In addition to the grants described above, the Compensation Committee approved a discretionary retention grant of 10,000 shares of restricted stock to Mr. Cicchinelli; 2,500 shares vested on the date of grant, 2,500 shares vested on January 1, 2020, and 5,000 shares will vest on January 1, 2021, subject to Mr. Cicchinelli’s continuing employment through the applicable vesting date.
In 2019, we granted 20,000 shares of time vesting restricted stock and 80,000 shares of performance vesting restricted stock to Mr. Singh under the 2015 Equity Incentive Plan as contemplated by his March 2019 employment agreement (described below). The 20,000 time vesting shares vest and are distributable to Mr. Singh on March 31, 2020, provided Mr. Singh is employed as Chief Executive Officer or is otherwise providing services to the Company on such date. The 80,000 performance vesting shares vest on such date or dates as the Compensation Committee certifies the achievement of performance goals, including the percentage of achievement; and, to the extent vested, are distributable to Mr. Singh in equal installments on March 31, 2020, March 31, 2021 and March 31, 2022, provided Mr. Singh remains employed as our Chief Executive Officer or is otherwise providing services to the Company continuously through and including the applicable distribution dates. Based on performance, the Compensation Committee determined that Mr. Singh earned 78,000 of the performance vesting shares.
Benefits. Our named executive officers are eligible for the same benefits available to our other full-time employees. Our benefits include our 401(k)/retirement plan (“retirement plan”), employee stock purchase plan, health and life insurance plans, and other welfare benefit programs. Our retirement plan has a deferred profit-sharing component. Contributions to the profit-sharing component of the retirement plan are made at the discretion of the Board. No contributions were made to the profit-sharing program in 2019.
Deferred Compensation. We sponsor a non-qualified deferred compensation plan for a select group of highly compensated employees that includes certain of our named executive officers. Participants may make voluntary deferrals of their salary and/or cash bonus to the plan. The Board also has the sole discretion to make employer contributions to the plan, although it did not make any such employer contributions in 2019.
Employment Arrangements in effect for 2019
Savneet Singh. In connection with his appointment as Interim Chief Executive Officer and President of the Company effective December 4, 2018, we entered into an employment letter with Mr. Singh, which provided for an annual base salary of $473,500 (which was pro-rated for 2018). Pursuant to the employment letter Mr. Singh was granted 5,000 shares of performance based restricted stock under the 2015 Equity Incentive Plan.
In connection with his appointment as Chief Executive Officer and President of the Company effective March 22, 2019, we entered into a new employment agreement with Mr. Singh. The March 2019 employment agreement superseded and preempted the terms of the December 2018 employment letter (including cancelling the 5,000 performance shares described above). The March 2019 employment agreement provided for an annual base salary of $490,000, an STI bonus target equal to 90% of his base salary earned in 2019, 20,000 shares of restricted stock that vest on March 31, 2020, subject to his continued service, and 80,000 shares of performance vesting restricted stock as described above under “Long-Term Incentive (“LTI”) Compensation”. The March 2019 employment agreement further provided that for each of 2020 and 2021, Mr. Singh would be eligible to receive an award of 90,000 shares of performance vesting restricted stock that would become earned to the extent performance goals established by the Compensation Committee are satisfied, and then, so long as he remained continuously employed as Chief Executive Officer, fully vested on the third anniversary date thereafter. In accordance with the Company’s reimbursement policy, Mr. Singh was eligible for reimbursement of travel and other expenses, including up to $35,000 in reimbursement for housing and living expenses.
On February 27, 2020, we entered into a new employment agreement with Mr. Singh. The February 2020 employment agreement supersedes and preempts the March 2019 employment letter and is further described in our Current Report on Form 8-K filed with the SEC on March 2, 2020 and is filed as Exhibit 10.20 to our Annual Report on Form 10-K for our fiscal year ended December 31, 2019. The terms of the February 2020 employment offer letter will be further described in our proxy statement for the 2021 annual meeting of stockholders.
Bryan A. Menar. In connection with his appointment as Chief Financial Officer and Vice President of the Company, we entered into an employment agreement with Mr. Menar. Pursuant to that employment agreement Mr. Menar was paid an annual base salary of 250,000, which was increased to $271,000 in 2018; he participates in our STI program at an individual bonus target of up to 40% of his annual base salary for performance against targets established by the Board; and he participates in our retirement plan and receives insurance and other customary benefits offered by us to our executives. If Mr. Menar’s employment had been terminated without cause prior to November 14, 2019, then, pursuant to the terms of his employment agreement, he would have been paid severance equal to six months of his then annual base salary in exchange for a duly executed standard release.
Matthew R. Cicchinelli. Effective December 12, 2015, Mr. Cicchinelli was appointed to the position of President of PAR Government Systems Corporation and Rome Research Corporation. In connection with this appointment, we entered into an employment agreement with Mr. Cicchinelli. Pursuant to that employment agreement, Mr. Cicchinelli was paid an annual base salary of $240,000, which was increased to $247,000 in 2018; participates in our STI program at an individual bonus target of up to 50% (increased to 55% by the Compensation Committee in 2019) of his annual base salary for performance against targets established by the Board; and participates in our retirement plan and receives insurance and other customary benefits offered by us to our executives. Mr. Cicchinelli’s employment is not governed by any severance agreement.
Summary Compensation Table
The following table sets forth information regarding compensation earned by our named executive officers during 2019 and 2018.
Name and Principal Position | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non- Equity Incentive Plan Compensation ($) | | | Non- Qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | |
(a) | (b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
Savneet Singh, CEO and | 2019 | | | 485,939 | | | | ------ | | | | 2,450,400 | | | | ------ | | | | 448,878 | | | | ------ | | | | 29,388 | | | | 3,414,605 | |
President | 2018 | | | 30,595 | | | | ------ | | | | 96,850 | | | | ------ | | | | ------ | | | | ------ | | | | ------ | | | | 127,445 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Bryan A. Menar, Chief Financial and Accounting Officer, | 2019 | | | 271,000 | | | | ------ | | | | 65,000 | | | | 35,000 | | | | 113,159 | | | | ------ | | | | 4,891 | | | | 489,050 | |
Vice President | 2018 | | | 260,169 | | | | 32,500 | | | | 48,750 | | | | 26,250 | | | | ------ | | | | ------ | | | | 2,438 | | | | 370,107 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Matthew R. Cicchinelli, President, PAR Government | 2019 | | | 247,000 | | | | 37,304 | | | | 299,850 | | | | 26,250 | | | | ------ | | | | ------ | | | | 3,081 | | | | 613,485 | |
Systems Corporation and Rome Research Corporation | 2018 | | | 244,827 | | | | 16,768 | | | | 48,750 | | | | 26,250 | | | | 121,750 | | | | ------ | | | | 3,031 | | | | 461,376 | |
Column (c) - Salary. Mr. Singh’s base salary during the period he served as Interim Chief Executive Officer and President from December 4, 2018 through March 22, 2019 was $473,500. In connection with his appointment to Chief Executive Officer and President, effective March 22, 2019, Mr. Singh’s base salary was increased to $490,000.
Column (d) - Bonus. Mr. Cicchinelli’s PGSC retention bonus ($17,304) and discretionary bonus ($20,000) earned in 2019.
Column (e) - Stock Awards. The dollar amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 with respect to stock awards made to our named executive officers. Assumptions made, including the probable outcome of performance conditions of the performance-based stock awards, in the valuations are discussed in Note 10 to our 2019 Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 16, 2020.
For Mr. Singh, column (e) reflects the grant date fair value of the 100,000 shares of restricted stock granted to him 2019 in connection with his appointment to the position of Chief Executive Officer and President on March 22, 2019. Of these shares, 20,000 shares, granted in March 27, 2019, are time vesting shares, that vest and are distributable on March 31, 2020, subject to Mr. Singh’s continued service, and 80,000 shares, granted on May 13, 2019, are performance vesting shares, that vest on such date or dates as our Compensation Committee certifies the achievement of performance goals, including the percentage of achievement; and, to the extent vested, are distributable to Mr. Singh in equal installments on March 31, 2020, March 31, 2021 and March 31, 2022, provided he remains employed as our Chief Executive Officer or is otherwise providing services continuously through and including the applicable distribution dates. The 5,000 shares of restricted stock, with a grant date fair value of $96,850, granted to Mr. Singh in December 2018 in connection with his appointment as Interim Chief Executive Officer and President in December 2018, were cancelled.
For Mr. Menar, column (e) reflects the grant date fair value of 2,613 shares of restricted stock granted to him on August 9, 2019. Of these shares, 1,005 are time vesting shares, that vest ratably in one-third increments on December 31, 2019, December 31, 2020 and December 31, 2021, subject to Mr. Menar’s continued service, and 1,608 are performance vesting shares, that vest ratably in one-third increments on December 31, 2019, December 31, 2020 and December 31, 2021, based on the percentage annual performance goals are achieved for the applicable performance year, and subject to Mr. Menar’s continued service. The grant date fair value of the performance vesting restricted stock, assuming the highest level of performance will be achieved, is $59,986.
For Mr. Cicchinelli, column (e) reflects the grant date fair value of 10,000 shares of timing vesting restricted stock granted to him on May 10, 2019, of which 2,500 vested on the date of grant, 2,500 vested on January 1, 2020 and 5,000 shares vest on January 1, 2021, subject to Mr. Cicchinelli’s continuous employment; and the grant date fair value of 1,959 shares of restricted stock granted to him in August 2019. Of these shares, 753 are time vesting shares, that vest ratably in one-third increments on December 31, 2019, December 31, 2020 and December 31, 2021, subject to Mr. Cicchinelli’s continued service, and 1,206 are performance vesting shares, that vest ratably in one-third increments on December 31, 2019, December 31, 2020 and December 31, 2021, based on the percentage annual performance goals are achieved for the applicable performance year, and subject to Mr. Cicchinelli’s continued service. The grant date fair value of the performance vesting restricted stock, assuming the highest level of performance will be achieved, is $44,989.
Column (f) – Option Awards. The dollar amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions made in the valuations are discussed in Note 10 to our 2019 Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 16, 2020.
For each of Messrs. Menar and Cicchinelli column (f) reflects non-qualified stock options to purchase shares of our common stock granted on August 9, 2019. The options vest ratably in one-third increments on August 9, 2020, August 9, 2021, and August 9, 2022, subject to continuing employment on the applicable vesting dates.
Column (g) – Non-Equity Incentive Plan Compensation. Reflects the STI bonuses earned by Messrs. Singh and Menar in 2019.
Column (i) - All Other Compensation. The amounts represent 401(k) employer matching contributions ($4,192 -Mr. Singh, $4,303 – Mr. Menar and $2,500 – Mr. Cicchinelli), the Company’s payment of premiums on term life insurance ($588 – Messrs. Singh and Menar and $581 – Mr. Cicchinelli), as to Mr. Singh, payments related to relocation expenses of $14,544 and a company car lease of $10,064.
Outstanding Equity Awards at Fiscal Year-End
The following table shows information regarding outstanding equity awards held by our named executive officers at December 31, 2019.
| | Option Awards | | | Stock Awards | |
Name | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock that Have Not Vested ($)(1) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | | | Equity Incentive Awards: Market Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) (1) | |
(a) | | (b) | | | (c) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
Savneet Singh | | | -- | | | | -- | | | | -- | | | | -- | | | | 20,000 | (2) | | | 614,800 | | | | -- | | | | -- | |
| | | | | | | | | | | | | | | | | | | 16,000 | (3) | | | 491,840 | | | | 64,000 | (3) | | | 1,967,360 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | | | | | | | | | -- | | | | -- | |
Bryan A. Menar | | | -- | | | | 5,382 | (4) | | | 24.87 | | | 8/09/29 | | | | -- | | | | -- | | | | -- | | | | -- | |
| | | 1,062 | | | | 2,126 | (5) | | | 22.18 | | | 8/13/28 | | | | -- | | | | -- | | | | -- | | | | -- | |
| | | 20,000 | | | | 20,000 | (6) | | | 8.90 | | | 12/08/27 | | | | -- | | | | -- | | | | -- | | | | -- | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | 670 | (8) | | | 20,596 | | | | -- | | | | -- | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | | | | | | | | | 1,608 | (9) | | | 49,430 | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | 282 | (11) | | | 8,669 | | | | -- | | | | -- | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | 418 | | | | 12,849 | | | | 902 | (12) | | | 27,727 | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | 1,500 | (13) | | | 46,110 | |
Matthew R. Cicchinelli | | | -- | | | | 4,036 | (4) | | | 24.87 | | | 8/09/29 | | | | -- | | | | -- | | | | -- | | | | -- | |
| | | 1,062 | | | | 2,126 | (5) | | | 22.18 | | | 8/13/28 | | | | -- | | | | -- | | | | -- | | | | -- | |
| | | 2,000 | (7) | | | -- | | | | 4.80 | | | 1/9/24 | | | | -- | | | | -- | | | | -- | | | | -- | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | 502 | (8) | | | 15,431 | | | | -- | | | | -- | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | 1,206 | (9) | | | 37,072 | |
| | | | | | | | | | | | | | | | | | | 7,500 | (10) | | | 230,550 | | | | -- | | | | -- | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | 282 | (11) | | | 8,669 | | | | -- | | | | -- | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | 418 | | | | 12,849 | | | | 902 | (12) | | | 27,727 | |
| | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | 1,667 | (13) | | | 51,244 | |
| 1. | The dollar amounts reflect the market value of the shares based on the closing price of our common stock on December 31, 2019 ($30.74). |
| 2. | These shares of restricted stock were granted on March 27, 2019 and vest and are distributable on March 31, 2020. |
| 3. | These shares of performance vesting restricted stock were granted on May 13, 2019, and vest on such date or dates as our Compensation Committee certifies the achievement of performance goals, including the percentage of achievement; and, to the extent vested, are distributable in equal installments on March 31, 2020, March 31, 2021 and March 31, 2022. |
| 4. | This option was granted on August 9, 2019 and vests ratably over three years on the anniversary of the date of grant. |
| 5. | This option was granted on August 13, 2018 and vests ratably over three years on the anniversary of the date of grant. |
| 6. | This option was granted on December 8, 2017 and vests ratably over four years on the anniversary of the date of grant. |
| 7. | This option was granted on January 9, 2014 and vested ratably over three years on the anniversary of the date of grant. |
| 8. | These shares of time vesting restricted stock were granted on August 9, 2019 and vest ratably December 31, 2019, 2020 and 2021. |
| 9. | These shares of performance vesting restricted stock were granted on August 9, 2019 and vest ratably December 31, 2019, 2020 and 2021 subject to attaining annual performance targets. |
| 10. | These shares of time vesting restricted stock were granted on May 10, 2019 and vest as follows: 2,500 shares on the date of grant, 2,500 shares on January 1, 2020 and 5,000 shares on January 1, 2021. |
| 11. | These shares of time vesting restricted stock were granted on August 13, 2018 and vest ratably on December 31, 2018, 2019 and 2020. |
| 12. | These shares of performance vesting restricted stock were granted on August 13, 2018 and vest on December 31, 2020 subject to attaining annual performance targets for the years ending December 31, 2018, 2019 and 2020. The number of shares assumes that performance goals for the remaining vesting dates will be achieved. |
| 13. | These shares of performance vesting restricted stock were granted on December 8, 2017 and vest ratably on December 31, 2017, 2018 and 2019 if annual performance targets are achieved. However, if a performance target for a performance year is not met, the shares of restricted stock for such missed performance year are eligible for recapture. The shares of restricted stock for a missed performance year are eligible for recapture at the end of the immediately subsequent performance year, if the cumulative actual performance exceeds the cumulative performance targets for such performance years. The recapture right is only available in the immediately subsequent performance year; provided, in the case of the last performance year, if the performance target for the last performance year is not met, the shares of restricted stock for that last performance year may be recaptured if the cumulative actual performance for the three (3) performance years exceeds the cumulative performance targets for the three (3) performance years. None of the shares were eligible to vest based on performance. |
PROPOSAL 2 — NON-BINDING, ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Our disclosure regarding the compensation of our named executive officers is pursuant to the scaled requirements for smaller reporting companies under Item 402(m) through (q) of Regulation S-K of the Exchange Act. The compensation paid to our named executive officers in 2019 is disclosed in the narrative discussion and compensation tables on pages 17 through 26 of this Proxy Statement. As discussed, we believe our compensation program is focused on pay-for-performance principles and are strongly aligned with the long-term interests of building stockholder value.
Our stockholders, through their non-binding, advisory vote at the 2019 annual meeting of stockholders, indicated a desire for an annual non-binding, advisory vote regarding the compensation of our named executive officers. Our Board believes an annual vote will enhance stockholder communication by providing a clear, simple means for us to obtain information on stockholder sentiment about our executive compensation philosophies and practices. Therefore, in accordance with Section 14A of the Exchange Act and the associated regulations, stockholders are being asked to provide a non-binding, advisory vote on the following resolution:
RESOLVED, that the stockholders of PAR Technology Corporation approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement, including the compensation tables and narrative discussion contained herein.
The next non-binding, advisory vote regarding the compensation of our named executive officers will be held at the 2021 annual meeting of stockholders.
The vote solicited by Proposal 2 is advisory in nature, and therefore is not binding on the Company, the Board, or the Compensation Committee. While the opinions of our stockholders are valued, the result of the vote will not require the Company, the Board, or the Compensation Committee to take any actions, and will not be construed as overruling any decision of the Company, the Board or the Compensation Committee. To the extent there is any significant vote against the compensation of our named executive officers as disclosed in this Proxy Statement, we will consider stockholder concerns and an evaluation will be made as to whether any actions are necessary to address those concerns.
The Board of Directors unanimously recommends a vote “For” the proposal to approve the compensation of our named executive officers as disclosed in this Proxy Statement, including the compensation tables and narrative discussion.
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK FROM 29,000,000 TO 58,000,000
We currently have thirty million (30,000,000) shares of authorized capital stock, par value $0.02 per share, consisting of twenty-nine million (29,000,000) shares of common stock and one million (1,000,000) shares of preferred stock.
As of March 27, 2020 we had outstanding 18,275,044 shares of common stock. No shares of preferred stock are outstanding.
Of the 9,711,385 shares of common stock authorized, but unissued, as of March 27, 2020 we had approximately 952,192 shares of common stock reserved for issuance upon the exercise of outstanding stock options under the 2015 Equity Incentive Plan; approximately 160,243 shares of common stock available for future awards under the 2015 Equity Incentive Plan, which will increase to approximately 860,243 if Proposal 4 is approved; 43,350 shares reserved for issuance upon the exercise of outstanding stock options under the Company’s 2005 Equity Incentive Plan; 67,273 shares issuable upon vesting of restricted stock units issued by us in connection with our assumption of awards granted by AccSys, Inc. (“Restaurant Magic”) to its employees and contractors prior to the closing of our acquisition of Restaurant Magic in December 2019; 148,072 shares for issuance to the sellers of Restaurant Magic in the event certain post-closing earn-out targets are achieved; and approximately 1,013,571 unreserved shares of common stock held in treasury. In addition, there are approximately 4,338,322 shares of common stock reserved for issuance in the event some or all of our 4.500% convertible senior notes due 2024 and/or our 2.875% convertible senior notes due 2026 convert into shares of common stock.
Due to the limited number of shares of common stock remaining available for future issuance, our Board unanimously approved and voted to recommend that you approve an amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock from 29,000,000 to 58,000,000. In addition, to effect this change, the total number of shares of capital stock authorized in the Certificate of Incorporation, as amended, would increase from 30,000,000 to 59,000,000, consisting of 58,000,000 shares of common stock and 1,000,000 shares of preferred stock. The proposed Amendment to our Certificate of Incorporation is included as Appendix A to this Proxy Statement.
The additional shares of common stock would provide us with greater flexibility and additional potential opportunities in the future by allowing us to take any one or a combination of general corporate initiatives to optimize stockholder value and support our growth plans, including: raise additional capital through common stock offerings; provide stock-based awards to attract, motivate, and retain employees, executive officers and non-employee Directors; acquire businesses, technologies, product franchises or other assets through business combinations and acquisitions using common stock as consideration; and issue common stock for other corporate purposes. The Board believes that these additional shares of common stock will provide us with needed flexibility to issue shares in the future without potential expense and delay incident to obtaining stockholder approval for a particular issuance, except as otherwise required by law or the rules and regulations of the New York Stock Exchange. We currently have no specific plans, arrangements, or understandings to issue any of the newly authorized shares that have otherwise not been disclosed.
All newly authorized shares of common stock when issued would have the same rights as the presently authorized shares of common stock, including the right to cast one vote per share and to receive dividends if and to the extent we declare and pay them. There would be no change in the par value of $0.02 per share. Stockholders would have no preemptive rights with respect to the issuance of additional common stock.
Any issuance of additional shares of common stock would increase the outstanding number of shares of common stock and dilute the percentage ownership of existing stockholders. The dilutive effect of an issuance could discourage a change of control by making it more difficult or costly. We are not aware of any specific effort to obtain control of us, and we have no present intention of using the proposed increase in authorized common stock to deter a change of control.
Approval of the amendment to the Certificate of Incorporation requires the affirmative vote of a majority of all outstanding common stock. The Board of Directors recommends a vote “For” approval of the Amendment to our Certificate of Incorporation to increase the authorized shares of common stock from 29,000,000 to 58,000,000.
PROPOSAL 4 — APPROVAL OF AN AMENDMENT TO THE AMENDED AND RESTATED PAR TECHNOLOGY CORPORATION 2015 EQUITY INCENTIVE PLAN
The Board has unanimously approved and voted to recommend that you approve, an amendment to the Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan. The amendment (the “Amendment”) increases the number of shares of common stock authorized for issuance by 700,000. The Board believes that the Company’s ability to grant stock-based awards is important to its continuing ability to attract, motivate and retain talented people.
The PAR Technology Corporation 2015 Equity Incentive Plan was originally adopted by our Board and approved by our stockholders at the 2015 annual meeting of stockholders. In 2019, the Board adopted, and the stockholders approved, the Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan (the “Plan”), which included an increase of 1,000,000 shares available for issuance under the Plan.
In 2019, we increased the equity portion of total compensation for our employees, executive officers, and non-employee Directors in order to drive performance, align incentives with stockholder value, and improve retention. As a result, the total number of shares of common stock available for future awards under the Plan is 160,243 as of March 27, 2020. Based on estimated usage, the Compensation Committee anticipates depleting these shares by the end of calendar 2020. In order to continue to have an appropriate supply of shares for stock-based awards to attract, motivate, and retain the talent required to successfully execute our business strategy, the Board believes that the additional 700,000 shares requested in the Amendment will provide the Compensation Committee with sufficient shares for our equity compensation program for approximately three years, depending on the size of our workforce, the estimated range of our stock price, historical forfeiture rates, and other factors.
Our executive officers and non-employee Directors have an interest in this proposal by virtue of their being eligible to receive equity awards under the Plan as amended.
While adding 700,000 shares to the Plan will increase the potential dilution to our current stockholders, our Board believes that our equity compensation program is appropriately managed. As shown in the table below, as of December 31, 2017, 2018 and 2019, stockholder dilution, measured by the quotient of the sum of (1) shares of common stock reserved for future awards, (2) outstanding, but unexercised stock options, and (3) unvested restricted stock outstanding, over the total number of shares of common stock outstanding, attributable to the Plan was 9.24%, 7.73% and 9.38%, respectively. Potential dilution as of March 27, 2020, inclusive of the additional 700,000 shares, would be 12.19%.
| | December 31, 2017 | | December 31, 2018 | | December 31, 2019 | | March 27, 2020 (with 700,000 additional shares) | |
| Shares reserved for future awards under Current Plan | 555,437 | | 378,194 | | 1,127,717 | | 860,243 | |
| Outstanding, but unexercised stock options | 761,141 | | 677,840 | | 365,693 | | 952,192 | |
| Unvested restricted stock outstanding | 158,574 | | 193,342 | | 65,494 | | 415,931 | |
| Total shares of common stock outstanding | 15,969,085 | | 16,171,879 | | 16,629,177 | | 18,275,044 | |
| Total dilution | 9.24% | | 7.73% | | 9.38% | | 12.19% | |
The Company’s three-year adjusted average annual burn rate as of December 31, 2019 is 2.1%, well below the Institutional Shareholder Services (“ISS”) “burn rate benchmark” for our industry of 3.93%.
| (Shares are stated in thousands) | | | | | | | |
| Weighted Average Number of Shares of Common Stock Outstanding | | | | | | | |
| | | | | | | 123 | |
| | | | | | | | |
| | | | | 262 | | 421 | |
| Granted Stock Options and Restricted Stock Burn Rate | | |
| |
| | |
| 3-year average (adjusted) Burn Rate 2.1% |
(1) Adjusted total reflects that ISS considers full-value awards to be more valuable than stock options. The adjustment is made based on the Company’s annual stock price volatility, such that 1 full value award will count as 2 option shares.
Plan Summary
Set forth below is a summary of the principal provisions of the Plan. We are proposing to amend the Plan solely to increase the shares available for issuance. The Company is not proposing to amend any of the provisions described below. The summary is qualified in its entirety by reference to the text of the Plan, which is attached as Appendix B to this Proxy Statement. We urge our stockholders to carefully review the Plan.
Plan Term. The present term of the Plan began on June 10, 2019, the date of stockholder approval of the Plan. No awards may be granted under the Plan after June 10, 2029, but awards previously granted may extend beyond that date unless terminated by the Board or Compensation Committee in accordance with the terms of those awards.
Eligible Participants. All employees, officers, directors, consultants and advisors of the Company are eligible to participate in the Plan. As of March 27, 2020, there were approximately 1,000 employees (including officers) and five directors eligible to participate in the Plan. Although consultants and advisors are eligible to participate, we have not historically granted stock-based awards to consultants and advisors.
Total Shares Authorized. If stockholders approve the Amendment, the Plan will include an aggregate of 860,243 shares available for issuance.
Administration and Authority. The Board has broad authority to administer the Plan, which it may delegate to the Compensation Committee, which is comprised solely of independent Directors. References hereafter in this Proposal 4 to the Board apply equally to the Compensation Committee when the Board delegates its authority under the Plan. The Board has the authority to grant and amend awards and, subject to the express limitations of the Plan, the Board has the authority to (i) to construe and determine award agreements, awards and the Plan, (ii) to prescribe, amend and rescind rules and regulations relating to the Plan and any awards thereunder, (iii) to determine the terms and conditions of the awards, and (iv) to make all other determinations or certifications and take such other actions in the judgment of the Board are necessary or desirable for the administration and interpretation of the Plan.
Award Types. Stock options, restricted stock, and such other stock-based awards as the Board or Compensation Committee may determine, including securities convertible into our common stock, stock appreciation rights, phantom stock awards and restricted stock units. The Board may grant stock options that are incentive stock options (ISOs) or non-qualified stock options. Only employees may receive ISOs. No stock option can be exercised more than ten (10) years from the date of grant.
Award Limits. Awards intended to qualify as incentive stock options may not become exercisable in any one calendar year for shares of common stock with an aggregate fair market value of more than $100,000. The Plan places an annual limit of $200,000 on the fair value of shares awarded to non-employee Directors.
No Repricing. The Board may not reprice stock options or stock appreciation rights without stockholder approval.
Clawback, Recovery, and Recoupment. All awards are subject to clawback, recovery or recoupment in accordance with any compensation clawback, recovery, or recoupment policy adopted by the Board or otherwise required by applicable law, government regulation or stock exchange listing requirement and, in addition to any other remedies available under such policy and applicable law, government regulation or stock exchange listing requirement, may require the forfeiture and cancelation of outstanding awards and the recoupment of any gains realized with respect to any awards. The Board may impose any such clawback, recovery, or recoupment provisions in an award agreement as the Board determines necessary or appropriate.
Change in Control. In connection with a Change in Control as defined under the Plan, the Board may (1) make provision for continuation of the award, assumption of the award by the acquiring entity or by substitution of the award on an equitable basis for the shares subject to the award, (2) accelerate vesting of an award, or (3) exchange of the award for the right to participate in an equity or benefit plan of any successor corporation.
Acceleration. The Board may at any time provide that any stock options shall become immediately exercisable in full or in part, that any restricted stock awards shall be free of some or all restrictions, or that any other stock-based awards may become exercisable in full or in part or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be, despite the fact that such action may cause application of Section 280G and Section 4999 of the Internal Revenue Code of 1983, as amended (the “Code”) or disqualify all or part of an incentive stock option award.
Recapitalization. In the event of certain corporate transactions or changes in corporate capitalization, the Board or the Compensation Committee will make appropriate and proportionate adjustments to the terms of the Plan (e.g., the maximum number of shares available and individual limits) and outstanding awards.
Tax Withholding. The issuance of common stock in satisfaction of an award under the Plan is conditioned on the participant having made arrangements for the satisfaction of tax withholding obligations, which a participant may satisfy, by making a cash payment or authorizing withholding from the participant’s compensation, and subject to prior approval of the Company by (i) causing the Company to withhold shares of common stock from the payment of an award or (ii) by delivering to the Company shares of common stock already held by the participant.
Transferability. Awards granted under the Plan generally may not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the participant, shall be exercisable only by the participant, except as the Board may otherwise provide.
Amendment/Termination. The Board has broad authority to amend, suspend or terminate the Plan, except where stockholder approval is required (i) by the rules of any securities exchange or inter-dealer quotation system on which the Company’s common stock is listed or traded or (ii) in order to continue to comply with applicable provisions of the Code and any regulations promulgated thereunder. Amendments may not materially adversely affect participants without the consent of the affected participants.
Certain Federal Income Tax Consequences
The following discussion of the quality,U.S. federal income tax consequences of awards under the Plan is based on present federal tax laws and regulations and does not justpurport to be complete. Foreign, other federal, state and local taxes not described below may also apply.
Incentive Stock Options. If a stock option is an ISO, the acceptability,employee does not realize income upon grant or exercise of the accounting principles,ISO, and no deduction is available to the reasonablenesscompany at such times, but the difference between the value of significant judgments,the shares of stock purchased on the exercise date and the clarityexercise price paid is an item of disclosurestax preference for purposes of determining the employee’s alternative minimum tax. If the shares of stock purchased upon the exercise of an ISO are held by the employee for at least two years from the date of the grant and for at least one year after exercise, any resulting gain is taxed at long-term capital gains rates.
If the shares are disposed of before the expiration of that period, any gain on the disposition, up to the difference between the fair market value of the shares at the time of exercise and the exercise price of the ISO, is taxed at ordinary rates as compensation paid to the employee, and the company is entitled to a deduction for an equivalent amount. Any additional gain recognized from the disposition in excess of the fair market value of the shares at the time of exercise is treated as short- or long-term capital gain depending on how long the shares have been held.
Non-Qualified Stock Options. If a stock option is a NQSO, the participant does not realize income at the time of grant of the NQSO, and no deduction is available to the company at such time. At the time of exercise, ordinary income is realized by the participant in an amount equal to the difference between the exercise price and the fair market value of the shares of stock on the exercise date, and the company is entitled to a deduction for such amount. Upon disposition, any appreciation or depreciation of the shares after the date of exercise will be treated as short- or long-term capital gain or loss depending on how long the shares have been held.
Stock Awards. Upon the grant of an award of restricted shares of stock, no income is realized by the participant (unless the participant makes an election under Section 83(b) of the Code), and the company is not allowed a deduction at that time. When the restricted shares vest, the participant realizes ordinary income in an amount equal to the fair market value of the restricted shares at the time of vesting, and, subject to the limitations of Section 162(m) of the Code, the company is entitled to a corresponding deduction at such time. Upon disposition, any appreciation or depreciation of the shares after the time of vesting will be treated as short- or long-term capital gain or loss depending on how long the shares have been held.
If a participant makes a timely election under Section 83(b) of the Code, then the participant recognizes ordinary income in an amount equal to the fair market value of the restricted shares at the time of grant (instead of the time of vesting), and, subject to the limitations of Section 162(m) of the Code, the company is entitled to a corresponding deduction at such time. Upon disposition, any appreciation or depreciation of the shares after the time of grant will be treated as short- or long-term capital gain or loss depending on how long the shares have been held.
Restricted Stock Units. The grant of a restricted stock unit (RSU) will not result in taxable income to the participant. Provided that the grant sets forth the time and form of payment (as required under Section 409A of the Internal Revenue Code), at the time the RSU award is paid to the participant in the consolidated financial statements); and (b) management's assessmentform of shares of Company stock, the participant will recognize ordinary income equal to the then-current fair market value of the effectivenessCompany stock) and the Company will be entitled to a corresponding tax deduction. Gains and losses realized by the participant upon disposition of any shares received upon payment of a stock-settled RSU will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the Company's internal control over financial reportingshares at the time of payment.
New Plan Benefits
We cannot determine the benefits or amounts that participants will receive and/or the number of shares of common stock that will be granted under the Plan because the Compensation Committee, in compliance with Sectionits discretion, will determine the amount and form of grants to eligible participants in any year. As of April [●], 2020, the closing price of a share of our common stock was $[●].
Board Recommendation
Approval of the amendment to the Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan requires the affirmative vote of a majority of votes cast and entitled to vote on this Proposal. The Board of Directors recommends a vote “For” approval of the Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan.
EQUITY COMPENSATION PLAN INFORMATION The following table shows the number of shares of common stock authorized for issuance under our equity incentive plans as of December 31, 2019.
Plan Category | | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-Average exercise price of outstanding options, warrants and rights | | | Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
| | (a) | | | (b) | | | (c) | |
Equity compensation plans approved by security holders | | | 410,043 | | | $ | 14.50 | | | $ | 1,127,717 | (1)
|
Equity compensation plans not approved by security holders | | | 67,273 | (2)
| | | --- | | | | --- | |
Total | | | 477,316 | | | $ | 12.45 | | | $ | 1,127,717 | |
(1) | This total reflects those shares available for issuance under the Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan. The ability to issue grants under our 2005 Equity Incentive Plan expired by its terms on December 28, 2015; however, awards previously granted under that plan remain valid and may extend beyond that date. |
(2) | Reflects restricted stock units issued by us in connection with our assumption of awards granted by Restaurant Magic to its employees and contractors prior to the closing of our acquisition of Restaurant Magic in December 2019. The restricted stock units vest in equal annual installments over three (3) years, subject to continued service requirements. |
TRANSACTIONS WITH RELATED PERSONS The Board of Directors has adopted a written “Related Party Transactions Policy & Procedure” (“Policy”), which provides that the Company will only enter into, ratify, or continue a related party transaction, when the Board, acting through the Nominating & Corporate Governance Committee, determines that the transaction is in the best interests of the Company and its stockholders. Pursuant to the Policy, the Nominating and Corporate Governance Committee reviews and either approves or disapproves all transactions or relationships in which the Company or any of its subsidiaries: (i) is a party, (ii) the amount of the transaction exceeds or is expected to exceed $120,000, and (iii) in which a director (director nominee), executive officer, a person who beneficially owns more than 5% of our common stock, or any immediate family member or affiliated entity of any of the foregoing persons (a “related party”), has a direct or indirect interest.
Except as set forth below, no transactions occurred during 2018 or 2019 in which the Company was a participant, the amount involved exceeded the lesser of $120,000 or 1% of the Company’s total assets at December 31, 2019 or December 31, 2018, and a related party had a direct or indirect material interest as defined in Item 404 of Regulation S-K of the Sarbanes OxleyExchange Act, and no such related party transaction is currently proposed.
● Karen E. Sammon, a member of the immediate family of John W. Sammon, a Director and a beneficial owner of more than 10% of our common stock, served in the role of Chief of Staff of the Company from April 2017 until March 2019. Ms. Sammon’s total compensation for 2018 was $405,750, comprised of a base salary of $300,000, 3,098 shares of restricted stock, and a non-qualified stock option to purchase 4,495 shares of our common stock. Of the shares of restricted stock granted to Ms. Sammon in 2018, 1,191 shares vested ratably on December 31, 2018, December 31, 2019, and December 31, 2020 subject to Ms. Sammon’s continued employment with the Company on the applicable vesting dates, and 1,907 shares vest on December 31, 2020 to the extent annual performance targets are achieved; the non-qualified stock option vests ratably over three years beginning on the one-year anniversary of the date of grant, for an exercise price of $22.18 per share. The aggregate grant date fair value of equity awards granted to Ms. Sammon in 2018 was $105,750. In connection with Ms. Sammon’s departure from the Company in March 2019, the Company entered into an agreement with Ms. Sammon; in consideration of a general release of claims in favor of the Company, we agreed to pay Ms. Sammon $138,461, payable in equal amounts in accordance with the Company’s normal payroll cycle, permit Ms. Sammon to vest in the remaining 33.33% of her May 5, 2016 stock option (16,667 shares), permit Ms. Sammon to vest on December 31, 2020 in 33.33% of the performance vesting shares of restricted stock granted to Ms. Sammon in August 2018 linked to the performance year ended December 31, 2018, pay the current employer portion of COBRA coverage through the earlier of December 31, 2019 and Ms. Sammon’s securing substitute medical coverage; provide Ms. Sammon with career coaching services up to $1,500 per month until the earlier of December 31, 2019 and Ms. Sammon’s subsequent employment, and pay Ms. Sammon 120 hours of earned, but unused vacation. Except as to the remaining 33.33% of her May 5, 2016 stock option and 33.33% of the August 2018 performance vesting shares linked to the performance year ended December 31, 2018, all unvested equity awards granted to Ms. Sammon were forfeited.
● John W. Sammon, III, a member of the immediate family of John W. Sammon, became an employee of ParTech, Inc. on October 13, 2014, serving as General Manager & Senior Vice President, SureCheck, until his departure from the Company in September 2018. Mr. Sammon’s total compensation for 2018 was $183,164, comprised of a base salary of $138,164, 1,318 shares of restricted stock, and a non-qualified stock option to purchase 1,913 shares of our common stock. Of the shares of restricted stock granted to Mr. Sammon in 2018, 507 shares vested ratably on December 31, 2018, December 31, 2019, and December 31, 2020 subject to Mr. Sammon’s continued employment with the Company on the applicable vesting dates, and 811 shares vest on December 31, 2020 to the extent annual performance targets are achieved; the non-qualified stock option vests ratably over three years beginning on the one-year anniversary of the date of grant, for an exercise price of $22.18 per share. The aggregate grant date fair value of equity awards granted to Mr. Sammon in 2018 was $45,000. In connection with Mr. Sammon’s departure, all unvested equity awards were forfeited and, in consideration of a general release of claims in favor of the Company, the Company paid Mr. Sammon $47,307.
● During 2018, Karen E. Sammon and John W. Sammon, III were the principals of Sammon and Sammon, LLC, doing business as Paragon Racquet Club. For a portion of 2018, Paragon Racquet Club leased a building from us on a month-to-month basis at the base rate of $9,775 per month (or an aggregate annual amount of $39,100) and provided complimentary memberships to the Company’s local employees, which were valued at $6,350. Expenses related to the facility were $74,000 during 2018. The Nominating and Corporate Governance Committee reviewed this arrangement and, after consulting with Ms. Sammon and Mr. Sammon, terminated this arrangement as of April 30, 2018.
PROPOSAL 5 – RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT AUDITORS
Independent Public Accountants. The Audit Committee has appointed Deloitte & Touche LLP (“Deloitte & Touche”) as the Company’s independent auditor for its fiscal year ending December 31, 2020. BDO USA, LLP (“BDO”) served as the Company’s independent auditor for its fiscal years ended December 31, 2019 and December 31, 2018.
As previously reported on a Current Report on Form 8-K filed with the SEC on March 24, 2020 (“Current Report”), on March 19, 2020, the Audit Committee approved the dismissal of BDO and approved the appointment of Deloitte & Touche as our independent auditor for the fiscal year ending December 31, 2020.
BDO’s audit report on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2019 and December 31, 2018 did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that BDO’s audit report on the Company'sCompany’s consolidated financial statements as of and for the fiscal year ended December 31, 20132018 contained an explanatory paragraph stating that “As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, has defaulted on covenants related to its credit agreement, and has not generated sufficient cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.”
During the fiscal years ended December 31, 2019 and December 31, 2018, and in the subsequent interim period through March 19, 2020, there were preparedno disagreements with BDO (within the meaning of Item 304(a)(1)(iv) of Regulation S-K of the rules and regulations (“Regulation S-K”) of the SEC) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure that if not resolved to BDO’s satisfaction, would have caused BDO to make reference thereto in accordanceits reports.
The Company provided BDO with U.S. GAAP. In addition,a copy of the foregoing disclosures and a copy of the Current Report and requested that BDO furnish the Company with a copy of its letter addressed to the SEC stating whether BDO agreed with such disclosures. A copy of BDO’s letter dated March 24, 2020 is filed as Exhibit 16.1 to the Current Report. BDO declined to comment or provide further clarity on the disclosures contained in this Proxy Statement.
On March 19, 2020, the Audit Committee has held private sessionsapproved the appointment of Deloitte & Touche as the Company’s new independent registered public accounting firm for its fiscal year ending December 31, 2020 and related interim periods. The Company entered into an engagement letter with Deloitte & Touche dated March 23, 2020.
During the Company’s two most recent fiscal years ended December 31, 2019 and December 31, 2018, and for the subsequent interim period through March 23, 2020, neither the Company nor anyone on its behalf consulted Deloitte & Touche regarding theseany of the matters withset forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
Ratification of the Company's Chief Accounting Officer, Internal Audit and BDO. In relianceAppointment of Deloitte & Touche LLP. Although your vote to ratify the appointment of Deloitte & Touche is not binding on the reviews and discussions with both management and BDO referred to above,Company, the Audit Committee recommended towill consider your vote in determining the Board and the Board approved, the inclusionappointment of the audited consolidated financial statements in the Company's Annual Report on Form 10-Kour independent auditors for the fiscal year ended December 31, 2013 for filing with the SEC.
next year. The Audit Committee consideredreserves the right, in its sole discretion, to change an appointment at any time during the year if it determines that such a change would be in our best interests.
Ratification of the appointment of Deloitte & Touche as our independent auditors for 2020 requires the affirmative vote of a majority of votes cast and pre-approved any non-audit services provided by BDO during 2013 and 2012 andentitled to vote on this Proposal.
The Board of Directors recommends a vote “For” ratification of the fees and costs billed and expected to be billed for those services. The Audit Committee also considered whether the non-audit services provided by BDO were compatible with maintaining auditor independence. In reliance on the reviews and discussions withappointment of Deloitte & Touche LLP as the Company’s management, and BDO, the Committee is satisfied that non-audit services provided to the Company by BDO are compatible with and did not impair the independence of BDO. A breakdown of the fees and costs billed to the Company by BDO during 2013 and 2012 is provided below in this Proxy Statement under the heading, “Principal Accounting Fees and Services”.independent auditors for 2020.
This report is provided by the following independent directors, who comprise the Audit Committee.35
Sangwoo Ahn
(Chairman)
| Kevin R. Jost | James A. Simms |
PRINCIPAL ACCOUNTING FEES AND SERVICES
Principal Accounting Fees and Services
The following table presents fees billed to the Company for professional services rendered by BDO USA, LLP during the years ended December 31, 20132019 and December 31, 2012.2018 by BDO USA, LLP.
| | BDO USA, LLP | | | Fiscal Year Ended | |
Type of Fees | | 2013 | | | 2012 | | | 2019 | | 2018 | |
Audit Fees(1) | | $ | 366,000 | | | $ | 335,000 | | | $ | 717,530 | | | $ | 716,965 | |
| | | | | | | | | |
Audit-Related Fees | | | 0 | | | | 0 | | | | | | | | | |
| | | | | | | | | |
Tax Fees | | | 4,000 | | | | 0 | | | | | | | | | |
All Other Fees | | | 0 | | | | 0 | | | | | | | | | |
Total: | | $ | 370,000 | | | $ | 335,000 | | | $ | 717,530 | | | $ | 716,965 | |
In accordance with the SEC's rules and definitions, the categories of fees in the above table are defined as follows:
Audit Fees are fees for professional services rendered for the audit of the Company's consolidated | (1) | Audit Fees are fees for professional services rendered for the audit of the Company’s annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements. For the year ended December 31, 2019, this included fees related to a comfort letter and consents issued for certain registration statements. |
Audit-Related Fees are fees related to the performance of the audit or review of the financial statements and not reported within the audit fees above.
Tax Fees are fees for professional services for federal, state and international tax compliance, tax advice and tax planning.
All Other Fees are for any services not included in the first three categories.
Consistent with SEC policies regarding auditor independence, theThe Audit Committee has established a policy to pre-approve all auditing services and permitted non-audit services, including the fees and terms thereof, performed by the Company’s independent registered public accounting firm.auditors. As such, all auditing services and permitted non-audit services, including the fees and terms thereof, performed by BDO were pre-approved by the independent registered public accounting firm were pre-approved. The Audit Committee has concluded that the provision of the non-audit services listed above is compatible with maintaining the independence of the Company's independent registered public accounting firm.Committee.
The Audit Committee has selected BDO USA, LLP to serve as the Company's independent principal accountant for the current year. One or more representatives of BDODeloitte & Touche are expected to be in attendance atattend the Annual Meeting, where they will have the opportunity to make a statement, if they so desire, and be available to answer appropriate questions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regardingBDO will attend the ownership of the Company's Common Stock as of February 28, 2014, by each Director, each of the Named Executive Officers, all Directors and Executive Officers as a group and certain other principal beneficial holders. Under SEC regulation, "beneficial ownership" is defined as sole or shared voting or dispositive power over the Company's Common Stock.
Name of Beneficial Owner or Group (1) | Amount and Nature of Beneficial Ownership (2) | Percent of Class (3) |
Dr. John W. Sammon | 4,742,833 (4) | 30.11% |
Ronald J. Casciano | 251,200 (5) | 1.59% |
Sangwoo Ahn | 128,100 (6) | * |
James A. Simms | 68,100 (7) | * |
Stephen P. Lynch | 63,100 (8) | * |
Robert P. Jerabeck | 55,200 (9) | * |
Kevin R. Jost | 39,134 (10) | * |
Paul B. Domorski | 24,000 (11) | * |
All Directors and Executive Officers as a Group (11 persons) | 5,933,690 | 37.31% |
Other Principal Beneficial Owners | | |
Deanna D. Sammon | 2,092,596 (12)** | 13.28% |
J.W. Sammon Corp. 408 Lomond Place, Utica, NY 13502 and Sammon Family Limited Partnership 408 Lomond Place, Utica, NY 13502 | 2,062,096 (13)** | 13.09% |
Edward W. Wedbush P.O. Box 30014 Los Angeles, CA 90030-0014 | 873,819 (14) | 5.55% |
Dimensional Fund Advisors LP Palisades West, Building One 6300 Bee Cave Road Austin, TX 78746 | 771,536 (15) | 4.90% |
* | Represents less than 1% |
** | These shares are reported in the manner required by Item 403 of Regulation S-K. For clarity, it is noted that 2,062,096 of these shares are included in the total beneficial ownership holdings of Dr. John W. Sammon as set forth in the table. |
(1) | Except as otherwise noted, the address for each beneficial owner listed above is c/o PAR Technology Corporation, PAR Technology Park, 8383 Seneca Turnpike, New Hartford, NY 13413-4991. |
Annual Meeting.
(2) | Except as otherwise noted, each individual has sole voting and investment power with respect to all shares. |
2021 ANNUAL MEETING
(3) | “Percent of Class” is calculated utilizing 15,752,566 shares of Common Stock, which is the number of the Company’s shares of Common Stock outstanding as of February 28, 2014, and the number of options held by the named beneficial owners, if any, that become exercisable within 60 days thereafter. |
(4) | Includes 100 shares held jointly with Dr. Sammon's wife, Deanna D. Sammon, and 2,062,096 shares held by the Sammon Family Limited Partnership, for which Dr. Sammon possesses shared voting and dispositive power. The figure does not include 30,400 shares beneficially owned by Mrs. Sammon in which Dr. Sammon disclaims beneficial ownership. |
Stockholder Proposals
(5) | Includes 65,000 shares Mr. Casciano has or will have the right to purchase asWe will include in our proxy materials for our 2021 annual meeting of stockholders any stockholder proposal that complies with Rule 14a-8 under the Exchange Act. Rule 14a-8 requires that we receive such proposals not less than 120 days prior to the one-year anniversary of April 29, 2014 pursuant to the Company's stock option plans and 43,000 shares pledged as security. |
(6) | Includes 5,600 shares Mr. Ahn has or will have the right to purchase as of April 29, 2014 pursuant to the Company's stock option plans and 76,000 shares held by the Sangwoo Ahn Living Trust. |
(7) | Includes 5,600 shares Mr. Simms has or will have the right to purchase as of April 29, 2014 pursuant to the Company's stock option plans. Includes 13,500 shares pledged as security and 42,500 shares held jointly with his wife, Nancy G. Simms. |
(8) | Includes 45,000 shares Mr. Lynch has or will have the right to purchase as of April 29, 2014 pursuant to the Company's stock option plans. |
(9) | Includes 12,500 shares which Mr. Jerabeck has or will have the right to acquire as of April 29, 2014 pursuant to the Company's stock option plans. |
(10) | Includes 9,134 shares Mr. Jost has or will have the right to purchase as of April 29, 2014 pursuant to the Company's stock option plans and 12,500 shares held by the Kevin R. Jost Living Trust. |
(11) | Information related to Mr. Domorski's holdings was obtained from the Non-objecting Beneficial Owner list dated June 30, 2013. It includes 12,000 shares held as an IRA rollover for the benefit of Mr. Domorski and 12,000 shares held jointly with his wife, Terri Domorski. |
(12) | Information related to this shareholder was obtained from Schedule 13G filed with the SEC on February 14, 2013 by John W. Sammon, Deanna D. Sammon, J.W. Sammon Corp. and Sammon Family Limited Partnership ("the Partnership"). Amount includes 30,400 shares for which Mrs. Sammon holds sole voting and dispositive power, 2,062,096 shares held by the Partnership for which Mrs. Sammon possesses shared voting and dispositive power and 100 shares held jointly with her husband, Dr. John W. Sammon. Excludes 2,680,737 owned by Ms. Sammon's spouse, Dr. John W. Sammon, as to which she disclaims beneficial ownership. It is noted that 2,062,196 of these shares are included in the beneficial ownership holdings indicated in the table for Dr. John W. Sammon. |
(13) | Information related to this shareholder was obtained from Schedule 13G filed with the SEC on February 14, 2013, by John W. Sammon, Deanna D. Sammon, J.W. Sammon Corp ("JWSC"), and Sammon Family Limited Partnership (the "Partnership"). 2,062,096 shares are held by the Partnership. JWSC is general partner of the Partnership. Dr. Sammon and his spouse, Deanna D. Sammon are the sole owners of JWSC. The Partnership and JWSC, as general partner of the Partnership, each possess sole voting and dispositive power over the shares. Dr. and Mrs. Sammon are the sole owners of JWSC and, as such, hold shared voting and dispositive power over the shares. As a result, the Partnership, JWSC, John W. Sammon and Deanna D. Sammon are each deemed to be beneficial owners of the 2,062,096 shares held by the Partnership. It is noted that these shares are included in the beneficial ownership holdings indicated in the table for Dr. John W. Sammon. |
(14) | Information related to this shareholder was obtained from Schedule 13G/A filed with the SEC on February 14, 2014 by Edward W. Wedbush, Wedbush, Inc., and Wedbush Securities, Inc. Edward W. Wedbush reports he possesses sole voting and dispositive power of 285,916 shares, shared voting power of 766,967 shares and shared dispositive power of 873,819 shares. Mr. Wedbush reports he is Chairman of the Board and possesses approximately 50% ownership of the issued and outstanding shares of Wedbush, Inc. Wedbush, Inc. reports sole voting and dispositive power of 370,468 shares, shared voting and dispositive power of 481,051 shares. Wedbush Inc. is the sole shareholder of Wedbush Securities, Inc. Mr. Wedbush is President of Wedbush Securities, Inc. which reports sole voting and dispositive power of 49,951 shares, shared voting power of 481,051 shares and shared dispositive power of 587,903 shares. The reporting parties indicate in their filing that the inter-relationship of the parties should not be construed as an admission of beneficial ownership by Mr. Wedbush of the securities held or controlled by Wedbush, Inc. or Wedbush Securities Inc. |
(15) | Information related to these shareholders was obtained from Schedule 13G/A filed with the SEC on February 10, 2014 by Dimensional Fund Advisors LP a Delaware limited partnership. Dimensional Fund Advisors LP possesses sole voting power of 751,177 shares and sole dispositive power of 771,536 shares and is deemed to be the beneficial owner of an aggregate of 771,536 shares. In its filing, Dimensional Fund Advisors LP states it is an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, which furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the "Funds".) In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor sub-advisor and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively "Dimensional") possess voting and/or investment power over the securities of the Company that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Company held by the Funds. However, all securities reported in the Schedule 13G are owned by the Funds. Dimensional disclaims beneficial ownership of such securities and states that the filing of the Schedule 13G shall not be construed as an admission that Dimensional Fund Advisors LP or any of its affiliates is the beneficial owner of any of the Company's securities for any other purposes than Section 13(d) of the Security Exchange Act of 1934. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and Directors, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Such persons are required by SEC regulations to furnish the Company with copies of all such filings. Based solely on its review of the copies of such reports received by the Company and written representations from reporting persons, the Company believes that during 2013 all reports for the Company's executive officers and Directors that were required to be filed under Section 16(a) were filed on a timely basis except that a Form 4 in connection with a gifting transaction by Ms. Karen E. Sammon was filed late.
Directors who are employees of the Company are not separately compensated for serving on the Board. All Directors are reimbursed for reasonable expenses incurred in attending meetings. For 2013, Director compensation consisted of (i) a fixed annual cash retainer paid to Directors (with no additional attendance fee for attendance at Board and committee meetings), and (ii) an award of 15,000 shares of restricted stock to independent Directors vesting at the rate of 25% every 90 days from the date of grant,this Proxy Statement, or by December [●], 2020. If the proposal is in compliance with full vesting occurring 360 days after the date of grant, provided, as of the vesting dates, the independent Director's position had not been vacated by reason of resignation or removal for cause. Under terms of the grants, transfer of such stock is prohibited while the recipient serves as a Director except to the extent necessary to provide reimbursement for taxes incurred as a result of the vesting of such grants. The grants also stipulate that the Board may, in its discretion, waive any forfeiture triggered by the vacating of the independent Director and allow the grants to vest as scheduled. The Compensation Committee engaged the Burke Group as its compensation consultant for 2013 to provide market trend information in connection with compensation of the Company's Directors. The Burke Group was tasked with assisting the Committee in understanding trends and best practices in connection with director compensation in public companies. The Compensation Committee utilized the information provided by the compensation consultant in formulating its recommendations to the Board in connection with compensation to the Company's outside Directors. Upon recommendation of the Compensation Committee, the Board approved annual cash retainers at the same level as paid in 2012:
Independent Directors | $75,000 |
Presiding Director and Chairman of Audit Committee | $15,000 |
Non-independent / Non-management Directors | $65,000 |
In September 2013, upon recommendation of the Compensation Committee, the Board approved an additional annual cash retainer of $25,000 to Chairman Ahn for service as the non-executive Chairman effective as of October 1, 2013 with Chairman Ahn receiving a prorated payment of $6,250 during 2013.
The following table shows compensation information for the Company's non-management Directors for fiscal 2013.
Director Compensation for Fiscal 2013
Name of Director | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | | All Other Compen-sation ($) | | | Total ($) | |
Sangwoo Ahn | | | 96,250 | (2) | | | 63,450 | | | | 0 | (3) | | | 0 | | | | 0 | | | | 0 | | | | 159,700 | |
Kevin R. Jost | | | 75,000 | | | | 63,450 | | | | 0 | (4) | | | 0 | | | | 0 | | | | 0 | | | | 138,450 | |
Dr. John W. Sammon | | | 65,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 65,000 | |
James A. Simms | | | 75,000 | | | | 63,450 | | | | 0 | (5) | | | 0 | | | | 0 | | | | 0 | | | | 138,450 | |
(1) | The dollar amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions made in these valuations are discussed in footnote 7 of the Company’s 2013 Consolidated Financial Statement included in the Company’s Annual Report on 10-K filed with the SEC on March 14, 2014. There can be no assurance that the grant date fair value amounts will be realized. Each independent Director received a grant for 15,000 restricted shares of the Company’s Common Stock on April 29, 2013, in exchange for payment of $.02 per share. The grant date fair value of the aforementioned grants to each of the independent Directors was $4.23 per share. |
(2) | The dollar amount includes the sum of Mr. Ahn’s annual retainer of $75,000, the $15,000 for serving as Presiding Director and Chairman of the Audit Committee, and $6,250 which is the prorated portion received by Director Ahn for his service as the non-executive Chairman. |
(3) | At the end of 2013, Mr. Ahn had options to purchase an aggregate of 5,600 shares of the Company’s Common Stock and total aggregate restricted stock awards of 41,500 shares. |
(4) | At the end of 2013, Mr. Jost had options to purchase an aggregate of 9,134 shares of the Company’s Common Stock and total aggregate restricted stock awards of 41,500 shares. |
(5) | At the end of 2013, Mr. Simms had options to purchase an aggregate of 5,600 shares of the Company’s Common Stock and total aggregate restricted stock awards of 41,500 shares. |
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
The following table lists all persons who served as executive officers of the Company during all or part of 2013, and all persons chosen to become executive officers in 2014, their respective ages as of April 11, 2014, positions held by such persons and occupations for the last five years. Unless otherwise stated, all of the current executive officersrequirements set forth in Rule 14a-8, we will include the stockholder proposal in our proxy statement and place it on the form of proxy issued for the 2021 annual meeting. Stockholder proposals submitted for inclusion in our proxy materials should be mailed to the following address: Corporate Secretary, PAR Technology Corporation, 8383 Seneca Turnpike, New Hartford, New York 13413-4991.
Stockholder Nominations of Directors and Other Annual Meeting Business
As described in our bylaws, stockholders may bring nominations for directors and other items of business before the 2021 annual meeting of stockholders only with timely and proper notice to the Company. To be considered timely, our Corporate Secretary must receive notice of stockholder nominations for directors and/or other items of business not more than 90 days nor less than 60 days before the 2021 annual meeting of stockholders. However, in the event the Company are serving open ended terms. There is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected.
Name | Age | Positions | Occupation for Last 5 Years |
Ronald J. Casciano | 60 | ·Chief Executive Officer, President and Treasurer, PAR Technology Corporation (as of March 25, 2013)
·Senior Vice President, Chief Financial Officer and Treasurer, PAR Technology Corporation
| On March 25, 2013, Mr. Casciano was named Chief Executive Officer and President and continues to hold the office of Treasurer of PAR Technology Corporation. Mr. Casciano, a Certified Public Accountant, had been Vice President, Chief Financial Officer and Treasurer of the Company since June 1995. In 2012, he was promoted to Senior Vice President. Mr. Casciano held the office of Chief Accounting Officer of the Company from 2009 to May 2012. |
Paul B. Domorski | 57 | Chairman, Chief Executive Officer and President, PAR Technology Corporation
(through March 19, 2013)
| Mr. Domorski had been elected Chairman, Chief Executive Officer and President of the PAR Technology Corporation in April 2011 and resigned from the Company in March 2013. Previously, Mr. Domorski served as President, Chief Executive Officer and a Director of EMS Technologies, Inc., a publicly-traded manufacturer of communication equipment and systems which was acquired by Honeywell International, Inc. in 2011. Prior to joining EMS, he was vice president of service operations at Avaya Corporation. He served as President and Chief Executive Officer during the restructuring of RSL Communications Ltd., an international provider of communications services.
|
Lawrence W. Hall | 54 | President, PAR Springer-Miller Systems, Inc. | Mr. Hall was named President, PAR Springer-Miller Systems, Inc., a wholly owned subsidiary of the Company, in
August 2008. Previously, Mr. Hall was President and Chief Executive Officer of Hotel Booking Solutions, Inc.
|
Robert P. Jerabeck | 58 | Executive Vice President and Chief Operating Officer, PAR Technology Corporation | Mr. Jerabeck was appointed Executive Vice President and Chief Operating Officer of the Company effective as of April 11, 2014. Prior to joining the Company, Mr. Jerabeck, held various positions with a unit of Honeywell International Inc., Honeywell Scanning and Mobility, a global supplier of data collection and management solutions for in-premises, mobile and wireless applications. From March 2012 until joining the Company, Mr. Jerabeck served as Director, Quality Assurance, and, from May 2011 through September 2012, he led the integration of the EMS Global Tracking and LXE businesses acquired by Honeywell Scanning and Mobility. Mr. Jerabeck served as Chief Technology Officer for Honeywell Scanning and Mobility from January 2008 to May 2011. At the time of its acquisition by Honeywell in December 2007, Mr. Jerabeck held the position of Chief Operating Officer for Hand Held Products, Inc., which he joined in 1986. |
Name | Age | Positions | Occupation for Last 5 Years |
Stephen P. Lynch | 57 | President, PAR Government Systems Corporation and Rome Research Corporation | Mr. Lynch was named President of two of the Company's wholly owned subsidiaries, PAR Government Systems Corporation and Rome Research Corporation, in January 2008. Previous to his appointment to the position of President, Mr. Lynch served as Executive Vice President of PAR Government Systems Corporation since July 2006. |
Steven M. Malone | 33 | Vice President, Chief Accounting Officer and Corporate Controller, PAR Technology Corporation | Mr. Malone, a Certified Public Accountant, was named Vice President and Chief Accounting Officer of the Company in May 2012. Mr. Malone holds these positions concurrently with the position of Corporate Controller, a position he has held from June 2010. Prior to joining the Company as the Director of Financial Analysis and Planning in May 2009, Mr. Malone was employed by KPMG LLP as Audit - Senior Manager. |
Karen E. Sammon | 49 | President, ParTech, Inc. | Ms. Sammon was named President, ParTech, Inc., a wholly owned subsidiary of the Company, effective April 1, 2013. Ms. Sammon is the former Senior Vice President of The CBORD Group, Inc. ("CBORD") which she joined in 2010. CBORD is a provider of cashless card solutions, food and nutrition service management software, and integrated security solutions for colleges and universities, healthcare facilities, supermarkets, and corporations. While at CBORD, Ms. Sammon had responsibility for strategic planning and P&L management of the US and Asia-Pacific operations. Prior to joining CBORD, Ms. Sammon held a variety of positions with ParTech, Inc. from 1993 to 2010, including Chief Product & Strategy Officer; President, PAR Software Solutions; Vice President, Business Development and Director of Marketing. Ms. Sammon is the daughter of Dr. John W. Sammon, Director, Chairman Emeritus and Founder of the Company. |
The Company qualifies as a “smaller reporting company” as defined by Item 10(f) of Regulation S-K. As such, the “Named Executive Officers” for the Company are limited to the Company’s principal executive officer and the two most highly compensated other executive officers who were serving as executive officers at the end of the Company’s last completed fiscal year. The following narrative describes the Company’s compensation objectives, policies and elements of compensation for its executive officers, including its Named Executive Officers for 2013: Ronald J. Casciano, Chief Executive Officer and President (who until his promotion in March 2013 served as the Company’s Chief Financial Officer); Stephen P. Lynch, President of PAR Government Systems Corporation and Rome Research Corporation, wholly owned subsidiaries of the Company, and Robert Jerabeck, Executive Vice President & Chief Operating Officer. This narrative will also include compensation information for Paul Domorski, former Chief Executive Officer and President. Specific discussion regarding the method used to determine compensation for these Named Executive Officers for the 2013 fiscal year is also provided which includes the material factors necessary for an understanding of the information provided in the Summary Compensation Table which follows.
Philosophy
The Company’s compensation philosophy regarding executive compensation is to structure programs that motivate executive officers to grow the Company’s revenues and profits, creating long-term value for shareholders. To achieve this, compensation programs have been designed and implemented to (i) reward executive officers for operating performance and leadership, (ii) align their interests with shareholders, and (iii) encourage them to remain with the Company.
Objectives
The Company's compensation objectives are to:
Reward performance and behaviors that reinforce the values of leadership, integrity, accountability, teamwork, innovation, and quality;
Achieve the Company's overall performance goals;
Ensure the alignment of compensation with the performance objectives of each of our employees, including executive officers; and
Ensure alignment with management and shareholder interests.
Compensation Policy
Consistent with our philosophy, the Compensation Committee designs compensation programs for the Company's executive officers in accordance with the following overriding policies:
Compensation must be tied to the Company's general performance and achievement of financial and strategic goals;
Compensation opportunities should be competitive with those provided by other companies of comparable size engaged in similar businesses; and
Compensation should provide incentives that align the long-term financial interests of the Company's executive officers with those of its shareholders.
In the view of the Compensation Committee, compensation paid to the executive officers, including the Named Executive Officers, in 2013 was consistent with the above policies. The primary responsibility of the Company's Chief Executive Officer and its other executive officers is the enhancement of shareholder value through balancing the requirements of long-term growth with the achievement of short term performance. The contribution an executive officer has made to achieve the Company's short term strategic performance objectives as well as that executive officer's anticipated contribution toward long term objectives provide the basis upon which the executive officer's individual compensation awards are established.
Compensation Consultant
The Compensation Committee has the authority to engage independent advisors to assist it in carrying out its duties. For 2013, the Compensation Committee engaged the Burke Group as its independent advisor with respect to executive compensation and incentive plan design. During 2013, the Burke Group's services to the Compensation Committee included providing an overview of current trends and best practices for executive compensation in public companies, benchmark data for salaries, incentives and equity grants, long-term incentive design alternatives, and pay recommendations based on objectives, compensation philosophy, and market practices. Except for providing services to the Compensation Committee, the Burke Group has not provided any services to the Company, any member of the Company's management, or any member of the Compensation Committee.
Elements of Executive Compensation
To meet its compensation policy objectives, the Company compensated executive officers through a combination of Base Salary, Incentive Compensation (short-term), Equity Compensation, Deferred Compensation, and various benefits, including medical and 401(k) plans generally made available to all employees of the Company.
The determination of the Company’s executive officers’ compensation is solely within the purview of the Compensation Committee. In determining and assessing the appropriateness of the compensation for all executive officers, the Compensation Committee solicits and considers the self-assessment of each executive as to his or her performance against pre-established goals and objectives, as well as the executive’s involvement in the day to day operations of the relevant business unit. In addition, the Compensation Committee also engaged an independent compensation consultant that supplied benchmark data from two third party surveys: the Towers Watson Top Management Compensation Report and the Economic Research Institute Executive Compensation Assessor. These third party compensation surveys are utilized by the Compensation Committee to evaluate the compensation levels of chief executive officers at companies of similar size and geographic location within the high technology sector.
In deciding compensation programs for the Chief Executive Officer, the Compensation Committee considered the third party information, market trends and best practices along with an assessment of individual contribution. The Chief Executive Officer does not have any role in establishing his compensation.
Base Salary. In setting the annual base salary of the Chief Executive Officer and in reviewing and approving the annual base salaries of the other executive officers, the Compensation Committee considered the salaries of executives in similar positions, the level and scope of responsibility, experience and performance of the individual executive officers, the financial performance of the Company and other overall general economic factors.
The Compensation Committee utilizes the benchmark data mentioned previously when reviewing annual base salaries. An objective of the Compensation Committee is to approve the salary for each executive officer near the average midpoint for similar positions identified in the surveys, taking into account variables such as industry, company size, geographic location, and comparison of duties. Consideration is also given to the individual performance of that executive officer, the performance of the organization over which the executive officer has responsibility, the performance of the Company and general economic conditions (with each factor being weighted as the Compensation Committee deems appropriate).
Incentive Compensation. The purpose of the Company's incentive compensation program for its executive officers is to provide financial incentive for meeting and exceeding pre-established financial performance goals for the respective businesses under their control. In general, the financial performance goals of the executive officers are approved by the Board.
For 2013, the financial performance measures taken into consideration to determine an appropriate incentive compensation bonus for executive officers were Consolidated Net Income and Business Unit Profit Before Tax. In 2013, the annual incentive compensation targets for the Named Executive Officers ranged from 50% to 65% of base salary. Named Executive Officers may earn from 0% to 200% of the individual target established for their business depending on actual financial performance compared to the actual goals of the operating plan. The incentive compensation bonus (assuming that each of the two aforementioned performance objectives were achieved at 100%) that could have been paid to Mr. Casciano, as a percentage of base salary, was 65%, while the percentage of base salary that could have been paid to Mr. Lynch and Mr. Jerabeck was 50%. The calculation of the award is based on performance level achievement of greater than 80% of the established goal. Cash payments are made following the completion of the Company’s yearly audit.
For 2013, total awards paid to executive officers based on performance of their respective business units could not exceed a pre-determined percentage of consolidated net profit. Mr. Casciano and Mr. Jerabeck were measured on the performance of the Company as a whole, and due to the failure to achieve operating plan goals for the Company, neither received incentive compensation for 2013. Mr. Lynch was measured on the performance of the Government segment and received incentive compensation of $247,061, representing 180% of target, for 2013 performance of the two business units that make up the Government segment.
Equity Compensation. Stock options granted under the 2005 Equity Incentive Plan may be either Incentive Stock Options as defined by the Internal Revenue Code (“Incentive Stock Options”) or options which are not Incentive Stock Options (“Non-Qualified Stock Options”). Options generally become exercisable noprovides less than one year after their grant and expire 10 years after70 days’ notice or prior public disclosure of the date of the grant. Option grants are discretionary2021 annual meeting of stockholders, a stockholder’s notice must be received not later than the close of business on the tenth (10th) day following the date on which the Company gives such notice or makes prior public disclosure.
Based on an assumed annual meeting date of June 4, 2021, the deadline for stockholders to provide timely notice of director nominations and/or other items of business will be no earlier than March 6, 2021, and the amount of the grant reflects of the value of the recipient’s position, as well as the current performance and continuing contribution ofno later than April 5, 2021. Stockholders must mail written notice that individualcomplies with all requirements set forth in our bylaws to the Company. In keeping with its philosophy of providing long-term financial incentives that relate to improvement in long-term shareholder value, the Company provided for a Long Term Incentive (“LTI”) program under the Company’s 2005 Equity Incentive Plan consisting of options, time vesting restricted shares and performance vesting restricted shares.following address: Corporate Secretary, PAR Technology Corporation, 8383 Seneca Turnpike, New Hartford, New York 13413-4991. We recommend all submissions be sent by Certified Mail — Return Receipt Requested.
| By Order of the Board of Directors, |
| |
| Cathy A. King |
| Corporate Secretary |
April [●], 2020 | |
Grants made in connection with Mr. Casciano’s promotion and Mr. Jerabeck’s employment offer were as follows. For Mr. Casciano, a grant under the LTI program was made in the amount
A copy of $212,600, which consisted of 33% restricted stock shares, time vesting as of March 31, 2014; and 67% performance shares (i.e. restricted stock vesting over two years based on achievement of certain financial performance objectives). For these awards, the financial performance objectives are a series of annual Consolidated Profit Before Tax targets, with 50% of performance shares vesting annually upon achievement of these targets for 2014 and 2015. The terms and conditions of the award made to Mr. Casciano can be found as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year 2013 filed with the SEC on March 14, 2014. For Mr. Jerabeck, a grant of 50,000 options was made on April 15, 2013. This award consisted of options for the purchase of Company Common Stock, time-vested 25% per year over four years. The terms and conditions of the award made to Mr. Jerabeck can be found as an exhibit to the Company’s Quarterly Report on Form 10-Q for the second quarter, 2012 filed with the SEC on August 14, 2012.
On June 19, 2013, the Board approved a grant of time-vested restricted shares to senior executives. Grants were extended to Mr. Casciano, Mr. Lynch and Mr. Jerabeck in the amount of 12,500 shares; 8,500 shares; and 9,500 shares respectively. These grants will vest as follows: 50% over two years on the anniversary of the grant in 2014 and 2015. The terms and conditions of the awards made to Messrs. Casciano, Lynch and Jerabeck can be found as an exhibit to the Company’s Quarterly Report on Form 10-Q for the second quarter, 2013, filed with the SEC on August 8, 2013.
On December 11, 2013, the Board made a special grant of stock options to Mr. Casciano, Mr. Lynch and Mr. Jerabeck in the amount of 150,000 options; 100,000 options and 150,000 options respectively in recognition of ongoing leadership to the Company. Each award consisted of options for the purchase of Common Stock, vesting 25% per year over four years. In addition to the aforementioned special grants of stock options, on December 11, 2013, the Board also approved LTI Program equity awards to Mr. Casciano and Mr. Jerabeck with a value at the time of grant of $116,416 and $76,725, respectively. Each award consisted of options for the purchase of Company Common Stock, time-vested 33% per year over three years, representing 21% of the value of the award, restricted stock shares, time vested as of March 31, 2014, representing 26% of the award, and performance shares (i.e. restricted stock vesting over two years based on achievement of certain financial performance objectives), representing 53% of the value of the award. For these awards, the financial performance objectives are a series of annual Profit Before Tax targets, with 50% of performance shares vesting annually upon achievement of these targets for 2014 and 2015. The terms and conditions of the grants under the LTI Program contain customary restrictions on transfer of shares, as well as non-solicitation and non-recruitment restrictions for one year following termination of employment. The terms of the grants also provide for the “claw back” (i.e. reversal of an award) of vested awards and any profits from exercise of options issued under the awards in the event vesting or profits are later determined, by the Board, to have resulted from materially inaccurate financial information. The terms and conditions of both the options and the LTI Program awards made to Messrs. Casciano, Lynch and Jerabeck can be found as exhibits to the Company’sour Annual Report on Form 10-K for the year endingended December 31, 20132019, including financial statements thereto but not including exhibits, as filed with the SEC on March 14, 2014.
Benefits and Perquisites. The Company provides partial payment for medical, dental and vision insurance, 401(k) plan with profit sharing and disability and life insurance benefits to its Named Executive Officers consistent with that offered generally to its employees. In addition, Named Executive Officers are provided a limited number of perquisites, the primary purpose of which16, 2020, is to minimize distractions from the executives' attention to important Company objectives.
PAR Technology Corporation Retirement Plan. The Named Executive Officers are eligible to participate in the PAR Technology Corporation Retirement Plan (the "Retirement Plan"). The Retirement Plan has a deferred profit-sharing component that covers substantially all the employees of the Company including the Named Executive Officers. The Company's annual profit sharing contribution to the Retirement Plan is at the discretion of the Board. The Retirement Plan also contains a 401(k) provision that allows employees to contribute a percentage of their salary, pre-tax, up to certain tax code limitations. The Company matches the deferrals of all participants in the Retirement Plan, including the Named Executive Officers, at the rate of 10%.
Deferred Compensation. The Company sponsors a Non-Qualified Deferred Compensation Plan for a select group of highly compensated employees that includes the Named Executive Officers. Participants may make voluntary deferrals of their salary to the plan in excess of tax code limitations that apply to the Company's Retirement Plan. The Board also has the sole discretion to make Company contributions to the plan on behalf of employee participants, although it did not make any such employer contributions in 2013.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the Internal Revenue Code of 1986, as amended, provides that compensation in excess of $1,000,000 paid to the Named Executive Officers of a publicly held company will not be deductible for federal income tax purposes unless such compensation is paid pursuant to one of the enumerated exceptions set forth in Section 162(m). The Company's primary objective in designing and administering its compensation policies is to support and encourage the achievement of the Company's long-term strategic goals and to enhance stockholder value. In general, stock options granted under the Company's 2005 Equity Incentive Plan are intended to qualify under and comply with the "performance based compensation" exemption provided under Section 162(m), thus excluding from the Section 162(m) compensation limitation any income recognized by executives at the time of exercise of such stock options. Because salary and bonuses paid to Named Executive Officers have been below the $1,000,000 threshold, the Committee has elected, at this time, to retain discretion over bonus payments, rather than to ensure that payments of salary and bonus in excess of $1,000,000 are deductible. The Committee intends to review periodically the potential impacts of Section 162(m) in structuring and administering the Company's compensation programs.
Role of Executive Officers
The Company's Chief Executive Officer reports on his evaluations of executive officers, including the other Named Executive Officers. He makes compensation recommendations to the Compensation Committee for the other Named Executive Officers with respect to base salary and annual and long-term incentives.
In 2013, the Company's Chief Operating Officer took direction from and brought suggestions to the Compensation Committee on compensation matters for the Named Executive Officers. Messrs. Casciano and Jerabeck oversaw the actual formulation of plans incorporating the suggestions of the Compensation Committee and provided information to the Compensation Committee on how employees were evaluated and the overall results of the evaluations.
Employment and Severance Agreements
On March 19, 2013, Mr. Domorski resigned from his positions of Chairman of the Board, Chief Executive Officer and President of the Company. In connection with his resignation, the Company and Mr. Domorski entered into a separation agreement, superseding all prior agreements and understandings, providing for separation pay of $750,000 in exchange for a general release of the Company from any claims by Mr. Domorski and other customary separation provisions.
On March 25, 2013, the Board appointed Ronald J. Casciano to the position of Chief Executive Officer and President. In connection with his promotion, Mr. Casciano entered into an employment agreement with the Company under which his employment is "at will" and provides for the following: (a) an annual base salary of $350,000; (b) a one-time transition bonus of $30,000; (c) participation in the Company's Incentive Compensation Plan at the rate of 32.5% for 2013 and thereafter at a rate of 65% of his annual base salary for on plan performance against financial targets associated with the Company's Annual Operating Plan and specific business objectives as established by the Board (any payment based on 2013 performance will be pro-rated from March 25, 2013, through December 31, 2013, while participation in the Company's Incentive Compensation Plan for the period from January 1, 2013, thru March 24, 2013, will be based on Mr. Casciano's previous rate, which was 25% of his annual base salary); (d) subject to approval and terms established by the Board on the grant date, a grant under the PAR Technology Corporation 2005 Equity Incentive Plan of (i) 30,000 shares of restricted stock with long-term performance based vesting as established by the Board and (ii) 15,000 stock options vesting at the rate of 25% each year on the anniversary of the date of the grant (any termination of employment prior to the completion of the performance period specified in the grants would result in forfeiture of such portion of the grants that exceed the pro-rata portion of the period of performance correlating to the period of employment); (e) subject to approval and terms established by the Board on the grant date, a grant of 40,000 shares of restricted stock with performance based vesting as established by the Board (any termination of employment prior to the completion of the performance period specified in the grant would result in forfeiture of such portion of the grant that exceeds the pro-rata portion of the period of performance correlating to the period of employment); and (f) continued participation in the Company's retirement plan, as well as provision of insurance benefits and other customary benefits offered to the Company's senior executives. Any termination of Mr. Casciano's employmentavailable without cause prior to March 25, 2014, would result in a severance payment of an amount equal to that amount of his annual base salary that he would have received if he were to have continued to be employed through March 25, 2014, and a pro-rated portion of any current year cash payment due to him under the Company's incentive compensation plan. Such payments would be subject to and conditionedcharge upon execution of a general release of claims.
On March 25, 2013, the Board appointed Robert Jerabeck to the position of Executive Vice President and Chief Operating Officer. Mr. Jerabeck commenced employment with the company on April 15, 2013. In connection with his employment, Mr. Jerabeck entered into an employment agreement with the Company under which his employment is "at will" and provides for the following: (a) an annual base salary of $300,000; (b) a one-time relocation payment of $50,000; (c) participation in the Company's Incentive Compensation Plan at the rate of 25% for 2013 and thereafter at a rate of 50% of his annual base salary for on plan performance against financial targets associated with the Company's Annual Operating Plan and specific business objectives as established by the Board (any payment based on 2013 performance would be pro-rated from March 25, 2013, through December 31, 2013); (d) subject to approval and terms established by the Board on the grant date, a grant under the PAR Technology Corporation 2005 Equity Incentive Plan of (i) 20,000 shares of restricted stock with long-term performance based vesting as established by the Board and (ii) 10,000 stock options vesting at the rate of 25% each year on the anniversary of the date of the grant (any termination of employment prior to the completion of the performance period specified in the grants would result in forfeiture of such portion of the grants that exceed the pro-rata portion of the period of performance correlating to the period of employment); (e) subject to approval and terms established by the Board on the grant date, a grant of 50,000 stock options vesting at the rate of 25% each year on the anniversary of the date of the grant (any termination of employment prior to the completion of the performance period specified in the grants would result in forfeiture of such portion of the grants that exceed the pro-rata portion of the period of performance correlating to the period of employment);; and (f) participation in the Company's retirement plan, as well as provision of insurance benefits and other customary benefits offered to the Company's senior executives. Any termination of Mr. Jerabeck's employment without cause prior to April 15, 2015, would result in a severance payment of an amount equal to that amount of his annual base salary that he would have received if he were to have continued to be employed through March 25, 2014, and a pro-rated portion of any current year cash payment due to him under the Company's incentive compensation plan. Such payments would be subject to and conditioned upon execution of a general release of claims.
From April 2011 until his resignation in March 2013, Mr. Domorski and the Company had an employment agreement in connection with Mr. Domorski's position as Chairman of the Board, Chief Executive Officer and President providing for: (a) an initial term of two years, after which Mr. Domorski would be an employee "at will"; (b) an annual base salary of $400,000; (c) participation in the Company's Incentive Compensation Plan at the rate of 65% of his annual base salary; (d) new hire option award of 250,000 non-qualified stock options with vesting at 25% annually on each of the next four anniversaries of the grant; (e) accelerated vesting of all unvested equity interests upon a change of control event; and (f) reimbursement for transportation and accommodations associated with his presence at the Company's headquarters. Under the terms of the employment agreement, any termination by the Company without cause prior to April 26, 2015 or termination by Mr. Domorski for "good reason", as defined in the agreement, would trigger immediate vesting of 50% of any unvested portion of the 250,000 non-qualified stock options granted upon hire. Immediate vesting of all unvested equity interests would be triggered by any change of control event as defined in his agreement. Pursuant to the agreement, severance payments would result in the event of termination without cause prior to April 26, 2013, in an amount equal to (a) the greater of one year of Mr. Domorski's annual base salary, or the amount of his annual base salary for the period commencing on the termination date through April 25, 2013 and (b) an amount equal to the prior year's annual cash bonus paid to him, if any. In the event of termination by Mr. Domorski for "good reason", as defined in the agreement, termination without cause on or after April 26, 2013, or as a result of a change of control approved by the Board, resulting severance payments would equal the sum of Mr. Domorski's annual base salary and an amount equal to the prior year's annual cash bonus paid to him, if any. In the event of termination resulting from a change of control not approved by the Board, the resulting severance payment would be equal to three times the sum of Mr. Domorski's annual base salary and an amount equal to the prior year's annual cash bonus paid to him, if any.
Summary Compensation Table
The following table provides information concerning the compensation of the Company's Chief Executive Officers and the two other most highly compensated executive officers (the "Named Executive Officers") for fiscal 2013 and 2012. For a complete understanding of the table, please read the narrative disclosures above, as well as the footnotes that follow the table.
Name and Principal Position | Year | | Salary ($)(1) | | | Bonus ($) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | Non-Qualified Deferred Compensation Earnings ($)(5) | | | All Other Compensation ($)(6) | | | Total ($) | |
(a) | (b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
Ronald J. Casciano* Chief Executive Officer, President and Treasurer, PAR Technology Corporation | 2013 | | 332,500 | | | 30,000 | | | 253,862 | | | 272,597 | | | -- | �� | | 5,211 | | | 11,493 | | | 905,663 | |
2012 | | 277,116 | | | -- | | | -- | | | 19,854 | | | -- | | | 9,361 | | | 15,672 | | | 322,003 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Paul B. Domorski * Chairman, President and Chief Executive Officer, PAR Technology Corporation | 2013 | | 111,731 | | | -- | | | -- | | | -- | | | -- | | | | -- | | 763,362 | (7) | | 875,093 | |
2012 | | 413,558 | | | -- | | | -- | | | 29,781 | | | -- | | | -- | | | 27,982 | (7) | | 471,321 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Stephen P. Lynch President, PAR Government Systems Corporation and Rome Research Corporation | 2013 | | 275,000 | | | -- | | | 34,340 | | | 166,130 | | | 247,061 | | | | -- | | 20,349 | | | 742,880 | |
2012 | | 275,000 | | | -- | | | -- | | | -- | | | 219,000 | | | -- | | | 16,713 | | | 510,713 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Robert P. Jerabeck Executive Vice President and Chief Operating Officer, PAR Technology Corporation | 2013 | | 207,692 | | | -- | | | 79,054 | | | 337,235 | | | -- | | | | -- | | 52,260 | (8) | | 676,241 | (9) |
2012 | | -- | | | -- | | | -- | | | -- | | | -- | | | -- | | | -- | | | -- | |
* | On March 25, 2013, Mr. Casciano succeeded Mr. Domorski who resigned as CEO and President of the Company. Until his promotion, Mr. Casciano served as the Company's Senior Vice President, Chief Financial Officer, and Treasurer. |
(1) | Amounts reported in column (c) reflect base salaries earned by the Named Executive Officers for the listed fiscal year. Amounts shown are not reduced to reflect the Named Executive Officer's elections, if any, to defer receipt of salary into the Company's Deferred Compensation Plan. |
(2) | During fiscal year 2013, the Company granted 38,334 and 7,667 performance based awards to Messrs. Casciano and Jerabeck, respectively. The dollar amounts reflect the aggregate grant fair value based upon the probable outcome of such conditions, calculated in accordance with FASB ASC Topic 718. Assumptions made in these valuations are discussed in Note 7 to the Company's 2013 Consolidated Financial Statement included in the Company's Annual Report on Form 10-K filed with the SEC on March 14, 2014. The aggregate grant date fair value assuming the highest level of performance conditions will be achieved, are $204,000 and $41,000 for Messrs. Casciano and Jerabeck, respectively. |
During fiscal year 2012, the Company granted 30,000 and 20,000 performance based awards to Messrs. Domorski and Casciano, respectively. The dollar amounts reflected above represent the compensation expense recognized during 2012 in accordance with FASB ASC Topic 718. Assumptions made in these valuations are discussed in Note 7 to the Company's 2012 Consolidated Financial Statement included in the Company's Annual Report on Form 10-K filed with the SEC on March 14, 2013. The aggregate grant date fair value as computed in accordance with FASB ASC Topic 718, assuming the highest level of performance conditions will be achieved, are $143,400 and $95,600 for Messrs. Domorski and Casciano, respectively.
(3) | During fiscal year 2013, the Company granted 165,000, 210,000 and 100,000 stock options to Messrs. Casciano, Jerabeck, and Lynch respectively, and during fiscal year 2012 the Company granted 15,000 and 10,000 stock options to Messrs. Domorski and Casciano, respectively. The dollar amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Assumptions made in these valuations are discussed in Note 7 to the Company’s 2013 and 2012 Consolidated Financial Statement included in the Company’s Annual Reports on Form 10-K filed with the SEC on March 14, 2014 and March 14, 2013, respectively. There can be no assurance that the grant date fair value amounts will be realized. As reflected in the Outstanding Equity table below, pursuant to the terms of the grants to Mr. Domorski, all unvested options terminated upon his resignation on March 19, 2013. |
(4) | Amounts reported in column (g) represent the amounts paid under the Incentive Compensation element of the Company’s Executive Compensation Plan during the years indicated in respect of service performed during those years. A description of the Incentive Compensation element is contained in the discussion of Executive Compensation under the section entitled “Incentive Compensation” on page 18. Amounts shown are not reduced to reflect the Named Executive Officer’s elections, if any, to defer receipt of salary into the Deferred Compensation Plan. |
(5) | Amounts reported in column (h) consist of above-market or preferential earnings during years indicated on compensation that was deferred in or prior to such years under the PAR Technology Corporation Deferred Compensation Plan. |
(6) | In addition to any perquisites identified for the individual Named Executive Officers, the amounts reported in column (i) consist of Company contributions to the Company’s qualified plan and matching contribution to the 401(k); personal vehicle use; and imputed income on Company payment of term life insurance premiums as determined under the Internal Revenue Code. |
(7) | Fiscal year 2013 payments include $750,000 associated with the separation agreement as described on page 20. Fiscal year 2012 payments include $17,820 for an apartment for Mr. Domorski. |
(8) | Includes relocation benefits of $50,000. |
(9) | Compensation information for Mr. Jerabeck reflects a partial year commencing in April 2013 when he joined the Company. |
Outstanding Equity Awards at Fiscal Year-End
The following tables show all outstanding equity awards held by the Named Executive Officers at December 31, 2013.
| Option Awards |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
| Option Exercise Price
($)
| Option Expiration Date |
(a) | (b) | (c) | (d) | (e) | (f) |
Ronald J.
Casciano
| 60,000(1)
2,500(2)
0(6)
0(7)
| 0(1)
7,500(2)
15,000(6)
150,000(7)
| 0 | $6.01
$4.78
$5.32
$5.32
| 10/13/14
04/23/22
12/11/23
12/11/23
|
Robert P.
Jerabeck
| 0(8)
0(9)
0(7)
| 50,000(8)
10,000(9)
150,000(7)
| 0 | $4.41
$5.32
$5.32
| 4/15/23
12/11/23
12/11/23
|
Stephen P.
Lynch
| 20,000(3)
8,000(4)
15,000(5)
0(10)
| 0(3)
2,000(4)
15,000(5)
100,000(10)
| 0 | $6.25
$4.73
$4.25
$5.32
| 01/08/18
02/24/19
05/11/21
12/11/23
|
| (1) | These options were granted on October 13, 2004 and became fully vested on April 13, 2009. |
| (2) | These options were granted on April 23, 2012. Of these options 2,500 vested on April 23, 2013. The 7,500 unvested options vest as follows: 2,500 shares on April 23, 2014, 2,500 shares on April 23, 2015 and the remaining 2,500 shares on April 23, 2016. |
| (3) | These options were granted on January 8, 2008. The options vested 20% on the six month anniversary of the grant date, with the remainder vesting in equal quarterly installments over the next 48 months. |
| (4) | These options were granted on February 24, 2009. The options vest 20% annually over a five-year period on the anniversary of the date of the grant. |
| (5) | These options were granted on May 11, 2011. The options vest 25% annually over a four year period on the anniversary of the date of the grant. |
| (6) | These options were granted on December 11, 2013. The options will vest 33% each year as follows: 5,000 on December 31, 2014, 5,000 shares on December 31, 2015, and the remaining 5,000 shares on December 31, 2016. |
| (7) | These options were granted on December 11, 2013. The options will vest 25% each year as follows: 37,500 on December 31. 2014, 37,500 shares on December 31, 2015, 37,500 shares on December 31, 2016 and the remaining 37,500 shares on December 31, 2017. |
| (8) | These options were granted on April 15, 2013. The options will vest 25% annually over a four year period on the anniversary of the date of the grant. |
| (9) | These options were granted on December 11, 2013. The options will vest 33% each year as follows: 3,333 on December 31, 2014, 3,333 shares on December 31, 2015, and the remaining 3,334 shares on December 31, 2016. |
| (10) | These options were granted on December 11, 2013. The options will vest 25% each year as follows: 25,000 on December 31, 2014, 25,000 shares on December 31, 2015, 25,000 shares on December 31, 2016 and the remaining 25,000 shares on December 31, 2017. |
| Stock Awards |
Name | Grant Date | Number of Share or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#) | Equity Incentive Awards: Market or Payout Value of Unearned Shares Units or Other Rights that Have Not Vested ($) |
(a) | | (g) | (h) | (i) | (j) |
Ronald J. Casciano | 4/23/2012 6/19/2013 12/11/213 | 0 0 0 | 0 0 0 | 10,000(1) 12,500(2) 57,500(3) | 54,500(1) 68,125(2) 313,375(3) |
Robert P. Jerabeck | 6/19/2013 12/11/2013 | 0 0 | 0 0 | 9,500(2) 11,500(3) | 51,775(2) 62,675(3) |
Stephen P. Lynch | 6/19/2013 | 0 | 0 | 8,500(2) | 46,325(2) |
| (1) | The Company granted 20,000 performance based awards to Mr. Casciano, of which 10,000 were cancelled based on non-achievement of performance conditions. The dollar amounts reflected above represent the market value based on the Company’s closing stock price at December 31, 2013. The aggregate grant date fair value as computed in accordance with FASB ASC Topic 718, assuming the highest level of performance conditions will be achieved on the remaining shares, is $47,800 for Mr. Casciano. Assumptions made in these valuations are discussed in Note 7 to the Company’s 2013 Consolidated Financial Statement included in the Company’s Annual Report on 10-K filed with the SEC on March 14, 2014. |
| (2) | The Company granted 12,500, 9,500 and 8,500 time vesting based restricted stock awards to Messrs. Casciano, Jerabeck and Lynch, respectively. The dollar amounts reflected above represent the market value based on the Company’s closing stock price at December 31, 2013. The aggregate grant date fair value as computed in accordance with FASB ASC Topic 718 is $50,500, $38,380, and $34,340 for Messrs. Casciano, Jerabeck and Lynch, respectively. Assumptions made in these valuations are discussed in Note 7 to the Company’s 2013 Consolidated Financial Statement included in the Company’s Annual Report on 10-K filed with the SEC on March 14, 2014. |
| (3) | The Company granted 57,500 and 11,500 shared based awards to Messrs. Casciano and Jerabeck, respectively. The share based awards vest in three separate tranches in equal share amounts. The first tranche are time vested awards with a vest date of March 31, 2014. The second and third tranches are performance based awards, which vest on December 31, 2014 and December 31, 2015, respectively. The dollar amounts reflected above represent the market value based on the Company’s closing stock price at December 31, 2013. The aggregate grant date fair value as computed in accordance with FASB ASC Topic 718, assuming the highest level of performance conditions will be achieved is $305,229 and $61,046 for Messrs. Casciano and Jerabeck, respectively. Assumptions made in these valuations are discussed in Note 7 to the Company’s 2013 Consolidated Financial Statement included in the Company’s Annual Report on 10-K filed with the SEC on March 14, 2014. |
Equity Compensation Plan Information
The following table shows the number, as of December 31, 2013, of equity securities authorized for issuance under the Company's equity incentive plans, differentiated by those compensation plans that have been previously approved by shareholders and those compensation plans that have not been previously approved by shareholders.
Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-Average exercise price of outstanding options, warrants and rights | Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) |
| (a) | (b) | (c) |
Equity compensation plans approved by security holders | 1,047,759 | $5.45 | 764,869(*) |
Equity compensation plans not approved by security holders | 0 | 0 | 0 |
Total | 1,047,759 | $5.45 | 764,869 |
(*) | This total does not reflect shares which were subsequently returned to the Company's 2005 Equity Incentive Plan as a result of expirations and or cancellations of grants during the first quarter of 2014. |
Transactions with Related PersonsFor the Company's last fiscal year beginning January 1, 2013 and ending December 31, 2013, and for the Company's 2012 fiscal year, beginning January 1, 2012 and ending December 31, 2012, there were no transactions, or currently proposed transactions, in which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest, except for the following:
| · | Karen E. Sammon, a member of the immediate family of Dr. John W. Sammon, Director and Chairman Emeritus of the Company’s Board of Directors and a beneficial owner of more than five percent of the Company’s outstanding Common Stock, became the President of ParTech, Inc., a wholly owned subsidiary of the Company, effective April 1, 2013. ParTech, Inc. is the principal business unit in the Company’s Hospitality business segment. Ms. Sammon’s total compensation for 2013 was $487,543 and was principally comprised of her salary of $195,811, approximately $40,382 in equity or equity based awards with performance based vesting, and approximately $250,000 in time based equity or equity based awards, participation in the Company’s retirement plan, as well as provision of insurance benefits and other customary benefits offered to the Company’s senior executives.
|
| · | Karen E. Sammon, President of the Company’s subsidiary, ParTech, Inc., and her brother, John W. Sammon, III, are principals in Sammon and Sammon, LLC, doing business as Paragon Racquet Club. Paragon Racquet Club leases a portion of the Company’s facilities at New Hartford, New York on a month to month basis at the base rate of $9,775 (or an aggregate annual amount of $117,300 for 2013 and 2012). In addition, Paragon Racquet Club provided memberships to the Company's local employees valued at $23,600 and $25,000 for 2013 and 2012, respectively. Both Ms. Sammon and Mr. Sammon are members of the immediate family of Dr. Sammon. |
| · | John W. Sammon, III, a member of the immediate family of Dr. Sammon and Karen E. Sammon, was an employee of PAR Logistics Management Systems Corporation (“PAR LMS”), a subsidiary of the Company, where he served as President until January 12, 2012 when substantially all of the assets of the subsidiary were transferred to ORBCOMM Inc. Mr. Sammon’s total compensation for 2012 was $328,831 and was comprised of his salary, an incentive bonus in connection with the divestiture to ORBCOMM Inc. and a severance payment triggered by a change in control arrangement in place with Mr. Sammon and other executive-level employees of PAR LMS.
|
| · | John W. Sammon, III, a member of the immediate family of Dr. Sammon and Karen E. Sammon, together with other former executive-level employees of PAR LMS employed by ORBCOMM Inc. as part of the divesture described above, entered into an incentive arrangement with the Company in July 2012 whereby the participants would be paid a percentage of the dollar amount received by the Company in connection with contingent consideration payable to the Company based on ORBCOMM Inc. achieving certain agreed-upon targets for calendar years 2012 through 2014 pursuant to the terms of the Asset Purchase and Sale Agreement dated December 23, 2011 formalizing the divestiture of substantially all of the assets of PAR LMS to ORBCOMM Inc. Achievement of 100% of the contingent consideration targets would result in a payment to Mr. Sammon of $350,000. No contingent consideration targets were achieved in 2012. In 2013, Mr. Sammon separated from his employment with ORBCOMM Inc. Under the terms of the arrangement, such separation disqualifies Mr. Sammon from eligibility for any incentive payment for the remainder of the incentive period.
|
Policies and Procedures With Respect to Related Party Transactions
The Company's written Policy on Related Party Transactions requires Controllers of all subsidiaries to review on a quarterly basis all transactions and potential transactions for related party involvement. All identified transactions, if any, are reported to the Company's principal financial officer and the Company's legal counsel. Approval or ratification by the Nominating and Corporate Governance Committee is required for any transaction or series of transactions exceeding $120,000 in which the Company is a participant and any related person has a material interest. Related persons would include the Company's Directors and executive officers and their immediate family members as well as any person known to be the beneficial owner of more than 5% of the Company's Common Stock.
Under the Company's Corporate Governance Guidelines and Code of Business Conduct & Ethics, all Directors and executive officers and employees of the Company have a duty to report, which includes reports to the Company's Compliance Officer and to the Nominating and Corporate Governance Committee or Audit Committee, potential conflicts of interests, including transactions with related persons. All related party transactions, other than compensation arrangements, expense allowances and other similar items in the ordinary course of business are disclosed in the Company's financial statements. Compensation paid by the Company for service to an employee, even if the aggregate amount involved exceeds $120,000, are not reviewed by the Nominating and Corporate Governance or Audit Committees unless the Compliance Officer, principal financial officer or legal counsel believe such compensation to be inconsistent with peers of the related party within the Company or the Company's compensation practices in general.
| Ratification of the reservation of additional 500,000 shares for issuance under the PAR Technology Corporation 2005 Equity Incentive Plan |
On March 11, 2014, the Board of Directors voted unanimously to amend the Company’s 2005 Equity Incentive Plan, as amended (the “Plan”), to increase the number of shares reserved under the terms of the Plan from 2,250,000 to 2,750,000. This amendment was made subject to Shareholder approval. The Plan, as proposed to be amended, is attached to this Proxy Statement as Appendix A.
As of March 14, 2014, a total of 579,869 shares remained available for grant under the Plan. The Board believes that the Plan has been and will continue to be an excellent means by which to attract and retain key employees. Accordingly, the Board believes the number of shares reserved for issuance should be increased from 2,250,000 to 2,750,000 and recommends approval thereof by the Shareholders. There are no current plans for the issuance of any of the additional shares. The following resolution will be proposed at the Meeting for Shareholder consideration:
RESOLVED, that the amendment of the PAR Technology Corporation 2005 Equity Incentive Plan, as amended (the “Plan”), to increase the total number of shares reserved for issuance under the Plan from 2,250,000 to 2,750,000, which was approved by the Company’s Board of Directors on March 11, 2014, be and the same hereby is, approved, ratified and confirmed.
The Board of Directors recommends a vote FOR the proposal to ratify the amendment of the Company’s 2005 Equity Incentive Plan to reserve additional shares for issuance under the Plan. Unless a contrary direction is indicated, shares represented by valid proxies that are not marked with a vote in connection with Proposal 1, will be voted FOR the proposal.
Proposal 2: | Adoption of amendments to the Company's Certificate of Incorporation and By-Laws to declassify the Board of Directors |
Paragraph 3 of Article Eighth of the Company’s Certificate of Incorporation and Section 2 of Article III of the Company’s By Laws currently divide the Board into three classes (Class I, Class II and Class III). Each member of a class is elected for a three-year term, with the terms staggered so that approximately one-third of directors stand for election each year. With the decision by Directors Jost and Simms to not stand for re-election to the Board and the decision of Director Ahn to retire, effective as of the Meeting, there will be no Class I directors, one Class II director, whose term expires at the 2015 annual meeting, and one Class III director, whose term expires at the 2016 annual meeting.
Classified boards provide effective protection against hostile takeover tactics and proxy contests because they make it difficult to gain control of the board of directors without the cooperation or approval of incumbent directors. A classified board also fosters continuity and stability, not only on the board but also in the overall business of a company, since a majority of directors will always have prior experience as directors of the company.
Annually elected boards are perceived as increasing the accountability of directors to shareholders as they provide shareholders with the opportunity to register their views at each annual meeting on the prior year’s performance of the entire board of directors. Many institutional investors believe the election of directors is the primary means for shareholders to influence corporate governance policies and to hold management accountable for the implementation and execution of those policies.
After careful consideration, the Board has determined that it would be in the best interests of the Company and its shareholders to amend the Company’s Certificate of Incorporation as set forth in Appendix B and By Laws as set forth in Appendix C to end classification of the Board and provide instead for the annual election of directors (the “Amendments”).
If the Amendments are approved, then the Company will amend its Certificate of Incorporation and By Laws and all Directors thereafter will be elected for one-year terms at each annual meeting of shareholders. Therefore, Dr. Sammon's term (currently set to expire at the 2016 annual meeting) will be truncated and will expire at the 2015 annual meeting. Beginning with the 2015 annual meeting, the Board will be completely declassified and all directors will be subject to annual election to one-year terms. Consistent with Delaware law, the Amendments also provide that directors may be removed with or without cause.
If the Amendments are not approved by the shareholders, the Board will remain classified and the Company's directors will continue to be subject to the current classification pursuant the Company's governing documents.
An affirmative vote of two thirds (66.667%) of the shareholders entitled to vote generally for the election of directors is required for approval. Therefore, abstentions and broker “non-votes” have the practical effect of being votes against the matter.
The general descriptions of the Amendments are qualified in their entirety by reference to the text of the proposed amendments to the Certificate of Incorporation and By Laws which are attached as Appendix B and C, respectively, to this Proxy Statement.
The Board of Directors recommends a vote FOR the proposal to approve the Amendments to the Company’s Certificate of Incorporation and By Laws to declassify the Board. Unless a contrary direction is indicated, shares represented by valid proxies that are not marked with a vote in connection with Proposal 2, will be voted FOR the proposal.
Proposal 3: | Non-binding advisory vote regarding the compensation of the Company's Named Executive Officers |
At the 2013 Annual Meeting of Shareholders, the results of a non-binding advisory vote by the shareholders indicated a desire for an annual advisory vote regarding the compensation of the Company’s Named Executive Officers. The Board believes holding a non-binding shareholder advisory vote on the compensation of the Company’s Named Executive Officers on annual basis will enhance shareholder communication by providing a clear, simple means for the Company to obtain information on investor sentiment about its executive compensation philosophy. In accordance with Section 14A of the Security Exchange Act of 1934, as amended, and the regulations promulgated there under, shareholders are, therefore, being asked to provide a non-binding advisory vote on the following resolution:
RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this Proxy Statement, including the compensation tables and narrative discussion, is hereby APPROVED.
The compensation paid to the Company’s Named Executive Officers is disclosed in the narrative discussion and compensation tables and on pages 15 through 26 of this Proxy Statement. As a smaller reporting company, the Company provides disclosures pursuant to Item 402 (m) through (q) of Regulation S-K promulgated under the Securities Exchange Act of 1934 (“Regulation S-K”). While the Company’s smaller reporting company status exempts it from Item 402(b) of Regulation S-K which imposes compensation discussion and analysis of its executive compensation practices, the Company has elected to continue to provide information regarding its objectives and practices regarding executive compensation in order to give its shareholders transparency into its compensation philosophy and practices. As discussed in the disclosures contained in the Executive Compensation section of this Proxy Statement, the Company believes its compensation policies and decisions are focused on pay-for-performance principles and are strongly aligned with the long term interests of building shareholder value.
A shareholder vote on Proposal 3 is advisory in nature and, therefore, not binding on the Company, the Compensation Committee or the Board. The vote will not be construed to create or imply any change to the fiduciary duties for the Company, the Compensation Committee or the Board. However, the opinions of the Company’s shareholders are valued and to the extent there is any significant vote against the compensation of the Company’s Named Executive Officers as disclosed in this Proxy Statement, the Company, the Compensation Committee, and the Board will consider shareholder concerns and will evaluate whether any actions are necessary to address those concerns.
The Board of Directors recommends a vote FOR the proposal to approve the compensation of the Company’s Named Executive Officers, as disclosed in this Proxy Statement, including the compensation tables and narrative discussion. Unless a contrary direction is indicated, shares represented by valid proxies that are not marked with a vote in connection with Proposal 3, will be voted FOR the proposal.
Other than as described in the materials of this Proxy Statement, the Board knows of no matters that will be presented at the Meeting for action by shareholders. However, if any other matters properly come before the Meeting, or any postponement or adjournment thereof, the persons acting by authorization of the proxies will vote thereon in accordance with their judgment.
NO INCORPORATION BY REFERENCE
In the Company's filings with the SEC, information is sometimes "incorporated by reference." This means that we are referring shareholders to information that has previously been filed with the SEC and the information should be considered as part of the particular filing. As provided under SEC regulations, the "Report of the Audit Committee" and the executive compensation discussion contained in this Proxy Statement specifically are not incorporated by reference into any other filings with the SEC. In addition, this Proxy Statement includes several website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this Proxy Statement. If you have received this document in paper form, the Company's Annual Report to its shareholders for the year ended December 31, 2013, including audited consolidated financial statements, accompanies this Proxy Statement. Except to the extent expressly provided herein, the Company's Annual Report is not incorporated in this Proxy Statement by reference.
The Company's Annual Report on Form 10-K can be located with the Proxy Materials on the Company's website http://www.partech.com/investors/proxy. In addition, the Annual Report on Form 10-K can be accessed under the SEC Filings link on our website http://www.partech.com/investors/xbrl-documents/ together with the Company's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended. These reports are available for access as soon as is reasonably practicable after the Company electronically files such reports with, or furnishes those reports to, the SEC. The Company's Corporate Governance Guidelines, Board of Directors committee charters (including the charters of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee) and code of ethics entitled "Code of Business Conduct and Ethics" also are available at this same location on our website. Shareholders can receive free printed copies of any or all of these documents by directing a written or oral request to: PAR Technology Corporation, Attention:Attn: Investor Relations, PAR Technology Park, 8383 Seneca Turnpike, New Hartford, NY 13413-4991, 315-738-0600; http://www.partech.com/investors/investor-relations.
SHAREHOLDER PROPOSALS FOR 2015 ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for shareholder action at the Company’s Annual Meetings consistent with the regulations adopted by the SEC and the By-Laws of the Company. To be considered for inclusion in next year’s Proxy Statement and form of proxy relating to the 2015 Annual Meeting, any shareholder proposals must be received at the Company’s general offices no later than the close of business on December 12, 2014. If a matter of business is received by February 25, 2015, the Company may include it in the Proxy Statement and form of proxy and, if it does, it may use its discretionary authority to vote on the matter. For matters that are not received by February 25, 2015, the Company may use its discretionary voting authority when the matter is raised at the Annual Meeting of Shareholders, without inclusion of the matter in its Proxy Statement. Proposals should be addressed to the attention of: Corporate Secretary, PAR Technology Corporation, PAR Technology Park, 8383 Seneca Turnpike, New Hartford, New York 13413-4991.13413.
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
PAR TECHNOLOGY CORPORATION
PAR Technology Corporation, a corporation organized and existing under the laws of the State of Delaware, does hereby certify that:
1. The Company recommends all such submissionsname of the corporation is PAR Technology Corporation (the “Corporation”).
2. The Certificate of Incorporation of the Corporation is hereby amended as follows:
The section designated “Fourth”, paragraph “1.” in the Certificate of Incorporation is hereby amended to read in its entirety as follows:
FOURTH
1. The total number of shares of capital stock which the Corporation shall have the authority to issue is fifty-nine million (59,000,000) shares of stock, par value $0.02 per share, consisting of fifty-eight million (58,000,000) shares of Common Stock, and one million (1,000,000) shares of Preferred Stock.
3. The amendment of the Certificate of Incorporation herein certified has been duly adopted by the Corporation’s Board of Directors and stockholders in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be sent by Certified Mail - Return Receipt Requested.signed this _____ day of __________, 2020.
| BY ORDER OF THE BOARD OF DIRECTORS |
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| Acting SecretarySavneet Singh, Chief Executive Officer and President |
April 11, 2014
Appendix AAPPENDIX B
AMENDED AND RESTATED
PAR TECHNOLOGY CORPORATION
20052015 EQUITY INCENTIVE PLAN
(Effective Date: December 28, 2005)June 10, 2019, as amended June [●], 2020)
AS PROPOSED TO BE AMENDED ON MAY 22, 2014
1.1 Purpose and Eligibility. The purpose of this 2005Amended and Restated 2015 Equity Incentive Plan (the “Plan”“Plan”) of PAR Technology Corporation, a Delaware corporation (the “Company”“Company”) is to provide stock options, stock issuances and other equity interests in the Company (each, an “Award”“Award”) to (a) key employees, officers, directors, consultants and advisors of the Company and its Subsidiaries, and (b) any other Person who is determined by the Board to have made (or is expected to make) contributions to the Company.Subsidiaries. Any person to whom an Award has been granted under the Plan is called a “Participant”“Participant”. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future Subsidiary. Additional definitions are contained in Section 10.10 .
a.Administration by Board of Directors. The Plan will be administered by the Board of Directors of the Company (the “Board”“Board”). The Board, in its sole discretion, shall have the authority to grant and amend Awards, to adopt, amend and repeal rules relating to the Plan and to interpret and correct the provisions of the Plan and any Award.Awards. The Board shall have authority, subject to the express limitations of the Plan, (i) to construe and determine the respective Stock Option Agreement,Award Agreements (defined below), Awards and the Plan, (ii) to prescribe, amend and rescind rules and regulations relating to the Plan and any Awards, (iii) to determine the terms and provisionsconditions of the respective Stock Option AgreementsAwards, and Awards, which need not be identical, (iv) to initiate an Option Exchange Program, and (v) to make all other determinations or certifications and take such other actions that, in the judgment of the Board, of Directorsare necessary or desirable for the administration and interpretation of the Plan. The Board may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Stock OptionAward Agreement or Award in the manner and to the extent it shall deem expedient to carrycarry-out the Plan or to effectuate any Stock Option Agreement or Award into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be final and binding on all interested persons. Neither the Company nor any memberA Participant or other holder of an Award may contest a decision or action by the Board or other person exercising authority under the Plan only on the grounds that such decision or action was arbitrary or capricious or was unlawful, and any review of such decision or action shall be liable for anylimited to determining whether the Board’s or such other person’s decision or action was arbitrary or determination relating to the Plan.capricious or was unlawful.
b.Appointment of Committee. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to the Compensation Committee of the Board (the “Committee”“Committee”). All references in the Plan to the “Board” shall mean suchinclude the Committee or the Board. The Committee may consult with the Company’s Stock Option Committee, which shall make recommendations, with respect to Participants eligible to receive Awards and the number of shares subject to the Award,extent that some or all of such powers have been delegated to the Committee for its review and final approval.Committee.
c.Delegation to Executive Officers. To the extent permitted by applicable law, the Board or Committee may delegate to one or more executive officers of the Company the power to grant Awards and exercise such other powers under the Plan as the Board or Committee may determine, provided that the Board or Committee shall fix the maximum number of Awards to be granted and the maximum number of shares of Common Stock issuable to any one Participant pursuant to Awards granted by such executive officers.officers, and shall provide that no authorized executive officer may designate himself or herself or any Reporting Person (as defined below) as a recipient of any Award. Any actions taken by any executive officer of the Company pursuant to such delegation of authority shall be deemed to have been taken by the Board or the Committee, as applicable.
d.Applicability of Section Rule 16b-3. Anything to the contrary in the foregoing notwithstanding if, or at such time as, the Common Stock is or becomes registered under Section 12 of the Exchange Act of 1934, as amended (the “Exchange Act”), or any successor statute, theThe Plan shall be administered in a manner consistent with Rule 16b-3 promulgated thereunder,under the Securities Exchange Act of 1934, as it may be amended from time to time,(the “Exchange Act”), or any successor rules (“Rule 16b-3”16b-3”), such that all subsequent grants of Awards hereunder to Reporting Persons as hereinafter defined, shall be exempt under such rule. Those provisions of the Plan whichthat make express reference to Rule 16b-3 or which are required in order for certain option transactions to qualify for exemption under Rule 16b-3 shall apply only to such persons as are required to file reports under Section 16 (a)16(a) of the Exchange Act (a “Reporting Person”“Reporting Person”).
Appendix A
e.Applicability of Section 162 (m). Any provisions in thisthe Plan to the contrary notwithstanding, whenever the Board is authorized to exercise its discretion in the administration or amendment of thisthe Plan or any Award hereunder or otherwise, the Board may not exercise such discretion in a manner that would cause any outstanding Award that would otherwise qualify as performance-based compensation under Section 162 (m)162(m) of the Code to fail to so qualify under Section 162 (m)162(m).
3. | Stock Available for Awards3. Stock Available for Awards.
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a.Number of Shares. Subject to adjustment under Section 3(c)3(d), the aggregate number of shares of Common Stock of the Company (the “Common Stock”) that may be issued pursuant tounder the Plan is 2,750,0002,700,000, of which 860,243 shares remain available as of April [.●], 2020; 100% of such shares of Common Stock may be issued as Incentive Stock Options. If any Award expires, or is terminated, surrendered or forfeited, in whole or in part, the unissued Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. If an Award granted under the Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subjectShares to such Award shall again be available for subsequent Awards under the Plan, and if shares of Common Stock issued pursuant to the Plan are repurchased by, or are surrendered or forfeited to, the Company at no more than the price paid for such shares, such shares of Common Stock shall again be available for the grant of Awards under the Plan. Shares issueddelivered under the Plan may consist, in whole or in part, of authorized but unissued sharesCommon Stock or treasury shares.stock.
b.Per-Participant Limit. Subject to adjustment under Section 3(c)3(d), no Participant may be granted Awards during any one fiscal year to purchase more than the number of shares of Common Stock that are authorized for issuance pursuantunder the Plan.
c. Outside Director Awards. The aggregate dollar value of Awards (based on the grant date Fair Market Value of any such Awards) granted under the Plan during any calendar year to any non-employee director of the Board (each an “Outside Director”) shall not exceed $200,000; provided, however, that in the calendar year in which an Outside Director first joins the Board or is first designated as an Outside Director, the aggregate dollar value of Awards granted to the Plan.Outside Director may be up to 200% of the foregoing limit.
c.d. Adjustment to Common Stock. Subject to Section 7 , in the event of any stock split, reverse stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up,a Capitalization Adjustment, the Board or other similar change in capitalization or similar event,Committee will appropriately and proportionately adjust (i) the number and classclass(es) of securitiesStock available for Awards under the Plan and the per-Participant share limit,limit; (ii) the class(es) and maximum number of shares of Stock that may be issued pursuant to the exercise of Incentive Stock Options; and class(iii) the class(es) and number of securities, vesting scheduleshares of Stock or other property and exercisevalue (including the price per share of Stock) subject to each outstanding Option, (iii)Awards. The Board or Committee will make such adjustments, and its determination will be final, binding and conclusive.
e. Substitute Awards. To the repurchase price per security subject to repurchase,maximum extent permitted by applicable law and (iv) the terms of each other outstanding Award shall be adjustedany securities exchange or NYSE rule, Awards granted or Stock issued by the Company (or substitutedin assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines (“Substitute Awards”) shall not be charged against the limitation provided for in Section 3(a) . The terms and conditions of the Substitute Awards may be made if applicable)vary from the terms and conditions set forth in the Plan to the extent the Board or Committee may deem appropriate to conform, in whole or in part, to the provisions of the awards being assumed, substituted or exchanged. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by the acquired company’s stockholders and not adopted in contemplation of such acquisition or combination, such shares (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of the same class of shares of the company party to such acquisition or combination) may be used for Awards under the Plan and shall determine, in good faith,not reduce the shares of Stock authorized for issuance under the Plan; provided that Awards using such an adjustment (or substitution) is appropriate.available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were employees of such acquired or combined company before such acquisition or combination or to any employee who first commences employment with the Company or any Subsidiary after such acquisition or combination.
a.General. The Board or Committee may grant options to purchase shares of Common Stock (each, an “Option”“Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option and the shares of Common Stock issued upon the exercise of each Option, including, but not limited to, vesting provisions, repurchase provisions and restrictions relating to applicable federal or state securities laws. Each Option will be evidenced by a Stock Option Agreement consisting of a Notice of (a “Stock Option Award and a Stock Option Award Agreement (collectively, a “Stock Option Agreement””).
b.Incentive Stock Options. An Option that the Board or Committee intends to be an incentive stock option (an “Incentive“Incentive Stock Option”Option”) as defined in Section 422 of the Code as amended, or any successor statute (“Section 422”422”), shall be granted only to an employee of the Company or a Subsidiary and shall be subject to and shall be construed consistently with the requirements of Section 422 and regulations thereunder. TheNeither the Board, andCommittee nor the Company shall have noany liability if an Option or any part thereof that is intended to be an Incentive Stock Option does not qualify as such. An Option or any part thereof that does not qualify as an Incentive Stock Option is referred to herein as a “Nonstatutory“Nonstatutory Stock Option”Option” or “Non-Qualified“Non-Qualified Stock Option”Option”.
Appendix A
c.Dollar Limitation. For so long as the Code shall so provide, Options granted to any employee under the Plan (and any other incentive stock option plans of the Company) which are intended to qualify as Incentive Stock Options shall not qualify as Incentive Stock Options to the extent that such Options, in the aggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate fair market valueFair Market Value (determined as of the respective date or dates of grant) of more than $100,000. The amount of Incentive Stock Options which exceed such $100,000 limitation shall be deemed to be Non-Qualified Stock Options. For the purpose of this limitation, unless otherwise required by the Code or regulations of the Internal Revenue Service or determined by the Board or Committee, Options shall be taken into account in the order granted, and the Board or Committee may designate that portion of any Incentive Stock Option that shall be treated as a Non-Qualified Stock Option in the event that the provisions of this paragraph apply to a portion of any Option. The designation described in the preceding sentence may be made at such time as the Board or Committee considersconsiders appropriate, including after the issuance of the Option or at the time of its exercise.
d.Exercise Price. The Board or Committee shall establish the exercise price (or determine the method by which the exercise price shall be determined) at the time each Option is granted and specify the exercise price in the applicable Stock Option Agreement, provided, however, in no event may the per share exercise price be less than the Fair Market Value (as defined below) of the Common Stock.Stock on the date of grant. In the case of an Incentive Stock Option granted to a Participant who, aton the timedate of grant, of such Option, owns stockCommon Stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company, or any parent or subsidiary, then the exercise price shall be nonot less than 110% of the fair market valueFair Market Value of the Common Stock on the date of grant. In the case of a grant of an Incentive Stock Option to any other Participant, the exercise price shall be no less than 100% of the fair market value of the Common Stock on the date of grant.
e.Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board or Committee may specify in the applicable Stock Option Agreement; provided, that the term of any Incentive StockAgreement, but no Option may notwill be exercisable more than ten (10) years from the date of grant. Ingrant; provided, in the case of an Incentive Stock Option granted to a Participant who, aton the timedate of grant, of such Option, owns stockCommon Stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company, or any parent or subsidiary, the term of the Option shall be no longer than five (5) years from the date of grant.
f.Exercise of Option. Options may be exercised only by delivery to the Company of a written notice of exercise signed by the proper person together with payment in full as specified in Section 4(g) and the Stock Option Agreement for the number of shares of Common Stock for which the Option is exercised.
g.Payment Upon Exercise. Common Stock purchased upon the exercise of an Option shall be paid for by one or any combination of the following forms of payment as permitted by the Board or Committee in its sole and absolute discretion:
i.by cash or check payable to the order of the Company;
ii.only if the Common Stock is then publicly traded, by delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price, or delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price;
iii.to by the extent explicitly provided in the applicable Stock Option Agreement, by delivery of shares of Common Stock owned by the Participant valued at fair market value (as determinedhaving a Fair Market Value on the date of exercise equal to the exercise price;
iv. by the Board or as determined pursuantsurrender of shares of Common Stock issuable upon the exercise of the Option having a Fair Market Value on the date of exercise equal to the applicable Stock Option Agreement);exercise price; or
iv.v. payment of such other lawful consideration as the Board may determine.
The Board or Committee shall determine in its sole and absolute discretion and subject to the securities laws and its Insider Trading Policythe Company’s insider trading policy whether to accept consideration other than cash. The fair market value of any shares of the Company's Common Stock or other non-cash consideration which may be delivered upon exercise of an Option shall be determined in such manner as may be prescribed by the Board.
Appendix A
h.Acceleration, Extension, Etc. The Board may, in its sole discretion, and in all instances subject to any relevant tax and accounting considerations which may adversely impact or impair the Company, (i) accelerate the date or dates on which all or any particular Options or Awards granted under the Plan may be exercised, or (ii) extend the dates during which all or any particular Options or Awards granted under the Plan may be exercised; provided, however, in no event may any extension exceed the lesser of the option term permitted under Section 4(e) herein or the term set forth in the governing Stock Option Agreement.
i.Determination of Fair Market Value. If, at the time an Option is granted underFor purposes of the Plan, the Company's Common Stock is publicly traded under the Exchange Act, “fair market value” shall mean“Fair Market Value” will be determined as follows: (i) if the Common Stock is listedtrades on a national securities exchange, the closing sale price (for the primary trading session) for a share of Common Stock on the date of grant; or (ii) if the Company Stock does not trade on any established stock exchange, its fair market value shall be the last reported sales price for such stock (on that date) or the closing bid, if no sales were reported as quoted on such exchange, or system as reported in The Wall Street Journal or such other source as the Board deems reliable; or (ii) the average of the closing bid and asked prices last quoted (on that date)for a share of Common Stock on the date of grant as reported by an established quotation service for over-the-counter securities,marketplace designated by the Board; or (iii) if the Common Stock is not reportedpublicly traded, the Board will determine the Fair Market Value of a share of Common Stock for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals). For any date that is not a national market system. Intrading day, the absenceFair Market Value of an established marketa share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as applicable, for the immediately preceding trading day and with the timing formulas specified in clauses (i) and (ii) above adjusted accordingly. The Board has sole discretion to determine the Fair Market Value of a share of Common Stock for purposes of the fair market value thereof shall be determined in good faith byPlan, and all Awards are conditioned on the Board after taking into consideration all factors which it deems appropriate.Participants’ agreement that the Board’s determination is conclusive and binding even though others might make a different determination.
i. No Repricing of Options or Stock Appreciation Rights (“SAR”). Unless otherwise approved by the Company’s stockholders, the Board or the Committee may not “reprice” any Option or SAR. For purposes of this Section 4(i) , “reprice” means any of the following or any other action that has the same effect: (i) amending an Option or SAR to reduce its exercise price or base price, (ii) canceling an Option or SAR at a time when its exercise price or base price exceeds the Fair Market Value of a share of Common Stock in exchange for cash or an Option, SAR, or other equity award or (iii) taking any other action that is treated as a repricing under GAAP, provided that nothing in this Section 4(i) shall prevent the Board or the Committee from making adjustments pursuant to Section 3(d) .
5. Restricted Stock .
a.Grants. The Board or Committee may grant Awards entitling recipients to acquire shares of Common Stock subject to (i) delivery to the Company by the Participant of a check in an amount at least equal to the par value of the shares purchased,such terms and (ii) the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price from the Participant in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periodsas shall be established by the Board for such Awardor Committee consistent with the Plan (each, a “Restricted“Restricted Stock Award”Award”). Each Restricted Stock Award will be evidenced by a Restricted Stock Award Agreement (a “Restricted Stock Award Agreement”).
b.Terms and ConditionsConditions; Stock Certificates. The Board or Committee shall determine the terms and conditions of any such Restricted Stock Award. Any stock certificates issued in respect of shares of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board or Committee, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). After the expiration of the applicable restriction periods,restrictions, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or, if the Participant has died, to his or her Designated Beneficiary. “Designated Beneficiary” means (i) the beneficiary designated, by a Participant, in a manner determined by the Board or Committee, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant'sParticipant’s death (the “Designated Beneficiary”). Inor (ii) in the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant'sParticipant’s estate.
6.Other Stock-Based Awards. The Board or Committee shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board or Committee may determine, including, without limitation, the grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights,SARs, phantom stock awards or stock units.units; provided, however, that any such grant that would be subject to Section 409A of the Code, shall in all respects be compliant with Section 409A.
7.General Provisions Applicable to Awards.
a.Transferability of Awards. Except as the Board or Committee may otherwise determine or provide in an Award or Award Agreement, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted,Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution,distribution; and, during the life of the Participant, shall only be exercisable only by the Participant; provided, however, except as the Board or Committee may otherwise determine or provide in an Award that Nonstatutoryor Award Agreement, Non-Statutory Options and Restricted Stock Awards may be transferred during the Participant’s lifetime pursuant to a qualified domestic relations order (as defined inby the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended)amended, or the rules thereunder) or to a grantor-retained annuity trust or a similar estate-planning vehicle in which the trust is bound by all provisions of the Stock OptionAward Agreement, and Restricted Stock Award, which are applicable to the Participant. References to a Participant, to the extent relevant in the context, shall include references to transferees authorized transferees.
Appendix Aby this paragraph.
b.Documentation. Each Award under the Plan shall be evidenced by a written instrument in such form as the Board shall determine or as executed by ana duly authorized officer of the Company pursuant to authority delegated by the Board.Board or Committee (including a Stock Option Agreement and Restricted Stock Award Agreement, an “Award Agreement”). Each Award may contain terms and conditions in addition to those set forth in the Plan, provided that such terms and conditions do not contravene the provisions of the Plan or applicable law.
c.Board Discretion. The terms of each type of Award need not be identical, and the Board or Committee need not treat Participants uniformly.
d.Additional Award Provisions. The Board may, in its sole discretion, include additional provisions in any Stock Option Agreement, Restricted Stock Award or other Award granted under the Plan, including without limitation restrictions on transfer, repurchase rights, commitments to pay cash bonuses, to make, arrange for or guaranty loans or to transfer other property to Participants upon exercise of Awards, or transfer other property to Participants upon exercise of Awards, or such other provisions as shall be determined by the Board; provided that such additional provisions shall not be inconsistent with any other term or condition of the Plan or applicable law.
e.Termination of Status. The Board shall determine the effect on an Award of the disability (as defined in Code Section 22(e)(3)), death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant's legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award, subject to applicable law and the provisions of the Code related to Incentive Stock Options.
f.Change of Control of the Company.
i.Unless otherwise expressly provided in the applicable Stock Option Agreement or Restricted Stock Award or other Award Agreement, in connection with the occurrence of a Change in Control (as defined below), the Board or Committee shall, in its sole discretion, as to any outstanding Award (including any portion thereof; on the same basis or on different bases, as the Board or Committee shall specify), take one or any combination of the following actions:
A.(i) make appropriate provision for the continuation of suchthe Award by the Company or the assumption of suchthe Award by the surviving or acquiring entity and by substituting on an equitable basis for the shares of Common Stock then subject to suchthe Award either (x) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Change of Control, (y) shares of stock of the surviving or acquiring corporation or (z) such other securities as the Board or Committee deems appropriate, the fair market valueFair Market Value of which (as determined by the Board in its sole discretion) shall not materially differ from the fair market valueFair Market Value of the shares of Common Stock subject to suchthe Award immediately preceding the Change of Control;
B.(ii) accelerate the date of exercise or vesting of suchthe Award; or
C.(iii) permit the exchange of suchthe Award for the right to participate in any stock option or other employee benefit plan of any successor corporation.
Appendix A
D.For the purpose of this Agreement, a “Change“ Change of Control”Control ” shall mean:
(a)(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended [the “Exchange Act”]) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the then outstanding shares of voting stock of the Company (the “Outstanding“Outstanding Voting Stock”Stock”); provided, however, that any acquisition by the Company or its subsidiaries,Subsidiaries, or any employee benefit plan (or related trust) of the Company or its subsidiariesSubsidiaries of 50% or more of Outstanding Voting Stock shall not constitute a Change in Control; and provided, further, that any acquisition by a corporation with respect to which, following such acquisition, more than 50% of the then outstanding shares of common stock of such corporation, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Stock immediately prior to such acquisition in substantially the same proportion as their ownership immediately prior to such acquisition, of the Outstanding Voting Stock, shall not constitute a Change in Control; or
(b)(ii) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Directors”“Incumbent Directors”) cease for any reason to constitute a majority of the members of thisthe Board; provided that any individual who becomes a director after the Effective Date whose election or nomination for election by the Company’s Shareholdersstockholders was approved by a majority of the members of the Incumbent Directors (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened “election contest” relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 under the Exchange Act), “tender offer” (as such term is used in Section 14(d) of the Exchange Act) or a proposed Merger (as defined below) shall be deemed to be members of the Incumbent Directors; or
(c)(iii) The consummation of (i)(A) a reorganization, merger or consolidation (any of the foregoing, a “Merger”“Merger”), in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Stock immediately prior to such Merger do not, following such Merger, beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock of the corporation resulting from Merger (ii)in substantially the same proportion as their ownership immediately prior to such Merger, (B) a complete liquidation or dissolution of the Company or (iii)(C) the sale or other disposition of all or substantially all of the assets of the Company, excluding a sale or other disposition of assets to a subsidiary of the Company.Subsidiary.
g.e. Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Board or Committee shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Board or Committee in its sole discretion may provide for a Participant to have the right to exercise his or her Award until fifteen (15) days (or such other time determined by the Board) prior to such transaction as to all of the shares of Common Stock covered by the Option or Award, including shares as to which the Option or Award would not otherwise be exercisable, which exercise may in the sole discretion of the Board, be made subject to and conditioned upon the consummation of such proposed transaction. In addition, the Board may provide that any Company repurchase option applicable to any shares of Common Stock purchased upon exercise of an Option or Award shall lapse as to all such shares of Common Stock, provided the proposed dissolution and liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised or settled or shares of Common Stock have not previously been issued, an Award will terminate upon the consummation of such proposed action.
h.Assumption of Options Upon Certain Events. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards under the Plan in substitution for stock and stock-based awards issued by such entity or an affiliate thereof.
Appendix A
i.The substitute Awards shall be granted on such terms and conditions as the Board considers appropriate in the circumstances.
j.f. Parachute Payments and Parachute Awards. Notwithstanding any other provision of the provisionsPlan (including Section 7(d) ) or the terms of Section 7(f),any Award Agreement, if, in connection with a Change of Control described therein, a tax under Section 4999 of the Code would be imposed on the Participant (after taking into account the exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code, if applicable), then the number of Awards which shall become exercisable, realizable or vested as provided in such the Award Agreement and other provisions of the Plan without regard to this Section 7(f) (the “Parachute Awards”) shall be reduced (or delayed), to the minimum extent necessary, so that no such tax would be imposed on the Participant (the Awards not becoming so accelerated, realizable or vested, the “Parachute Awards”);Participant; provided, however, that if the “aggregate present value”after-tax value of the Parachute Awards would exceed the(including taking into consideration any tax that, but for this sentence, would be imposed on the Participant under Section 4999 of the Code in connection withCode) would exceed the Changeafter-tax value of Control,the Parachute Awards after taking into consideration such potential reduction or delay, then the Awards shall become immediately exercisable, realizable and vested in accordance with the terms of the Plan and the applicable Award Agreements without regard to the provisions of this sentence. For purposes of the preceding sentence, the “aggregate present value” of an Award shall be calculated on an after-tax basis (other than taxes imposed by Section 4999 of the Code) and shall be based on economic principles rather than the principles set forth under Section 280G of the Code and the regulations promulgated thereunder. All determinations required to be made under this Section 7(j)7(f) shall be made by the Company or a tax attorney or accountant selected by the Company.
k.Amendment of Awards. The Board may amend, modify or terminate any outstanding Award including, but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant.
l.g. Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company'sCompany’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.
h. Acceleration. The Board may at any time provide that any Options shall become immediately exercisable in full or in part, that any Restricted Stock Awards shall be free of some or all restrictions, or that any other stock-based Awards may become exercisable in full or in part or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be, despite the fact that the foregoing actions may (i) cause the application of Sections 280G and 4999 of the Code if a changeChange in controlControl of the Company occurs, or (ii) disqualify all or part of the Option as an Incentive Stock Option.
i Clawback, Recovery and Recoupment. All Awards shall be subject to clawback, recovery or recoupment in accordance with any compensation clawback, recovery or recoupment policy adopted by the Board or otherwise required by applicable law, government regulation or stock exchange listing requirement and, in addition to any other remedies available under such policy and applicable law, government regulation or stock exchange listing requirement, may require the forfeiture and cancelation of outstanding Awards and the recoupment of any gains realized with respect to any Awards. The Board may impose any such clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate.
8.Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of shares of Common Stock covered by an Award. The Company shall have the right to deduct or withhold from payments of any kind otherwise due to the optionee or recipient of an AwardParticipant any federal, state, local or localother income and employment taxes of any kind required by law to be withheld with respect to any shares issued upon exercise of Options under the Plan or the purchase of shares subject to theCommon Stock covered by an Award. Subject to the prior approval of the Company, including without limitation, its determination that such withholding complies with applicable tax and securities laws, which may be withheld by the Company in its sole discretion, the optionee or recipient of an AwardParticipant may elect to satisfy such obligation,the tax obligations, in whole or in part, (a) by causing the Company to withhold or retain shares of Common Stock otherwise issuable pursuant tofrom the exercise of an Option orAward creating the purchase of shares subject to an Awardtax obligation or (b) by delivering to the Company shares of Common Stock already owned by the optionee or Award recipient of an Award. The shares so delivered or withheld shall have a fair market value ofParticipant; provided that the shares used to satisfy such withholding obligationwithheld, retained or delivered shall be valued at their Fair Market Value as shall be determined by the Company as of the date that the amount of tax to be withheldobligation is to be determined. An optionee or recipient of an AwardA Participant who has made an election pursuant to this Section may only satisfy his or her withholdingtax obligation with shares of Common Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.
Appendix Ashares of Common Stock may be delayed by the Company until the Participant has made arrangements for the satisfaction of such tax withholding obligations to the satisfaction of the Company.
9.No ExerciseTreatment of OptionAward if Engagement or Employment Terminated for Cause. If the employment or engagement of any Participant is terminated “for Cause”, the Award may terminate, upon a determination of the Board or Company, on the date of such termination and the OptionAward shall thereupon not be exercisable to any extent whatsoever and the Company shall have the right to repurchase any shares of Common Stock subject to a Restricted Stock Award whether or not such shares have vested.forfeited. For purposes of this Section 9,the Plan, “for Cause” shall be defined as follows: (i)(a) if the Participant has executed an employment agreement, the definition of “Cause” contained therein, if any, shall govern, or (ii)otherwise (b) conduct, as determined by the Board of Directors,or Committee, involving one or more of the following: (a)(i) gross misconduct; or (b)(ii) the commission of an act of embezzlement, fraud or theft, which results in economic loss, damage or injury to the Company; or (c)(iii) the unauthorized use or disclosure of any trade secret or confidential information of the Company (or of any client, customer, supplier or other third party who has a business relationship with the Company) or the violation of any noncompetitionnon-competition, non-disparagement or nonsolicitationnon-solicitation covenant or assignment of inventions obligation with the Company; or (d)(iv) the commission of an act which constitutes unfair competition with the Company or which induces any customer or prospective customer of the Company to breach a contract with the Company or to decline to do business with the Company; or (e)(v) the indictment of the Participant for a felony or serious misdemeanor offense, either in connection with the performance of his or her obligations to the Company or which shall adversely affect the Participant’s ability to perform such obligations; or (f)(vi) the commission of an act of fraud or breach of fiduciary duty which results in loss, damage or injury to the Company; or (g)(vii) the failure of the Participant to perform in a material respect his or her employment, consulting or advisory obligations without proper cause; or (h)(viii) intentional violation of securities laws or the Company’s Insider Trading Policy. In the event of a conflict between “for Cause” as defined the Plan and any other agreement to which the Participant is otherwise subject, the terms that are enforceable and most protective of the Company shall govern. In making such determination, the Board or Committee shall act fairlyreasonably and in utmost good faith.fairly. The Board or Committee may in its discretion waive or modify the provisions of this Section at a meeting of the Board with respect to any individual Participant with regard to the facts and circumstances of any particular situation involving a determination under this Section.
10.Miscellaneous .
a. Definitions .
(i) Miscellaneous“Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Award after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other similar equity restructuring transaction, as that term is used in Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
a.Definitions.
(ii) “i.Code“Company”, for purposes” means the Internal Revenue Code of eligibility under1986, as amended, and any regulations thereunder.
(iii) “Common Stock” means the Plan, shall include any present or future subsidiary corporationscommon stock of PAR Technology Corporation, as definedthe Company.
(iv) “Subsidiary” has the meaning in Section 424(f) of the Code, (a “Subsidiary”), and any present or future parent corporation of the Company, as defined in Section 424(e) of the Code. Forprovided, however, for purposes of Awards other than Incentive Stock Options, the term “Company”“Subsidiary” shall also include any other business venture in which the Company has a direct or indirect significant interest that allow it to be treated as determined by the Board in its sole discretion.
ii.“Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.
iii.“Employee”a subsidiary for purposes of eligibilityRule 405 promulgated under the Plan shall include a person to whom an offerSecurities Act of employment has been extended by the Company.1933, as amended.
iv.“Option Exchange Program” means a program whereby outstanding options are exchanged for options with a lower exercise price.
b.No Right Toto Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant at any time, with or without “for Cause”, with or without advance notice, and for any reason or no reason, free from any liability or claim under the Plan.
Appendix A
c.No Rights Asas Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributedissued with respect to an Award until becoming the record holder thereof.of such shares. In accepting an Award under the Plan, a Participant agrees to be bound by any clawback policy the Company has in effect or may adopt in the future.
d.Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adoptedapproved by the Boardstockholders in 2019 (the “Effective Date”“Effective Date”). No Awards shall be granted under the Plan after the completion of ten (10) years from the date on which the Plan was adopted by the Board,Effective Date, but Awards previously granted may extend beyond that date.
e.Amendment of Plan. TheSubject to the limitations set forth in this Section 10(e), the Board or Committee may amend, suspend or terminate the Plan or any portion thereof at any time.
f.Settlementtime; provided, however, that no amendment for which shareholder approval is required either (i) by any securities exchange or inter-dealer quotation system on which the Common Stock is listed or traded or (ii) in order for the Plan and Awards to continue to comply with applicable provisions of Awards.the Code, shall be effective unless such amendment shall be approved by the requisite vote of the shareholders of the Company entitled to vote thereon. Any other provisionsuch amendment shall, to the extent deemed necessary or advisable by the Board or the Committee, be applicable to any outstanding Awards theretofore granted under the Plan, notwithstanding any contrary provisions contained in any Award Agreement. In the event of any such amendment to the Plan, the holder of any Award outstanding under the Plan shall, upon request of the Board or the Committee and as a condition to the exercisability thereof, execute a conforming amendment in the form prescribed by the Board or the Committee to any Award Agreement relating thereto. Notwithstanding anything contained in the Plan to the contrary, notwithstanding, ifunless required by law, no action contemplated or permitted by this Section 10(e) shall materially adversely affect any provisionrights of Participants or obligations of the Plan permits a Participant, at his or her election,Company to receive a cash settlement of Options or other AwardsParticipants with respect to any Award theretofore granted under the Plan or requireswithout the Company to pay a cash settlementconsent of Options or Awards under the Plan, the Participant shall be entitled to receive the cash settlement, and the Company shall be obligated to pay the cash settlement, only if the Company determines, in its sole and absolute discretion, to make such payment.affected Participant.
g.f. Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the state of incorporation of the Company, Delaware, without regard to any applicable conflicts of law.
Approvals:
Original Plan:
Adopted by the Board of Directors on: December 28, 2005
Modified Plan:
Adopted by the Board of Directors on: March 29, 2006April 16, 2019
Approved by the stockholders on: May 11, 2006
Amendment adding 1,250,000 shares
Adopted by the Board of Directors on: March 19, 2012
Approved by theCompany’s stockholders on: June 7, 201210, 2019, as amended June [●], 2020
Amendment adding 500,000 shares
Adopted by the Board of Directors on: March 11, 2014
Approved by the stockholders on: May 22, 2014
OF
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION, AS AMENDED
OF
PAR TECHNOLOLGY CORPORATION
PAR Technology Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify:
| 1. | This Certificate of Amendment (the "Certificate of Amendment") amends the provisions of the Corporation's Certificate of Incorporation filed with the Secretary of State on the 21st of April 1992, with the last amendment thereto being filed on the 16th of May 2008 (the "Certificate of Incorporation"). |
| 2. | That the Board of Directors of the Corporation (the "Board"), at a meeting held on March 11, 2014 duly adopted resolutions setting forth a proposed amendment of the Certificate of Incorporation of the Corporation declaring said amendment to be advisable and directing that the amendment be submitted to the shareholders of the Corporation for consideration at the 2014 Annual Meeting of Shareholders. The resolution submitted to the Shareholders setting forth the proposed amendment was as follows: |
RESOLVED, that Paragraph 3 of Article EIGHTH of the Corporation's Certificate of Incorporation, is hereby amended and restated in its entirety as follows:
| 3. | The directors (other than those who may be elected by the holders of any series of preferred stock, voting as a separate class) shall serve for a one-year term. Following the 2014 annual meeting of shareholders the Board of Directors will no longer be classified under Section 141(d) of the General Corporation Law of the State of Delaware and directors shall no longer be divided into three classes. The term of all directors currently serving or appointed to serve shall expire at the 2015 annual meeting of shareholders. Effective as of the 2015 annual meeting of shareholders and each annual meeting of shareholders thereafter, all directors (other than those who may be elected by the holders of any series of preferred stock, voting as a separate class) shall be elected for a one-year term expiring at the next annual meeting of shareholders. Each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation or removal. |
IT IS RESOLVED FURTHER, that all other provisions of the Certificate of Incorporation remain in full force and effect.
| 3. | That thereafter, pursuant to resolution of its Board, an annual meeting of the stockholders of the Corporation was duly called and held, on May 22, 2014, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. |
| 4. | That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and Paragraph 1 of Article ELEVENTH of the Corporation's Certificate of Incorporation. |
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed this 22nd day of May 2014.
| | |
| PAR TECHNOLOGY CORPORATION |
| | |
| By: | |
| | Viola A. Murdock |
| | Acting Corporate Secretary |
PROPOSED FORM
OF
CERTIFICATE OF AMENDMENT
TO THE
BY LAWS, AS AMENDED
OF
PAR TECHNOLOLGY CORPORATION
PAR Technology Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify:
| 1. | This Certificate of Amendment (the "Certificate of Amendment") amends the provisions of the Corporation's By Laws with the last amendment thereto being on the 29th of July 2013 (the "By Laws"). |
| 2. | That the Board of Directors of the Corporation (the "Board"), at a meeting held on March 11, 2014 duly adopted resolutions setting forth a proposed amendment of the By Laws of the Corporation declaring said amendment to be advisable and directing that the amendment be submitted to the shareholders of the Corporation for consideration at the 2014 Annual Meeting of Shareholders. The resolution submitted to the Shareholders setting forth the proposed amendment was as follows: |
RESOLVED, that Article III (Directors), Section 2 (Number, Election and Terms) of the Corporation's By Laws is hereby amended and restated in its entirety as follows:
| Section 2. | The authorized number of directors may be determined from time to time by a vote of a majority of the then authorized number of directors; provided, however, that such number shall not be less than a minimum of three nor more than a maximum of fifteen; and provided, further, that such number and such minimum and maximum may be increased or decreased pursuant to resolution of the Board. Subject to Sections 9 and 10 of Article III of these By Laws, the directors, other than those who may be elected by the holders of any series of preferred stock, shall serve for a one-year term. Following the 2014 annual meeting of shareholders the Board of Directors will no longer be classified under Section 141(d) of the General Corporation Law of the State of Delaware and directors shall no longer be divided into three classes. The term of all directors currently serving or appointed to serve shall expire at the 2015 annual meeting of shareholders. Effective as of the 2015 annual meeting of shareholders and each annual meeting of shareholders thereafter, all directors (other than those who may be elected by the holders of any series of preferred stock, voting as a separate class) shall be elected for a one-year term expiring at the next annual meeting of shareholders. Each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation or removal. Vacancies and newly created directorships resulting from any increase in the authorized number of directors, and any vacancies on the Board resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the Board, or by a sole remaining directors, and the directors so chosen shall hold office, subject to Sections 9 and 10 of Article III of these Bylaws until the next Annual Meeting of shareholders and until their respective successors are elected and qualified. No decrease in the number of directors constituting the Board shall shorten the terms of any incumbent director. |
IT IS RESOLVED FURTHER, that all other provisions of the By Laws remain in full force and effect.
| 3. | That thereafter, pursuant to resolution of its Board, an annual meeting of the stockholders of the Corporation was duly called and held, on May 22, 2014, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. |
Appendix C
| 4. | That said amendment was duly adopted in accordance with the provisions of Article XIII of the Corporation's By Laws. |
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed this 22nd day of May 2014.
| | |
| PAR TECHNOLOGY CORPORATION |
| | |
| By: | |
| | Viola A. Murdock |
| | Acting Corporate Secretary |
Langham Place, Fifth Avenue
400 Fifth Avenue
New York, NY 10018
212-613-8736
http://newyork.langhamplacehotels.com/
Langham Place, Fifth Avenue is located just 22 minutes from John F. Kennedy Airport, 12 minutes from LaGuardia Airport and 25 minutes from Newark Airport, by road (without traffic).
Driving directions
From All Points NORTH
· | Take I-95 S (toward New York City). |
· | Take the exit onto I-278 W toward Brooklyn/Staten Island and follow it for 3.3 miles. |
· | Take exit 35 for I-495/Long Island Expressway toward Midtown Tunnel and merge onto I-495 W. |
· | Continue NY-495 W and turn right at E 34th Street. |
· | Turn left at the 3rd cross street onto E 37th St |
· | Turn right at Madison Ave and follow it for 0.2 miles. |
· | Take your first left onto 5th Ave |
· | Langham Place, Fifth Avenue will be on the right at 400 Fifth Avenue. |
All Points SOUTH
· | Take I-95 N (toward New York City). |
· | Take exit 16E toward Lincoln Tunnel/NJ-3. |
· | Keep left at the fork and merge onto NJ-495 E. |
· | Take the exit toward 42 Street/I-495 E/New York 9A. |
· | Turn right at W 40th Street and follow it for 0.8 miles. |
· | Turn right at 5th Avenue. |
· | Langham Place, Fifth Avenue will be on the right at 400 Fifth Avenue. |
From John F. Kennedy (JFK) Airport
· | Follow the signs and merge onto to I-678 N for 7.4 miles. |
· | Take exit 12B (I-495 W/Long Island Expressway) toward Midtown Tunnel and continue on I-495 for approximately 7.5 miles. |
· | Turn right at E 34th St and continue for 0.3 miles. |
· | Turn right at Madison Ave and continue for 0.2 miles |
· | Turn left at the 3rd cross street onto E 37th St |
· | Take your first left onto 5th Ave |
· | Langham Place, Fifth Avenue will be on the right at 400 Fifth Avenue. |
From LaGuardia Airport
· | Follow the signs toward Grand Central Parkway W and follow it for approximately 0.9 miles. |
· | Take the exit onto Brooklyn Queens Expy E and follow it for 1.2 miles. |
· | Merge onto I-278 W and follow it for 2.2 miles. |
· | Take exit 35 for I-495/Long Island Expressway toward Midtown Tunnel/Eastern Long Island/Greenpoint Ave. |
· | Follow I-495 for approximately 3 miles. |
· | Turn right at E 34th Street and follow it for 0.3 miles. |
· | Turn right at Madison Avenue and follow it for 0.2 miles. |
· | Turn left at the 3rd cross street onto E 37th Street and follow it for 0.1 miles. |
· | Take the 1st left onto 5th Avenue. |
· | Langham Place, Fifth Avenue will be on the right at 400 Fifth Avenue. |
From Newark Airport
· | Take US-1 N/US-9 N to I-95N. |
· | Follow I-95N for 5.5 miles. |
· | Take exit 16E toward Lincoln Tunnel/NJ-3 Toll road |
· | Keep left at the fork and follow the signs for N J 3/Secaucus and merge onto NJ-495 E. |
· | From 495 E, take the exit toward 42 St/I-495 E. |
· | Turn right at W 40th St and drive for 0.8 miles. |
· | Turn right at 5th Avenue. |
· | Langham Place, Fifth Avenue will be on the right at 400 Fifth Avenue. |