given to him
under the Plan, except those resulting from his own gross
negligence or willful misconduct.
(b) The
Compensation Committee may select one of its members as its
chairman and shall hold meetings at such time and places as it may
determine. All references in this Plan to the Compensation
Committee shall mean the Board if no Compensation Committee has
been appointed. From time to time the Board may increase the size
of the Compensation Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new
members in substitution therefor, fill vacancies however caused, or
remove all members of the Compensation Committee and thereafter
directly administer the Plan.
(c)
Stock Rights may be granted to members of the Board, whether such
grants are in their capacity as directors, Officers, or
consultants. All grants of Stock Rights to members of the Board
shall in all other respects be made in accordance with the
provisions of this Plan applicable to other eligible persons.
Members of the Board who are either (i) eligible for Stock Rights
pursuant to the Plan or (ii) have been granted Stock Rights may
vote on any matters affecting the administration of the Plan or the
grant of any Stock Rights pursuant to the Plan.
A-3
(d) In
addition to such other rights of indemnification as he may have as
a member of the Board, and with respect to administration of the
Plan and the granting of Stock Rights under it, each member of the
Board and of the Compensation Committee shall be entitled without
further act on his part to indemnification from the Company for all
expenses (including advances of litigation expenses, the amount of
judgment, and the amount of approved settlements made with a view
to the curtailment of costs of litigation) reasonably incurred by
him in connection with or arising out of any action, suit, or
proceeding, including any appeal thereof, with respect to the
administration of the Plan or the granting of Stock Rights under it
in which he may be involved by reason of his being or having been a
member of the Board or the Compensation Committee, whether or not
he continues to be such member of the Board or the Compensation
Committee at the time of the incurring of such expenses;
provided
,
however
, that such
indemnity shall be subject to the limitations contained in any
indemnification agreement between the Company and the Board member
or Officer. The foregoing right of indemnification shall inure to
the benefit of the heirs, executors, or administrators of each such
member of the Board or the Compensation Committee and shall be in
addition to all other rights to which such member of the Board or
the Compensation Committee would be entitled to as a matter of law,
contract, or otherwise.
(e) The
Board may delegate the powers to grant Stock Rights to Officers to
the extent permitted by the laws of the Company’s state of
incorporation.
3.
Eligible Employees and
Others
. ISOs may be granted to any employee of the Company
or any Related Corporation. Those Officers and directors of the
Company who are not employees may not be granted ISOs under the
Plan. Subject to compliance with Rule 16b-3 and other applicable
securities laws, Non-Qualified Options, Restricted Stock, RSUs, and
SARs may be granted to any director (whether or not an employee),
Officers, employees, or consultants of the Company or any Related
Corporation. The Compensation Committee may take into consideration
a recipient’s individual circumstances in determining whether
to grant an ISO, a Non-Qualified Option, Restricted Stock, RSUs, or
a SAR. Granting of any Stock Right to any individual or entity
shall neither entitle that individual or entity to, nor disqualify
him from participation in, any other grant of Stock
Rights.
4.
Common Stock
. The
Common Stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock, or shares of Common Stock
reacquired by the Company in any manner, including purchase,
forfeiture, or otherwise. The aggregate number of shares of Common
Stock which may be issued pursuant to the Plan, subject to
adjustment as provided in Section 14, is the sum of (i) 2,700,000
plus (ii) an annual increase on the first day of each calendar year
beginning January 1, 2022 and ending on and including January 1,
2030 equal to the lesser of (A) five percent (5%) of the shares of
Common Stock outstanding on the final day of the immediately
preceding calendar year, and (B) such smaller number of shares of
Common Stock as determined by the Board. Any such shares may be
issued under ISOs, Non-Qualified Options, Restricted Stock, RSUs,
or SARs, so long as the number of shares so issued does not exceed
the limitations in this Section. If any Stock Rights granted under
the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be
exercisable in whole or in part, or if the Company shall reacquire
any unvested shares, the unpurchased shares subject to such Stock
Rights and any unvested shares so reacquired by the Company shall
again be available for grants under the Plan.
5.
Granting of Stock
Rights
.
(a) The
date of grant of a Stock Right under the Plan will be the date
specified by the Board or Compensation Committee at the time it
grants the Stock Right;
provided
,
however
, that such date shall
not be prior to the date on which the Board or Compensation
Committee acts to approve the grant. The Board or Compensation
Committee shall have the right, with the consent of the optionee,
to convert an ISO granted under the Plan to a Non-Qualified Option
pursuant to Section 17.
(b) The
Board or Compensation Committee shall grant Stock Rights to
participants that it, in its sole discretion, selects. Stock Rights
shall be granted on such terms as the Board or Compensation
Committee shall determine, except that ISOs shall be granted on
terms that comply with the Code and regulations
thereunder.
A-4
(c) A
SAR entitles the holder to receive, as designated by the Board or
Compensation Committee, cash or shares of Common Stock, value equal
to (or otherwise based on) the excess of: (a) the Fair Market Value
of a specified number of shares of Common Stock at the time of
exercise over (b) an exercise price established by the Board or
Compensation Committee. The exercise price of each SAR granted
under this Plan shall be established by the Compensation Committee
or shall be determined by a method established by the Board or
Compensation Committee at the time the SAR is granted, provided the
exercise price shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of grant, or such higher price as
is established by the Board or Compensation Committee. A SAR shall
be exercisable in accordance with such terms and conditions and
during such periods as may be established by the Board or
Compensation Committee. Shares of Common Stock delivered pursuant
to the exercise of a SAR shall be subject to such conditions,
restrictions, and contingencies as the Board or Compensation
Committee may establish in the applicable SAR agreement or
document, if any. The Board or Compensation Committee, in its
discretion, may impose such conditions, restrictions, and
contingencies with respect to shares of Common Stock acquired
pursuant to the exercise of each SAR as the Board or Compensation
Committee determines to be desirable. A SAR under the Plan shall be
subject to such terms and conditions, not inconsistent with the
Plan, as the Board or Compensation Committee shall, in its
discretion, prescribe. The terms and conditions of any SAR to any
grantee shall be reflected in such form of agreement as is
determined by the Board or Compensation Committee. A copy of such
document, if any, shall be provided to the grantee, and the Board
or Compensation Committee may condition the granting of the SAR on
the grantee executing such agreement.
(d) An
RSU gives the grantee the right to receive a number of shares of
the Company’s Common Stock on applicable vesting or other
dates. Delivery of the RSUs may be deferred beyond vesting as
determined by the Board or Compensation Committee. RSUs shall be
evidenced by an RSU agreement in the form determined by the Board
or Compensation Committee. With respect to an RSU that becomes
non-forfeitable due to the lapse of time, the Compensation
Committee shall prescribe in the RSU agreement the vesting period.
With respect to the granting of an RSU that becomes non-forfeitable
due to the satisfaction of certain pre-established
performance-based objectives imposed by the Board or Compensation
Committee, the measurement date of whether such performance-based
objectives have been satisfied shall be a date no earlier than the
first anniversary of the date of the RSU. A recipient who is
granted an RSU shall possess no incidents of ownership with respect
to such underlying Common Stock, although the RSU agreement may
provide for payments in lieu of dividends to such
grantee.
(e)
Notwithstanding any provision of this Plan, the Board or
Compensation Committee may impose conditions and restrictions on
any grant of Stock Rights including forfeiture of vested Options,
cancellation of Common Stock acquired in connection with any Stock
Right, and forfeiture of profits.
(f) The
Options and SARs shall not be exercisable for a period of more than
10 years from the date of grant.
6.
Sale of Shares
. The
shares underlying Stock Rights granted to any Officer, director, or
a beneficial owner of 10% or more of the Company’s securities
registered under Section 12 of the Exchange Act shall not be sold,
assigned, or transferred by the grantee until at least six months
elapse from the date of the grant thereof.
7.
ISO Minimum Option Price
and Other Limitations
.
(a) The
exercise price per share relating to all Options granted under the
Plan shall not be less than 100% of the Fair Market Value of the
Common Stock subject to the Option on the date of the grant. For
purposes of determining the exercise price, the date of the grant
shall be the later of (i) the date of approval by the Board or
Compensation Committee, or (ii) for ISOs, the date the recipient
becomes an employee of the Company. In the case of an ISO to be
granted to an employee owning Common Stock which represents more
than 10% of the total combined voting power of all classes of stock
of the Company or any Related Corporation, the price per share
shall not be less than 110% of the Fair Market Value per share of
Common Stock on the date of grant and such ISO shall not be
exercisable after the expiration of five years from the date of
grant.
(b) In
no event shall the aggregate Fair Market Value (determined at the
time an ISO is granted) of Common Stock for which ISOs granted to
any employee are exercisable for the first time by such employee
during any calendar year (under all stock option plans of the
Company and any Related Corporation) exceed $100,000.
8.
Duration of Stock
Rights
. Subject to earlier termination as provided in
Sections 3, 5, 9, 10 and 11, each Option and SAR shall expire on
the date specified in the original instrument granting such Stock
Right (except with respect to any part of an ISO that is converted
into a Non-Qualified Option pursuant to Section 17),
provided
,
however
, that such instrument
must comply with Section 422 of the Code with regard to ISOs and
Rule 16b-3 with regard to all Stock Rights granted pursuant to the
Plan to Officers, directors, and 10% shareholders of the
Company.
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9.
Exercise of Options and
SARs; Vesting of Stock Rights
. Subject to the provisions of
Sections 3 and 9 through 13, each Option and SAR granted under the
Plan shall be exercisable as follows:
(a) The
Options and SARs shall either be fully vested and exercisable from
the date of grant or shall vest and become exercisable in such
installments as the Board or Compensation Committee may
specify.
(b)
Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option and SAR, unless
otherwise specified by the Board or Compensation
Committee.
(c)
Each Option and SAR or installment, once it becomes exercisable,
may be exercised at any time or from time to time, in whole or in
part, for up to the total number of shares with respect to which it
is then exercisable.
(d) The
Board or Compensation Committee shall have the right to accelerate
the vesting date of any installment of any Stock Right;
provided
that the
Board or Compensation Committee shall not accelerate the exercise
date of any installment of any Option granted to any employee as an
ISO (and not previously converted into a Non-Qualified Option
pursuant to Section 17) if such acceleration would violate the
annual exercisability limitation contained in Section 422(d) of the
Code as described in Section 7(b).
10.
Termination of
Employment
. Subject to any greater restrictions or
limitations as may be imposed by the Board or Compensation
Committee or by a written agreement, if an optionee ceases to be
employed by the Company and all Related Corporations other than by
reason of death or Disability, no further installments of his
Options shall vest or become exercisable, and his Options shall
terminate as provided for in the grant or on the day 12 months
after the day of the termination of his employment (except three
months for ISOs), whichever is earlier, but in no event later than
on their specified expiration dates. Employment shall be considered
as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations, or
governmental service) provided that the period of such leave does
not exceed 90 days or, if longer, any period during which such
optionee’s right to re-employment is guaranteed by statute. A
leave of absence with the written approval of the Board shall not
be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of
the optionee after the approved period of absence. ISOs granted
under the Plan shall not be affected by any change of employment
within or among the Company and any Related Corporations so long as
the optionee continues to be an employee of the Company or any
Related Corporation.
11.
Death; Disability
.
Unless otherwise determined by the Board or Compensation Committee
or by a written agreement:
(a) If
the holder of an Option or SAR ceases to be employed by the Company
and all Related Corporations by reason of his death, any Options or
SARs held by the optionee may be exercised to the extent he could
have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the Options or SARs
by will or by the laws of descent and distribution, at any time
prior to the earlier of: (i) the Options’ or SARs specified
expiration date or (ii) one year (except three months for an ISO)
from the date of death.
(b) If
the holder of an Option or SAR ceases to be employed by the Company
and all Related Corporations, or a director or Officer can no
longer perform his duties, by reason of his Disability, any Options
or SARs held by the optionee may be exercised to the extent he
could have exercised it on the date of termination due to
Disability until the earlier of (i) the Options’ or
SARs’ specified expiration date or (ii) one year from the
date of the termination.
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12.
Assignment, Transfer or
Sale
.
(a) No
ISO granted under this Plan shall be assignable or transferable by
the grantee except by will or by the laws of descent and
distribution, and during the lifetime of the grantee, each ISO
shall be exercisable only by him or his guardian or legal
representative.
(b)
Except for ISOs, all Stock Rights are transferable subject to
compliance with applicable securities laws and Section 6 of this
Plan.
13.
Terms and Conditions of
Stock Rights
. Stock Rights shall be evidenced by instruments
(which need not be identical) in such forms as the Board or
Compensation Committee may from time to time approve. Such
instruments shall conform to the terms and conditions set forth in
Sections 5 through 12 hereof and may contain such other provisions
as the Board or Compensation Committee deems advisable which are
not inconsistent with the Plan. In granting any Stock Rights, the
Board or Compensation Committee may specify that Stock Rights shall
be subject to the restrictions set forth herein with respect to
ISOs, or to such other termination and cancellation provisions as
the Board or Compensation Committee may determine. The Board or
Compensation Committee may from time to time confer authority and
responsibility on one or more of its own members and/or one or more
Officers of the Company to execute and deliver such instruments.
The proper Officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to
carry out the terms of such instruments.
14.
Adjustments Upon Certain
Events
.
(a)
Subject to any required action by the shareholders of the Company,
the number of shares of Common Stock covered by each outstanding
Stock Right, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no
Stock Rights have yet been granted or which have been returned to
the Plan upon cancellation or expiration of a Stock Right, as well
as the price per share of Common Stock (or cash, as applicable)
covered by each such outstanding Option or SAR, shall be
proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination, or
reclassification of Common Stock, or any other increase or decrease
in the number of issued shares of Common Stock effected without
receipt of consideration by the Company;
provided
,
however
, that conversion of any
convertible securities of the Company or the voluntary
cancellation, whether by virtue of a cashless exercise of a
derivative security of the Company or otherwise, shall not be
deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board or
Compensation Committee, whose determination in that respect shall
be final, binding, and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject
to a Stock Right. No adjustments shall be made for dividends or
other distributions paid in cash or in property other than
securities of the Company.
(b) In
the event of the proposed dissolution or liquidation of the
Company, the Board or Compensation Committee shall notify each
participant as soon as practicable prior to the effective date of
such proposed transaction. To the extent it has not been previously
exercised, a Stock Right will terminate immediately prior to the
consummation of such proposed action.
(c) In
the event of a merger of the Company with or into another
corporation, or a Change of Control, each outstanding Stock Right
shall be assumed (as defined below) or an equivalent option or
right substituted by the successor corporation or a parent or
subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Stock
Rights, the participants shall fully vest in and have the right to
exercise their Stock Rights as to which it would not otherwise be
vested or exercisable. If a Stock Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board or Compensation Committee shall
notify the participant in writing or electronically that the Stock
Right shall be fully vested and exercisable for a period of at
least 15 days from the date of such notice, and any Options or SARs
shall terminate one minute prior to the closing of the merger or
sale of assets.
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For the
purposes of this Section 14(c), the Stock Right shall be considered
“assumed” if, following the merger or Change of
Control, the option or right confers the right to purchase or
receive, for each share of Common Stock subject to the Stock Right
immediately prior to the merger or Change of Control, the
consideration (whether stock, cash, or other securities or
property) received in the merger or Change of Control by holders of
Common Stock for each share held on the effective date of the
transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of
the outstanding shares);
provided
,
however
, that if such
consideration received in the merger or Change of Control is not
solely common stock of the successor corporation or its parent, the
Board or Compensation Committee may, with the consent of the
successor corporation, provide for the consideration to be received
upon the exercise of the Stock Right, for each share of Common
Stock subject to the Stock Right, to be solely common stock of the
successor corporation or its parent equal in Fair Market Value to
the per share consideration received by holders of Common Stock in
the merger or Change of Control.
(d)
Notwithstanding the foregoing, any adjustments made pursuant to
Section 14(a), (b) or (c) with respect to ISOs shall be made only
after the Board or Compensation Committee, after consulting with
counsel for the Company, determines whether such adjustments would
constitute a “modification” of such ISOs (as that term
is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Board
or Compensation Committee determines that such adjustments made
with respect to ISOs would constitute a modification of such ISOs,
it may refrain from making such adjustments.
(e) No
fractional shares shall be issued under the Plan and the optionee
shall receive from the Company cash in lieu of such fractional
shares.
15.
Means of Exercising Stock
Rights
.
(a) An
Option or SAR (or any part or installment thereof) shall be
exercised by giving written notice to the Company at its principal
office address. Such notice shall identify the Stock Right being
exercised and specify the number of shares as to which such Stock
Right is being exercised, accompanied by full payment of the
exercise price therefor (to the extent it is exercisable in cash)
either (i) in United States dollars by check or wire transfer; or
(ii) at the discretion of the Board or Compensation Committee,
through delivery of shares of Common Stock having a Fair Market
Value equal as of the date of the exercise to the cash exercise
price of the Stock Right; or (iii) at the discretion of the Board
or Compensation Committee, by any combination of (i) and (ii)
above. If the Board or Compensation Committee exercises its
discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (ii) or (iii) of the
preceding sentence, such discretion need not be exercised in
writing at the time of the grant of the Stock Right in question.
The holder of a Stock Right shall not have the rights of a
shareholder with respect to the shares covered by his Stock Right
until the date of issuance of a stock certificate to him for such
shares. Except as expressly provided above in Section 14 with
respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which
the record date is before the date such stock certificate is
issued.
(b)
Each notice of exercise shall, unless the shares of Common Stock
are covered by a then current registration statement under the
Securities Act, contain the holder’s acknowledgment in form
and substance satisfactory to the Company that (i) such shares are
being purchased for investment and not for distribution or resale
(other than a distribution or resale which, in the opinion of
counsel satisfactory to the Company, may be made without violating
the registration provisions of the Securities Act), (ii) the holder
has been advised and understands that (1) the shares have not been
registered under the Securities Act and are “restricted
securities” within the meaning of Rule 144 under the
Securities Act and are subject to restrictions on transfer and (2)
the Company is under no obligation to register the shares under the
Securities Act or to take any action which would make available to
the holder any exemption from such registration, and (iii) such
shares may not be transferred without compliance with all
applicable federal and state securities laws. Notwithstanding the
above, should the Company be advised by counsel that issuance of
shares should be delayed pending registration under federal or
state securities laws or the receipt of an opinion that an
appropriate exemption therefrom is available, the Company may defer
exercise of any Stock Right granted hereunder until either such
event has occurred.
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16.
Term, Termination, and
Amendment
.
(a)
This Plan was adopted by the Board. This Plan may be approved by
the Company’s shareholders, which approval is required for
ISOs.
(b) The
Board may terminate the Plan at any time. Unless sooner terminated,
the Plan shall terminate on July 23, 2031. No Stock Rights may be
granted under the Plan once the Plan is terminated. Termination of
the Plan shall not impair rights and obligations under any Stock
Right granted while the Plan is in effect, except with the written
consent of the grantee.
(c) The
Board at any time, and from time to time, may amend the Plan.
Provided
,
however
, except as
provided in Section 14 relating to adjustments in Common Stock, no
amendment shall be effective unless approved by the shareholders of
the Company to the extent (i) shareholder approval is necessary to
satisfy the requirements of Section 422 of the Code or (ii)
required by the rules of the principal national securities exchange
or trading market upon which the Company’s Common Stock
trades. Rights under any Stock Rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except
with the written consent of the grantee.
(d) The Board at any time, and from
time to time, may amend the terms of any one or more Stock
Rights;
provided
,
however
,
that the rights under the Stock Right shall not be impaired by any
such amendment, except with the written consent of the
grantee.
17.
Conversion of ISOs into
Non-Qualified Options; Termination of ISOs
. The Board or
Compensation Committee, at the written request of any optionee, may
in its discretion take such actions as may be necessary to convert
such optionee’s ISOs (or any installments or portions of
installments thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of
such conversion.
Provided
,
however
, the Board or
Compensation Committee shall not reprice the Options or extend the
exercise period or reduce the exercise price of the appropriate
installments of such Options without the approval of the
Company’s shareholders. At the time of such conversion, the
Board or Compensation Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Board or Compensation Committee in its
discretion may determine, provided that such conditions shall not
be inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any optionee the right to have such optionee’s ISOs
converted into Non-Qualified Options, and no such conversion shall
occur until and unless the Board or Compensation Committee takes
appropriate action. The Compensation Committee, with the consent of
the optionee, may also terminate any portion of any ISO that has
not been exercised at the time of such termination.
18.
Application of
Funds
. The proceeds received by the Company from the sale of
shares pursuant to Options or SARS (if cash settled) granted under
the Plan shall be used for general corporate purposes.
19.
Governmental
Regulations
. The Company’s obligation to sell and
deliver shares of the Common Stock under this Plan is subject to
the approval of any governmental authority required in connection
with the authorization, issuance, or sale of such
shares.
20.
Withholding of Additional
Income Taxes
. In connection with the granting, exercise, or
vesting of a Stock Right or the making of a Disqualifying
Disposition, the Company, in accordance with Section 3402(a) of the
Code, may require the optionee to pay additional withholding taxes
in respect of the amount that is considered compensation includable
in such person’s gross income.
To the
extent that the Company is required to withhold taxes for federal
income tax purposes as provided above, any optionee may elect to
satisfy such withholding requirement by (i) paying the amount of
the required withholding tax to the Company; (ii) delivering to the
Company shares of its Common Stock (including shares of Restricted
Stock) previously owned by the optionee; or (iii) having the
Company retain a portion of the shares covered by an Option
exercise. The number of shares to be delivered to or withheld by
the Company times the Fair Market Value of such shares shall equal
the cash required to be withheld.
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21.
Notice to Company of
Disqualifying Disposition
. Each employee who receives an ISO
must agree to notify the Company in writing immediately after the
employee makes a Disqualifying Disposition of any Common Stock
acquired pursuant to the exercise of an ISO. If the employee has
died before such stock is sold, the holding periods requirements of
the Disqualifying Disposition do not apply and no Disqualifying
Disposition can occur thereafter.
22.
Continued
Employment
. The grant of a Stock Right pursuant to the Plan
shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company or any
Related Corporation to retain the grantee in the employ of the
Company or a Related Corporation, as a member of the
Company’s Board, or in any other capacity, whichever the case
may be.
23.
Governing Law;
Construction
. The validity and construction of the Plan and
the instruments evidencing Stock Rights shall be governed by the
laws of the Company’s state of incorporation. In construing
this Plan, the singular shall include the plural and the masculine
gender shall include the feminine and neuter, unless the context
otherwise requires.
24. (a)
Forfeiture of Stock Rights
Granted to Employees or Consultants
. Notwithstanding any
other provision of this Plan, and unless otherwise provided for in
a Stock Rights Agreement, all vested or unvested Stock Rights
granted to employees or consultants shall be immediately forfeited
at the discretion of the Board if any of the following events
occur:
(1)
Termination of the relationship with the grantee for cause
including, but not limited to, fraud, theft, dishonesty, and
violation of Company policy;
(2)
Purchasing or selling securities of the Company in violation of the
Company’s insider trading guidelines then in
effect;
(3)
Breaching any duty of confidentiality including that required by
the Company’s insider trading guidelines then in
effect;
(4)
Competing with the Company;
(5)
Being unavailable for consultation after leaving the
Company’s employment if such availability is a condition of
any agreement between the Company and the grantee;
(6)
Recruitment of Company personnel after termination of employment,
whether such termination is voluntary or for cause;
(7)
Failure to assign any invention or technology to the Company if
such assignment is a condition of employment or any other
agreements between the Company and the grantee; or
(8) A
finding by the Board that the grantee has acted disloyally and/or
against the interests of the Company.
(b)
Forfeiture of Stock Rights
Granted to Directors
. Notwithstanding any other provision of
this Plan, and unless otherwise provided for in a Stock Rights
Agreement, all vested or unvested Stock Rights granted to directors
shall be immediately forfeited at the discretion of the Board if
any of the following events occur:
(1)
Purchasing or selling securities of the Company in violation of the
Company’s insider trading guidelines then in
effect;
(2)
Breaching any duty of confidentiality including that required by
the Company’s insider trading guidelines then in
effect;
(3)
Competing with the Company;
A-10
(4)
Recruitment of Company personnel after ceasing to be a director;
or
(5) A
finding by the Board that the grantee has acted disloyally and/or
against the interests of the Company.
The
Company may impose other forfeiture restrictions which are more or
less restrictive and require a return of profits from the sale of
Common Stock as part of said forfeiture provisions if such
forfeiture provisions and/or return of provisions are contained in
a Stock Rights Agreement.
(c)
Profits on the Sale of
Certain Shares; Redemption
. If any of the events specified
in Section 24(a) or (b) of the Plan occur within one year from the
date the grantee last performed services for the Company in the
capacity for which the Stock Rights were granted (the
“Termination Date”) (or such longer period required by
any written agreement), all profits earned from the sale of the
Company’s securities, including the sale of shares of Common
Stock underlying the Stock Rights, during the two-year period
commencing one year prior to the Termination Date shall be
forfeited and immediately paid by the grantee to the Company.
Further, in such event, the Company may at its option redeem shares
of Common Stock acquired upon exercise of the Stock Right by
payment of the exercise price to the grantee. To the extent that
another written agreement with the Company extends the events in
Section 24(a) or (b) beyond one year following the Termination
Date, the two-year period shall be extended by an equal number of
days. The Company’s rights under this Section 24(c) do not
lapse one year from the Termination Date but are contract rights
subject to any appropriate statutory limitation
period.
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