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o | Definitive Additional Materials |
o | Soliciting Material Pursuant to §240.14a-12 |
x | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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o | 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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We havestatement, including the following matters: (i) the election of seven directors to hold office until the next annual meeting and until their successors are duly elected to take advantageand qualified; (ii) the ratification of Securities and Exchange Commission rules that allow us to provide accessthe appointment of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016; (iii) the approval of a series of alternate amendments to our certificate of incorporation, to effect, at the discretion of our Board of Directors, a reverse stock split of our common stock, whereby each outstanding 2 through 15 shares would be combined, converted and changed into one share of our common stock (the “Reverse Stock Split Proposal”) and to reduce proportionally the number of shares of common stock the Company is authorized to issue; and (iv) such other business as may properly be brought before the meeting or any adjournment or postponement thereof.
Sincerely, | |
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James Kirsch Executive Chairman of the Board of Directors |
1. | Elect seven directors to serve until the next annual meeting of stockholders (and until their successors are duly elected and qualified); |
2. | Ratify the appointment of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016; |
3. | Authorize the Board of Directors to effect, in its discretion, a reverse stock split of the outstanding and treasury shares of the Company’s common stock in a ratio of [1-for-2] [1-for-3] [1-for-4] [1-for-5] [1-for-6] [1-for-7] [1-for-8] [1-for-9] [1-for-10] [1-for-11] [1-for-12] [1-for-13] [1-for-14] [1-for-15], to be determined by the Board of Directors, and to approve a corresponding amendment to the Company’s Certificate of Incorporation to effect the reverse stock split and to reduce proportionally the number of shares of common stock the Company is authorized to issue; and |
4. | Transact such other business as may properly come before the 2016 annual meeting of stockholders and any adjournment or postponement thereof. |
and at any adjournments or postponements.
Sincerely,
James Kirsch
By Order of the Board of Directors | |
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James Kirsch | |
Executive Chairman of the Board of Directors |
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A-1 |
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that thePROXY STATEMENT
Q: | Who can vote at the 2016 Annual Meeting of Stockholders? |
A: | Holders of our common stock at the close of business on August 4, 2016, are entitled to vote their shares at the 2016 annual meeting of stockholders. As of August 4, 2016, there were 14,510,960 shares of common stock issued, outstanding and entitled to vote. Each share of common stock issued and outstanding is entitled to one vote. |
Q: | What constitutes a quorum, and why is a quorum required? |
A: | We are required to have a quorum of stockholders present to conduct business at the meeting. The holders of record of a majority of the aggregate voting power of our common stock issued and outstanding and entitled to be voted, present in person or by proxy, will constitute a quorum for the transaction of business at the 2016 annual meeting of stockholders or any adjournment or postponement thereof. Proxies received but marked as abstentions, if any, and broker non-votes will be counted as present at the meeting for quorum purposes. If we do not have a quorum, we will be forced to reconvene the 2016 annual meeting of stockholders at a later date. |
Q: | What is the difference between a stockholder of record and a beneficial owner? |
A: | If your shares are registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, Inc., you are considered the “stockholder of record” with respect to those shares. |
Q: | How do I vote? |
A: | If you are a stockholder of record, you may vote: |
· | via Internet; |
· | by telephone; |
· | by mail, if you have received a paper copy of the proxy materials; or |
· | in person at the meeting. |
Q: |
A: | At the 2016 annual meeting of stockholders you will be asked to vote on the following proposals. Our Board recommendation for each of these proposals is set forth below. |
Proposal | Board Recommendation | |
1. To elect | FOR each director nominee |
2. To ratify the appointment | FOR | |||
3. Authorize the Board of Directors to effect, in its discretion, a reverse stock split of the outstanding and treasury shares of the Company’s common stock in a ratio of [1-for-2] [1-for-3] [1-for-4] [1-for-5] [1-for-6] [1-for-7] [1-for-8] [1-for-9] [1-for-10] [1-for-11] [1-for-12] [1-for-13] [1-for-14] [1-for-15], to be determined by the Board of Directors, and to approve a corresponding amendment to the Company’s Certificate of Incorporation to effect the reverse stock split and to reduce proportionally the number of shares of common stock the Company is authorized to issue. | FOR |
The Board
A listsuch proposals.
Q: | What happens if additional matters are presented at the 2016 Annual Meeting of Stockholders? |
A: | Other than the items of business described in this proxy statement, we are not aware of any other business to be acted upon at the 2016 annual meeting of stockholders. If you grant a proxy, the persons named as proxy holders, James Kirsch and Katherine Butkevich, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting in accordance with Delaware law and our bylaws. You will not be asked to vote on the proposals related to the pending acquisition by CFL of 51% of shares of our common stock on a fully diluted basis. You will receive separate materials with respect to a special meeting of stockholders to be held at a later date determined by our Board of Directors, to vote on such proposals. |
Q: | What if I abstain on a proposal? |
A: | If you sign and return your proxy marked “abstain” on any proposal, your shares will not be voted on that proposal. However, your shares will be counted for purposes of determining whether a quorum is present. |
Q: | What is the required vote for approval of each of the proposals in this proxy statement? |
![]() | Proposal | ![]() | ||||
1. Election of Directors | Plurality of shares present and entitled to vote | |||||
2. Ratification of Auditor | Majority of shares present and entitled to vote | |||||
3. Authorization of the Reverse Stock Split and Approval of a Corresponding Amendment to the Certificate of Incorporation to Effect the Reverse Split | ||||||
i
The enclosed proxy is solicited by and on behalfElection of the board of directors (the “Board”) of Professional Diversity Network, Inc., a Delaware corporation (“Professional Diversity Network” or the “Company”), for use at Professional Diversity Network’s 2015 Annual Meeting of Stockholders (the “Annual Meeting”)Directors. In order to be held on June 3, 2015 at 11:00 a.m., Central Time, at the offices of the Company, 801 W. Adams Street, Chicago, Illinois 60607, and at any and all adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
In accordance with rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each of our stockholders, we are furnishing proxy materials on the Internet. If you received a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail, you will not receive a printed copy of the proxy materials other than as described herein. Instead, the Notice will instruct you as to how you may submit your vote over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting proxy materials included in the Notice.
We anticipate that the Notice will be sent to stockholders on or about April 24, 2015. This proxy statement and the form of proxy relatingelected to the Annual Meeting will be made available on the Internet to stockholders on the date that the Notice is first sent.
The Board, has fixed the close of business on April 8, 2015 as the record date for the Annual Meeting (the “Record Date”). Only holders of record of the Company’s common stock, $0.01 par value per share (“CommonStock”), at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting. Each holder of Common Stock on the Record Date is entitled to one vote for each share then held on all matters to be voted upon at the Annual Meeting. As of the close of business on the Record Date, there were 12,928,072 shares of Common Stock outstanding and entitled to vote.
Quorum. The holders of record of a majority of the aggregate voting power of the Common Stock issued and outstanding and entitled to be voted, present in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting or any adjournment or postponement thereof. In the event there are not sufficient shares present to establish a quorum or to approve proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies by the Company.
Vote Required. Holders of Common Stock are entitled to one vote for each share held as of the Record Date on all matters to be voted on. The Company’s Bylaws provide that, except as otherwise provided by applicable law, the rules of the Nasdaq Stock Market, the Company’s Certificate of Incorporation or the Bylaws, all matters will be decided by the vote of a majority in voting power of the shares present in person or by proxy and entitled to vote at the Annual Meeting and on the matter. In the election of directors (Proposal 1), the Board will be elected bynominee must receive a plurality of the voting power of the Common Stock representedCompany’s common stock present in person or represented by proxy at the 2016 annual meeting of stockholders and entitled to vote aton the Annual Meeting. Each stockholder is entitled toelection of directors. This means that the director nominees who receive the highest number of votes “FOR” their election are elected. Stockholders may only vote in favor“FOR” or withhold his, her or its votetheir votes with respect to each individual nominee.the election of the nominees to the Board. Votes that are withheld and broker non-votes will have no effect on the election of directors.
Equity Compensation Plan) and Proposal 3 (Accounting Firm Ratification Proposal). None of the proposals are contingent upon the approval of any other proposal.
Abstentions. Abstentions will be counted for purposes of determining a quorum at the Annual Meeting. Abstentions are not considered votes cast and therefore will have no effect on the outcome of Proposal 1 (Election of Directors). Abstentions with respect to Proposal 2 (Amendment of the Professional Diversity Network, Inc. 2013 Equity Compensation Plan) and Proposal 3 (Ratifying the Selection of Marcum LLP) will have the same effect as a vote against such proposals.
Broker Discretionary Voting. If your shares are held in a brokerage account, by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and the Notice is being sent to you by your broker, bank or other nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote. If you do not give instructions to your brokerage firm or bank, it will still be able to vote your shares with respect to “discretionary” proposals, but will not be allowed to vote your shares with respect to “non-discretionary” proposals. The Company expects that Proposal 3 (Ratifying the Selection of Marcum LLP) will be considered to be a discretionary proposal on which banks and brokerage firms may vote. The Company expects that all other proposals being presented to stockholders at the Annual Meeting will be considered to be non-discretionary items on which banks and brokerage firms may not vote. Therefore, if you do not instruct your broker or bank regarding how you would like your shares to be voted, your bank or brokerage firm will not be able to vote on your behalf with respect to these proposals. In the case of these non-discretionary items, the shares will be treated as “broker non-votes.” Broker non-votes are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that it does not have discretionary authority to vote on a particular matter. Your failure to give instructions to your bank or broker will not affect the outcome of Proposal 1, because broker non-votes are not considered votes cast, nor the outcome of Proposal 2 or Proposal 3 because Proposal 2 and Proposal 3 require the affirmative vote of a majority in voting power of the shares present in person or by proxy and entitled to vote at the Annual Meeting and on these proposals and broker non-votes will not be deemed “entitled to vote on the proposal” and therefore broker non-votes are not counted in the vote for these proposals.
Shares Not Present in Person or by Proxy at the Annual Meeting. Shares not present in person or by proxy at the Annual Meeting will not be counted for purposes of determining a quorum at the Annual Meeting.
Officers, directors and other employees of the Company may solicit proxies in person or by regular mail, electronic mail, facsimile transmission or personal calls. These persons will receive no additional compensation for solicitation of proxies, but may be reimbursed for reasonable out-of-pocket expenses.
The Company will pay all of the expenses of soliciting proxies to be voted at the Annual Meeting. Banks, brokerage firms and other custodians, nominees or fiduciaries will be requested to forward soliciting material to their principals and to obtain authorization for the execution of proxies. They will be reimbursed for their reasonable out-of-pocket expenses incurred in that regard.
Your vote is important. You may vote on the Internet, by telephone, by mail or by attending the Annual Meeting and voting by ballot, all as described below. If you vote by telephone or on the Internet, you do not need to return your Notice, proxy card or voting instruction card. Telephone and Internet voting facilities are available now and will be available 24 hours a day until 11:59 p.m., Eastern Time, on June 2, 2015.
If you have Internet access, you may submit your proxy by going towww.proxyvote.com and following the instructions provided on the secure website. If you vote on the Internet, you do not have to mail in a proxy card.
You can also vote by telephone by calling 1-800-690-6903. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. If you vote on by telephone, you do not have to mail in a proxy card.
If you choose to vote by mail, complete, sign and date the proxy card included with a paper copy of this proxy statement, and return it to the Company’s Secretary. Please allow sufficient time for mailing if you decide to vote by mail.
The method or timing of your vote will not limit your right to vote at the Annual Meeting if you attend the Annual Meeting and vote in person. However, if your shares are held in the name of a bank, broker or other nominee, you must obtain a legal proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting. You should allow yourself enough time prior to the Annual Meeting to obtain this proxy from the holder of record.
Street name holders may submit a proxy by telephone or the Internet if their bank or broker makes these methods available, in which case the bank or broker will enclose related instructions with this proxy statement. If you submit a proxy by telephone or via the Internet you should not return the proxy card included with a paper copy of this proxy statement. If you hold your shares through a bank, broker or other nominee you should follow the voting instructions you receive from your bank, broker or other nominee.
If you are the holder of record for your shares, you may revoke your proxy at any time before it is exercised at the Annual Meeting by taking either of the following actions: (i) delivering to the Company’s Secretary a revocation of the proxy or a proxy relating to the same shares and bearing a later date prior to the vote at the Annual Meeting; or (ii) attending the Annual Meeting and voting in person, although attendance at the Annual Meeting will not, by itself, revoke a proxy. Stockholders may also revoke a prior proxy by providing later voting instructions for voting of a later proxy prior to 11:59 P.M. Eastern Time the night of the last business day, June 2, 2015, before the date of the Annual Meeting.
Stockholders have no appraisal rights with respect to any of the matters to be voted upon at the Annual Meeting.
The Board recommends that Professional Diversity Network stockholders voteFOR the election of each nominee for director (Proposal 1),FORthe amendment to the Professional Diversity Network, Inc. 2013 Equity Compensation Plan (Proposal 2) andFOR the ratification of the Company’s selection of Marcum LLP as the Company’s independent registered public accounting firm (Proposal 3).
Reverse Stock Split. The affirmative vote of a majority of our outstanding shares of common stock entitled to vote is required to approve the Reverse Stock Split Proposal. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” this proposal.
Q: | What if I sign and return my proxy without making any selections? |
A: | If you sign and return your proxy without making any selections, your shares will be voted “FOR” Proposals 1, 2 and 3. If other matters properly come before the meeting, James Kirsch and Katherine Butkevich will have the authority to vote on those matters for you at their discretion. As of the date of this proxy, we are not aware of any matters that will come before the meeting other than those disclosed in this proxy statement. |
Q: | What if I am a beneficial owner and I do not give the nominee voting instructions? |
A: | If you are a beneficial owner and your shares are held in the name of a broker, the broker is bound by the rules of the Nasdaq Stock Market regarding whether or not it can exercise discretionary voting power for any particular proposal if the broker has not received voting instructions from you. Brokers have the authority to vote shares for which their customers do not provide voting instructions on certain “routine” matters. A broker non-vote occurs when a nominee who holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the owner of the shares. Broker non-votes are included in the calculation of the number of votes considered to be present at the meeting for purposes of determining the presence of a quorum. |
Proposal | Can Brokers Vote Absent Instructions? | Impact of Broker Non-Vote | ||
1. Election of Directors | No | None | ||
2. Ratification of Auditor | Yes | N/A | ||
3. Authorization of the Reverse Stock Split and Approval of a Corresponding Amendment to the Certificate of Incorporation to Effect the Reverse Split | No | Against |
Q: | Can I change my vote after I have delivered my proxy? |
A: | Yes. You may revoke your proxy at any time before its exercise by: |
· | delivering to the Secretary, prior to the vote at the 2016 annual meeting of stockholders, a notice of revocation of the proxy bearing a later date than your proxy; |
· | executing and delivering to the Secretary a proxy dated as of a later date than a previously executed and delivered proxy; |
· | by voting again by Internet or telephone as more fully detailed in your proxy card; or |
· | attending the 2016 annual meeting of stockholders and voting in person. |
Q: | Who can attend the 2016 Annual Meeting of Stockholders? |
A: | Only stockholders and our invited guests may attend the 2016 annual meeting of stockholders. To gain admittance, you must bring a form of personal identification to the meeting, where your name will be verified against our stockholder list. If a broker or other nominee holds your shares and you plan to attend the meeting, you should bring a recent brokerage statement showing your ownership of the shares as of the record date, a letter from the broker confirming such ownership, and a form of personal identification. Cameras, recording devices and other electronic devices will not be permitted at the meeting. |
Q: | If I plan to attend the 2016 Annual Meeting of Stockholders, should I still vote by proxy? |
A: | Yes. Casting your vote in advance does not affect your right to attend the 2016 annual meeting of stockholders. |
Q: | Where can I find voting results of the 2016 Annual Meeting of Stockholders? |
A: | We will announce the results for the proposals voted upon at the 2016 annual meeting of stockholders and publish voting results in a Form 8-K filed within four business days after the 2016 annual meeting of stockholders. |
Q: | Who should I call with other questions? |
A: | If you have additional questions about this proxy statement or the meeting or would like additional copies of this proxy statement or our annual report, please contact: Professional Diversity Network, Inc., Attention: Secretary, 801 W. Adams Street, Suite 600, Chicago, Illinois 60607, Telephone: (312) 614-0950. |
experience, skills and qualities to fully perform his or her duties as a director and contribute to our success. Our directors were nominated because each is of high ethical character, highly accomplished in his or her field with superior credentials and recognition, has the ability to exercise sound business judgment, and is able to dedicate sufficient time to fulfilling his or her obligations as a director. We believe that our nominees as a group complement each other and each of their respective experiences, skills and qualities. Each director’s principal occupation and other pertinent information about particular experience, qualifications, attributes and skills that led the Board to conclude that such person should serve as a director, appears below.
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Name | Age | Position | ||
55 | ||||
Director | ||||
Star Jones | President and Director | |||
Stephen Pemberton | ||||
Director | ||||
Andrea Sáenz | Director | |||
David Schramm | 67 | Director |
Set forth below is the name
James Kirschbusiness of the NAPW division.
Donna Brazile has been a member of the Board since September 2014 and is a veteran Democratic Party political strategist, adjunct professor, author, syndicated columnist, television political commentator, Vice Chair of Voter Registration and Participation at the Democratic National Committee and former interim NationalDirectors of Lawson Products, Inc., where he serves as Chair of the Democratic National Committee, as well as the former chair of the DNC’s Voting Rights Institute. Ms. Brazile worked on every presidential campaign from 1976 through 2000, when she became the first African American to manage a presidential campaign. Since 2000, Ms. Brazile has lectured at over 150 colleges and universities across the country on such topics asInspiring Civility in American Politics, Race Relations in the Age of Obama,Why Diversity Matters andWomen in American Politics. Author of the best-selling memoirCooking with Grease: Stirring the Pots in American Politics, Ms. Brazile has served as an adjunct professor at Georgetown University since 2012, a syndicated newspaper columnist for Universal
Uclick, a columnist forMs. magazine andO, the Oprah Magazine, an on-air contributor to CNN and ABC, where she regularly appears on ABC’sThis Week. Since 2009, she has been on the board of the National Democratic Institute (NDI), National Institute for Civil Discourse and the Joint Center for Political and Economic Studies. Ms. Brazile is the proud recipient of honorary doctorate degrees from Louisiana State University, North Carolina A&T State University, Thomas Jefferson University, Grambling University, Northeastern Illinois University and Xavier University of Louisiana, the only historically Black Catholic institution of higher education in the United States. Ms. Brazile is also a former member of Presidential Life Insurance Company. Ms. Brazile is founder and has been managing director of Brazile & Associates LLC, a general consulting, grassroots advocacy and training firm based in Washington, D.C. from 2002 to present. We believe that Ms. Brazile is a valuable asset to the Board because she brings a high degree of knowledge and experience with the factors that drive diversity hiring in both the public and private sectors, and has stood apart for many years as a thought leader in this area.
Barry S. Feierstein has been a director, chairman of our compensation committee and a member of our audit and nominating and corporate governance committees since the consummation of our initial public offering in March 2013. He was employed at the University of Phoenix, an online institution of higher learning and a wholly owned subsidiaryas Chair of the Apollo Group from 2010 until 2013, where he served initially as Executive Vice President, Workforce Solutions and then as Chief Business Operating Officer beginning in 2011. Beginning in December 2013 he transitioned to the Apollo Group where he served as the Chief Commercial Officer until September 2014, after which time he has been self-employedFinancial Strategies Committee. Mr. Hillman also serves as a business management consultant. Prior to that, he servedTrustee of Adelphia Recovery Trust. He serves as Executive Vice President of Sales & Marketing for Sallie Mae, a student loan origination and service company, from December 2007 to November 2009, and Senior Vice President of Private Credit Lending at Sallie Mae from January 2007 to December 2007, and Private Credit Strategy Executive from April 2006 to December 2006. Mr. Feierstein graduated with a B.A. in Economics and History from Tufts University and earned an M.B.A. from Harvard Business School. Mr. Feierstein has expertise in online marketing, with a specific concentration in online education and marketing. We believe his ability to analyze complex Internet marketing strategies and experience in connecting education to careers is an asset to the Board.
Star Jones has been a member of the audit committee of each of the aforementioned boards. Mr. Hillman is a certified public accountant and former audit partner with Ernst & Young, LLP. Mr. Hillman’s experience as a chief executive officer, chief financial officer and director of other public U.S. and international companies and as a former audit partner of an international accounting firm provides valuable insights to our Board.
Matthew B. Proman has been a member of the Board since September 2014 and founded NAPW in October 2007 and served as the Chairman and Chief Executive Officer of NAPW’s predecessor company until it was merged with a subsidiary of the Company. Mr. Proman’s “hands-on,” entrepreneurial approach at the Company’s NAPW subsidiary includes his day-to-day operational leadership of NAPW’s sales, technology and marketing functions. Mr. Proman previously founded and led Cambridge Publishing Co., a publishing company specializing in business-to-business and business-to-consumer networking, from 2002 to 2007. Mr. Proman also devotes considerable time to a variety of charities such as Mount Sinai Hospital in New York City, the National Diabetes Foundation and the Jack Martin Foundation for Terminally Ill Children. Mr. Proman brings extensive direct mail marketing industry knowledge to the Company and a deep background in business-to-business, membership services and career development networking. His previous service as Chairman and Chief Executive Officer of NAPW’s predecessor company creates a critical link between the Board and the NAPW business.
began her social sector career leading community based adult education and workforce development at Congreso de Latinos Unidos in Philadelphia. She holds a Bachelor’s degree in Latin American Studies from Scripps College and a Master’s degree in government administration from the University of Pennsylvania. Andrea is from Quito, Ecuador and grew up in Los Angeles. She was a 2010 Broad Resident and a 2008 Leadership Greater Chicago Fellow. We believe that Andrea is a valuable addition to our Board because she brings to us critical experience as an accomplished leader in the field of professional and educational advancement with expertise in educational and career access for minorities, with particular experience in the not-for-profit and government sectors.
Randi Zuckerbergminorities.
In order to be electedadvisor to the Board each nominee must receiveof Directors of Maxwell Technologies, Inc., a pluralitydeveloper, manufacturer and marketer of the votingenergy storage and power delivery products for transportation, industrial, information technology and other applications and microelectronic products for space and satellite applications. From 2007 until 2013, Mr. Schramm was President and CEO of the Common Stock present in person or represented by proxy at the Annual Meeting. Stockholders may only vote for or withhold their votes for the electionMaxwell Technologies, Inc. From 2001 to 2006, he was president and chief executive officer of the nomineesArrowhead Products Corp., a leading supplier of specialty systems to the Board. Votes that are withheldaerospace and broker non-votes, if any, will be counted for purposesautomotive industries. Previously, he spent the bulk of determining the presence or absencehis business career in a series of a quorum. Votes that are withheld will be considered votes cast but abstentionssenior management and broker non-votes will have no effect on the election of directors. Unless instructions to the contrary are specified, as permitted by applicable law and the rules of the Nasdaq Stock Market, the proxy holders will vote the proxies received by them “FOR” each of the director nominees.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES AS DIRECTORS.
The Board has constituted an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.
Audit Committee. The Audit Committee was established for the purpose of overseeing the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. The Audit Committee met on five occasions in 2014 and operates under a charter approved by the Board. The Audit Committee’s primary functions are:
The Audit Committee currently consists of Barry Feierstein, Daniel Marovitz and Stephen Pemberton. The Audit Committee meets periodically with the Company’s independent registered public accounting firm, both with and without management present. The Board has determined thatGeneral Motors. Mr. Marovitz is an “audit committee financial expert” within the meaning of Item 407 of Regulation S-K under the Exchange Act. A copy of the Audit Committee charter is posted and available on the Corporate Governance link of the Investor Relations section of the Company’s website,www.prodivnet.com. Information on the Company’s website is not incorporated by reference in this proxy statement.
Compensation Committee. The Compensation Committee, which met on two occasions in 2014 and operates under a charter approved by the Board, is responsible for, among other things:
The Compensation Committee currently consists of Barry Feierstein, Daniel Marovitz and Stephen Pemberton. The Compensation Committee also has authority to delegate its responsibilities to a subcommittee. The Company and the Compensation Committee may, from time to time, directly retain the services of consultants or other experts to assist the Company or the Compensation Committee, as the case may be, in connection with executive compensationboard oversight matters. However, during the fiscal year ended December 31, 2014, neither the Company nor the Compensation Committee engaged a compensation consultant.
A copy of the Compensation Committee charter is posted and available on the Corporate Governance link of the Investor Relations section of the Company’s website,www.prodivnet.com. Information on the Company’s website is not incorporated by reference in this proxy statement.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee, which met on two occasions in 2014 and operates under a charter approved by the Board, is responsible for, among other things:
The Nominating and Corporate Governance Committee currently consists of Barry Feierstein, Daniel Marovitz and Stephen Pemberton. A copy of the charter of the Nominating and Corporate Governance Committee is posted and available on the Corporate Governance link of the Investor Relations section of the Company’s website,www.prodivnet.com. Information on the Company’s website is not incorporated by reference in this proxy statement.
During the fiscal year ended December 31, 2014, the Board held a total of 10 meetings. Each member of the Board, other than Stephen Pemberton, attended 80% or more of the meetings of the Board and of the committees of which the director was a member. The Company does not have a policy regarding director attendance at Annual Meetings of stockholders, however, all directors are strongly encouraged to attend.
Barry Feierstein, Daniel MarovitzRelated Party Transactions
The Board does not have a policy requiring that the roles ofJames Kirsch from Chief Executive Officer and Chairman of the Board be separate.to Executive Chairman and (ii) the appointment of Katherine Butkevich as our new CEO, we separated the offices of Chairman of the Board and Chief Executive Officer. The Board believes thatCEO is responsible for the strategic direction and the day-to-day leadership and performance of the Company, and its stockholders benefit when the Board is free to determine the most appropriate leadership structure in light of the experience, skills and availability of directors and the Chief Executive Officer as well as other circumstances. Currently, Mr. Kirsch serves aswhile the Chairman of the Board provides guidance to the CEO, sets the agenda for the Board meetings and presides over meetings of the Chief Executive Officer. TheBoard. At this time, the Board believes thisthat the current leadership structure is the most appropriatebest structure for the Company at this time becauseas it makes the best use of the experience, skills and availability of Mr. Kirsch. Additionally, because six of the Company’s nine Board members have been determined byenables the Board to be “independent,”continue to benefit from Mr. Kirsch’s experience, skills, expertise and knowledge of the Company and the industry.
The Company faces numerous risks more fully described in the Company’s annual and quarterly reports filed with the SEC. The Company’s management bears responsibility for the day-to-day management of risks the Company faces and for communicating the most material risks to the Board and its committees. The Board, as a whole and through its committees, is responsible for company-wide oversight of risk management. The Board and its committees perform their risk management function principally through the receipt of regular reports from management and discussions with management regarding risk assessment and risk management. In its risk oversight role, the Board is responsible for satisfying itself that the risk management processes described and implemented by management are adequate and functioning as designed.
The Board has adopted athree standing Committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. During 2015, the Audit Committee met on four occasions, the Compensation Committee met on two occasions and the Nominating and Corporate Governance Committee Charter,met on two occasions. Each director, other than Donna Brazile, Stephen Pemberton and Randi Zuckerberg, attended 75% or more of the meetings of the Board and of the committees of which includes the Company’s general director nomination policies.
was a member.
· | assisting the Board with the oversight of our financial reporting process, accounting functions and the integrity of our financial statements; |
· | reviewing and assessing of the adequacy of our internal controls over and procedures for financial reporting; |
· | the appointment, compensation, retention and oversight of our independent auditor; |
· | reviewing and discussing the relationships we have with our independent auditor in order to consider and evaluate the independent auditor’s continued independence; |
· | ensuring the rotation of the lead audit partner and other significant audit partners; |
· | assisting the Board with risk management oversight; |
· | reviewing and approving all related-party transactions; and |
· | reviewing procedures designed to assess, monitor and manage compliance with laws and regulations and our code of business conduct and ethics. |
· | reviewing and approving on an annual basis corporate goals and objectives for CEO compensation, evaluating the CEO’s performance in light of those goals and objectives, and recommending to the Board the CEO’s overall compensation levels based on this evaluation; |
· | reviewing and approving on an annual basis the annual base salaries and annual incentive opportunities of the CEO and the other executive officers; |
· | reviewing and approving periodically all other cash-based and equity-based incentive awards and opportunities of the CEO and the other executive officers; |
· | reviewing and approving any employment agreements and severance arrangements, change-in-control agreements and change-in-control provisions affecting any elements of compensation and benefits of the CEO and the other executive officers; |
· | providing guidance to senior management on significant issues affecting compensation philosophy or policy; and |
· | conducting a risk assessment of our compensation policies and practices. |
· | leading the search for individuals qualified to serve as members of the Board and conducting the appropriate inquiries with respect to such persons; |
· | evaluating the size and composition of the Board and its committees and recommending any changes to the Board; |
· | reviewing the qualifications of, and making recommendations regarding, director nominations submitted to the Company by stockholders; |
· | reviewing the Board’s committee structure and recommending to the Board for its approval directors to serve as members of each committee; and |
· | reviewing and recommending committee slates annually and recommending additional committee members to fill vacancies as needed. |
The Nominating and Corporate Governance Committee may use multiple sources for identifying director candidates, including its own contacts and referrals from other directors, members of management, the Company’s advisors and executive search firms. The Nominating and Corporate Governance Committee will also consider director candidates recommended by stockholders in accordance with the procedures governing such recommendations in the Company’s bylaws and will evaluate such director candidates in the same manner in which it evaluates candidates recommended by other sources.
Stockholders may communicate with one or more directors or theand its committees. The Board, as a whole and through its committees, is responsible for overseeing and reviewing with management Company-wide risks and the policies and practices established to manage such risks. The Board and its committees perform their risk management function principally through the receipt of regular reports from management and discussions with management regarding risk assessment and risk management. In its risk oversight role, the Board is responsible for satisfying itself that the risk management processes described and implemented by sending written communications addressed to such person or persons to the Secretary, Professional Diversity Network, Inc., 801 W. Adams Street, Suite 600, Chicago, Illinois 60607. All communications will be compiled by the Secretarymanagement are adequate and relayed to the applicable director or directors.
We did$5,000,000, provided that the borrowings thereunder may not issue any equity securities duringexceed 75% of the fiscal year ended December 31, 2014Company’s eligible customer receivables, as determined pursuant to our directors, executive officers or holdersthe Master Credit Facility, unless otherwise approved in White Winston’s discretion. Borrowings under the Master Credit Facility bear interest at 8% per annum, subject to an increase of more than 5%700 basis points in case of our capital stock, except (i) inan event of default. As of June 30, 2016, there was $1,572,576 outstanding under the Master Credit Facility.
Please seethe other transactions contemplated by the stock purchase agreement, dated as of August 12, 2016, between the Company and CFL (the “Executive CompensationPurchase Agreement”) and waived its participation rights and board representation rights under the Board Representation Agreement in connection therewith. In consideration for the Amendment, we agreed that the Pro Rata Warrant shall be fully exercisable, notwithstanding the pro rata formula set forth in the Warrant, and paid a fee of $15,000. In addition, White Winston granted us an option to repurchase its outstanding, in-the-money Warrants following consummation of the Tender Offer on the terms set forth in the Amendment. See “Security Ownership of Certain Beneficial Owners and Management—Arrangements that May Result in a Change of Control” for more information regardingon the employment agreementsPurchase Agreement.
Additionally, at the effective time of the merger, the Company, as additional consideration, paid to Proman, in cash, $3,555,000 and issued to Proman (i) a promissory note in the original principal amount of $445,000, (ii) an option to purchase 183,000 shares of the Company’s Common Stockour common stock at a price of $3.45 per share, (iii) a warrant to purchase 50,000 shares of the Company’s Common Stockour common stock at a price of $4.00 per share and (iv) a warrant to purchase 131,250 shares of the Company’s Common Stockour common stock at a price of $10.00 per share.
Also, at the effective time of the merger, as a condition to the closing of the merger, Messrs. Proman and Wesser, Ms. Jones (collectively, the “NAPW Affiliates”) and the Company entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company, on March 31, 2015, filed an amended universal shelf registration on Form S-3 (File No. 333-201341) with the SEC providing for, among other things, the resale of the shares by the holders of shares of Common Stockcommon stock issued to them in connection with the Merger. The Company is further required to use its best efforts to keep such registration statement effective until the earlier of three years thereafter or when each of the parties to the Registration Rights Agreement (other than the Company) can sell all of his or her shares without the need for current public information or other restriction pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). Once sold by the holders under the registration statement, the shares will be freely tradeabletradable without restriction or further registrations under the Securities Act.
Additionally, under the terms of the Registration Rights Agreement, each of Messrs. Proman and Wesser and Ms. Jones (collectively, the “NAPW Affiliates”) has agreed not, without the consent of the Company, to offer to sell, sell or otherwise dispose of, or encumber any shares of the Company’s Common Stock received by such person in connection with the merger during the 12 months following the Closing Date, except under certain circumstances.
Under the terms of the Registration Rights Agreement, the Company will bear all SEC registration and filing fees, printing and mailing expenses, fees and disbursements of counsel and accountants for the Company and all expenses related to listing the shares on the NASDAQ Capital Market, while the NAPW Affiliates will bear all fees and disbursements of counsel for all underwriters, brokers and dealers engaged in connection with the distribution of such shares and any discounts, commissions and fees of such underwriters, brokers and dealers, FINRA filing fees and expenses, legal fees and disbursements and other expenses of complying with state securities or blue sky laws and the fees and disbursements of legal counsel for the NAPW Affiliates. The Registration Rights Agreement also places indemnity obligations on each of the Company, to indemnify the NAPW Affiliates under certain circumstances, and the NAPW Affiliates, to indemnify the Company under certain circumstances.
Other than as disclosed in the sections above entitled “Equity Issuances to Directors, Executive Officers and 5% Stockholders,” “Agreements with Directors and Executive Officers” and “Merger with NAPW” there are no agreements between or among the Company and any holder of more than 5% of our capital stock.
The charter of the Company’s Audit Committee sets forth the Company’s policies and procedures for the review, approval or ratification of transactions in which the Company is a participant and the amount exceeds $120,000, and in which any related person had or will have a direct or indirect material interest. The Audit Committee charter expressly states that the review and approval of such transactions is among the responsibilities of the Audit Committee, unless otherwise delegated to another committee of the Board consisting solely of independent directors. The Audit Committee is authorized to engage independent counsel and other advisers as it determines is necessary to carry out its duties, including with respect to its review of related party transactions. There are no additional policies stating the standards required to be met for such transactions to be approved; accordingly, the Audit Committee will act within its discretion, subject to its fiduciary and other duties, in deciding whether to approve any related party transaction.
The Company and the Compensation Committee may, from time to time, directly retain the services of consultants and other experts to assist the Company or the Compensation Committee in connection with executive compensation matters. During the fiscal year ended December 31, 2014, the Company did not engage the services of a compensation consultant.
The amounts shown in the Stock Awards column reflect unique restricted stock awards granted to Ms. Jones and Mr. Wesser in connection with our merger with NAPW. These awards represent a portion of the total amount of merger consideration that Mr. Proman requested be paid to Ms. Jones and Mr. Wesser in recognition of the considerable services they provided to NAPW. Due to the fact that neither Ms. Jones nor Mr. Wesser were shareholders in NAPW, these restricted stock awards are considered compensatory and are shown in the table below. As these awards relate to the Company’s merger with NAPW, the Company does not anticipate making similar sized equity awards to its executive officers in the future.
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Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | All Other Compensation ($)(1) | Total ($) | ||||||||||||||||||
James Kirsch, Chairman and Chief Executive Officer | 2014 | 256,250 | 50,000 | — | 9,504 | 315,754 | ||||||||||||||||||
2013 | 200,000 | — | — | 17,383 | (2) | 217,383 | ||||||||||||||||||
Star Jones, President, Chief Development Officer and National Spokesperson | 2014 | 80,769 | — | 5,361,347 | (3)(4) | 21,405 | 5,460,962 | |||||||||||||||||
2013 | — | — | — | — | — | |||||||||||||||||||
Christopher Wesser, Executive Vice President and General Counsel | 2014 | 67,308 | — | 1,340,337 | (3)(5) | 1,993 | 1,407,645 | |||||||||||||||||
2013 | — | — | — | — | — |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||
James Kirsch, | 2015 | $ | 327,438 | $ | 100,000 | — | $ | 9,504 | (2) | $ | 436,942 | |||||||||||
Chairman and Chief Executive Officer(1) | 2014 | $ | 256,250 | $ | 50,000 | — | $ | 9,504 | $ | 315,754 | ||||||||||||
Star Jones, | 2015 | $ | 300,000 | $ | — | — | $ | 24,895 | (2) | $ | 324,895 | |||||||||||
President, Chief | 2014 | $ | 80,769 | $ | — | $ | 5,361,347 | $ | 21,405 | $ | 5,463,521 | |||||||||||
Development Officer | ||||||||||||||||||||||
David Mecklenburger | 2015 | $ | 251,875 | $ | 50,000 | $ | — | $ | — | $ | 301,875 | |||||||||||
Chief Financial Officer | ||||||||||||||||||||||
Matthew Proman | 2015 | $ | 153,365 | $ | — | $ | — | $ | 221,750 | (2) | $ | 375,115 | ||||||||||
Former Chief Operating Officer |
(1) |
(2) | All other compensation consists |
(3) |
Effective September 24, 2014, we entered into new with Named Executive Officers
reduced.
restrictive covenant period may not extend past the severance period (as described below). The Employment Agreements also contain customary confidentiality, work product and return of Company property covenants.
We were formerly parties to an employment agreement
On December 30, 2014, Ms. Jones andare paid by Mr. Wesser each entered into a restricted stock agreement (together,Proman under the “Restricted Stock Agreements”) withConsolidated Omnibus Budget Reconciliation Act (COBRA) during the Company with an effective date of September 24, 2014,nine-month period following the closing date of the Company’s merger transaction with NAPW, Inc. As discussed above,Separation Agreement. Mr. Proman released and discharged the sharesCompany and its officers, directors, employees and agents from any and all claims, whether now known or unknown, which Mr. Proman then had or had had based upon or arising out of Common Stockany matter occurring or existing at any time up to and including the date of the Separation Agreement. The Company awardedlikewise released and discharged Mr. Proman from any and all claims, whether then known or unknown, which the Company then had or had had based upon or arising out of any matter occurring or existing at any time up to Ms. Jones and Mr. Wesser pursuant toincluding the Restricted Stock Agreements that are subject to certain vesting conditions (such shares, the “Restricted Stock”), represent a portiondate of the total amount of merger considerationSeparation Agreement. In addition, the parties agreed that Mr. Proman requested be paid(i) the warrant to Ms. Jones and Mr. Wesser in recognition of the considerable services they provided to NAPW. Due to the fact that neither Ms. Jones nor Mr. Wesser were shareholders in NAPW, these restricted stock awards are considered compensatory.
The Restricted Stock Agreements are substantially similar to one another and govern the grant to Ms. Jones of 959,096purchase 50,000 shares of the Company’s Common Stock andcommon stock for $4.00 per share, (ii) the warrant to Mr. Wesser of 239,774purchase 131,250 shares of the Company’s Common Stock. Each Restricted Stock Agreement provides that the applicable named executive officer may become vested in his or hercommon stock for $10.00 per share and (iii) options to purchase 183,000 shares of Restricted Stock accordingthe Company’s common stock at $3.45 per share, received by Mr. Proman in connection with the merger with NAPW, shall expire three calendar years from the date of the Separation Agreement.
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Stock Awards | ||||||||
Name | Number of shares or units of stock that have not vested (#)(1) | Market value of shares of units of stock that have not vested ($) | ||||||
James Kirsch | — | — | ||||||
Star Jones | 959,096 | $ | 5,361,347 | |||||
Christopher Wesser | 239,774 | $ | 1,340,337 |
Option Awards | Stock Awards | |||||||||||||||||||||
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 or units that have not vested | ||||||||||||||||
James Kirsch | — | — | — | — | — | |||||||||||||||||
Star Jones | — | — | — | 639,397 | (1) | $ | 319,699 | (2) | ||||||||||||||
David Mecklenburger | 10,000 | 20,000 | (3) | $ | 3.45 | 3/31/2024 | — | — | ||||||||||||||
Matthew Proman | 183,000 | 0 | $ | 3.45 | 9/24/2019 | — | — |
(1) | Represents unvested portion of an award of 959,096 shares of restricted stock |
For
(2) | The market value of the unvested portion of the restricted stock is calculated by multiplying the closing price of the Company’s common stock on December 31, 2015 ($0.50) by the number of unvested restricted stock. |
(3) | The stock options awarded pursuant to this stock option grant vest and become exercisable in three equal installments on each anniversary of the grant date (March 31, 2014). |
The following table provides information regarding the compensation earned by the directors who served on our Board during the year ended December 31, 2014. $25,000 and $10,000, respectively.
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Name | Fees Earned or Paid in Cash ($) | All Other Compensation ($) | Total ($) | |||||||||
Donna Brazile | 2,000 | — | 2,000 | |||||||||
Daniel Marovitz | 11,500 | — | — | |||||||||
Stephen Pemberton | 8,500 | — | 5,000 | |||||||||
Barry Feierstein | 9,500 | 6,350 | (1) | 15,850 | ||||||||
Andrea Sáenz | 5,500 | — | 5,500 | |||||||||
Randi Zuckerberg | 1,000 | — | 1,000 | |||||||||
Total | 38,000 | 6,350 | 29,350 |
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(6) | All Other Compensation ($) | Total ($) | |||||||||||||||
Donna Brazile | $ | 3,000 | (1) | $ | 9,541 | $ | - | $ | 12,541 | ||||||||||
Daniel Marovitz | $ | 16,000 | (2) | $ | 13,357 | $ | - | $ | 29,357 | ||||||||||
Stephen Pemberton | $ | 8,000 | (3) | $ | 9,541 | $ | - | $ | 17,541 | ||||||||||
Barry Feierstein | $ | 11,375 | (4) | $ | 9,922 | $ | 83,400 | (7) | $ | 104,697 | |||||||||
Andrea Sáenz | $ | 6,125 | (5) | $ | 9,541 | $ | - | $ | 15,666 | ||||||||||
Randi Zuckerberg | $ | 2,000 | (1) | $ | 9,541 | $ | - | $ | 11,541 |
(1) |
(2) |
(3) | Represents Board and committee meeting fees earned during 2015 as well as fees earned for Mr. Pemberton’s service as a member of the Compensation and Governance Committees. |
(4) | Represents Board and committee meeting fees earned during 2015 as well as fees earned for Mr. Feierstein’s service as a member of the Audit and Governance Committees through August 2015 and for his services as a Chair of the Compensation committee through August 2015. Mr. Feierstein stepped down from all committees in September 2015. |
(5) | Represents Board and committee meeting fees earned during 2015 as well as fees earned for Ms. Sáenz’s service as a member of the Audit and Compensation Committees. |
(6) | Represents the grant date fair value of the stock options awarded to each non-employee director on March 23, 2015 under FASB ASC Topic 718. Please refer to Note 13 of our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as amended, for the assumptions utilized in calculating fair value. |
Name | Aggregate Number of Unexercised Stock Options Outstanding at December 31, 2015 | |||
Donna Brazile | 5,102 | |||
Daniel Marovitz | 122,939 | |||
Stephen Pemberton | 8,435 | |||
Barry Feierstein | 8,639 | |||
Andrea Sáenz | 8,435 | |||
Randi Zuckerberg | 5,102 |
(7) | Represents consulting fees paid to Mr. Feierstein |
The general policy of our Board is that compensation for non-employee directors should be a mix of cash and equity-based compensation. We do not pay management directors for Board service in addition to their regular employee compensation. Our directors are also reimbursed for travel expenses associated with attendance at Board meetings. There were no reimbursements for travel expenses for the fiscal year ended December 31, 2014.
The Professional Diversity Network, Inc. 2013 Equity Compensation Plan (the “Plan”) has authorized for issuance 500,000 sharesTable of Common Stock of the Company, of which 141,143 shares remain available for future grants as of April 24, 2015. You are being asked to approve Amendment No. 1 to the Plan (the “2015 Amendment”), which amends the Plan to increase the total number of shares reserved for grants of awards under the Plan by 1.3 million shares to a total of 1.8 million shares. A copy of the Plan and the 2015 Amendment are attached as Appendix A and Appendix B hereto, respectively. Our Board believes that the approval of the 2015 Amendment to the Plan is in the best interests of the Company and its stockholders because it will provide the Company an adequate number of shares reserved for issuance under the Plan to grant as awards designed to attract, motivate and retain qualified individuals who are essential to our success.
The Plan is a key component of our incentive compensation program. The Company put the Plan in place for such purposes in 2013 and has previously been approved by the stockholders. The Plan is designed to further our long term stability and financial success by attracting, retaining and motivating our directors, officers, employees and consultants through the use of incentives and to further align the interests of such persons with those of the stockholders of the Company by providing for or increasing the proprietary interest of such persons in the Company. The Plan includes a mechanism to provide incentive awards to Participants through the use of stock options (both incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and annual incentive awards. Those persons who receive incentive awards under the Plan are referred to as “Participants.” The key purpose of the Company’s equity compensation program is to incentivize our key employees with stock options because we believe they are an effective tool to motivate such employees to focus on shareholder value.
This following summary is subject to the more complete description of the terms and conditions of the Plan contained the full text of the Plan and the 2015 Amendment, which are attached hereto as Appendix A and Appendix B, respectively.
The Plan was originally effective March 8, 2013. The 2015 Amendment was adopted in April 2015, subject to and effective upon the approval of our stockholders. If not sooner terminated, the Plan will terminate on March 8, 2023. Any awards made prior to the date the Plan is terminated will continue in effect pursuant to the terms of the award and the Plan.
Any person who is an employee of the Company or any affiliate, a member of the Board of Directors of the Company, or a consultant, advisor or independent contractor who provides services to the Company or any affiliate, can be considered by the Committee for grants of awards under the Plan. The Committee has sole and complete discretion to determine the Participants who receive awards pursuant to the Plan and to determine the type and terms and conditions of any award.
The Plan is administered and interpreted by the Compensation Committee of the Board of Directors (the “Committee”). The Committee has the authority to take any and all actions necessary or desirable in its sole discretion, in connection with the administration of the Plan. In connection with the administration, the Committee may:
All decisions, determinations and interpretations made by the Committee are final and binding on all eligible persons and Participants in the Plan.
If this Proposal No. 2 is approved, the number of common shares of the Company available for issuance under the Plan will be 1.3 million shares plus the total number of shares remaining available for issuance under the Plan as of the effective date of the 2015 Amendment (the “Previously Reserved Shares”) and subject to the share utilization provisions for forfeited awards described below. The Previously Reserved Shares were authorized by the Company’s stockholders for reservation under the Plan.
As of April 24, 2015:
Shares of Common Stock covered by an incentive award shall only be counted as used to the extent shares are actually delivered. If the outstanding shares of Common Stock shall be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, recapitalization, reorganization, or other corporate event, the Committee may, appropriately and equitably adjust the number and kind of shares which are subject to the Plan or any awards so as to maintain the proportionate number of shares without changing the aggregate exercise or settlement price.
The Company’s Common Stock is traded on the NASDAQ Global Market. The last reported sales price of the Company’s Common Stock on April 22, 2015 was $3.00 per share.
Any award will be governed by the terms of the Plan and an award agreement or other documents, if any, between the Company and the Participant receiving the award.
The Committee may grant an incentive stock option at its discretion at any time or from time to time or automatically upon the occurrence of an event. Any incentive stock option shall be granted pursuant to one or more award documents which will contain provisions determined by the Committee including the number of shares, the purchase price (not less than fair market value on the grant date, though greater for certain shareholders (see below)), the term of the option, any vesting and restrictions on transfer, among other
restrictions. An incentive stock option granted to a Participant under this Plan is a right to purchase shares of the Company’s Common Stock. Incentive stock options may be granted only to employees. If certain terms and conditions are met by the Company and the Participant, an incentive stock option is given favorable tax treatment to the Participant under the Internal Revenue Code of 1986, as amended (the “Code”). See the “Federal Income Tax Consequences” section below for a discussion of the difference in tax treatment.
In order to receive the favorable tax treatment, the exercise provisions for an incentive stock option must be no more favorable than the following terms and conditions:
The Committee may grant a nonqualified stock option at its discretion at any time or from time to time or automatically upon the occurrence of an event. Any nonqualified stock option shall be granted pursuant to one or more award documents which will contain provisions determined by the Committee including without limitation, the number of shares, the purchase price (not less than fair market value on the grant date), the term of the option, any vesting and restrictions on transfer. A nonqualified stock option granted to a Participant under this Plan is a right to purchase shares of the Company’s Common Stock. Nonqualified stock options may be granted to employees, members of the Board of Directors, consultants and other service providers to the Company or any affiliates. Unlike an incentive stock option, a nonqualified stock option is not given favorable tax treatment under the Code. See the “Federal Income Tax Consequences” section below for a discussion of the difference in tax treatment.
The Committee may grant an award of stock appreciation rights (“SARs”) at its discretion at any time or from time to time. SARs under the Plan may be freestanding or tandem SARs, or any combination of the two. Each SAR award shall be evidenced by an award agreement and shall specify the grant price, the term of the SAR, and other provisions, including restrictions, determined by the Committee. The Committee shall have discretion in determining the number of SARs to be granted to each Participant, and determining the terms and conditions of the SARs. The grant price for a freestanding SAR shall be determined by the Committee, but shall not be less than the fair market value of a share of the Company’s Common Stock on the grant date. The grant price of a tandem SAR shall be equal to the option price of the option to which it relates. Freestanding SARs may be exercised upon whatever terms and conditions the Committee imposes, while tandem SARs may only be exercised with respect to shares for which their related options are then exercisable. At the discretion of the Committee, payment upon SAR exercise may be in cash, shares or any combination of the two, or in another manner approved by the Committee.
The Committee may grant restricted stock or Restricted Stock Units (“RSUs”) to Participants in such amounts as it determines from time to time. RSUs are similar to restricted stock, except no shares are actually awarded to the Participant on the grant date. Each restricted stock or RSU grant shall be evidenced by an award agreement that specifies the restriction periods, the number of shares or restricted stock or the number of RSUs granted, and other provisions and restrictions determined by the Committee, including, a requirement that Participants pay a purchase price for each share of restricted stock or RSU, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting after the attainment of performance goals and time based restrictions alone, among other restrictions.
The Company may retain certificates representing shares of restricted stock until all restrictions applicable to the shares lapse. RSUs shall be paid in shares, unless otherwise provided in an award agreement. Unless otherwise determined by the Committee, to the extent permitted or required by law, Participants holding restricted stock may be granted voting rights even though the shares are subject to restrictions. Participants shall have no voting rights with respect to RSUs.
The Committee may grant other equity-based awards in such amounts and subject to such terms and conditions determined by the Committee. Such awards might be paid in cash, based on share value, or they may involve the transfer of shares to Participants. The Committee may establish performance goals for such awards.
The Committee may designate employees who are eligible to receive a monetary payment in any Plan year based on a percentage of an incentive pool determined by reference to one or more performance measures. The Committee shall allocate an incentive pool percentage to each designated employee for each Plan year, and the sum of the incentive pool percentages for all employees cannot exceed 100% of the total pool. An employee’s allocated portion of the incentive pool is subject to adjustment downward in the sole discretion of the Committee, though the allocated portion may not be increased, including as a result of any reduction in another employee’s allocated portion.
In the event the Committee desires for the incentive award to satisfy the requirements of Section 162(m) of the Code in order to guarantee that the Company may deduct such payments, then the performance criteria shall be measured based on one or more of the performance goals described in the Plan. Examples of performance goals described in the plan include earnings per share, return on equity and total shareholder return, among others.
The Company shall have the power and right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.
With respect to withholding required as the result of a taxable event arising as a result of an incentive award granted under the Plan, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement in whole or in part, by having the Company withhold shares of Common Stock having a fair market value on the date of withholding equal to the minimum statutory total tax that could be imposed on the transaction.
Upon a dissolution of the Company, a merger or consolidation involving the Company, a sale of substantially all of the assets of the Company, a change in majority ownership of the Company or another transaction or event resulting in a change in control of the Company, the Committee may take such actions with respect to the Plan and awards granted under the Plan as it deems appropriate and the documentation regarding such a transaction may mandate the treatment of such awards.
If provided in an award agreement or otherwise determined by the Committee, upon a Change in Control, all then-outstanding options and stock appreciation rights shall become fully vested and exercisable, and all other then-outstanding awards shall vest in full and be free of restrictions. The Committee will not be required to treat all awards similarly in a Change in Control.
The Committee may terminate the Plan and any incentive award in whole or in part at any time subject to certain restrictions. If not sooner terminated, the Plan will terminate on March 8, 2023. Any awards made prior to the date the Plan is terminated will continue in effect pursuant to the terms of the award and the Plan.
The Board of Directors may amend the Plan and any document governing any award at any time. The Company’s stockholders must approve any amendment by the Board which increases the maximum number of shares of Common Stock for which awards may be granted under the Plan or other material changes that require stockholder approval under the law, regulations or applicable stock exchange rules. Any amendment of the Plan or any document governing any award by the Board shall not impair the rights of any award holder without such award holder’s consent, unless the amendment is in connection with compliance with Section 409A of the Code, or otherwise required to satisfy any law or regulation or to meet the requirements of applicable stock exchange rules.
Rights under the Plan are not transferable, except by will or the laws of descent and distribution, and during the Participant’s life are exercisable only by the Participant.
It is not possible at this time to determine the benefits that will be received by executive officers or other employees, directors or consultants of the Company under the Plan if it is approved by our stockholders. Such benefits will depend on future actions of the Committee and on the fair market value of the shares of Common Stock of the Company at various future dates and the extent to which performance goals set by the Compensation Committee are met.
The following is a brief description of the federal income tax treatment that will generally apply to awards granted under the Plan, based on federal income tax laws in effect on the date hereof. The exact federal income tax treatment of awards will depend on the specific nature of the award. Such an award may, depending on the conditions applicable to the award, be taxable as an option, as restricted or unrestricted stock, as a cash payment or otherwise. Recipients of options or other awards should not rely on this discussion for individual tax advice, as each recipient’s situation and the tax consequences of any particular award will vary depending on the specific facts and circumstances involved. Each recipient is advised to consult his or her own tax advisor for particular federal, as well as state and local, income and any other tax advice.
As the holder of an option, a Participant will not recognize any taxable income at the time an option is granted to him or her and the Company will not be entitled to a federal income tax deduction at that time unless an option is granted at an exercise price below fair market value. If an option is granted below fair market value, the grant may be treated as a deferral of income pursuant to Section 409A of the Code and the difference between fair market value and the option exercise price would be treated as deferred income which would be taxed as current income for income tax purposes as well as be subject to a 20% excise tax. Currently the Plan does not permit the grant of an option at below fair market value of the underlying share on the grant date.
No ordinary income will be recognized by the holder of an incentive stock option at the time of exercise. The excess of the fair market value of the shares of Common Stock at the time of exercise over the aggregate option exercise price will be an adjustment to alternative minimum taxable income for purposes of the federal “alternative minimum tax” at the date of exercise. If the option holder holds the shares of Common Stock purchased for not less than two years after the date the incentive stock option was granted and not less than one year after the acquisition of such shares of Common Stock, the difference between the aggregate option price and the amount realized upon disposition of the shares of Common Stock will constitute a long term capital gain or loss, as the case may be, and the Company will not be entitled to a federal income tax deduction.
If the shares of Common Stock acquired upon exercise of an incentive stock option are disposed of in a sale, exchange or other “disqualifying disposition” within two years after the date of grant or within one year after the date of exercise, the option holder will realize taxable ordinary income in an amount equal to the lesser of (i) the excess of the fair market value of the shares of Common Stock purchased at the time of exercise over the aggregate option exercise price or (ii) the excess of the amount realized upon disposition of such shares of Common Stock over the option exercise price the Company will be entitled to a federal income tax deduction equal to the amount of ordinary income recognized by the option holder. The excess, if any, of the amount realized upon disposition of the shares of Common Stock in a disqualifying disposition over the fair market value of the shares of Common Stock at the time of exercise will constitute capital gain.
Taxable ordinary income will be recognized by the holder of an option that does not qualify as an incentive stock option and is therefore a nonqualified stock option at the time of exercise, in an amount equal to the excess of the fair market value of the shares of Common Stock purchased at the time of such exercise over the aggregate option exercise price the Company will be entitled to a federal income tax deduction equal to that amount. The option holder will generally recognize a taxable capital gain or loss based upon the difference between the per share fair market value at the time of exercise and the per share selling price at the time of a subsequent sale of the shares. The capital gain or loss will be short term or long term depending on the period of time the shares are held by the option holder following exercise.
SARs will not be subject to taxation upon the date of grant or vesting. Upon exercise of the SARs, the full value of the difference between fair market value of the shares of Common Stock on the date of exercise and the fair market value of the shares of Common Stock on the grant date, or the “spread,” will be taxed at ordinary income tax rates the Company will be entitled to a federal income tax deduction equal to the amount of ordinary income recognized by the holder of SARs. To avoid potential excise taxes under Section 409A of the Code, the SARs must be limited to the increase in the fair market value of a share of Common Stock between the date of grant and the date of exercise, and should not contain any feature for the deferral of compensation.
Restricted stock grants under the Plan will generally result in ordinary income to the recipient at the time of payment except in the case of grants subject to a vesting requirement. The amount of ordinary income the recipient will be required to recognize from restricted stock grants other than those subject to a vesting requirement is equal to the amount by which the fair market value of any shares received by the recipient exceeds the purchase price, if any, paid by the recipient for such shares.
A recipient of shares pursuant to a restricted stock grant which is not substantially vested, may elect in accordance with Section 83(b) of the Code, within 30 days of the date the shares are transferred, to recognize ordinary income at the time of transfer of the shares equal to the amount by which the fair market value on the date of transfer of the shares exceeds the purchase price, if any, paid by the recipient for such shares.
A recipient of shares pursuant to a restricted stock grant which is not substantially vested who does not make an election under Section 83(b) of the Code will recognize ordinary income at the time the shares become substantially vested in an amount equal to the difference between the fair market value on the date of substantial vesting of the shares and the purchase price, if any, paid by the recipient for such shares.
The recipient’s tax basis for purposes of determining the amount of gain or loss realized in a taxable disposition of restricted stock grant shares will be equal to the amount, if any, paid for the shares plus the amount of ordinary income recognized by the recipient upon transfer or vesting, as the case may be. Any gain or loss realized by the recipient from a taxable disposition of the shares of common stock in excess of such basis generally will be taxed as short-term capital gain or loss if the disposition occurs within 12 months of the event giving rise to ordinary income (i.e., transfer or vesting) and long-term capital gain or loss if1he disposition occurs 12 months or more after such event.
Subject to the application of Section 162(m) of the Code, the Company will receive a tax deduction in the amount of the ordinary income recognized by a recipient.
A recipient of restricted stock units will not have taxable income at the time of grant. Instead, the recipient will recognize ordinary income when he or she receives payment for such units in cash or Common Stock. The Company generally will be entitled to a deduction equal in amount to the ordinary income realized by the recipient in the year paid.
Any gain or loss the recipient recognizes upon the same or exchange of shares acquired through a grant of restricted stock units generally will be treated as capital gain or loss and will be long-term or short-term depending upon whether the recipient held the shares for more than one year.
Subject to the application of Section 162(m) of the Code, the Company will receive a tax deduction in the amount of the ordinary income recognized by a recipient.
An eligible person receiving an incentive award will not recognize income, and the Company will not be allowed a deduction at the time the award is granted. When the recipient receives payment in cash, the amount of cash received will be ordinary income to the recipient. Subject to the application of Section 162(m) of the Code, the Company will receive a tax deduction in the amount of the ordinary income recognized by a recipient.
Special rules will apply in cases where a recipient of an award pays the exercise or purchase price of the award or any applicable withholding tax obligations under the Plan by delivering previously owned shares of Common Stock or by reducing the number of shares of Common Stock otherwise issuable pursuant to the award. The surrender or withholding of such shares of Common Stock will in certain circumstances result in the recognition of income with respect to such shares of Common Stock or a carry-over basis in the shares of Common Stock acquired, and may constitute a disqualifying disposition with respect to incentive stock option shares.
In the event of a change in control and depending on the individual circumstances of the recipient, certain amounts with respect to such awards may constitute “excess parachute payments” under the “golden parachute” provisions of the Code. Pursuant to these provisions, a recipient will be subject to a 20% excise tax on any excess parachute payments and the Company will be denied any deduction with respect to such payments. Participants in the Plan should consult their tax advisors as to whether accelerated vesting of an award in connection with a change in control would give rise to an excess parachute payment.
Section 409A of the Code sets forth the rules for deferral of compensation and describes situations where compensation is deemed deferred. It is possible that certain awards made under the Plan, in particular when the award is not subject to a substantial risk of forfeiture, will be deemed deferred compensation under Code Section 409A. If that is the result, then the recipient of the award may be subject to income tax and a 20% excise tax upon the grant of the award.
No withholding taxes are payable in connection with the grant of any stock option or the exercise of an incentive stock option. However, withholding taxes must be paid at the time of exercise of any nonqualified stock option. In respect of all other awards, withholding taxes must be paid whenever the participant recognizes income for tax purposes.
The affirmative vote of a majority of the voting power of Common Stock present in person or by proxy and entitled to vote at the Annual Meeting and on the proposal is required to approve the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” PROPOSAL 2.
The Audit Committee of the Board has appointed Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015.
The Board is submitting the selection of Marcum LLP to the stockholders for ratification as a matter of good corporate practice and will reconsider whether to retain Marcum LLP if the stockholders fail to ratify the Audit Committee’s selection. In addition, even if the stockholders ratify the selection of Marcum LLP, the Audit Committee may in its discretion appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that a change is in the best interests of the Company. Representatives of Marcum LLP are expected to attend the Annual Meeting to make such statements as they may desire and respond to appropriate questions that may be asked by stockholders.
The Audit Committee and the Board recommend that you ratify this appointment.
The affirmative vote of a majority of the voting power of Common Stock present in person or by proxy and entitled to vote at the Annual Meeting and on the proposal is required to ratify the selection of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” PROPOSAL 3.
· | each person known by us to beneficially own more than 5% of our common stock; |
· | each of our current named executive officers; |
· | each of our directors; and |
· | all of our directors and current executive officers as a group. |
The percentage ownership information shown in the table is based upon a total of 14,598,072 shares of Common Stock outstanding.
Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our Common Stock. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of Common Stock issuablesuch person pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before the daterestricted stock units that isvest within 60 days after the date of this proxy statement. These sharesAugust 4, 2016 are deemed to be outstanding for purposes of determining the total number of outstanding shares for such person and beneficially owned by the person holding those optionsare not deemed outstanding for thesuch purpose of computing the percentage ownership of that person. Unlessfor all other stockholders. To our knowledge, except as otherwise indicated, the persons or entities identified in this table havebeneficial ownership includes sole voting and investmentdispositive power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
shares. Unless otherwise noted below, the address for each person or entity listed in the table is c/o Professional Diversity Network, 801 W. Adams Street, Suite 600, Chicago, Illinois 60667.
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Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
5% Stockholders | ||||||||
Daniel Ladurini | 2,290,541 | (1) | 15.7 | % | ||||
North Star Investment Management Corporation 20 N. Wacker Drive, Suite 1416 Chicago, Illinois 60606 | 789,090 | (2) | 5.4 | % | ||||
Executive Officers and Directors | ||||||||
Donna Brazile | 100 | * | ||||||
Barry Feierstein | 2,667 | (3) | * | |||||
Star Jones | 959,096 | 6.6 | % | |||||
Michael John Hall | 6,667 | (4) | * | |||||
Chad Hoersten | 5,000 | (5) | * | |||||
James Kirsch | 1,433,288 | (6) | 9.8 | % | ||||
Daniel Marovitz | 113,014 | (7) | * | |||||
David Mecklenburger | 10,000 | (8) | * | |||||
Stephen Pemberton | 1,667 | (9) | * | |||||
Matthew B. Proman | 5,242,225 | (10) | 35.6 | % | ||||
Andrea Sáenz | 1,667 | (11) | * | |||||
Daniel Sullivan | 8,333 | (12) | * | |||||
Christopher Wesser | 239,774 | 1.6 | % | |||||
Randi Zuckerberg | — | — | ||||||
Directors and officers as a group (15 persons) | 8,023,498 | 54.3 | % |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class Owned(1) | |||||
5% Stockholders | |||||||
White Winston Select Asset Funds, LLC | 2,750,000 | (2) | 15.93% | ||||
Daniel Ladurini | 2,290,541 | (3) | 15.78% | ||||
North Star Investment Management Corporation | 1,563,977 | (4) | 10.78% | ||||
Matthew B. Proman | 2,011,647 | (5) | 13.52% | ||||
Executive Officers and Directors | |||||||
Katherine Butkevich | - | - | |||||
Lee Hillman | 20,000 | (6) | * | ||||
Star Jones | 960,596 | 6.62% | |||||
James Kirsch | 1,507,288 | (7) | 10.13% | ||||
David Mecklenburger | 24,500 | (8) | * | ||||
Stephen Pemberton | 8,435 | (9) | * | ||||
Andrea Sáenz | 9,180 | (10) | * | ||||
David Schramm | 60,000 | (11) | * | ||||
Randi Zuckerberg | 5,102 | (12) | * | ||||
Directors and executive officers as a group (10 persons) | 2,834,875 | (13) | 19.00% |
__________ |
* | Less than 1%. |
(1) | The percentages reported are based on 14,510,960 outstanding shares of our common stock as of August 4, 2016. |
(2) | Based on Schedule 13D filed by White Winston Select Asset Funds, LLC (“White Winston”) on July 11, 2016. All of these shares may be acquired upon the exercise of two warrants that are currently exercisable or will become exercisable within 60 days of August 4, 2016. White Winston has the sole voting power and the sole dispositive power over the 2,750,000 shares of our common stock underlying the warrants. Todd M. Enright, Mark Blundell and Donald Feagan, the managers (the “Managers”) of White Winston, have shared voting power and dispositive power over the 2,750,000 shares of our common stock underlying the warrants. Does not include a warrant to purchase 1,000,000 shares of our common stock exercisable beginning on December 30, 2016. White Winston’s and the Managers’ address is 265 Franklin St., Suite 1702, Boston, MA 02110. |
(3) | Includes 2,071,781 shares held by the Ladurini Family Trust, |
Based on a Schedule 13G/A filed by North Star Investment Management Corporation |
(5) | Based on the Company’s records and Form 4 filed |
All of these shares |
1,000 of these shares are held by Mr. Kirsch’s daughter who shares the same household as Mr. Kirsch in an account over which Mr. Kirsch serves as custodian. 1,000 of these shares are subject to Mr. Kirsch’s investment power and held in an account for Mr. Kirsch’s adult son and 1,000 of these shares are subject to Mr. Kirsch’s investment power and held in an account for Mr. Kirsch’s adult daughter. 369,322 of these shares are currently owned by the Ladurini Family Trust and subject to an option agreement between the Ladurini Family Trust and Mr. Kirsch pursuant to which Mr. Kirsch may purchase, during a ten year exercise period that began in March 2013, from the Ladurini Family Trust a number of shares of the Company’s |
(8) | All of these shares may be acquired upon the exercise of options that are currently exercisable |
(9) | Includes |
(10) | Includes |
All of these shares are held by a trust, of which Mr. Schramm and his wife are co-trustees. |
(12) | Includes 5,102 shares that may be acquired upon the exercise of options that are currently exercisable |
(13) | Includes an aggregate of 416,396 shares that may be acquired upon the exercise of options that are currently exercisable or will become exercisable within 60 days of August 4, 2016. |
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Plan category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | (b) Weighted-average exercise price of outstanding options, warrants and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by our shareholders | 721,357 | $ | 5.98 | 141,143 | ||||||||
Equity compensation plans not approved by our shareholders | 0 | — | — | |||||||||
Total | 721,357 | $ | 5.98 | 141,143 |
Fees | 2015 | 2014 | ||||||
Audit Fees | $ | 219,729 | $ | 150,988 | ||||
Audit-Related Fees | 47,350 | 35,400 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | 140,000 | ||||||
Total | $ | 267,079 | $ | 326,388 |
Management is responsiblehas primary responsibility for the Company’s financial statements and the reporting process, including internal control over financial reporting and disclosure controls and the financial reporting process.procedures designed to ensure compliance with accounting standards and applicable laws and regulations. Marcum LLP, the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States)(“PCAOB”) and issuing a report on those financial statements. The Audit Committee, among other things, is responsible for monitoring and overseeing these processes and is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent auditors.
The2015.
Committee’s meetings in 2015.
Barry Feierstein
Daniel Marovitz
Stephen Pemberton
Stephen Pemberton
· | The status of the common stock listing on the Nasdaq Capital Market; |
· | The historical trading price and trading volume of our common stock; |
· | The then prevailing trading price and trading volume for our common stock; |
· | The anticipated impact of the Reverse Stock Split on the trading price of and market for our common stock; and |
· | Prevailing general market and economic conditions. |
can do so if the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive trading days before October 10, 2016. If we fail to regain compliance by October 10, 2016, our common stock will be subject to delisting by Nasdaq.
· | the issuance of our securities may require compliance with the individual securities laws or “blue sky” laws of several states, which may be time consuming and costly; |
· | limited availability of market quotations for our securities; |
· | the determination that our common stock is a “penny stock,” which would require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock; |
· | more limited amount of news and analyst coverage for us; |
· | decreased ability to issue additional securities or obtain additional financing in the future; and |
· | decreased ability of our securityholders to sell their securities in certain states. |
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Fees: | 2014 | 2013 | ||||||
Audit Fees | $ | 150,988 | $ | 115,000 | ||||
Audit-Related Fees | 35,400 | 144,450 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | 140,000 | — | ||||||
Total | $ | 326,388 | $ | 259,450 |
Audit Fees. Foreffective date of the fiscal years ended December 31, 2014 and 2013,reverse split, additional details regarding the “Audit Fees” reported above were billed by Marcum LLP for professional services rendered forreverse split, including the auditspecific ratio the Board selects.
Audit-Related Fees. For the fiscal year ended December 31, 2014, the “Audit-Related Fees” reported above were billed by Marcum LLP for professional services rendered to assistlong term, which may prevent the Company from qualifying for continued listing with Nasdaq.
· | the number of outstanding shares of the Company’s common stock will be decreased based on the reverse stock split ratio selected by the Board; |
· | the total number of shares of common stock the Company is authorized to issue will be reduced proportionally based on the reverse stock split ratio selected by the Board; |
· | appropriate adjustments will be made to stock options, restricted stock and other securities convertible into shares of our common stock granted under our plans to maintain the economic value of the awards; |
· | the number of shares reserved for issuance under our 2013 Equity Compensation Plan, as amended, will be reduced proportionally based on the ratio selected by the Board (and any other appropriate adjustments or modifications will be made under the plans); and |
· | the exercise price of our warrants to purchase our common stock and the number of shares reserved for issuance upon exercise will be adjusted in accordance with their terms based on the ratio selected by the Board. |
Reverse Stock Split Ratio | Approximate Number of Outstanding Shares of Common Stock Following the Reverse Stock Split | |
1-for-2 | 7,255,480 | |
1-for-3 | 4,836,987 | |
1-for-4 | 3,627,740 | |
1-for-5 | 2,902,192 | |
1-for-6 | 2,418,493 | |
1-for-7 | 2,072994 | |
1-for-8 | 1,813,870 | |
1-for-9 | 1,612,329 | |
1-for-10 | 1,451,096 | |
1-for-11 | 1,319,178 | |
1-for-12 | 1,209,247 | |
1-for-13 | 1,116,228 | |
1-for-14 | 1,036,497 | |
1-for-15 | 967,397 |
Tax Fees. The Company did not pay any tax related feeshow a stockholder should surrender his, her or its certificates representing pre-split shares of our common stock to Marcum LLPthe Transfer Agent in 2014 or 2013.
All Other Fees. Forexchange for certificates representing post-split shares. No new certificates will be issued to a stockholder until that stockholder has surrendered the fiscal year ended December 31, 2014,stockholder’s outstanding certificate(s) together with the other fees reported above under “All Other Fees” were billedproperly completed and executed letter of transmittal.
The Audit Committee has a policy requiringoutstanding, will be reduced in proportion to the pre-approvalsize of the Reverse Stock Split. Correspondingly, our additional paid-in capital account, which consists of the difference between our stated capital and the aggregate amount paid to us upon issuance of all auditcurrently outstanding shares of our common stock, shall be credited with the amount by which the stated capital is reduced. Our stockholders’ equity, in the aggregate, will remain unchanged. However, after the Reverse Stock Split, net income or loss per share, and permissible non-audit services providedother per share amounts, will be increased because there will be fewer shares of common stock outstanding. In future financial statements, net income or loss per share and other per share amounts for periods ending before the Reverse Stock Split would be recast to give retroactive effect to the Reverse Stock Split.
In accordance with Section 10A of the Exchange Act by Section 202 of the Sarbanes-Oxley Act of 2002,common stock the Company is requiredauthorized to disclose the approval by the Audit Committee ofissue will remain at 25,000,000 shares until such time as the Board of non-audit services performed by the Company’s independent auditors. Non-audit services are services other than those providedrecommends, and our stockholders separately approve, any future increase (including any increase that may be approved in connection with an audit reviewProposed Transactions at a separate meeting of the financial statements. During the period covered by this filing, all audit-related fees, tax fees and all other fees, and the services rendered in connection with those fees, as reported in the table shown above, were approved by the Company’s Audit Committee.
copies of the forms received by us and written representations from certain reporting persons, that they have complied with the relevant filing requirements, we believe that, during the year ended December 31, 2014,2015, all of our executive officers, directors and greater-than-ten percent stockholders complied with all Section 16(a) filing requirements.
Asrequirements, except that one Form 4 for each of Donna Brazile, Barry Feierstein, Daniel Marovitz, Stephen Pemberton, Andrea Sáenz and Randi Zuckerberg reporting the dategrant of this proxy statement,stock options was not timely filed due to an administrative error.
Assuming that next year’s annual meeting of stockholders is held on schedule, we must receive written notice of an intention to introduce a nomination or other item of business at that meeting between May 1, 2017 and May 31, 2017.
The Company reserves60607.
Because
Attendance at the Annual Meeting is limited to stockholders. Admission to the meeting will be on a first-come, first-served basis. Registration will begin at 10:30 a. m. and each stockholder may be asked to present valid picture identification such as a driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the meeting.
By Order of the Board of Directors
James KirschChairman of the board and Chief Executive Officer
Chicago, Illinois
April 24, 2015
Appendix A
Effective March 8, 2013
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A-i
, a Delaware Corporation (the “Corporation”), in order to amend its Amended and Restated Certificate of Incorporation, hereby certifies as follows:
Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.
2.1 “Affiliate” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.
2.2 “Annual Incentive Award” means an award under Article 10.
2.3 “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Annual Incentive Awards or Other Stock-Based Awards, in each case subject to the terms of this Plan.
2.4 “Award Agreement” means a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan including any amendment or modification.
2.5 “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.6 “Board” or “Board of Directors” meansPROFESSIONAL DIVERSITY NETWORK, INC.
2.7 “Cause” meansCorporation adopted resolutions setting forth a proposed amendment to the Participant’s (a) continued failureCorporation’s Amended and Restated Certificate of Incorporation, declaring said amendment to substantially perform his duties withbe advisable and in the Company or to follow rulesbest interests of the Company; (b) convictionCorporation and its stockholders, and authorizing the appropriate officers of a felony; (c) engagementthe Corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment is as follows:
2.8 “Change in Control” means the occurrence of any of the following events after the Effective Date:
2.9 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provisions.
2.10 “Committee” means the Compensation Committee of the Board or a subcommittee thereof, or any other committee designated by the Board to administer this Plan. There shall be at least two (2) members of the Committee, who shall be appointed from time to time by and shall serve at the discretion of the Board, and who shall be (a) “independent” within the requirements of applicable listing standards, (b) “outside directors” within the meaning of Section 162(m) of the Code, and (c) “non-employee directors” within the meaning of Rule 16b-3.
2.11 “Company” means Professional Diversity Network, Inc. and any successor thereto as provided in Article 19. References herein to Company shall also include Affiliates as the context requires.
2.12 “Consultant” means any consultant, advisor, or independent contractor who renders services to the Company and/or its Affiliates.
2.13 “Director” means any individual other than an employee who is a member of the Board of Directors of the Company.
2.14 “Effective Date” means March 8, 2013, or if later, the effective date of the Company’s initial public offering in 2013.
2.15 “Employee” means any employee of the Company, and/or its Affiliates.
2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
2.17 “Fair Market Value” or “FMV” means, with respect to a Share on a specified date:
2.18 “Freestanding SAR” means an SAR that is granted independently of any Options, as described in Article 7.
2.19 “Grant Price” means the price established at the time of grant of an SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.
2.20 “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Section 422 of the Code, or any successor provision.
2.21 “Nonqualified Stock Option” or “NQSO” means an Option to Purchase Shares that is not intended to meet the requirements of Section 422 of the Code, or that otherwise does not meet such requirements.
2.22 “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.
2.23 “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.
2.24 “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.
2.25 “Participant” means any Employee, Director or Consultant as set forth in Article 5 to whom an Award is granted.
2.26 “Performance Measures” means the measures set forth in Section 10.3.
2.27 “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.
2.28 “Person”Corporation shall have the meaning ascribedauthority to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
2.29 “Plan” means this Professional Diversity Network, Inc. 2013 Equity Compensation Plan.
2.30 “Plan Year” means the Company’s fiscal year or such other period asissue is provided by the Committee with respect to an Award.
2.31 “Restricted Stock” means a Restricted Stock Award granted to a Participant pursuant to Article 8.
2.32 “Restricted Stock Unit” means a Restricted Stock Award granted to a Participant pursuant to Article 8.
2.33 “Share” means a share of common stock of the Company,[ ]1 shares, $0.01 par value per share.
2.34 “Stock Appreciation Right” or “SAR” means an Award, designated as an SAR, granted pursuant to the terms The number of Article 7 herein.
2.35 “Tandem SAR” means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exerciseauthorized shares of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled).
3.1 General. The Committee shall be responsible for administering the Plan, subject to this Article 3 and the other provisions of the Plan. The Committee may employ attorneys, consultants, accountants, agents, and other Persons, any of whomCommon Stock may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions,increased or valuations of any such Persons. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company, and all other interested Persons.
3.2 Authority of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of the Plan and any Award Agreement or other agreement or document ancillary to or in connection with the Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering the Plan as the Committee may deem necessary or proper. Such authority shall include, butdecreased (but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements, granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, and, subject to Article 16, adopting modifications and amendments to the Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company and/or its Affiliates operate.
3.3 Delegation. A Participant who wishes to appeal any determination of the Committee concerning an Award granted pursuant to the Plan shall notify the Committee in a writing, which shall state the basis for the appeal. The appeal shall be filed with the Committee within 30 days after the date the Participant received the notice from the Committee. The written appeal may be filed by the Participant’s authorized representative. The Committee shall review the appeal and issue its decision within 90 days after it receives the Participant’s appeal. If the Committee needs additional time to review the appeal, it shall notify the Participant in writing and specify when it expects to render its decision. After completion of its review, the Committee shall notify the Participant of its decision in writing, which shall state the reasons for the Committee’s decision.
4.1 Number of Shares Available for Awards. Subject to adjustment as provided in Section 4.4 herein, the maximum number of Shares available for issuance to Participants under the Plan shall be 500,000 Shares.
4.2 Share Usage. Shares covered by an Award shall only be counted as used to the extent Shares are actually delivered. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares shall be available again for grant under the Plan. The Shares available for delivery under the Plan may be authorized and unissued Shares or treasury Shares.
4.3 Shares Available. Subject to Section 4.4, the aggregate number of Shares subject to awards granted during any calendar year that may be the subject of Options, Stock Appreciation Rights and Awards (including the Shares issued for meeting or exceeding Performance Measures, as defined in Article 10 hereof, (the “Peformance Units”)) to any one Employee shall not exceed 500,000 Shares.
Subject to Section 4.4, the maximum number of Shares that may be the subject of any type of Award other than Options and Stock Appreciation Rights (including the Share-equivalent number of Performance Shares) granted to an Eligible Individual in any calendar year shall be 500,000. For purposes of this Article 4, the Share-equivalent number of Performance Shares shall be equal to the quotient of (i) the aggregate dollar amount in which the Performance Shares are denominated, divided by (ii) the Fair Market Value of a Share on the date of grant. In the case of any Award under the Plan that is neither denominated in Shares nor valued on the basis of the value or change in value of a Share, the maximum Award to any individual for any year shall be $10,000,000.
4.4 Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) after the Effective Date, such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change-in-capital structure or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under the Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under the Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, and other value determinations applicable to outstanding Awards. The Committee, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under the Plan to reflect or related to such changes or distributions and to modify any other terms of outstanding Awards, including modifications of performance
goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants.
5.1 Eligibility. Subject to the provisions of the Plan, the Committee may, from time to time, select the Employees, Directors, and Consultants, whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of, each Award.
5.2 Award Agreement. Each Award shall be evidenced by an Award Agreement. Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or provision of services to the Company and/or its Affiliates. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.
6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion.
6.2 Award Agreement. Each Award Agreement granting an Option shall specify the Option Price, the maximum duration of the Option,below the number of Shares to whichshares thereof then outstanding) by the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the termsaffirmative vote of the Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO, and in the absence of any such specification, the Option shall be an NQSO.
6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be as determined by the Committee and shall be specified in the Award Agreement, and shall be no less than the Fair Market Value on the date of grant.
6.4 Duration of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the tenth (10th) anniversary of its grant date other than an Option granted to a Participant outside the United States.
6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.
6.6 Payment. Options shall be exercised by the deliveryholders of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.
A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the aggregate Option Price (provided that the Committee may require that the Shares that are tendered must have been held by the Participant for specified period prior to their tender to satisfy the aggreagte Option Price if acquired under this Plan or any other compensation plan mentioned by the Company, or have been purchased on the open market); (c) by a combination of (a) and (b); or (d) any other method approved or accepted by the Committee in its sole discretion, including, without limitation, if the Committee so determines, a cashless (broker-assisted) exercise.
Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
6.7 ISO. To the extent that an Option is an Incentive Stock Option, the following provisions shall apply:
Subject to the limit set forth in Section 4.1 on the number of Shares that may be issued in the aggregate under the Plan, the maximum number of Shares that may be issued pursuant to ISOs shall be 500,000. ISOs may be granted only to eligible Employees of the Company or of any parent or subsidiary corporation (as permitted by Section 422 of the Code and the treasury regulations thereunder). If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten (10) days thereof and such Option shall be considered to be an NQSO.
Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will expire no later than the expiration of the underlying ISO; (b) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the excess of the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised over the Option Price of the underlying ISO; and (c) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) adoption of the Plan by the Board, or (b) the Effective Date.
To the extent that the aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which options designated as ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or any other plan of the Company, or any subsidiary as defined in Section 424 of the Code) exceeds $100,000, such options shall constitute NQSOs. If an ISO is granted to any person who, at the time such option is granted, owns capital stock possessing more than ten percent (10%)majority of the total combined voting power of all classesthe outstanding shares of capital stock of the Company (orCorporation entitled to vote, irrespective of any subsidiary), the purchase price per Share shall be 110% of Fair Market Value and the ISO may not be exercised more than 5 years from the date of grant, otherwise the grant shall be considered to be an NQSO.
7.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.
Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of Section 242(b)(2) of the Plan, in determining the terms and conditions pertaining to such SARs.
The Grant Price for each grantGeneral Corporation Law or any corresponding provision hereinafter enacted.
7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.
7.3 Term of SAR. The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th) anniversary of its grant date.
7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes.
7.5 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related OptionIncorporation is then exercisable.
7.6 Payment of SAR Amount. Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
At the discretion of the Committee, the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.
7.7 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of an SAR granted pursuant to the Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of an SAR for a specified period of time.
8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the Participant on the date of grant.
8.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the period(s) of restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.
8.3 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.
To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.
Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and except as expressly provided by the Committee in the Award Agreement, Restricted Stock Units shall be paid in Shares.
8.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 20.3, each certificate representing Shares of Restricted Stock granted pursuant to the Plan may bear a legend such as the following or as otherwise determined by the Committee in its sole discretion:
The sale or transfer of Shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Professional Diversity Network, Inc. 2013 Equity Compensation Plan, and in the associated Award Agreement. A copy of the Plan and such Award Agreement may be obtained from Professional Diversity Network, Inc.
8.5 Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the time such shares are subject to restrictions under Section 8.2 or 8.3. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.
8.6 Section 83(b) Election. If a Participant makes an election pursuant to Section 83(b) of the Code concerning a Restricted Stock Award, the Participant shall be required to promptly file copy of such electionfiled with the Company.
9.1 Other Stock-Based Awards. The Committee may grant other typesSecretary of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares.
9.2 Value of Other Stock-Based Awards. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee. The Committee may establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals, the number and/or value of Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.
9.3 Payment of Other Stock-Based Awards. Payment, if any, with respect to an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines.
10.1 Establishment of Annual Incentive Pool. The Committee may designate Employees who are eligible to receive a monetary payment in any Plan Year based on a percentage of an incentive pool determined by reference to one or more Performance Measures set forth in Section 10.3. The Committee shall allocate an incentive pool percentage to each designated Employee for each Plan Year, provided the sum of the incentive pool percentages for all Employees cannot exceed one hundred percent (100%) of the total pool.
10.2 Determination of Employees’ Portions. As soon as possible after the determination of the incentive pool for a Plan Year, the Committee shall calculate each Employee’s allocated portion of the incentive pool based upon the percentage established at the beginning of the Plan Year. Each Employee’s incentive award then shall be determined by the Committee based on the Employee’s allocated portion of the incentive pool subject to adjustment in the sole discretion of the Committee. In no event may the portion of the incentive pool allocated to a Employee be increased in any way, including as a result of the reduction of any other Employee’s allocated portion. The Committee shall retain the discretion to adjust such Awards downward.
10.3 Performance Measures. The performance measures applicable to the payment or vesting of an Award intended to qualify as performance-based compensation under section 162(m) of the Code to a person determined by the Committee to be reasonably likely to be a covered employee under section 162(m) of the Code shall be chosen from among the following performance measures (“Performance Measures”): net earnings or net income (before or after taxes); earnings per Share; net sales or revenue growth; net operating profit; return measures (including, but not limited to, return on assets, capital, invested capital, equity, revenue,
or sales); cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on equity); earnings before or after taxes, interest, depreciation, and/or amortization; gross or operating margins; productivity ratios; Share price (including, but not limited to, growth measures and total shareholder return); expense targets; margins; operating efficiency; market share; customer satisfaction; and balance sheet and statement of cash flow measures (including but not limited to, working capital amounts and levels of short and long-term debt). In addition, the Committee may make grants without satisfying the requirements of Code Section 162(m) and provide for vesting to be determined based on Performance Measures other than those set forth herein.
For Awards intended to qualify as performance-based compensation under section 162(m) of the Code, the Committee shall establish the applicable Performance Measure(s) within the time prescribed under section 162(m) of the Code. All determinations by the Committee as to the achievement of the applicable Performance Measure(s) shall be in writing prior to the payment of the Award.
Any Participant selected by the Committee may be granted dividend equivalents based on the dividends declared on Shares that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is earned or vested and the date the Award is exercised or expires, as determined by the Committee. Such dividend equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Committee. Notwithstanding the foregoing, the receipt of dividend equivalents on Options or SARs shall not be made contingent on the exercise of any Award.
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
Unless otherwise determined by the Committee, Awards by their terms shall not be transferable by the Participant other than by will or by the laws of descent and distribution, and the Shares granted pursuant to Awards shall be distributable, during the lifetime of the Participant, only to the Participant.
14.1 Employment. Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company and/or its Affiliates to terminate any Participant’s employment or service on the Board or to the Company at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment or service as a Director or Consultant for any specified period of time.
Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company and/or its Affiliates and, accordingly, subject to Article 16 of this Plan, the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company and/or its Affiliates.
14.2 Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
14.3 Rights as a Stockholder. Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.
If provided in an Award Agreement or otherwise determined by the Committee, upon a Change in Control, all then-outstanding Options and Stock Appreciation Rights shall become fully vested and
exercisable, and all other then-outstanding Awards shall vest in full and be free of restrictions. The Committee will not be required to treat all Awards similarly in a Change in Control.
16.1 Shareholder Approval; Amendment, Modification, Suspension, and Termination. The Plan shall be subject to approval of shareholders of the Company. Subject to Section 16.4, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company’s stockholders and except as provided in Sections 4.4 and 16, Options or SARs issued under the Plan will not be repriced, replaced, or regranted through cancellation, or cash out, or by lowering the Option Price of a previously granted Option or the Grant Price of a previously granted SAR, and no amendment of the Plan or grant of Award under the Plan shall be made without stockholder approval if stockholder approval is required by law, regulation, or stock exchange rule; including, but not limited to, the Exchange Act, the Code, and, if applicable, the New York Stock Exchange Listed Company Manual/the Nasdaq Stock Market Rules.
16.2 Termination of the Plan. Unless sooner terminated as provided herein, the Plan shall terminate ten (10) years from the Effective Date. After the Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions.
16.3 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.
16.4 Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, except as set forth in Section 17.1, no termination, amendment, suspension, or modification of the Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.
17.1 To the extent that the Plan and/or any Awards granted or awarded under the Plan are construed to be non-qualified deferred compensation plans described in section 409A of the Code, the Plan and any Award Agreements shall be operated, administered and construed so as to comply with the requirements of section 409A of the Code. The Plan and any Award Agreements shall be subject to amendment, with or without advance notice to Employees, Directors and other interested parties, and on a prospective or retroactive basis, including, but not limited to, amendment in a manner that adversely affects the rights of Employees, Directors and other interested parties, to the extent necessary to effect compliance with section 409A of the Code. This Plan does not permit the acceleration of the time or schedule of any distribution of an Award subject to section 409A of the Code, except as provided by Section 409A of the Code.
18.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
18.2 Share Withholding. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the
date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All such elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
20.1 Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for Cause, termination of the Participant’s provision of services to the Company and/or its Affiliates, violation of material Company and/or Affiliate policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.
20.2 Recapture. If the grant of an Award or a payment under this Plan is subject to recapture under any securities law or rule or other applicable provision or in accordance with any recapture or clawback policy of the Company, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued subject to such recapture or clawback provision.
20.3 Legend. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such Shares.
20.4 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.
20.5 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
20.6 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
20.7 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to the earlier of (a) obtaining any approvals from governmental or regulatory body or agencies that the Company determines are necessary or advisable; and (b) completion of any registration or other qualification of the Shares under any applicable national, local or foreign law or ruling of any governmental or regulatory body or agency that the Company determines to be necessary or advisable. The inability of the Company to obtain authority from any governmental or regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
20.8 Investment Representations. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.
20.9 Uncertificated Shares. To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be affected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
20.10 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company and/or its Affiliates may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other Person. To the extent that any individual acquires a right to receive payments from the Company and/or its Affiliates under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company and/or its Affiliates.
20.11 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.
20.12 Retirement and Welfare Plans. Neither Awards made under the Plan nor Shares or cash paid pursuant to such Awards, except pursuant to Annual Incentive Awards, may be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s, and/or its Affiliates’ retirement plans (both qualified and nonqualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit.
20.13 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or its Affiliates’ right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (ii) limit the right or power of the Company and/or its Affiliates to take any action which such entity deems to be necessary or appropriate.
20.14 Governing Law. The Plan and each Award Agreement shall be governed by the lawsState of the State of Delaware excluding(the “Effective Time”), each [two] [three] [four] [five] [six] [seven] [eight] [nine] [ten] [eleven] [twelve] [thirteen] [fourteen] [fifteen] shares of Common Stock issued and outstanding immediately prior to the Effective Time shall be combined and changed into one (1) validly issued, fully paid and non-assessable share of Common Stock without any conflictsfurther action by the Corporation or choiceany holder thereof, subject to the treatment of law rule or principlefractional share interests as described below (the “Reverse Stock Split”). No certificates representing fractional shares of Common Stock shall be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares of Common Stock because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an additional fraction of a share of Common Stock to round up to the next whole share. Each certificate that might otherwise refer construction or interpretationimmediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, plus any additional fraction of a share of Common Stock to round up to the next whole share.”
Appendix B
The Professional Diversity Network, Inc. 2013 Equity Compensation Plan (the “Plan”) is hereby amended as follows, effective upon the date approved by Professional Diversity Network, Inc.’s shareholders:
1. Section 4.1 of the Plan is amended to read as follows:
“4.1Number of Shares Available for Awards. Subject to adjustment as providedFOURTH: That said amendment was duly adopted in Section 4.4 herein, the maximum number of Shares available for issuance to Participants under the Plan shall be 1,800,000 shares.”
2.Continuing Effect of Plan. Except as expressly modified herein,accordance with the provisions of Section 242 of the Plan are and shall remain in full force and effect.
General Corporation Law of the State of Delaware.
PROFESSIONAL DIVERSITY NETWORK, INC. | |||
By: | ![]() | ||
Name: | |||
Title: |
PROFESSIONAL DIVERSITY NETWORK, INC.
1 | To be completed with the appropriate number of authorized shares reflecting a reduction that is proportional to the Reverse Stock Split. |
PROFESSIONAL DIVERSITY NETWORK, INC. 801 W. ADAMS STREET, SUITE 600 CHICAGO, IL 60607 | VOTE BY INTERNET - www.proxyvote.com Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on September 25, 2016. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on September 25, 2016. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. VOTE IN PERSON You may vote the shares in person by attending the Annual Meeting. |
KEEP THIS PORTION FOR YOUR RECORDS | |||
DETACH AND RETURN THIS PORTION ONLY | |||
PROFESSIONAL DIVERSITY NETWORK, INC. | For | Withhold | For All | To withhold authority to vote for any individual | ||||||||
The Board of Directors recommends you vote FOR Proposals 1, 2 and 3. | All | All | Except | nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||
1. Election of Directors | o | o | o | |||||||||
Nominees: | ||||||||||||
01) Katherine Butkevich | 05) Stephen Pemberton | |||||||||||
02) Lee Hillman | 06) Andrea Sáenz | |||||||||||
03) Star Jones | 07) David Schramm | |||||||||||
04) James Kirsch |
For | Against | Abstain | ||||||||||||||||||||||||||||
2. To ratify the appointment of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016. | o | o | o | |||||||||||||||||||||||||||
3. To authorize the Board of Directors to effect, in its discretion, a reverse stock split of the outstanding and treasury shares of the Company’s common stock in a ratio of [1-for-2] [1-for-3] [1-for-4] [1-for-5] [1-for-6] [1-for-7] [1-for-8] [1-for-9] [1-for-10] [1-for-11] [1-for-12] [1-for-13] [1-for-14] [1-for-15], to be determined by the Board of Directors, and to approve a corresponding amendment to the Company’s Certificate of Incorporation to effect the reverse stock split and to reduce proportionally the number of shares of common stock the Company is authorized to issue. | o | o | o | |||||||||||||||||||||||||||
NOTE: Such other business as may properly come before the meeting or any adjournment or postponement thereof. | ||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting | o | o | ||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | ||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
PROFESSIONAL DIVERSITY NETWORK, INC. Annual Meeting of Stockholders September 26, 2016 11:00 AM This proxy is solicited by the Board of Directors | ||
The stockholder(s) hereby appoint(s) James Kirsch and Katherine Butkevich, or either of them, as proxies, each with the power to appoint (his/her) substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of PROFESSIONAL DIVERSITY NETWORK, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 11:00 AM, CDT on September 26, 2016, at the offices of the company located at 801 W. Adams Street, Suite 600, Chicago, IL 60607, and any adjournment or postponement thereof. | ||
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. | ||
Continued and to be signed on reverse side | ||