ntn_def14a-060210.htm
SCHEDULE
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NTN
Buzztime, Inc
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NTN
BUZZTIME, INC.
Carlsbad,
California 92008
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To the
Stockholders of NTN Buzztime, Inc.:
NOTICE IS
HEREBY GIVEN that the annual meeting of stockholders (the “Annual Meeting”) of
NTN Buzztime, Inc. (“NTN Buzztime” or the “Company”) will be held at the
Company’s headquarters located at 5966 La Place Court, Carlsbad, California
92008, at 9:00 a.m. local time, on June 2, 2010 for the following purposes, as
more fully described in the attached Proxy Statement:
1.
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To
elect four (4) directors to hold office until the 2011 annual meeting of
stockholders and until their respective successors are duly elected and
qualified;
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2.
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To
vote upon a proposal to adopt the NTN Buzztime, Inc. 2010 Performance
Incentive Plan;
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3.
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To
ratify the appointment of Mayer Hoffman McCann P.C. as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2010; and
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4.
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Any
other matters that may properly come before the annual
meeting.
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The Board
of Directors fixed the close of business on April 19, 2010 as the record
date for determining the stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournments or postponements thereof. A list of
stockholders entitled to vote at the meeting will be available for inspection at
the Company’s offices for at least 10 days prior to the meeting, and will also
be available for inspection at the meeting.
You are
cordially invited to attend the Annual Meeting in person. Whether or not
you plan to attend the Annual Meeting in person, in order to ensure your
representation at the meeting, please promptly complete, date, sign, and return
the enclosed proxy in the accompanying envelope. In addition
to voting by mail, you may vote by telephone or via the internet. You do not
need to return your proxy by mail if you vote either by telephone or via the
internet.
VOTE
VIA THE INTERNET – www.proxyvote.com
You may
vote via the internet at www.proxyvote.com. Use the internet to transmit your
voting instructions and for electronic delivery of information up until 11:59
p.m. Eastern Time the day before the meeting date. Have your proxy card in hand
when you access the web site and follow the instructions to obtain your records
and to create an electronic voting instruction form.
VOTE
VIA TELEPHONE – 1.800.690.6903
You may
vote via telephone by dialing 1.800.690.6903. Use any touch-tone telephone to
transmit your voting instructions up until 11:59 p.m. Eastern Time the day
before the meeting date. Have your proxy card in hand when you call and then
follow the instructions.
ELECTRONIC
DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you
would like to reduce the costs incurred by the Company in mailing proxy
materials, you can consent to receiving all future proxy statements, proxy cards
and annual reports electronically via e-mail or the internet. To enroll in
electronic delivery, please follow the instructions above to vote via the
internet and, when prompted, indicate that you agree to receive or access
stockholder communications electronically in future years.
The
prompt return of your proxy will help to save expenses incurred in further
communication. Your proxy can be revoked as described in the Proxy Statement and
will not affect your right to vote in person should you decide to attend the
Annual Meeting.
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BY
ORDER OF THE BOARD OF DIRECTORS
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Kendra
Berger
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Chief
Financial Officer and Secretary
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Carlsbad,
California 92008
Annual
Meeting of Stockholders to be held June 2, 2010
The
enclosed proxy is being solicited on behalf of the Board of Directors of NTN
Buzztime, Inc. (“NTN Buzztime” or the “Company”) for use at the annual meeting
of stockholders to be held at the Company’s headquarters located at 5966 La
Place Court, Carlsbad, California 92008, at 9:00 a.m. local time, on June 2,
2010 and at any adjournment or postponement thereof (the “Annual Meeting”), for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Stockholders. We are first mailing this Proxy Statement, together with the
accompanying proxy solicitation materials, to stockholders, and posting it on
our corporate website at www.buzztime.com, on or about April 30,
2010.
Proposals
You Are Asked to Vote on and the Board’s Voting
Recommendations
The
matters you will be asked to vote on and the Board’s recommendations
are:
Proposal
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Voting
Recommendations
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1.
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To
elect four (4) directors to hold office until the 2011 annual meeting
of stockholders and until their respective successors are duly elected and
qualified;
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FOR
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2.
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To
vote upon a proposal to adopt the NTN Buzztime, Inc. 2010 Performance
Incentive Plan;
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FOR
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3.
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To
ratify the appointment of Mayer Hoffman McCann P.C. as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2010; and
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FOR
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4.
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Any
other matters that may properly come before the annual
meeting.
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(*)
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*
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The
Board is not aware of any other matters to be presented to you for a vote,
however, if a matter requiring a vote is properly brought forth during the
meeting, the Board’s recommended vote will be communicated to you at that
time.
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We have
one class of voting stock outstanding, designated common stock, $.005 par value
(“Common Stock”). Each share of our Common Stock is entitled to one
vote for each director to be elected and for each other matter to be voted on at
the Annual Meeting. Only holders of record of Common Stock at the
close of business on April 19, 2010 are entitled to notice of and to vote
at the Annual Meeting. There were approximately 60,687,549 shares of
Common Stock outstanding as of the record date.
The proxy
holders will vote all shares of Common Stock represented by a properly completed
proxy received in time for the Annual Meeting in accordance with the
stockholder’s instructions. If no instructions are given in the
proxy, the shares will be voted according to the recommendations of the Board of
Directors. Therefore, if no instructions are given, the shares will
be voted “FOR” Proposal 1, the election as directors of each of the nominees
named in this Proxy Statement, “FOR” Proposal 2, approval of our 2010
Performance Incentive Plan, and “FOR” Proposal 3, ratification of the
appointment of Mayer Hoffman McCann P.C. as our registered independent public
accounting firm for the fiscal year ending December 31,
2010. With respect to any other item of business that may properly
come before the Annual Meeting, the proxy holders will vote the proxy in
accordance with their best judgment.
Brokers
who hold shares of Common Stock for the accounts of their clients may vote such
shares either as directed by their clients or in their own discretion if
permitted by the stock exchanges or other organizations of which they are
members. Members of the New York Stock Exchange (NYSE) are permitted
to vote their clients’ proxies in their own discretion on certain matters if the
clients have not furnished prior voting instructions. However, the
NYSE defines various proposals as “non-discretionary” and brokers who have not
received voting instructions from their clients do not have discretion to vote
on those items. When a broker votes a client’s shares on some but not
all of the proposals at a meeting, the withheld votes are referred to as “broker
non-votes.”
The
presence, in person or by proxy, at the Annual Meeting, of stockholders entitled
to cast a majority of the votes entitled to be cast by all stockholders will
constitute a quorum for the transaction of business at the Annual
Meeting. Persons returning executed proxy cards will be counted as
present for purposes of establishing a quorum even if they abstain from voting
on any or all proposals. Shares held by brokers who vote such shares
on any proposal will be counted as present for purposes of establishing a
quorum, and broker non-votes on other proposals will not affect the presence of
a quorum. Abstentions will be counted as present for purposes of
establishing a quorum but for purposes of determining the outcome of a proposal,
abstentions will not be treated as affirmative votes.
For
Proposal 1, the election as directors of each of the nominees named in this
Proxy Statement, nominees receiving the highest number of affirmative votes cast
at the Annual Meeting, up to the number of directors to be elected, will be
elected as directors. Abstentions and broker non-votes will not have
any effect on the outcome of a nominee’s election.
To be
approved, Proposal 2 (approval of our 2010 Performance Incentive Plan) and
Proposal 3 (ratification of the appointment of Mayer Hoffman McCann P.C. as our
registered independent public accounting firm for the fiscal year ending
December 31, 2010) must receive “For” votes from the holders of a majority
of shares of Common Stock present or represented by proxy at the Annual Meeting
and entitled to be voted on such proposal. Abstentions will be
included in the number of shares present and entitled to vote on these proposals
and, accordingly, will have the effect of a vote "AGAINST" such
proposal. If a broker indicates on the proxy it does not have
discretionary authority to vote certain shares on such proposal, those shares
will not be considered as present and entitled to vote on that proposal (other
than to reduce the number of affirmative votes required to approve the
proposal). Therefore, broker non-votes will not be counted and will
have no effect on these proposals.
The
inspector of election appointed for the Annual Meeting will tabulate all votes
including a separate tabulation of the affirmative and negative votes and
abstentions.
You may
revoke a proxy at any time before it has been exercised by giving written notice
of revocation to our Secretary, by executing and delivering to the Secretary a
proxy dated as of a later date than the accompanying proxy, or by attending the
Annual Meeting and voting in person. If, however, your shares of record are held
by a broker, bank or other nominee and you wish to vote in person at the Annual
Meeting,
you must obtain from that record holder a proxy issued in your
name. Attendance at the Annual Meeting, by itself, will not
serve to revoke a proxy.
We will
bear the cost of soliciting proxies. This Proxy Statement and the accompanying
proxy solicitation materials, in addition to being mailed directly to
stockholders, will be distributed through brokers, custodians and other nominees
to beneficial owners of shares of Common Stock. We may reimburse such parties
for their reasonable expenses in forwarding solicitation materials to beneficial
owners. We do not expect these costs to be significant. Our directors, officers
or regular employees may follow up the mailing to stockholders by telephone,
electronic mail or personal solicitations, but no special or additional
compensation will be paid to those directors, officers or employees for doing
so.
Stockholder
Proposals for 2011 Annual Meeting
Our
Amended and Restated Bylaws provide that advance notice of a stockholder’s
proposal must be delivered to the Secretary of our company at our principal
executive offices not later than ninety (90) calendar days or more
than one hundred twenty (120) calendar days in advance of the anniversary
of the mailing date of the proxy materials for the previous year’s annual
meeting. However, the bylaws also provide that in the event that no annual
meeting was held in the previous year or the date of the annual meeting is
advanced by more than 30 days or delayed by more than 30 days from the
anniversary of the previous year’s annual meeting, this advance notice must be
received no later than the close of business on the later of the 90th day
before such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made.
Stockholders
are advised to review our bylaws, which contain additional requirements with
respect to advance notice of stockholder proposals. Our bylaws are available on
the Corporate Governance section of our website at www.buzztime.com. In
addition, a copy of the full text of the provisions of our bylaws dealing with
stockholder nominations and proposals is available to stockholders from the
Secretary of our company upon written request.
Stockholders
who wish to submit one or more proposals for inclusion in our Proxy Statement
relating to the 2011 annual meeting of stockholders must submit such proposals
so that we receive such proposals at our principal executive offices on or after
December 31, 2010 and on or before January 31, 2011. In addition, if
we are not notified by January 31, 2011 of a proposal to be brought before
the 2011 Annual Meeting by a stockholder, then proxies held by management may
provide the discretion to vote against such proposal even though it is not
discussed in the proxy statement for such meeting.
Selection
of Director Nominees
The
Nominating and Corporate Governance/Compensation Committee will consider
candidates for Board membership suggested by other Board members, as well as by
management and stockholders. As a stockholder, you may recommend any qualified
person for consideration as a nominee for director by writing to the Nominating
and Corporate Governance/Compensation Committee of the Board of Directors, c/o
NTN Buzztime, Inc., 5966 La Place Court, Carlsbad, California 92008.
Recommendations must be received on or after December 31, 2010 and on or
before January 31, 2010 to be considered for the 2011 annual meeting of
stockholders, and must comply with the requirements in our bylaws.
Recommendations must include the name and contact information of the candidate,
a statement of the candidate’s business and educational experience, including
relevant dates and past employment and degrees or certifications received, the
class and number of shares of our company that are beneficially owned by such
person, information regarding the candidate that is sufficient to enable the
Nominating and Corporate Governance/Compensation Committee to evaluate the
candidate under the Board membership criteria described below under the heading
“Director Nominations,” a statement detailing any relationship between the
candidate and any customer, supplier or competitor of the Company, detailed
information regarding any relationship or understanding between the candidate
and the stockholder who is submitting the candidate’s nomination; the
candidate’s signed written consent to serve on the Board if elected, and any
additional information relating to the candidate as is necessary in order to
comply with the solicitations of proxies for the election of directors pursuant
to Regulation 14A under the Securities Exchange Act of 1934. In addition, such
notice shall set forth as to the stockholder making such recommendation, the
name and address of such stockholder, the class and number of shares of our
company which are beneficially owned by the stockholder, and any material
interest of the stockholder relating to the proposed candidate for director. The
procedures for considering candidates recommended by a stockholder for Board
membership will be no different than the procedures for candidates recommended
by members of the Board or by management.
We are
committed to integrity, reliability and transparency in our disclosures to the
public. We have established corporate governance practices to help ensure that
our business is operated in the best interests of our stockholders and in full
compliance with our legal obligations including the corporate governance listing
standards of the NYSE Amex and regulations of the Securities and Exchange
Commission (the “SEC”).
Our
Corporate Governance Guidelines, Committee Charters, the Code of Ethics and
other corporate governance materials and related information are posted in the
Corporate Governance section of our website at www.buzztime.com. You may
request copies of these documents, without charge, by writing to us at: NTN
Buzztime, Inc., 5966 La Place Court, Carlsbad, California 92008, Attention:
Corporate Secretary.
Our
bylaws provide that the number of directors constituting the whole board
of directors shall be determined by the Board from time to time by a
resolution duly adopted by the Board. The number of
directors as determined by the Board is
currently five. Our board of directors
currently consists of four members with one
vacancy. Our certificate of incorporation provides for the annual
election of all of our directors. Vacancies on the Board of Directors (including
vacancies created by an increase in the authorized number of directors) may be
filled solely by the Board of Directors. A director appointed by the Board of
Directors to fill a vacancy would serve for the remainder of the one year term
and until his or her successor is elected and qualified.
The Board
of Directors has selected the following nominees for election as directors at
the Annual Meeting. Each such nominee is currently serving as a director of the
Company. Mr. Bush was appointed as a director by the Board to fill a vacancy on
our Board. He was recommended by Mr. Berg in 2009 for consideration
by our Nominating and Corporate Governance/Compensation Committee. If
elected, the following nominees would hold office until the annual meeting of
stockholders in 2011 and until their respective successors are duly elected and
qualified.
Name
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Age
(1)
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Director
Since
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Terry
Bateman
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53
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2008
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Jeff
Berg
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50
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2008
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Mary
Beth Lewis
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52
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2009
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Michael
Bush
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49
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2009
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________________________________
The
following biographical information is furnished with respect to members of our
board of directors:
Terry
Bateman has served on our Board of directors since November 2008 and
served as our Chief Executive Officer from February 2009 to March
2010. Mr. Bateman has nearly 30 years executive experience in
developing, growing, managing and selling businesses. Mr. Bateman has
been a personal investor in Red Zone Capital from 2006 to the present, and in
connection with that investment activity, served as Chief Executive Officer of
Dick Clark Productions, a television production company, from June 2007 to
February 2008. Prior to that, Mr. Bateman served as interim Chief
Marketing Officer of the Washington Redskins, a professional football team, from
September 2006 to June 2007. From September 2005 to September 2006,
Mr. Bateman served as President and Chief Executive Officer at Barton Cotton,
Inc., a provider of integrated direct marketing fundraising services to
non-profit organizations, and prior to that, served as its Executive Vice
President of Fundraising beginning in 1998. He was President of
Snyder Communications' Marketing Services Division between 1994 and
1997. Mr. Bateman was Executive Vice President, Vice President and
Director of Whittle Communications between 1981 and 1994, having begun his
career in marketing with The Gillette Company between 1979 and
1981. Mr. Bateman holds a B.S. in Economics from the University of
Tennessee. Our Nominating and Corporate Governance/Compensation Committee
determined that Mr. Bateman should be nominated for election as a director
because of his extensive consumer out-of-home marketing and advertising
experience, as well as his general business acumen.
Jeff Berg
has served on our Board of Directors since August 2008 and as Chairman of our
Board since November 2008. Mr. Berg is a private investor currently
serving as General Partner of Matador Capital Partners, an investment firm that
he founded in 2007. Since 2001, he has been Chairman of the Board and
a lead investor in Surfline/Wavetrak Inc., an action sports media
company. He was also the lead Director of Swell Commerce, Inc., a
direct marketer of surf apparel and accessories, a company that he co-founded in
1999, until it was sold in December 2009 to Billabong
International. From July 2000 to April 2001, Mr. Berg served as
Interim Chief Executive Officer of Swell. He was also founder and
sole stockholder of Airborne Media LLC, a specialty media company that he
founded in 2006, which operates web sites and publishes magazines and other
niche-market print products, and sold the majority of its assets in
2009. Between 1995 and 2000, Mr. Berg was Chairman of the Board of
AccentHealth, a provider of segmented, patient education-oriented TV programming
to medical waiting rooms. Mr. Berg has over 20 years experience as a
professional investor, having worked for 9 years at Raymond James Financial as
an institutional securities analyst prior to founding Matador Capital
Management, where he served as the Chief Investment Officer from 1994 to
2006. Mr. Berg holds a B.S. in Business Administration from the
University of Florida. Our Nominating and Corporate Governance/Compensation
Committee determined that Mr. Berg should be nominated for election as a
director because of his experience with out-of-home media, as well as being a
significant shareholder of the Company.
Mary Beth
Lewis has served on our Board of Directors since February 2009.
From August 2007 to January 2009, Ms. Lewis served as Chief Financial Officer of
Fresh Produce Sportswear, Inc., a women’s apparel company. From
August 2006 to May 2007, she was an accounting instructor in the College of
Business at Colorado State University. From October 2001 to April
2005, Ms. Lewis served as Chief Financial Officer of Noodles & Company, a
restaurant chain. Prior to that, she was the Chief Financial Officer
of Wild Oats Markets, Inc., a national natural foods grocery store
chain. Ms. Lewis currently serves on the Board of Directors for
eBags, Inc., an online retailer of bags and accessories, where she also serves
as the Audit Committee Chair. Ms. Lewis holds two undergraduate
degrees from West Virginia University: a B.A. in Psychology and a
B.S. in Speech Pathology and Audiology. Ms. Lewis also holds an MBA
in Accounting and Finance from the University of Pittsburgh. Our Nominating and
Corporate Governance/Compensation Committee determined that Ms. Lewis should be
nominated for election as a director because of her financial and corporate
governance expertise and her prior experience as a chief financial
officer.
Michael J.
Bush was appointed a Director in September 2009 and was appointed as our
President and Chief Executive Officer effective April 12, 2010. Prior to
becoming our President and Chief Executive Officer, Mr. Bush was President and
Chief Executive Officer of 3 Day Blinds Corporation, a position he held from
September 2007 to April 2010. 3 Day Blinds declared bankruptcy in
October 2008. Prior to joining 3 Day Blinds, a seller of
custom-crafted window coverings, from December 2003 to February 2007, Mr. Bush
served as President and Chief Executive of Anchor Blue Retail Group, a 175 store
chain of youth oriented apparel stores and served as President and Chief
Executive Officer of Levi’s and Dockers’ Outlets by MOST, an 80 store chain of
outlet stores selling Levi Strauss & Company apparel in outlet malls. From
February 2000 to May 2002, Mr. Bush served as President and Chief Executive of
Bally North America, a manufacturer and seller of women’s footwear and apparel,
a member of the Board of Directors of Bally International AG, the parent company
for Bally, and Senior Vice President of Global Re-engineering. Prior to Bally,
Mr. Bush was Chief Operating Officer and Executive Vice President of Movado
Group, Inc., a publicly traded global manufacturer and marketer of wristwatches.
Mr. Bush joined Movado from Ross Stores where he served as Senior Vice President
of Strategic Planning, Business Development and Marketing. Mr. Bush currently
serves as a director of Ross Stores, a national chain of discount department
stores and a Fortune 500 company, and Technoserve, a global not-for-profit
enterprise. Mr. Bush also joined 3 Day Blinds’ board of directors upon his
resignation as President and Chief Executive Officer of 3 Day
Blinds. He is a graduate of Dartmouth College and the Stanford
Graduate School of Business. Our Nominating and Corporate
Governance/Compensation Committee determined that Mr. Bush should be nominated
for election as a director because of his extensive experience in executing
business growth strategies as well as his leadership qualities as a chief
executive officer.
Our
business affairs are managed by and under the direction of the Board of
Directors. During 2009, the Board of Directors held 20 meetings. During 2009,
each director attended at least 75% of the aggregate of (i) the total
number of Board meetings held during such member’s service and (ii) the
total number of meetings of committees of the Board of Directors on which he or
she served, during the period of such member’s service. The schedule for regular
meetings of the Board for each year is submitted and approved by the Board in
advance.
We have
adopted a policy regarding attendance by members of our Board of Directors at
our annual meeting of stockholders. Board members are strongly encouraged to
attend the annual meeting. All of the nominees for election as directors who
were then members of the Board attended the 2010 annual meeting of stockholders,
with the exception of Ms. Lewis.
Each
committee of the Board of Directors meets as frequently and for such length of
time as it deems necessary to carry out its assigned duties and
responsibilities. In addition, the chairman of a committee may call a special
meeting of that committee at any time if deemed advisable. In September 2009, we
combined the Compensation and the Nominating and Corporate Governance committees
into a single committee, and currently have two standing committees: Audit and
Nominating and Corporate Governance/Compensation. The committees’
respective duties are outlined in their charters. The Board reviews the
committees’ duties from time to time and may form new committees, revise a
committee’s structure, or disband committees, depending on the
circumstances.
Board
Structure and Risk Oversight
Our
Board’s leadership structure is such that our Chairman of the Board and Chief
Executive Officer positions are separated. The Nominating and
Corporate Governance/Compensation Committee believes this leadership structure
is prudent and provides appropriate segregation and independence.
Our Board
of Directors provides oversight to the management of the Company’s risk profile,
including but not limited to internal controls over financial reporting, credit
risk, interest rate risk, liquidity risk, operational risk, reputational risk
and compliance risk. The Board of Directors monitors and manages these risks
through the activities of Board Committees in conjunction with management, the
independent registered public accounting firm, and other independent
advisors. Our executive officers are assigned responsibility for the
various categories of risk, with the Chief Executive Officer being ultimately
responsible to the Board of Directors for all risk categories. Our
executive officers periodically report to and receive input from the Board and
Audit Committee regarding material risks the Company faces and how the Company
plans to respond to and mitigate these risks.
The Board
has determined that Jeff Berg and Mary Beth Lewis are each “independent” under
current NYSE Amex rules:
Committee
Composition
Audit
Committee
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Nominating
and Corporate
Governance/Compensation
Committee
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Mary
Beth Lewis*+
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Jeff
Berg+
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Jeff
Berg
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Mary
Beth Lewis
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+Chairperson
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*Financial
Expert
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We have a
separately designated standing Audit Committee that operates under a written
charter adopted by our Board of Directors. The role of the Audit Committee is to
oversee the accounting and financial reporting processes of our company and
audits of our financial statements. The responsibilities of the Audit Committee
include the periodic review of our accounting and financial reporting and
internal control policies and procedures, appointing and providing the
compensation of the independent registered public accounting firm of certified
public accountants to be retained as our independent auditors, and reviewing the
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” disclosure contained in our quarterly and annual reports filed with
the SEC, and reviewing our quarterly and audited annual financial statements.
The Audit Committee is currently comprised of two non-employee directors: Ms.
Lewis and Mr. Berg, each of whom are independent under the listing standards of
the NYSE Amex and the Securities Exchange Act. The Audit Committee
held seven meetings in 2009.
Audit
Committee Financial Expert
The Board
has determined that Mary Beth Lewis is an “audit committee financial expert” and
independent as defined by the rules of the Securities and Exchange
Commission.
Nominating
and Corporate Governance/Compensation Committee
In
September 2009, our Board of Directors consolidated the Compensation Committee
and the Nominating and Corporate Governance Committee into a single committee
designated as the Nominating and Corporate Governance/Compensation Committee.
This committee consists of Mr. Berg and Ms. Lewis, each of whom is an
independent director under the rules of the NYSE Amex. The function of this
committee is to administer our benefit and equity incentive plans; determine the
amount and form of compensation paid to our Chief Executive Officer; review and
administer all compensation arrangements for our other executive officers; and
establish and review general policies relating to the compensation and benefits
of our officers and employees. In addition, this committee identifies
individuals qualified to become members of the Board; selects, or recommends
that the Board select, nominees for election to the Board; and develops and
implements policies and procedures that are intended to ensure that the Board
will be appropriately constituted and organized to meet its fiduciary
obligations to the Company and our stockholders. The Nominating and Corporate
Governance/Compensation Committee operates under a written charter adopted by
the Board. The Nominating and Corporate Governance/Compensation Committee held
12 meetings in 2009 (either as separate committees or
combined).
The Board
has adopted charters for our Audit and our Nominating and Corporate
Governance/Compensation Committees. The Board has also adopted a code
of ethics that applies to all of our employees, officers and
directors. These materials are posted on the Corporate Governance
section of our website at www.buzztime.com. The
information on our website is not incorporated by reference in this Proxy
Statement.
Our
Nominating and Corporate Governance/Compensation Committee acts in considering
new candidates for Board membership suggested by Board members, management and
stockholders. The Nominating and Corporate Governance/Compensation Committee has
established qualifications for directors, including the ability to apply fair
and independent judgment in a business situation and the ability to represent
the interests of all our stockholders and constituencies. A director also must
be free of any conflicts of interest that would interfere with his or her
loyalty to the Company or our stockholders. In evaluating Board candidates, the
Nominating and Corporate Governance/Compensation Committee considers these
qualifications as well as several other factors, including the
following:
·
|
independence
from management;
|
·
|
depth
and breadth of relevant business
experience;
|
·
|
judgment,
skill, integrity and
reputation;
|
·
|
existing
commitments to other businesses and willingness to devote adequate time to
board duties;
|
·
|
potential
conflicts of interests with other
pursuits;
|
·
|
legal
considerations such as antitrust
issues;
|
·
|
personal
background, including past involvement in SEC inquiries, legal
proceedings, criminal record, or involvement in acts of fraud or
dishonesty;
|
·
|
business
experience in finance and accounting to aid the Nominating and Corporate
Governance/Compensation Committee in determining whether a candidate would
be suitable for Audit Committee
membership;
|
·
|
executive
compensation and/or corporate governance background, to aid the Nominating
and Corporate Governance/Compensation Committee in determining whether a
candidate would be suitable for membership on that committee;
and
|
·
|
interplay
of candidate’s experience and skills with those of other board
members.
|
Other
than as described above, the Nominating and Corporate Governance/Compensation
Committee has not adopted any specific policy on the issue of considering
diversity in identifying nominees for director.
The
Nominating and Corporate Governance/Compensation Committee will consider
director recommendations by stockholders that are made in writing and addressed
to the Secretary of our company or to the Nominating and Corporate
Governance/Compensation Committee. Such stockholder’s recommendation shall set
forth as to each person whom the stockholder proposes to nominate for election
or re-election as a director: (A) the name and contact information of the
candidate, (B) a statement of the candidate’s business and educational
experience, including relevant dates and past employment and degrees or
certifications received, (C) the class and number of shares of our company
that are beneficially owned by such person, (D) information regarding the
candidate that is sufficient to enable the Nominating and Corporate
Governance/Compensation Committee to evaluate the candidate under the Board
membership criteria described above, (E) a statement detailing any
relationship between the candidate and any customer, supplier or competitor of
the Company, (F) detailed information regarding any relationship or
understanding between the candidate and the stockholder who is submitting the
candidate’s nomination; (G) the candidate’s signed written consent to serve
on the Board if elected, and (H) any additional information relating to the
candidate as is necessary in order to comply with the solicitations of proxies
for the election of directors pursuant to Regulation 14A under the Securities
Exchange Act of 1934. In addition, such notice shall set forth as to the
stockholder making such recommendation, (A) the name and address of the
stockholder making such recommendation, (B) the class and number of shares
of our company which are beneficially owned by the stockholder, and (C) any
material interest of the stockholder relating to the proposed candidate for
director. The procedures for considering candidates recommended by a stockholder
for Board membership will be no different than the procedures for candidates
recommended by members of the Board or by management.
Directors’
Common Stock Ownership and Compensation
To
encourage directors to have a direct and material cash investment in shares of
our common stock, the Board has established stock ownership guidelines for
members of our Board. The ownership guidelines strongly suggest that each
director hold shares of our common stock, purchased for cash, equal to the
following:
·
|
one
times the annual cash retainer for Board service by the second anniversary
of the director’s Board
service;
|
·
|
two
times the annual cash retainer for Board service by the third anniversary
of the director’s Board service;
and
|
·
|
four
times the annual cash retainer for Board service by the fifth anniversary
of the director’s Board
service.
|
At any
time between the second and fifth anniversary of any director’s Board service,
if (i) such director is not then in compliance with the ownership guidelines set
forth above and (ii) the Board, in its sole discretion, makes a determination
that such director is not adhering to the spirit of these guidelines, the Board
may request such director’s immediate resignation from the Board. In
such event, such director shall immediately deliver to the Chairperson of the
Board (or in the absence of a Chairperson, to the full Board) his or her
written, unqualified resignation with immediate effect.
Annual
Retainer and Meeting Fees
Our
non-employee directors, except for the Chairman of the Board, are entitled to
receive an annual cash retainer in the amount of $25,000 for their services as
directors. Our Chairman of the Board is entitled to receive an additional annual
cash retainer of $20,000 for his services. Generally, directors who
are employees of the Company do not receive any additional compensation for
their services as directors.
We do not
pay our non-employee directors participation fees for meeting
attendance.
We pay
our non-employee directors additional compensation for their service on the
Board committees. The additional annual retainers for Board committee service
are as set forth in the table below. As compensation for their additional
responsibilities, we pay the chairperson of each Board committee a higher
retainer than the other members of the committee.
Additional
Annual Retainer
for
Board Committee Service
|
|
Chairperson
|
|
|
Member
|
|
Audit
Committee
|
|
$ |
10,000 |
|
|
$ |
5,000 |
|
Nominating
and Corporate Governance/Compensation Committee
|
|
$ |
10,000 |
|
|
$ |
5,000 |
|
We also
compensate our non-employee directors through stock option awards. In connection
with the commencement of a new director’s term of service, we grant to such new
director an option to purchase 30,000 shares of our common stock. The exercise
price of each of these new director option awards is equal to the closing market
price of our common stock on the date of grant. As of the date of grant, 15,000
of the shares subject to the option are fully vested and exercisable, and the
remaining 15,000 shares vest and become exercisable, subject to the director’s
continued service, in equal monthly installments beginning in the month
immediately following the date of grant through the date of the next annual
meeting of stockholders.
Each
non-employee director who is re-elected for an additional term of service will
be granted an additional option to purchase 20,000 shares of our common stock on
the date of our annual stockholder meeting. The exercise price of
each of these annual option awards is equal to the closing market price of our
common stock on the date of the annual meeting of stockholders on which it is
granted and the underlying shares vest and become exercisable in twelve equal
monthly installments thereafter, subject to the director’s continued service.
Options granted to non-employee directors as compensation for service on the
Board of Directors expire on the earlier of ten years from the date of grant or
one year from the date the director ceases to serve on the Board of Directors.
In the event of the Company’s merger with another corporation, a sale of all or
substantially all of our assets, certain acquisitions of 30% or more of our
outstanding common stock, or other change in control events, all non-employee
director options will become fully vested and exercisable.
Our
non-employee director compensation program is subject to Board review and
renewal annually on or around the date of our annual meeting of
stockholders.
Compensation
of Directors
The
following table shows 2009 compensation information for all individuals who
served as non-employee directors during the year ended December 31,
2009:
2009 Director
Compensation
Name
|
|
Fees
Earned
or
Paid
in
Cash
|
|
|
Option
Awards
(1)
|
|
|
Total
|
|
Jeff
Berg
|
|
$ |
52,052 |
|
|
$ |
- |
|
|
$ |
52,052 |
|
Mary
Beth Lewis(2)
|
|
$ |
32,634 |
|
|
$ |
3,816 |
|
|
$ |
36,450 |
|
Michael
Bush(3)
|
|
$ |
10,986 |
|
|
$ |
11,955 |
|
|
$ |
22,941 |
|
Joseph
J. Ferricielli(4)
|
|
$ |
23,174 |
|
|
$ |
- |
|
|
$ |
23,174 |
|
Gary
Arlen(5)
|
|
$ |
14,500 |
|
|
$ |
- |
|
|
$ |
14,500 |
|
Robert
Clasen(6)
|
|
$ |
4,539 |
|
|
$ |
- |
|
|
$ |
4,539 |
|
(1)
|
The
amounts reported in this column represent the aggregate grant date fair
value of stock options granted during 2009. These amounts were
computed in accordance with Financial Accounting Standards Board, or FASB,
Accounting Standards Codification, or ASC, Topic 718, Compensation – Stock
Compensation, except that any estimate of forfeitures was
disregarded. For a description of the assumptions used in computing the
dollar amount recognized for financial statement reporting purposes, see
Note 12 under “Common Stock Options, Deferred Stock Units and Warrants” in
the Notes to the Consolidated Financial Statements contained in our Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 2010. As of December 31, 2009, our
non-employee directors had options outstanding to purchase the following
number of shares of our common
stock:
|
Name
|
|
|
|
|
|
#
of Shares
Subject
to
Outstanding
Options
|
Mr.
Berg(7)
|
|
|
|
|
|
-
|
Ms.
Lewis
|
|
|
|
|
|
30,000
|
Mr.
Bush
|
|
|
|
|
|
30,000
|
(2)
|
Ms.
Lewis was appointed to the Board on February 13,
2009
|
(3)
|
Mr.
Bush was appointed to the Board on September 8,
2009.
|
(4)
|
Mr.
Farricielli resigned from the Board effective August 18,
2009.
|
(5)
|
Mr.
Arlen resigned from the Board effective February 6,
2009.
|
(6)
|
Mr.
Clasen resigned from the Board effective February 17,
2009.
|
(7)
|
Mr.
Berg waived the initial stock option grant when he was appointed to the
Board on August 19, 2008 as well as his 2009 annual
grant.
|
Required
Vote
Nominees
receiving the highest number of affirmative votes cast at the Annual Meeting, up
to the number of directors to be elected, will be elected as directors. Proxies
may not be voted for a greater number of persons than the number of nominees
named herein. The nominees have each indicated a willingness to serve as
directors. If any of them should decline or be unable to act as a director,
however, the proxy holders will vote for the election of another person as the
Board of Directors recommends.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED.
EXCEPT WITH RESPECT TO BROKER NON-VOTES, PROXIES WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES NAMED IF NO DIRECTION IS GIVEN IN THE
PROXIES.
Compensation
Processes and Procedures
The
Nominating and Corporate Governance/Compensation Committee of the Board of
Directors has the responsibility for determining the amount and form of
compensation paid to our Chief Executive Officer, reviewing and approving all
compensation arrangements for our other executive officers, administering the
Company’s benefit plans and providing guidance over our organizational
structure. Typically, the Chief Executive Officer presents
compensation recommendations to the Committee with respect to the executive
officers who report to him. The Committee may accept or adjust such
recommendations. The Committee is solely responsible for determining
the Chief Executive Officer’s compensation while the full Board of Directors
participates in evaluating the performance of the Chief Executive
Officer.
Over the
course of 2009, we evaluated compensation rates for executive officers hired
during 2009 by externally comparing viable candidates and referencing current
public salary survey data to determine the appropriate level of salary,
performance-based bonus, and/or equity incentives to present a competitive
compensation package in order to attract and retain top
talent. Typically, we evaluate between three and five different
sources of compensation data to provide relevant market benchmark data for a
given executive role. Additionally, the Committee has the authority
to engage the services of outside advisors and experts to assist and advise the
Committee on matters relating to executive compensation.
Tax
and Accounting Implications
Compensation
paid to our chief executive officer and our two other highest compensated
officers (each a "Covered Employee") is subject to a $1,000,000 annual deduction
limit pursuant to Section 162(m) of the Internal Revenue Code, as
amended. This deduction limit does not apply to compensation that
qualifies for the performance-based compensation exception under Section
162(m). In fiscal 2009, no Covered Employee's total compensation
exceeded $1,000,000, and it is similarly expected that in fiscal 2010 no Covered
Employee's compensation will exceed $1,000,000. However, the Board of
Directors and its Nominating and Corporate Governance/Compensation Committee are
aware that the future grant of certain equity compensation awards, other than
stock options or stock appreciation rights granted without any discount, under
our proposed 2010 Performance Incentive Plan to Covered Employees may not
qualify as performance-based compensation and therefore this could potentially
cause the $1,000,000 deduction limit to be exceeded in future years. However,
the Board of Directors wishes to retain the flexibility to make such awards if
necessary and more generally does not anticipate that the compensation deduction
limit will significantly affect our executive compensation
policies.
The
Company accounts for stock-based payments including equity awards under our
equity incentive plans in accordance with the requirements of FASB ASC No.
718, Compensation – Stock
Compensation.
Summary
Compensation Table
The
following table sets forth information concerning compensation during the years
ended December 31, 2009 and 2008 awarded to, earned by or paid to all
individuals who served as our principal executive officer as well as our two
most highly compensated executive officers other than the principal executive
officers who were serving as executive officers at the end of December 31,
2009. Collectively, these are the “named executive
officers.” There were no additional former executive officers for
whom disclosure is required under applicable SEC requirements.
2009
Summary Compensation Table
Name
and Principal Position
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
|
Stock
Awards
(1)
|
|
|
Option
Awards
(1)
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
All
Other
Compensation
|
|
Total
|
|
Terry
Bateman (2)
|
2009
|
|
$ |
343,750 |
|
|
$ |
- |
|
|
|
$ |
- |
|
|
$ |
210,350 |
|
|
$ |
93,750 |
|
|
$ |
11,023 |
|
(3) |
|
$ |
658,873 |
|
Chief
Executive Officer and Director
|
2008
|
|
$ |
- |
|
|
$ |
- |
|
|
|
$ |
- |
|
|
$ |
2,025 |
|
|
$ |
- |
|
|
$ |
28,000 |
|
(4) |
|
$ |
30,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kendra
Berger
|
2009
|
|
$ |
291,351 |
|
|
$ |
- |
|
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
75,000 |
|
|
$ |
- |
|
|
|
$ |
366,351 |
|
Chief
Financial Officer
|
2008
|
|
$ |
270,057 |
|
|
$ |
69,378 |
|
(5) |
|
$ |
579 |
|
|
$ |
6,000 |
|
|
$ |
- |
|
|
$ |
2,066 |
|
(6) |
|
$ |
348,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ken
Keymer (7)
|
2009
|
|
$ |
131,250 |
|
|
$ |
- |
|
|
|
$ |
- |
|
|
$ |
185,250 |
|
|
$ |
64,167 |
|
|
$ |
165,910 |
|
(8) |
|
$ |
546,577 |
|
Chief
Operating Officer
|
2008
|
|
$ |
- |
|
|
$ |
- |
|
|
|
$ |
- |
|
|
$ |
2,868 |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
$ |
2,868 |
|
(1)
|
The
amounts reported in this column represent the aggregate grant date fair
value of stock awards and stock options granted during
2009. These amounts were calculated in accordance with FASB ASC
Topic 718, Compensation
– Stock Compensation, except that any estimate of forfeitures was
disregarded. For a description of the assumptions used in computing the
dollar amount recognized for financial statement reporting purposes, see
Note 12 under “Common Stock Options, Deferred Stock Units and Warrants” in
the Notes to the Consolidated Financial Statements contained in our Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 2010.
|
(2)
|
Mr.
Bateman’s employment began on February 2, 2009. Mr. Bateman resigned
as Chief Executive Officer on March 31,
2010.
|
(3)
|
Includes
$10,800 related to stock option exercises and amounts paid for group term
life insurance. Mr. Bateman waived his compensation as a
non-employee director in
2009.
|
(4)
|
Mr.
Bateman entered into an executive advisory agreement with the Company
effective November 18, 2008 and earned a total of $28,000 in consulting
compensation for his consulting services in
2008.
|
(5)
|
Related
to a retention bonus.
|
(6)
|
Includes
payments for employer 401(k) contributions and group term life
insurance.
|
(7)
|
Mr.
Keymer’s employment began on July 27, 2009. Mr. Keymer resigned as Chief
Operating Officer effective April 30,
2010.
|
(8)
|
Mr.
Keymer entered into a consulting agreement with the Company effective
March 2009 and earned a total of $106,452 in consulting
compensation. Also included are $40,000 for relocation
reimbursement, $19,153 for compensation as a non-employee director, and
$305 for group term life
insurance.
|
Agreements
with Terry Bateman
In
November 2008, we entered into an executive advisory agreement with Mr.
Bateman. Under the terms of this agreement, we engaged Mr. Bateman to
serve as a consultant and to assist us with a strategic analysis of our
operations and to advise and assist the Company’s management team in seeking to
identify and employ a permanent chief executive officer. The initial
term of the agreement was for a 90-day period, which we, in our sole discretion,
could extend for up to two additional 45-day periods. In exchange for
his services, we agreed to pay Mr. Bateman $20,000 per month. This
agreement was terminated when Mr. Bateman was appointed our Chief Executive
Officer in February 2009.
Effective
February 2, 2009, we entered into an employment agreement with Mr.
Bateman. Under the terms of that agreement, Mr. Bateman's employment
was "at will" and his annual base salary was $375,000. In connection
with the commencement of his employment, we granted Mr. Bateman an option to
purchase 1,750,000 shares of our common stock. This option was granted under our
2004 Performance Incentive Plan. Subject to Mr. Bateman's continued service to
the Company, the option was to vest in 48 equal monthly installments over a
period of four years. Mr. Bateman was entitled to health and life
insurance and other benefits generally available to our
employees. Mr. Bateman was also entitled to severance payments if his
employment was terminated under specified circumstances, which are discussed
under "Potential Payments Upon Termination or Change-in-Control—Mr. Bateman,"
below.
Mr.
Bateman voluntarily resigned as our Chief Executive Officer effective as of
March 31, 2010.
Agreements
with Ken Keymer
In
February 2009, we entered into a three month consulting agreement with Mr.
Keymer. Under the terms of this agreement, we engaged Mr. Keymer to
serve as a consultant and to assist us with analyzing and improving certain
business processes and compensated him $20,000 per month for these
services. The three month agreement was extended for an additional
two months, at which time the agreement terminated when Mr. Keymer was appointed
as our Chief Operating Officer in July 2009.
Effective
July 27, 2009, we entered into an employment agreement with Mr.
Keymer. Under the terms of that agreement, Mr. Keymer's employment is
"at will" and he receives an annual base salary of $300,000. In
connection with the commencement of his employment, Mr. Keymer received a
one-time lump sum relocation payment of $40,000, and we granted Mr. Keymer an
option to purchase 750,000 shares of our common stock. This option was granted
under our 2004 Performance Incentive Plan. Subject to Mr. Keymer's
continued service to the Company, the option vests as follows: 25% of the total
number of option shares vest on the first anniversary of the grant date and the
remaining 75% of the total number of option shares vest in 36 equal monthly
installments over the following three years. Mr. Keymer is entitled
to health and life insurance and other benefits generally available to our
employees. Mr. Keymer is entitled to severance payments if his
employment is terminated under specified circumstances, which are discussed
under "Potential Payments Upon Termination or Change-in-Control—Mr. Keymer,"
below.
Mr. Keymer
voluntarily resigned as our Chief Operating Officer effective as of April
30, 2010.
Incentive
Plan Compensation
We
believe that incentive compensation awards for our employees, including our
named executive officers, should be largely driven by our overall corporate
performance. To this end, the Nominating and Corporate Governance/Compensation
Committee of our Board of Directors adopted the NTN Buzztime, Inc. Corporate
Incentive Plan for Eligible Employees of NTN Buzztime, Inc. and NTN Canada Inc.
Fiscal Year 2009, or the "2009 Incentive Plan." The purpose of the 2009
Incentive Plan is to motivate eligible participants to focus on and maximize
their efforts to achieve our corporate goals and to encourage the retention of
those employees that do so. All active, full-time employees are eligible to
participate in the 2009 Incentive Plan unless they participate in any of our
other compensation programs. Eligible participants include each of our named
executive officers.
Each
participant in the 2009 Incentive Plan was assigned a target payout amount that
equaled a percentage of such participant's annual base salary. The initial
target payout amount for Mr. Bateman, our Chief Executive Officer, was 50% of
his 2009 base salary, or $187,500. The initial target payout amount
for Ms. Berger, our Chief Financial Officer, was 50% of her 2009 base salary, or
$150,000. The target payout amount for Mr. Keymer, our Chief
Operating Officer, was 50% of his 2009 base salary. Mr. Keymer began
serving as our Chief Operating Officer on July 27, 2009, and as such his target
payout amount was prorated to $64,167.
To earn
compensation under the 2009 Incentive Plan, the 2009 Incentive Plan must be
funded and the participant must be employed by us on the payout
date. The 2009 Incentive Plan is funded only if we achieve our
corporate goals. For 2009, the initial corporate goals were for our company to
achieve earnings before interest, tax, depreciation and amortization, or EBITDA,
of at least $3.6 million, and free cash flow of at least $0.1 million. Free cash
flow is defined as our operating cash flow less capital
expenditures.
The
amount of the target payout that a participant actually earns is determined by
taking into account our corporate goals, that participant's individual
performance and such participant's department performance, each of which is
given a different weight factor in calculating each individual's total target
payout. Fifty percent of the compensation payable under the 2009 Incentive Plan
was payable to participants following the first six-months of the fiscal year if
(i) all prerequisites to earning incentive compensation were met at such time,
(ii) our company is forecasted to meet or exceed the corporate goal for 2009 and
(iii) our company's year-to-date financial performance for the first six-months
of the fiscal year were at or better than budget. Our company's financial
performance for the first six months of the fiscal year did not meet our
corporate goals. At that time our board of directors approved revised corporate
goals for the balance of 2009. The revised corporate goals were for our company
to achieve EBITDA of at least $1.0 million for the last six months of 2009, and
negative free cash flow of no more than $0.4 million for the last six months of
2009. Because the corporate goals were decreased, our board of
directors also decreased the target payout amounts to 50% of the original target
payout amounts, other than with respect to participants that joined our company
after June 30, 2009, including Mr. Keymer. EBITDA and free cash flow for the
last six months of 2009 was $1.0 million and $0.5 million, respectively.
Accordingly, Mr. Bateman, Ms. Berger and Mr. Keymer earned $93,750, $75,000 and
$64,167, respectively, under the 2009 Incentive Plan.
Potential
Payments Upon Termination or Change-in-Control
Terry Bateman
Under the
terms of his employment agreement, if we terminate Mr. Bateman’s employment
without cause, we would pay him an amount equal to the sum of one (1) month of
severance for every two (2) months he has been employed up to a maximum of six
(6) months calculated at his base salary rate in effect on the date of
termination, less tax withholdings, which shall be payable in substantially
equal installments on a bi-weekly basis over the payment period. If
Mr. Bateman’s employment is terminated with cause, he will not be entitled to
any severance benefits. If Mr. Bateman had been terminated without cause on
December 31, 2009, the amount of his severance payment would have been
$188,000, less all applicable withholdings. Mr. Bateman voluntarily
resigned as our Chief Executive Officer effective as of March 31,
2010.
Ken
Keymer
Under the
terms of his employment agreement, if we terminate Mr. Keymer’s employment
without cause, we would pay him an amount equal to the sum of one (1) month of
severance for every two (2) months he has been employed up to a maximum of three
(3) months calculated at his base salary rate in effect on the date of
termination, less tax withholdings. If Mr. Keymer’s employment is
terminated with cause, he will not be entitled to any severance
benefits. If Mr. Keymer had been terminated without cause on
December 31, 2009, the amount of his severance payment would have been
$75,000, less all applicable withholdings. Mr. Keymer voluntarily resigned
as our Chief Operating Officer effective as of April 30,
2010.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information concerning equity awards held by the
named executive officers that were outstanding as of December 31,
2009:
Outstanding Equity Awards at 2009
Fiscal Year-End
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
Date
of
Grant
|
|
Number
of Securities Underlying Unexercised
Options
Exercisable
(#)
|
|
|
Number
of Securities Underlying Unexercised Options Unexercisable
(#)
|
|
|
Option
Exercise Price
($)
|
|
|
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
|
|
Terry
Bateman
|
02/02/09
|
(1) |
|
218,750 |
|
|
|
1,385,417 |
|
|
|
0.17 |
|
|
02/01/19
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kendra
Berger
|
08/12/08
|
(2) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,750 |
|
|
|
8,438 |
|
|
09/04/07
|
(3) |
|
56,250 |
|
|
|
43,750 |
|
|
|
0.95 |
|
|
09/03/17
|
|
|
|
- |
|
|
|
- |
|
|
08/28/06
|
(3) |
|
333,333 |
|
|
|
66,667 |
|
|
|
1.21 |
|
|
08/27/16
|
|
|
|
- |
|
|
|
- |
|
|
06/14/06
|
(4) |
|
20,000 |
|
|
|
- |
|
|
|
1.54 |
|
|
06/13/16
|
|
|
|
- |
|
|
|
- |
|
|
07/01/05
|
(4) |
|
20,000 |
|
|
|
- |
|
|
|
1.88 |
|
|
06/30/15
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ken
Keymer
|
07/27/09
|
(3) |
|
- |
|
|
|
750,000 |
|
|
|
0.31 |
|
|
07/26/19
|
|
|
|
- |
|
|
|
- |
|
|
11/06/08
|
(5) |
|
30,000 |
|
|
|
- |
|
|
|
0.17 |
|
|
11/05/18
|
|
|
|
- |
|
|
|
- |
|
(1)
|
The
option vests and becomes exercisable in 48 equal monthly
installments.
|
(2)
|
The
units of stock will become 100% vested on the fourth anniversary of the
grant date. The vesting of the units is subject to acceleration upon
the Company achieving certain performance
targets.
|
(3)
|
The
option vests and becomes exercisable at the rate of 25% of the shares
underlying the option on the first anniversary of the option grant date,
and the remaining shares underlying the option shall vest in 36 equal
monthly installments
thereafter.
|
(4)
|
The
option was granted for Ms. Berger’s service as a non-employee director and
was vested and exercisable in full as of the one year anniversary of the
date of grant.
|
(5)
|
The
option was granted for Mr. Keymer’s service as a non-employee director and
was vested and exercisable in full as of the one year anniversary of the
date of grant.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the number and percentage ownership of common stock
as of March 31, 2010 by:
|
·
|
all
persons known to us to own beneficially more than 5% of the outstanding
shares of common stock based on reports filed by each such person with the
Securities and Exchange
Commission;
|
|
·
|
each
of our directors and nominees for
director;
|
|
·
|
each
of the Named Executive Officers;
and
|
|
·
|
all
of the executive officers and directors as a group. Beneficial ownership
includes any shares which a person has the right to acquire within 60 days
of March 31, 2010. Except as otherwise indicated and subject to applicable
community property and similar laws, each of the persons named has sole
voting and investment power with respect to the shares of common stock
shown.
|
Except as
otherwise indicated, the address for each person is c/o NTN Buzztime, Inc., 5966
La Place Court, Carlsbad, California 92008.
Name
|
|
Number
of Shares
Beneficially
Owned
(1)
|
|
|
Percent
of
Common
Stock (1)
|
Jeff
Berg (2)
|
|
|
5,875,600 |
|
|
9.7% |
Terry
Bateman (3)
|
|
|
576,875 |
|
|
* |
Kendra
Berger (4)
|
|
|
520,417 |
|
|
* |
Ken
Keymer (5)
|
|
|
128,100 |
|
|
* |
Mary
Beth Lewis (6)
|
|
|
40,000 |
|
|
* |
Michael
Bush (7)
|
|
|
64,975 |
|
|
* |
Fidelity
National Financial, Inc. (8)
|
|
|
5,921,811 |
|
|
9.8% |
Matador
Capital Partners, L.P. (2)
|
|
|
5,845,600 |
|
|
9.6% |
Trinad
Capital Master Fund, Ltd. (9)
|
|
|
4,248,479 |
|
|
7.0% |
Kinderhook
Partners, L.P. (10)
|
|
|
3,582,616 |
|
|
5.9% |
All
executive officers and directors of NTN as a Group (6 persons)
(11)
|
|
|
7,205,967 |
|
|
11.7% |
(1)
|
Included
as outstanding for purposes of this calculation are 60,687,549 shares of
common stock (the amount outstanding as of March 31, 2010) plus, in the
case of each particular holder, the shares of common stock subject to
currently exercisable options, warrants, or other instruments exercisable
for or convertible into shares of common stock (including such instruments
exercisable within 60 days after March 31, 2010) held by that person,
which instruments are specified by footnote. Shares issuable as part or
upon exercise of outstanding options, warrants, or other instruments other
than as described in the preceding sentence are not deemed to be
outstanding for purposes of this
calculation.
|
(2)
|
Based
upon a Schedule 13D filed on December 19, 2008 containing information as
of December 12, 2008 as well as Form 4 filings during 2009, the following
person and entities beneficially owned the number of shares as set forth
below:
|
Entity
or Person
|
|
Shares
Beneficially
Owned
|
|
|
Sole
Voting
Power
|
|
|
Shared
Voting
Power
|
|
|
Sole
Dispositive
Power
|
|
|
Shared
Dispositive
Power
|
|
JABAM,
Inc. ("JABAM")
|
|
5,845,600 |
|
|
- |
|
|
5,845,600 |
|
|
- |
|
|
5,845,600 |
|
Jeffrey
A. Berg
|
|
5,875,600 |
|
|
30,000 |
|
|
5,845,600 |
|
|
30,000 |
|
|
5,845,600 |
|
Matador
Capital Partners, L.P. ("Matador")
|
|
5,845,600 |
|
|
- |
|
|
5,845,600 |
|
|
- |
|
|
5,845,600 |
|
Mr. Berg
is the President and controlling shareholder of JABAM. JABAM is the
general partner of Matador. Each of JABAM and Mr. Berg disclaims
beneficial ownership in shares of common stock beneficially owned by the other
party or by Matador except to the extent of its or his pecuniary interest
therein. The address for each of JABAM, Mr. Berg and Matador is P.O.
Box 55399, St. Petersburg, Florida 33732.
(3)
|
Includes
72,917 shares subject to options held by Mr. Bateman that are
currently exercisable or exercisable within 60 days of March 31,
2010.
|
|
|
(4)
|
Includes
481,667 shares subject to options held by Ms. Berger that are
currently exercisable or exercisable within 60 days of March 31,
2010.
|
|
|
(5)
|
Includes
30,000 shares subject to options held by Mr. Keymer that are currently
exercisable or exercisable within 60 days of March 31,
2010.
|
|
|
(6)
|
Includes
30,000 shares subject to options held by Ms. Lewis that are currently
exercisable or exercisable within 60 days of March 31,
2010.
|
|
|
(7)
|
Includes
30,000 shares subject to options held by Mr. Bush that are currently
exercisable or exercisable within 60 days of March 31,
2010.
|
|
|
(8)
|
Based
upon a Schedule 13D/A filed on August 20, 2009 containing information as
of August 19, 2009, the following entities beneficially owned the number
of shares as set forth below. We believe that Fidelity holds
significantly fewer shares than the information contained in their
Schedule 13D/A filed on August 20,
2009.
|
Entity
|
|
Shares
Beneficially
Owned
|
|
|
Sole
Voting
Power
|
|
|
Shared
Voting
Power
|
|
|
Sole
Dispositive
Power
|
|
|
Shared
Dispositive
Power
|
|
Fidelity
National Financial, Inc. ("FNF")
|
|
|
5,921,811 |
|
|
|
213,400 |
|
|
|
5,708,411 |
|
|
|
213,400 |
|
|
|
5,708,411 |
|
Security
Union Title Insurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
("Security Union")
|
|
|
1,222,030 |
|
|
|
- |
|
|
|
1,222,030 |
|
|
|
- |
|
|
|
1,222,030 |
|
Alamo
Title Insurance ("Alamo")
|
|
|
1,170,679 |
|
|
|
- |
|
|
|
1,170,679 |
|
|
|
- |
|
|
|
1,170,679 |
|
Ticor
Title Insurance Company ("TTIC")
|
|
|
1,237,000 |
|
|
|
- |
|
|
|
1,237,000 |
|
|
|
- |
|
|
|
1,237,000 |
|
Chicago
Title Insurance Company ("CTIC")
|
|
|
1,222,702 |
|
|
|
- |
|
|
|
1,222,702 |
|
|
|
- |
|
|
|
1,222,702 |
|
Fidelity
National Title Insurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
("FNT")
|
|
|
856,000 |
|
|
|
- |
|
|
|
856,000 |
|
|
|
- |
|
|
|
856,000 |
|
FNF is
the parent company of each of Security Union, Alamo, TTIC, CTIC and FNT, each of
which is a majority-owned by FNF.
The
address for FNF is 601 Riverside Avenue, Jacksonville, Florida
32204.
The
address for Security Union and TTIC is 4050 Calle Real, Suite 210, Santa
Barbara, California, 93110.
The
address for Alamo is 10010 San Pedro, Suite 700, San Antonio, Texas
78216.
The
address for CTIC is 171 N. Clark Street, Chicago, Illinois 60601.
The
address for FNT is 17911 Von Karman, Suite 300, Irvine, California
92614.
(9)
|
Based
upon a Schedule 13D/A filed on January 8, 2010 containing information as
of December 23, 2009, the following entities and persons beneficially
owned in the aggregate number of shares as set forth
below:
|
Entity
or Person
|
|
Shares
Beneficially
Owned
|
|
|
Sole
Voting
Power
|
|
|
Shared
Voting
Power
|
|
|
Sole
Dispositive
Power
|
|
|
Shared
Dispositive
Power
|
|
Trinad
Capital Master Fund, Ltd.
|
|
|
3,862,379 |
|
|
|
- |
|
|
|
3,862,379 |
|
|
|
- |
|
|
|
3,862,379 |
|
Trinad
Management, LLC
|
|
|
3,862,379 |
|
|
|
- |
|
|
|
3,862,379 |
|
|
|
- |
|
|
|
3,862,379 |
|
Trinad
Capital LP
|
|
|
3,264,869 |
|
|
|
- |
|
|
|
3,264,869 |
|
|
|
- |
|
|
|
3,264,869 |
|
Trinad
Advisors II, LLC
|
|
|
3,264,869 |
|
|
|
- |
|
|
|
3,264,869 |
|
|
|
- |
|
|
|
3,264,869 |
|
Robert
S. Ellin
|
|
|
4,248,479 |
|
|
|
386,100 |
|
|
|
3,862,379 |
|
|
|
386,100 |
|
|
|
3,862,379 |
|
Robert
S. Ellin Profit Sharing Plan
|
|
|
386,100 |
|
|
|
386,100 |
|
|
|
- |
|
|
|
386,100 |
|
|
|
- |
|
Each of
Trinad Management, LLC, and Trinad Advisors II, LLC disclaims beneficial
ownership in shares of common stock beneficially owned by Trinad Capital Master
Fund, Ltd. Robert S. Ellin disclaims beneficial ownership of the shares of
common stock beneficially owned by Trinad Capital Master Fund, Ltd., except to
the extent of his pecuniary interest therein. The address for Trinad Capital
Master Fund, Ltd., Trinad Management, LLC, Trinad Capital LP, Trinad Advisors
II, LLC, Robert S. Ellin is 2121 Avenue of the Stars, Suite 2550, Los Angeles,
California 90067
(10)
|
Based
upon a Schedule 13G/A filed on February 5, 2010 containing information as
of December 29, 2009, the following person and entities beneficially owned
the number of shares as set forth
below:
|
Entity
or Person
|
|
Shares
Beneficially
Owned
|
|
|
Sole
Voting
Power
|
|
|
Shared
Voting
Power
|
|
|
Sole
Dispositive
Power
|
|
|
Shared
Dispositive
Power
|
|
Kinderhook
Partners, LP
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
Kinderhook
GP, LLC
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
Tushar
Shah
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
Stephen
J. Clearman
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
|
|
- |
|
|
|
3,582,616 |
|
Each of
Kinderhook Partners, LP, Kinderhook GP, LLC, Tushar Shah and Stephen J. Clearman
disclaim beneficial ownership in shares of common stock beneficially owned by
the other party except to the extent of their pecuniary interest therein. The
address for Kinderhook Partners, LP, Kinderhook GP, LLC, Tushar Shah and Stephen
J. Clearman is 1 Executive Drive, Suite 160, Fort Lee, New Jersey
07024.
(11)
|
Includes
644,584 shares subject to options held by the directors and executive
officers that are currently exercisable or exercisable within 60 days of
March 31, 2010.
|
Equity
Compensation Plan Information
The
following table sets forth information as of December 31, 2009 regarding
our compensation plans authorizing us to issue equity securities and the number
of securities.
Plan
Category
|
|
(a)
Number
of
securities
to be
issued
upon
exercise
of
outstanding
options,
warrants
and
rights
|
|
|
(b)
Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
|
|
|
(c)
Number
of
securities
remaining
available
for
future issuance
under
equity
compensation
plans,
excluding
securities
reflected
in column
(a)
|
|
Equity
compensation plans approved by security holders
|
|
|
4,979,000 |
(1) |
|
$ |
0.66 |
|
|
|
300,000 |
(2) |
Equity
compensation plans not approved by security holders
|
|
|
4,500,000 |
(3) |
|
$ |
0.79 |
|
|
|
- |
|
|
|
|
9,479,000 |
|
|
|
|
|
|
|
300,000 |
|
(1)
|
Includes
shares issuable upon exercise of options and rights granted pursuant to
the NTN Buzztime, Inc. 2004 Performance Incentive
Plan.
|
(2)
|
Includes
300,000 shares of Buzztime Entertainment, Inc. common stock available for
grant under the Buzztime Entertainment, Inc. 2001 Incentive Stock Option
Plan. To date, no options have been granted under the Buzztime
Entertainment, Inc. 2001 Incentive Stock Option Plan. No additional
securities remain available for grant under the NTN Buzztime, Inc. 2004
Performance Incentive Plan.
|
(3)
|
The
4,500,000 shares issuable that are not pursuant to equity compensation
plans approved by security holders are all pursuant to warrants granted in
connection with the asset purchase agreements with iSports and i-am TV
during 2009.
|
We have
entered into indemnity agreements with each of our directors and executive
officers. The indemnity agreements provide that we will indemnify these
individuals under certain circumstances against certain liabilities and expenses
they may incur in their capacities as our directors or officers. We believe that
the use of such indemnity agreements is customary among corporations and that
the terms of the indemnity agreements are reasonable and fair to us, and are in
our best interests to attract and retain experienced directors and
officers.
Certain
Relationships and Related Transactions
During
2009 and 2008, there has not been nor are there currently proposed any
transactions or series of similar transactions to which the Company was or is to
be a party in which the amount involved exceeds the lesser of $120,000 or 1% of
the Company’s total assets and in which any director, executive officer, holder
of more than 5% of our common stock or any member of the immediate family of any
of the foregoing persons had or will have a direct or indirect material
interest.
Company
Policy Regarding Related Party Transactions
Pursuant
to its charter, our Audit Committee must review and approve, where appropriate,
all related party transactions.
Section 16(a)
Beneficial Ownership Reporting Compliance
Under
federal securities laws, our directors and officers and any persons holding more
than 10% of our common stock are required to report their beneficial ownership
of our common stock and any changes in that ownership to the Securities and
Exchange Commission. We believe that, based on the written representations of
our directors and officers and copies of reports filed with the Commission in
2009, our directors, officers and holders of more than 10% of our common stock
complied with the requirements of Section 16(a) during
2009.
The Audit
Committee operates pursuant to a written charter adopted by the Board of
Directors and reviewed by the Audit Committee annually. As set forth in the
Charter, the purpose of the Audit Committee is to oversee the accounting and
financial reporting processes of the Company and audits of its financial
statements. The responsibilities of the Audit Committee include appointing,
providing for the compensation of, retaining, evaluating and overseeing the work
of the Company’s independent registered public accounting firm. Each of the
members of the Audit Committee meets the independence requirements of NYSE
Amex.
Management
is primarily responsible for the preparation, presentation and integrity of our
financial statements, our accounting and financial reporting principles, and
internal controls designed to assure compliance with accounting standards and
applicable laws and regulations. Our independent registered public accounting
firm is responsible for auditing our financial statements and expressing an
opinion as to their conformity with generally accepted accounting
principles.
In the
performance of its oversight function and in connection with the audited
financial statements contained in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2009, the Audit Committee:
|
·
|
reviewed
and discussed the audited financial statements as of and for the fiscal
year ended December 31, 2009 with management and Mayer Hoffman McCann
P.C., the Company’s independent registered public accounting
firm;
|
|
·
|
discussed
with Mayer Hoffman McCann P.C. the matters required to be discussed by
Statement on Auditing Standards No. 61,Communication with Audit
Committees, as amended by Statement of Auditing Standards
No. 90, Audit Committee
Communications (Codification of Statement on Auditing Standards,
AU380), as adopted by the Public Company Accounting Oversight Board
(the “PCAOB”) in Rule 3200T;
|
|
·
|
received
and reviewed the written disclosures and the letter from Mayer Hoffman
McCann P.C. regarding its independence as applicable requirements of the
PCAOB and discussed with Mayer Hoffman McCann P.C. its
independence;
|
|
·
|
based
on these reviews and discussions, recommended to the Board of Directors
that the audited financial statements be included in our Annual Report on
Form 10-K for the year ended December 31, 2009 as filed with the
Securities and Exchange Commission;
and
|
|
·
|
instructed
the registered public accounting firm that the Audit Committee expects to
be advised if there are any subjects that require special
attention.
|
Audit
Committee of the Board
Mary Beth
Lewis (Chairperson)
Notwithstanding
anything to the contrary set forth in any our filings and other documents that
might incorporate by reference this proxy statement, in whole or in part, the
foregoing report of the Audit Committee shall not be incorporated by reference
into any such filings or documents.
Principal
Accounting Firm Fees
The
following table presents fees for professional audit services rendered by Mayer
Hoffman McCann P.C. for the audit of the Company’s annual financial statements
for 2009 and 2008, the three quarterly reviews for 2009 and 2008, and fees
billed for 2009 and 2008 for other services rendered by Mayer Hoffman McCann
P.C.
|
|
For
the year ended
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
Audit
Fees
|
|
$ |
244,000 |
|
|
$ |
307,000 |
|
Audit-Related
Fees
|
|
$ |
6,000 |
|
|
$ |
16,000 |
|
Tax-Related
Fees
|
|
$ |
48,000 |
|
|
$ |
- |
|
All
Other Fees
|
|
$ |
- |
|
|
$ |
- |
|
|
|
$ |
298,000 |
|
|
$ |
323,000 |
|
Our Audit
Committee has adopted a Pre-Approval Policy whereby all engagements of our
independent auditor must be pre-approved by the Audit Committee. The committee
has delegated to the Chairman of the committee the authority to evaluate and
approve engagements on behalf of the committee in the event that a need arises
for pre-approval between committee meetings. If the Chairman approves any such
engagements, the Chairman reports that approval to the full committee at the
next committee meeting.
APPROVAL
OF THE NTN BUZZTIME, INC.
2010
PERFORMANCE INCENTIVE PLAN
We
previously maintained the 2004 Performance Incentive Plan ("2004 Plan") under
which we could award stock based incentive awards to employees and other key
service providers. However, the 2004 Plan expired in 2009 and we
presently have no stock plan from which to grant equity compensation awards to
our key service providers.
Therefore,
at the Annual Meeting, stockholders will be asked to approve the NTN Buzztime,
Inc. 2010 Performance Incentive Plan (the "2010 Plan") and to authorize up to
6,000,000 shares for issuance under the 2010 Plan. The 2010 Plan was
adopted, subject to stockholder approval, by the Board of Directors ("Board") on
February 4, 2010.
We
believe that incentives and stock-based awards focus employees on the objective
of creating stockholder value and promoting the success of NTN Buzztime, and
that incentive compensation plans like the proposed 2010 Plan are an important
attraction, retention and motivation tool for participants in the
plan.
The Board
approved the 2010 Plan based, in part, on a belief that the Plan helps attract
and retain the experienced executives, application developers, creative talent
and sales personnel required for our business to grow. Our success will depend
significantly upon hiring and retaining such experienced, knowledgeable
professionals. There is significant competition for employees with the skills
required to develop and sell the products and services we offer. If we cannot
attract, motivate and retain qualified professionals, our business, financial
condition and results of operations will suffer.
Similar
to the 2004 Plan, the 2010 Plan will permit the discretionary award of incentive
stock options ("ISO"), nonstatutory stock options ("NSO"), restricted stock,
stock units, stock appreciation rights ("SARs") and cash awards to
Awardees. Such awards may be granted commencing on the date of board
approval of the 2010 Plan and continuing through February 3, 2020 or the
earlier termination of the 2010 Plan, subject to obtaining stockholder
approval.
As of
April 16, 2010, the fair market value of a share of the Company’s common stock
(as determined by the last transaction price quoted by the NYSE Amex on such
date) was $0.57.
Stockholder
approval of the 2010 Plan will allow the Company to continue to provide
long-term incentives to Awardees who are responsible for the Company’s success
and growth. Increased stock ownership by Awardees will further align
their interests with the interests of stockholders and will assist the Company
in attracting and retaining talented employees. Stockholder approval
of the 2010 Plan will also enable (i) awards granted to employees covered by
Internal Revenue Code (“Code”) section 162(m) to be eligible to qualify as tax
deductible performance-based compensation and (ii) Code section 422 ISO grants
to employees to qualify for favorable federal income tax
treatment. If stockholders do not approve the 2010 Plan by February 3, 2011, the 2010 Plan will
terminate and any then-outstanding awards granted thereunder shall be forfeited
without consideration.
The Board
of Directors encourages stockholders to consider the following in voting to
approve the 2010 Plan. The following points summarize why the Board
strongly believes the 2010 Plan is essential for the Company's future
success:
|
·
|
Achieving
superior long-term results always has been a primary objective for the
Company and therefore it is essential that employees think and act like
owners. Stock ownership helps enhance the alignment of the long-term
economic interests of stockholders and employees. Accordingly, the
Company has a history of issuing equity awards as a long term incentive to
attract, motivate and retain employees. If the 2010 Plan is not
approved by stockholders, the Company will have no ability to grant equity
compensation awards to valued employees in the
future.
|
|
·
|
The
Company's employees are its most valuable asset. The Company's
ability to grant equity compensation awards is vital (i) to attract and
keep intact a talented management team and (ii) to attract and retain
other talented and experienced individuals as it competes for qualified
and talented employees. If the 2010 Plan is not approved by
stockholders, the Company would be at a competitive disadvantage in each
of these areas and would need to resort to providing short term incentive
or direct immediate compensation to prevent a loss of management and other
employees and to continue to attract high caliber executives and employees
for the Company’s future needs.
|
|
·
|
A
balanced approach to executive compensation, using a mix of salaries,
performance-based bonus incentives and long term equity incentives, helps
facilitate management decisions that favor longer term stability,
profitability and strength over transitory short-term
results.
|
|
·
|
The
6,000,000 new shares of Common Stock that would become available for grant
under the 2010 Plan represent approximately only 9.9% of the number of
shares of Common Stock that are currently
outstanding.
|
|
·
|
The
complete text of the 2010 Plan is attached as Exhibit A to this Proxy
Statement. Stockholders are urged to review it together with
the following information, which is qualified in its entirety by reference
to Exhibit A. If there is any inconsistency between this
Proposal 2 and the 2010 Plan terms or if there is any inaccuracy in this
Proposal 2, the terms of the 2010 Plan shall
govern.
|
Key
Features of the 2010 Plan
Certain
features of the 2010 Plan are summarized as follows:
|
·
|
The
2010 Plan will have a maximum total of 6,000,000 common shares reserved
for issuance.
|
|
·
|
Various
types of equity-based awards may be issued. In addition,
cash-based performance awards may be issued under the 2010
Plan.
|
|
·
|
If
not terminated earlier by the Board, the 2010 Plan will terminate on February 3,
2020.
|
|
·
|
The
2010 Plan is generally administered by a committee comprised solely of
members of the Board. The Board has determined that the 2010
Plan will be administered by the Nominating and Corporate
Governance/Compensation Committee of the Board ("2010 Plan
Committee").
|
|
·
|
Employees,
directors and consultants are eligible to receive awards provided that the
2010 Plan Committee has the discretion to determine (i) who shall receive
any awards and (ii) the terms and conditions of such
awards.
|
|
·
|
Stock
options and stock appreciation rights may not be granted at per share
exercise price below the fair market value of a Company common share on
the date of grant.
|
|
·
|
Stock
options and stock appreciation rights may not be repriced without
stockholder approval.
|
|
·
|
Awards
can qualify as tax deductible “qualified performance-base compensation”
within the meaning of Code section
162(m).
|
Description
of the 2010 Plan
Background and Purpose of the 2010
Plan. The purpose of the 2010 Plan is to help promote the long-term
success of the Company and the creation of stockholder value by:
|
·
|
attracting
and retaining the services of employees and certain key service
providers,
|
|
·
|
motivating
such employees, through the award of equity and performance-based
compensation grants, to achieve long-term performance
goals,
|
|
·
|
providing
equity compensation awards that are competitive with similar companies,
and
|
|
·
|
further
aligning Awardees’ interests with stockholders through compensation that
is based upon the performance of the Company’s common stock which can
thereby promote the long-term financial interest of the Company and
enhancement of long-term stockholder
return.
|
The 2010
Plan permits the grant of the following types of equity-based incentive awards:
(1) stock options (which can be either ISOs or NSOs), (2) stock appreciation
rights, (3) restricted stock, and (4) stock units. In addition,
cash-based performance awards can also be granted under the 2010
Plan.
Eligibility to Receive
Awards. Employees, directors and
consultants of the Company and certain of its affiliated companies are eligible
to receive awards under the 2010 Plan. The 2010 Plan Committee
determines, in its discretion, the Awardees who will be granted awards under the
2010 Plan. As of April 13, 2010, approximately 142
employees (including 2 officers and 1 employee director) and 3 non-employee
directors would be eligible to participate in the 2010 Plan. The total number of
employees at the Company as of April 13, 2010 is approximately 151.
Shares Subject to the 2010
Plan. The
maximum number of common shares that can be issued under the 2010 Plan is
6,000,000 shares. The shares underlying forfeited or terminated
awards will become available again for issuance under the 2010 Plan and shares
that are utilized to pay an award's exercise price or tax withholding
obligations shall not count against the 2010 Plan's share limit.
Administration of the 2010
Plan. The
2010 Plan will be administered by the 2010 Plan Committee whose composition will
consist of Board members. The Board has designated its Nominating and
Corporate Governance/Compensation Committee as the 2010 Plan
Committee. Subject to the terms of the 2010 Plan, the 2010 Plan
Committee has the sole discretion, among other things, to:
|
·
|
select
the individuals who will receive
awards,
|
|
·
|
determine
the terms and conditions of awards (for example, performance
conditions, if any, and vesting
schedule),
|
|
·
|
correct
any defect, supply any omission, or reconcile any inconsistency in the
2010 Plan or any award
agreement,
|
|
·
|
accelerate
the vesting, extend the post-termination exercise term or waive
restrictions of any awards at any time and under such terms and conditions
as it deems appropriate, and
|
|
·
|
interpret
the provisions of the 2010 Plan and outstanding
awards.
|
The 2010
Plan Committee may also use the 2010 Plan to issue shares under other plans or
subplans as may be deemed necessary or appropriate, such as to provide for
participation by non-U.S. employees and those of any of Company subsidiaries and
affiliates. In addition, awards may be subject to any policy that the
Company may implement on the recoupment of compensation (referred to as a
clawback policy). The members of the Board, the 2010 Plan Committee and their
delegates shall be indemnified by the Company to the maximum extent permitted by
applicable law for actions taken or not taken regarding the 2010
Plan.
Awards
issued under the 2010 Plan will be evidenced by a written agreement executed by
and between the Company and the Awardee. Such written agreement will
recite the specific terms and conditions of the award.
Stock Options. A stock option is the
right to acquire shares at a fixed exercise price over a fixed period of
time. The 2010 Plan Committee will determine the number of shares
covered by each stock option and the exercise price of the shares subject to
each stock option, but such per share exercise price cannot be less than the
fair market value of a Company common share on the date of grant of the stock
option.
Stock
options granted under the 2010 Plan may be either ISOs or NSOs. As
required by the Code and applicable regulations, ISOs are subject to various
limitations. For example, the exercise price for any ISO granted to any employee
owning more than 10% of common stock may not be less than 110% of the fair
market value of the common stock on the date of grant and such ISO must expire
not later than five years after the grant date. The aggregate fair
market value (determined at the date of grant) of common stock subject to all
ISOs held by a participant that are first exercisable in any single calendar
year cannot exceed $100,000. ISOs may not be transferred other than upon death,
or to a revocable trust where the participant is considered the sole beneficiary
of the stock option while it is held in trust. The 2010 Plan provides
that no more than 6,000,000 shares may be issued pursuant to the exercise of
ISOs.
A stock
option granted under the 2010 Plan generally cannot be exercised until it
becomes vested. The 2010 Plan Committee establishes the vesting
schedule of each stock option at the time of grant. The maximum term
life for stock options granted under the 2010 Plan may not exceed ten years from
the date of grant.
The
exercise price of each stock option granted under the 2010 Plan must be paid in
full at the time of exercise, either with cash or through a broker-assisted
“cashless” exercise and sale program, or through another method approved by the
2010 Plan Committee. The optionee must also make arrangements to pay
any taxes that the Company is required to withhold at the time of
exercise.
Stock Appreciation
Rights. A
SAR is the right to receive, upon exercise, an amount equal to the excess of the
fair market value of the shares on the date of the SAR's exercise over the fair
market value of the shares covered by the exercised portion of the SAR on the
date of grant. The 2010 Plan Committee determines the terms of stock
appreciation rights including the exercise price (provided that such per share
exercise price cannot be less than the fair market value of a Company common
share on the date of grant), the vesting and the term of the SAR. The
maximum term life for grants under the 2010 Plan may not exceed ten years from
the date of grant. The 2010 Plan Committee may determine that a SAR will only be
exercisable if the Company satisfies performance goals established by the 2010
Plan Committee. Settlement of a SAR may be in shares of common stock or in cash,
or any combination thereof, as the 2010
Plan Committee may determine.
Restricted Stock. Awards of restricted
stock are shares of common stock that vest in accordance with the terms and
conditions established by the 2010 Plan Committee. The 2010 Plan Committee also
will determine any other terms and conditions of an award of restricted shares.
In determining whether an award of restricted shares should be made, and/or the
vesting schedule for any such award, the 2010 Plan Committee may impose whatever
conditions to vesting as it determines to be appropriate. For
example, the 2010 Plan Committee may determine that an award of restricted
shares will vest only if the Company satisfies performance goals established by
the 2010 Plan Committee.
Stock Units. Stock units are the
right to receive an amount equal to the fair market value of the shares covered
by the stock unit at some future date after the grant. The 2010 Plan Committee
will determine all of the terms and conditions of an award of stock units,
including the vesting period. Upon each vesting date of a stock unit, an Awardee
will be entitled to receive an amount equal to the then fair market value of the
shares on the settlement date. The 2010 Plan Committee may determine
that an award of stock units will vest only if the Company satisfies performance
goals established by the 2010 Plan Committee. Payment for vested
stock units may be in shares of common stock or in cash, or any combination
thereof, as the 2010 Plan Committee may determine. Settlement of
stock units shall generally occur within thirty days of vesting unless the
Awardee has timely elected to defer such compensation.
Cash Awards. We
may also award cash-based performance bonus opportunities to Awardees under the
2010 Plan. Such cash awards will be (i) payable only in cash, (ii)
paid based on achievement of performance goal(s) applying the performance
criteria specified below and (iii) intended to qualify as performance-based
compensation under Code section 162(m).
Non-Employee Director Fees.
Upon the
Board's affirmative determination to authorize such a provision, a non-employee
director may elect to receive from 50% to all of his or her annual
retainer payments in the form of vested stock or stock units granted under the
2010 Plan. The terms and conditions of such an arrangement shall be determined
by the Board.
Performance Conditions and Annual
Grant Limits. The 2010 Plan specifies performance conditions that the
2010 Plan Committee may include in awards that are intended to qualify as
performance-based compensation under Code section 162(m). These
performance condition criteria shall be limited to one or more of the following
target objectives involving the Company or a subsidiary or
affiliate:
|
·
|
earnings
before interest and taxes
|
|
·
|
sales
or revenue growth
|
|
·
|
fair
market value or price of the Company's shares (including, but not limited
to, growth measures and total stockholder
return)
|
|
·
|
operating
income before or after taxes
|
|
·
|
cash
flow (including, but not limited to, operating cash flow and free cash
flow)
|
|
·
|
cash
flow return on investments (which equals net cash flow divided by total
capital)
|
|
·
|
internal
rate of return
|
|
·
|
costs
or expenses or cost containment or
reduction
|
|
·
|
corporate
transactions including without limitation mergers, acquisitions,
dispositions and/or joint
ventures
|
|
·
|
earnings
before or after interest, taxes, depreciation and/or
amortization
|
If this
Proposal 2 is approved by stockholders, then each of the above performance
criteria would be approved for use, in the Company's discretion, in awards that
are intended to qualify as performance-based compensation under Code section
162(m). Including one or more of the foregoing performance conditions
in awards of restricted stock and stock units or in cash-based awards to Covered
Employees (as defined below in the federal income tax section) can permit these
awards to qualify as performance-based compensation. Certain other
awards, such as stock options, may qualify as performance-based compensation
under Code section 162(m) without the inclusion of any of the above performance
criteria.
Approval
of the material terms of the 2010 Plan (which consists of participant
eligibility, the foregoing specified performance condition criteria and the
numerical limitations on the magnitude of grants or on the value of cash-based
awards) by stockholders is necessary for grants to Covered Employees to qualify
for the performance-based compensation exception to the income tax deduction
limitations of section 162(m) of the Code. Qualified
performance-based compensation approved by stockholders is not subject to the
Code section 162(m) deduction limit. By seeking approval of this
Proposal 2, the Board also intends to prevent Code section 162(m) from limiting
the deductibility of 2010 Plan Awards to Covered Employees. In this
regard, the 2010 Plan imposes the following annual grant limits on awards that
are intended to constitute qualified performance-based compensation under Code
section 162(m).
|
Limit Per Fiscal Year
|
Equity
Awards
|
1,000,000
shares
|
Cash
Awards
|
$1,000,000
|
The above
share grant limit is increased to 1,750,000 shares for equity awards that are
granted in the fiscal year that the Covered Employee commences
employment.
However,
it is impossible to be certain that all 2010 Plan Awards or any other
compensation paid by the Company to Covered Employees will be tax
deductible. Further, the 2010 Plan does not preclude the Nominating
and Corporate Governance/Compensation Committee from making other compensation
payments outside of the 2010 Plan to Covered Employees even if such payments do
not qualify for tax deductibility under Code section 162(m). See also
the section under the heading “Internal Revenue Code Section 162(m)
Limits” below for further information on Code section
162(m).
Limited Transferability of
Awards. Awards granted under the
2010 Plan generally are not transferrable other than upon death, or pursuant to
a court-approved domestic relations order. However, the 2010 Plan Committee may
in its discretion permit awards other than ISOs to be transferred. Generally,
where transfers are permitted, they will be permitted only by gift to a member
of the Awardee’s immediate family or to a trust or other entity for the benefit
of the member(s) of the Awardee’s and/or his or her immediate family.
Termination of Employment, Death or
Disability. The 2010 Plan Committee will determine the effect of the
termination of employment on awards, which determination may be different
depending on the nature of the termination, such as terminations due to cause,
resignation, death, disability or retirement, and the status of the award as
vested or unvested.
Adjustments Upon Changes in
Capitalization. In the event of a subdivision of the
outstanding shares, stock dividend, dividend payable in a form other than shares
in an amount that has a material effect on the price of the shares,
consolidation, combination or reclassification of the shares,
recapitalization, spin-off, or other similar occurrence, then the number and
class of shares issued under the 2010 Plan and subject to each award, along with
any exercise prices, as well as the number and class of shares available for
issuance under the 2010 Plan, shall each be equitably and proportionately
adjusted by the 2010 Plan Committee.
Corporate Transaction. In the event that the
Company is a party to a merger or other reorganization, outstanding 2010 Plan
awards will be subject to the agreement of merger or reorganization. Such
agreement may provide for (i) the continuation of the outstanding awards by the
Company if the Company is a surviving corporation, (ii) the assumption of the
outstanding awards by the surviving corporation or its parent, (iii) full
exercisability or full vesting, or (iv) cancellation of outstanding awards with
or without consideration, in all cases with or without consent of the
Awardee. The Board or 2010 Plan Committee need not adopt the same
rules for each award or Awardee.
Change in Control. The 2010 Plan Committee
will decide the effect of a change in control of the Company on outstanding
awards. The 2010 Plan Committee may, among other things, provide that
awards will fully vest upon a change in control, or upon a change in control
followed by an involuntary termination of employment within a certain period of
time.
Term of the 2010 Plan. If approved by
stockholders, the 2010 Plan will continue in effect until February 3, 2020 or until
earlier terminated by the Board.
Governing Law. The 2010 Plan
shall be governed by the laws of the state of Delaware (which is the state of
the Company's incorporation) except for conflict of law provisions.
Amendment and Termination of the
2010 Plan.
The Board generally may amend or terminate the 2010 Plan at any time and for any
reason, except that the Board must obtain stockholder approval of material
amendments, including any addition of shares, or any repricing or as may be
required by NYSE Amex rules.
Certain
Federal Income Tax Information
The
following is a general summary, as of April 2010, of the federal income tax
consequences to the Company and to U.S. participants for awards granted under
the 2010 Plan. The federal tax laws may change and the federal, state and local
tax consequences for any participant will depend upon his or her individual
circumstances. Tax consequences for any particular individual may be different.
This summary is not intended to be exhaustive and does not discuss the tax
consequences of a participant’s death or provisions of income tax laws of any
municipality, state or other country. The Company advises participants to
consult with their own tax advisors regarding the tax implications of their
awards under the 2010 Plan.
Incentive Stock Options. For federal income tax
purposes, the holder of an ISO has no taxable income at the time of the grant or
exercise of the ISO. If such person retains the common stock acquired under the
ISO for a period of at least two years after the stock option is granted and one
year after the stock option is exercised, any gain upon the subsequent sale of
the common stock will be taxed as a long-term capital gain. A participant who
disposes of shares acquired by exercise of an ISO prior to the expiration of two
years after the stock option is granted or before one year after the stock
option is exercised will realize ordinary income as of the date of exercise
equal to the difference between the exercise price and fair market value of the
stock. Any additional gain or loss recognized upon any later disposition of the
shares would be short or long term capital gain or loss depending on whether the
shares have been held by the participant for more than one year. The
difference between the option exercise price and the fair market value of the
shares on the exercise date of an ISO is an adjustment in computing the holder’s
alternative minimum taxable income and may be subject to an alternative minimum
tax which is paid if such tax exceeds the participant’s regular income tax for
the year.
Nonstatutory Stock
Options. A
participant who receives an NSO generally will not realize taxable income on the
grant of such option, but will realize ordinary income at the time of exercise
of the stock option equal to the difference between the option exercise price
and the fair market value of the stock on the date of exercise. Any additional
gain or loss recognized upon any later disposition of the shares would be short
or long term capital gain or loss depending on whether the shares had been held
by the participant for more than one year.
Stock Appreciation
Rights. No
taxable income is generally reportable when a stock appreciation right is
granted to a participant. Upon exercise, the participant will recognize ordinary
income in an amount equal to the amount of cash received plus the fair market
value of any shares received. Any additional gain or loss recognized upon any
later disposition of any shares received would be short or long term capital
gain or loss depending on whether the shares had been held by the participant
for one year or more.
Restricted Stock. A participant will
generally not have taxable income upon grant of unvested restricted shares
unless he or she elects to be taxed at that time pursuant to a Code section
83(b) election. Instead, he or she will recognize ordinary income at the time(s)
of vesting equal to the fair market value (on each vesting date) of the shares
or cash received minus any amount paid for the shares.
Stock Units. No taxable income is
generally reportable when unvested stock units are granted to a participant.
Upon settlement of the vested stock units, the participant will recognize
ordinary income in an amount equal to the value of the payment received pursuant
to the vested stock units.
Income Tax Effects for the
Company.
The Company generally will be entitled to a tax deduction in connection with an
award under the 2010 Plan in an amount equal to the ordinary income realized by
a participant at the time the participant recognizes such income (for example,
upon the exercise of an NSO).
Internal Revenue Code Section 162(m)
Limits. Section 162(m) of the
Code places a limit of $1,000,000 on the amount of compensation that the Company
may deduct in any one fiscal year with respect to the Company’s principal
executive officer and each of the other three most highly compensated officers
(other than the principal financial officer) (“Covered Employees”).
The 2010
Plan is intended to enable certain awards to constitute performance-based
compensation not subject to the annual deduction limitations of section 162(m)
of the Code. However, to maintain flexibility in compensating executive officers
in a manner designed to promote varying corporate goals, the Board has not
adopted a policy that all compensation must be tax deductible.
Internal Revenue Code Section 409A. Section 409A of the Code
governs the federal income taxation of certain types of nonqualified deferred
compensation arrangements. A violation of section 409A of the Code generally
results in an acceleration of the recognition of income of amounts intended to
be deferred and the imposition of a federal excise tax of 20% on the employee
over and above the income tax owed plus possible penalties and
interest. The types of arrangements covered by section 409A of the
Code are broad and may apply to certain awards available under the 2010 Plan
(such as stock units). The intent is for the 2010 Plan, including any awards
available thereunder, to comply with the requirements of section 409A of the
Code to the extent applicable. As required by Code section 409A,
certain nonqualified deferred compensation payments to specified employees may
be delayed to the seventh month after such employee's separation from
service.
All
awards of the 2010 Plan will be granted at the 2010 Plan Committee's discretion
and therefore cannot be determined in advance. To date, the 2010 Plan
Committee approved, subject to stockholder approval of the 2010 Plan, the option
grants set forth in the table below. If our stockholders do not approve the 2010
Plan, the options granted to date will be forfeited. Other than the grants
discussed in the table below, the 2010 Plan Committee has not determined the
number or type of awards that it may grant under the 2010 Plan in the
future.
Name of Individual or Group
|
|
Dollar
Value ($)
|
|
Number
of Units (1)
|
|
Terry
Bateman, President, Chief Executive Officer and Director
|
|
—
|
|
|
|
Kendra
Berger, Chief Financial Officer
|
|
|
|
|
|
Ken
Keymer, Chief Operating Officer
|
|
|
|
|
|
All
current executive officers, as a group
|
|
|
|
1,750,000
|
|
All
current directors who are not executive officers, as a
group
|
|
|
|
|
|
All
employees, including all current officers who are not executive
officers
|
|
|
|
80,400
|
|
|
|
|
|
|
|
|
|
(1)
Represents the number of shares of common stock underlying options
granted.
|
The
exercise price of each option that has been granted under the 2010 Plan
identified in the table above was equal to the closing price of the common stock
on the date of grant. In addition, each such option vests, if the 2010 Plan is
approved by our stockholders, as to 25% of the total number of shares of common
stock subject to the option on the first anniversary of the grant date and the
remaining 75% vest in 36 substantially equal monthly installments, with the
first installment vesting on the last day of the month following the month in
which the first anniversary of the grant date occurs and an additional
installment vesting on the last day of each of the 35 months
thereafter.
At the
Annual Meeting, stockholders will be asked to approve the 2010 Stock Incentive
Plan. This approval will require the affirmative vote of a majority
of the voting power of all outstanding shares of the Company’s common stock
present or represented by proxy at the Annual Meeting and entitled to be voted
on Proposal 2. Abstentions will be included in the number of shares
present and entitled to vote on this Proposal 2 and, accordingly, will have the
effect of a vote "AGAINST" Proposal 2. If a broker indicates on the
proxy it does not have discretionary authority to vote certain shares on this
proposal, those shares will not be considered as present and entitled to vote on
this Proposal 2 (other than to reduce the number of affirmative votes required
to approve this proposal). Therefore, a broker non-vote will not be
counted and will have no effect on this proposal to approve the 2010
Plan. In the event that stockholder approval is not obtained, the
Company may not make awards under the 2010 Plan.
THE
BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE 2010 STOCK INCENTIVE
PLAN.
RATIFICATION
OF APPOINTMENT
OF
MAYER HOFFMAN MCCANN P.C.
AS
INDEPENDENT REGISTERED PUBLIC
Our
independent registered public accounting firm for the fiscal year ended
December 31, 2009 was Mayer Hoffman McCann P.C. The Audit
Committee of our Board of Directors has reappointed Mayer Hoffman McCann P.C. to
continue as our independent registered public accounting firm for the year
ending December 31, 2010. Our bylaws do not require that our stockholders
ratify the selection of Mayer Hoffman McCann P.C. as our independent registered
public accounting firm. However, we are submitting the selection of Mayer
Hoffman McCann P.C. to our stockholders for ratification as a matter of good
corporate practice. If the stockholders do not ratify the selection, the Audit
Committee will reconsider whether or not to retain Mayer Hoffman McCann P.C.
Even if the selection is ratified, the Audit Committee in its discretion may
change the appointment at any time during the year if we determine that such a
change would be in the best interests of the Company and our
stockholders.
Representatives
of Mayer Hoffman McCann P.C. will be present at the Annual Meeting. They will be
given an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from stockholders present at the
Annual Meeting.
A
majority of the shares present at the meeting, either in person or by proxy,
must be voted in favor of Proposal 3 to ratify the appointment of Mayer Hoffman
McCann P.C. as our independent registered public accounting firm.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF
MAYER HOFFMAN McCANN P.C. TO SERVE AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM. PROXIES WILL BE VOTED “FOR” THE RATIFICATION OF THE APPOINTMENT
OF MAYER HOFFMAN McCANN P.C. IF NO DIRECTION IS GIVEN IN THE
PROXIES.
COMMUNICATIONS
WITH DIRECTORS
Stockholders
may communicate directly with the Board of Directors or individual members of
the Board of Directors in writing by sending a letter to the Board c/o the
Corporate Secretary at: NTN Buzztime, Inc. Board of Directors, 5966 La Place
Court, Suite 100, Carlsbad, California 92008. The Secretary will promptly
forward the communication to the Chairman of the Board of Directors or other
director identified in the communication without any editing or
screening.
Accompanying
this Proxy Statement is a letter to stockholders from Mr. Bush, our President
and Chief Executive Officer, together with our Annual Report for the fiscal year
ended December 31, 2009.
We will furnish, without charge, to
each person to whom this Proxy Statement is being sent a complete copy of our
Form 10-K (other than exhibits) for fiscal year ended December 31, 2009.
We will furnish any exhibit to our Form 10-K upon the payment of a fee to cover
our reasonable expenses in furnishing such exhibit. Written requests for the
Form 10-K should be directed to Ms. Kendra Berger, Corporate Secretary, at
our corporate offices located at 5966 La Place Court, Carlsbad, California
92008. Telephone requests may be directed to Ms. Berger at
(760) 438-7400.
As of the
time of preparation of this Proxy Statement, we do not know of any matter to be
acted upon at the Annual Meeting other than the matters described above. If any
other matter properly comes before the Annual Meeting, however, the proxy
holders will vote the proxies thereon in accordance with their best
judgment.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
Kendra
Berger
|
Chief
Financial Officer and Secretary
|
Exhibit A
NTN
BUZZTIME, INC.
2010
PERFORMANCE INCENTIVE PLAN
NTN
BUZZTIME, INC.
2010
PERFORMANCE INCENTIVE PLAN
SECTION
1. INTRODUCTION.
The
Company’s Board of Directors adopted the NTN Buzztime, Inc. 2010 Performance
Incentive Plan on the Adoption Date. The Plan is effective on the
Adoption Date conditioned upon and subject to obtaining Company stockholder
approval as provided in Section 15.
The
purpose of the Plan is to (i) attract and retain the services of persons
eligible to participate in the Plan; (ii) motivate Awardees, by means of
appropriate equity and performance based incentives, to achieve long-term
performance goals; (iii) provide equity and performance based incentive
compensation opportunities that are competitive with those of other similar
companies; and (iv) further align Participants' interests with those of the
Company's other stockholders and thereby promote the financial interests of the
Company and its Affiliates and enhancement of stockholder return.
The Plan
seeks to achieve this purpose by providing for Awards in the form of Options
(which may constitute Incentive Stock Options or Nonstatutory Stock Options),
Stock Appreciation Rights, Restricted Stock Grants, Stock Units and/or Cash
Awards.
This Plan
and all Awards shall be construed in accordance with and governed by the laws of
the State of Delaware, but without regard to its conflict of law
provisions. Capitalized terms shall have the meaning provided in
Section 2 unless otherwise provided in this Plan or any applicable Award
agreement.
SECTION
2. DEFINITIONS.
(a) “Adoption
Date” means February 4, 2010.
(b) “Affiliate”
means any entity other than a Subsidiary, if the Company and/or one or more
Subsidiaries own not less than 50% of such entity. For purposes of
determining an individual’s “Service,” this definition shall include any entity
other than a Subsidiary, if the Company, a Parent and/or one or more
Subsidiaries own not less than 50% of such entity.
(c) “Award”
means any award to an Awardee of an Option, SAR, Restricted Stock Grant, Stock
Unit or Cash Award under the Plan.
(d) “Awardee”
means an Employee, Consultant, Director, or Non-Employee Director who has been
selected by the Committee to receive an Award under the Plan.
(e) “Board”
means the Board of Directors of the Company, as constituted from time to
time.
(f) “Cash
Award” means an award of a bonus opportunity to an Awardee that is (i) payable
only in cash, (ii) not an Option, SAR, Restricted Stock Grant or Stock Unit,
(iii) paid based on achievement of Performance Goal(s) and (iv) intended to
qualify as performance-based compensation under Code Section
162(m).
(g) “Cashless
Exercise” means, to the extent that a Stock Option Agreement so provides and as
permitted by applicable law, a program approved by the Committee in which
payment may be made all or in part by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to sell Shares and
to deliver all or part of the sale proceeds to the Company in payment of the
aggregate Exercise Price and any applicable tax withholding obligations (up to
the maximum amount permitted by applicable law) relating to the
Option.
(h) “Cause”
means, except as may otherwise be provided in a Participant employment agreement
or applicable Award agreement (and in such case the employment agreement or
Award agreement shall govern as to the definition of Cause), (i) a conviction of
a Participant for a felony crime or the failure of a Participant to contest
prosecution for a felony crime, or (ii) a Participant’s misconduct, fraud,
disloyalty or dishonesty (as such terms may be defined by the Committee in its
sole discretion), or (iii) any unauthorized use or disclosure of confidential
information or trade secrets by a Participant, or (iv) a Participant's
negligence, malfeasance, breach of fiduciary duties, neglect of duties, or (v)
any material violation by a Participant of a written Company or Subsidiary or
Affiliate policy or any material breach by a Participant of a written agreement
with the Company or Subsidiary or Affiliate, or (vi) any other act or omission
by a Participant that, in the opinion of the Committee, could reasonably be
expected to adversely affect the Company's or a Subsidiary’s or an Affiliate's
business, financial condition, prospects and/or reputation. In each
of the foregoing subclauses (i) through (vi), whether or not a "Cause" event has
occurred will be determined by the Committee in its sole discretion and the
Committee’s determination shall be conclusive, final and binding.
(i) “Change
in Control” except as may otherwise be provided in a Participant’s employment
agreement or Award agreement (and in such case the employment agreement or Award
agreement shall govern as to the definition of Change in Control), means the
occurrence of any one or more of the following:
(i) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (a "Person")) of beneficial ownership
(within the meaning of Rule13d-3 promulgated under the Exchange Act) of 50% or
more of either (1) the then-outstanding Shares of Common Stock of the Company
(the "Outstanding Company Common Stock") or (2) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that, for purposes of this definition, the following
acquisitions shall not constitute a Change in Control; (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any affiliate of the Company or a successor, or (D)
any acquisition by any entity pursuant to a transaction that complies
with Sections 2(h)(iii)(1), (2) and (3) below;
(ii) Individuals
who, as of the Adoption Date, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Adoption Date
whose election, or nomination for election by the Company's stockholders, was
approved by a vote of at least two-thirds of the directors then comprising the
Incumbent Board (including for these purposes, the new members whose election or
nomination was so approved, without counting the member and his predecessor
twice) shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;
(iii) Consummation
of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company or any of its Subsidiaries,
a sale or other disposition of all or substantially all of the assets of the
Company, or the acquisition of assets or stock of another entity by the Company
or any of its Subsidiaries (each, a "Business Combination"), in each case
unless, following such Business Combination, (1) all or substantially all of the
individuals and entities that were the beneficial owners of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity that, as a result of such transaction, owns the Company or all or
substantially all of the Company's assets directly or through one or more
subsidiaries (a "New Parent")) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, (2) no Person (excluding any entity resulting from such Business
Combination or a New Parent or any employee benefit plan (or related trust) of
the Company or such entity resulting from such Business Combination or New
Parent) beneficially owns, directly or indirectly, 30% or more of, respectively,
the then-outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, except to the extent that the ownership in excess of
30% existed prior to the Business Combination, and (3) at least a majority of
the members of the board of directors or trustees of the
entity resulting from such Business Combination or a New Parent were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination;
or
(iv) Consummation
of a complete liquidation or dissolution of the Company other than in the
context of a transaction that does not constitute a Change in Control under
Section 2(h)(iii) above.
A
transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transactions.
(j) “Code”
means the Internal Revenue Code of 1986, as amended, and the regulations and
interpretations promulgated thereunder.
(k) “Committee”
means a committee described in Section 3.
(l) “Common
Stock” means the Company’s common stock, $0.005 par value per share, and any
other securities into which such shares are changed, for which such shares are
exchanged or which may be issued in respect thereof.
(m) “Company”
means NTN Buzztime, Inc., a Delaware corporation.
(n) “Consultant”
means an individual who performs bona fide services to the Company, a Parent, a
Subsidiary or an Affiliate, other than as an Employee or Director or
Non-Employee Director.
(o) “Covered
Employees” means those individuals whose compensation is subject to the
deduction limitations of Code Section 162(m).
(p) “Director”
means a member of the Board who is also an Employee.
(q) “Disability”
means, except as may otherwise be provided in a Participant employment agreement
or applicable Award agreement (and in such case the employment agreement or
Award agreement shall govern as to the definition of Disability), that the
Awardee is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. The Disability of an
Awardee shall be determined solely by the Committee on the basis of such medical
evidence as the Committee deems warranted under the circumstances.
(r) “Employee”
means any individual who is a common-law employee of the Company, a Parent, a
Subsidiary or an Affiliate.
(s) “Equity
Award” means any Award other than a Cash Award.
(t) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(u) “Exercise
Price” means, in the case of an Option, the amount for which a Share may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement. “Exercise Price,” in the case of a SAR, means an
amount, as specified in the applicable SAR Agreement, which is subtracted from
the Fair Market Value in determining the amount payable to a Participant upon
exercise of such SAR.
(v) “Fair
Market Value” means the market price of a Share, determined by the Committee as
follows:
(i) If
the Shares were traded on a stock exchange (such as the New York Stock Exchange,
NYSE Amex, the NASDAQ Global Market or NASDAQ Capital Market) at the time of
determination, then the Fair Market Value shall be equal to the regular session
closing price for such stock as reported by such exchange (or the exchange or
market with the greatest volume of trading in the Shares) on the date of
determination, or if there were no sales on such date, on the last date
preceding such date on which a closing price was reported;
(ii) If
the Shares were traded on the OTC Bulletin Board at the time of determination,
then the Fair Market Value shall be equal to the last-sale price reported by the
OTC Bulletin Board for such date of determination, or if there were no sales on
such date, on the last date preceding such date on which a sale was reported;
and
(iii) If
neither of the foregoing provisions is applicable, then the Fair Market Value
shall be determined by the Committee in good faith using a reasonable
application of a reasonable valuation method as the Committee deems
appropriate.
Whenever
possible, the determination of Fair Market Value by the Committee shall be based
on the prices reported by the applicable exchange or the OTC Bulletin Board, as
applicable, or a nationally recognized publisher of stock prices or quotations
(including an electronic on-line publication). Such determination
shall be conclusive and binding on all persons.
(w) “Fiscal
Year” means the Company’s fiscal year.
(x) “Grant”
means any grant of an Award under the Plan.
(y) “Incentive
Stock Option” or “ISO” means an incentive stock option described in Code Section
422.
(z) “Non-Employee
Director” means a member of the Board who is not an Employee.
(aa) “Nonstatutory
Stock Option” or “NSO” means a stock option that is not an ISO.
(bb) “Officer”
means an individual who is an officer of the Company within the meaning of Rule
16a-1(f) of the Exchange Act.
(cc) “Option”
means an ISO or NSO granted under the Plan entitling the Optionee to purchase a
specified number of Shares, at such times and applying a specified Exercise
Price, as provided in the applicable Stock Option Agreement.
(dd) “Optionee”
means an individual, estate or other entity that holds an Option.
(ee) “Parent”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the
Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain. A corporation that attains the status of a Parent on a date
after the Adoption Date shall be considered a Parent commencing as of such
date.
(ff) “Participant”
means an individual or estate or other entity that holds an Award.
(gg) “Performance
Goals” means one or more objective measurable performance factors as determined
by the Committee with respect to a Performance Period including without
limitation one or more of the following: (i) return on equity, (ii)
earnings per share, (iii) total earnings, (iv) earnings growth, (v) return on
capital, (vi) return on assets, (vii) economic value added, (viii) earnings
before interest and taxes, (ix) sales or revenue growth, (x) return on
investment, (xi) fair market value or price of the Company's shares (including,
but not limited to, growth measures and total stockholder return), (xii) net
operating profit, (xiii) operating income before or after taxes; (xiv) cash flow
(including, but not limited to, operating cash flow and free cash flow), (xv)
cash flow return on investments (which equals net cash flow divided by total
capital), (xvi) internal rate of return, (xvii) net present value, (xviii) costs
or expenses or cost containment or reduction, (xix) market share, (xx) customer
satisfaction, (xxi) corporate transactions including without limitation mergers,
acquisitions, dispositions and/or joint ventures, (xxii) product development,
(xxiii) capital expenditures, (xxiv) earnings before or after interest, taxes,
depreciation and/or amortization, and/or (xxv) gross revenue; each with respect
to the Company and/or one or more Affiliates or operating units as determined by
the Committee in its sole discretion. Awards issued to persons who
are not Covered Employees may take into account other (or no)
factors.
(hh) “Performance
Period” means any period of time determined by the Committee in its sole
discretion provided that such period cannot be less than three (3) months or
more than ten (10) years in duration. The Committee may establish
different Performance Periods for different Participants and the Committee may
establish concurrent or overlapping Performance Periods.
(ii) “Plan”
means this NTN Buzztime, Inc. 2010 Performance Incentive Plan as it may be
amended from time to time.
(jj) “Prior
Equity Plans” means the Company’s 2004 Performance Incentive Plan and
predecessor plans.
(kk) “Re-Price”
means that the Company has lowered or reduced the Exercise Price of outstanding
Options and/or outstanding SARs for any Participant(s) in a manner described by
SEC Regulation S-K Item 402(d)(2)(viii) (or as described in any successor
definition(s))..
(ll) “Restricted
Stock Grant” means Shares awarded under the Plan as provided in Section
9.
(mm) “Restricted
Stock Grant Agreement” means the agreement described in Section 9 evidencing
each Award of a Restricted Stock Grant.
(nn) “SAR
Agreement” means the agreement described in Section 8 evidencing each Award of a
Stock Appreciation Right.
(oo) “SEC”
means the Securities and Exchange Commission.
(pp) “Section
16 Persons” means those officers, directors or other persons who are subject to
Section 16 of the Exchange Act.
(qq) “Securities
Act” means the Securities Act of 1933, as amended.
(rr) “Service”
means service as an Employee, Director, Non-Employee Director or
Consultant. Service will be deemed terminated as soon as the entity
to which Service is being provided is no longer either (i) the Company, (ii) a
Parent, (iii) a Subsidiary or (iv) an Affiliate. A Participant’s
Service does not terminate if he or she is a common-law employee and goes on a
bona fide leave of absence that was approved by the Company in writing and the
terms of the leave provide for continued service crediting, or when continued
service crediting is required by applicable law. However, for
purposes of determining whether an Option is entitled to continuing ISO status,
a common-law employee’s Service will be treated as terminating ninety (90) days
after such Employee went on leave, unless such Employee’s right to return to
active work is guaranteed by law or by a contract. Service terminates
in any event when the approved leave ends, unless such Employee immediately
returns to active work. The Committee determines which leaves count
toward Service, and when Service commences and terminates for all purposes under
the Plan.
(ss) “Share”
means one share of Common Stock.
(tt)
“Stock Appreciation Right” or “SAR” means a stock appreciation right
awarded under the Plan which provides the holder with a right to potentially
receive, in cash and/or Shares, value with respect to a specific number of
Shares, as provided in Section 8.
(uu) “Stock
Option Agreement” means the agreement described in Section 6 evidencing each
Award of an Option.
(vv) “Stock
Unit” means a bookkeeping entry representing the equivalent of one Share, as
awarded under the Plan and as provided in Section 10.
(ww) “Stock
Unit Agreement” means the agreement described in Section 10 evidencing each
Award of Stock Units.
(xx) “Stockholder
Approval Date” means the date that the Company's stockholders approve this Plan
provided that such approval must occur on or before the first anniversary of the
Adoption Date.
(yy) “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the Adoption Date shall be considered
a Subsidiary commencing as of such date.
(zz) “Termination
Date” means the date on which a Participant's Service terminates as determined
by the Committee.
(aaa) “10-Percent
Shareholder” means an individual who owns more than ten percent (10%) of the
total combined voting power of all classes of outstanding stock of the Company,
its Parent or any of its Subsidiaries. In determining stock
ownership, the attribution rules of Section 424(d) of the Code shall be
applied.
SECTION
3. ADMINISTRATION.
(a) Committee
Composition. A Committee appointed by the Board shall
administer the Plan. Unless the Board provides otherwise, the Board’s
Compensation Committee (or a comparable committee of the Board) shall be the
Committee. The Board may also at any time reassume all powers and
authority previously delegated to the Committee.
To the
extent required, the Committee shall have membership composition which enables
(i) Awards to Section 16 Persons to qualify as exempt from liability under
Section 16(b) of the Exchange Act and (ii) Awards to Covered Employees to
qualify as performance-based compensation as provided under Code Section
162(m).
The Board
may also appoint one or more separate committees of the Board, each composed of
one or more directors of the Company who need not qualify under Rule 16b-3
of the Exchange Act or Code Section 162(m), that may administer the Plan with
respect to Awardees who are not Section 16 Persons or Covered Employees,
respectively, may grant Awards under the Plan to such Awardees and may determine
all terms of such Awards. To the extent permitted by applicable law,
the Board may also appoint a committee, composed of one or more Officers, that
may authorize Awards to Employees (who are not Section 16 Persons or Covered
Employees) within parameters specified by the Board and consistent with any
limitations imposed by applicable law.
Notwithstanding
the foregoing, the Board shall constitute the Committee and shall administer the
Plan with respect to all Awards granted to Non-Employee Directors.
(b) Authority of the
Committee. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion to take any actions it deems
necessary or advisable for the administration of the Plan. Such
actions shall include without limitation:
(i)
determining Awardees who are to receive Awards under the Plan;
(ii)
determining the type, number, vesting requirements, performance conditions (if
any) and their degree of satisfaction, and other features and conditions of such
Awards and amending such Awards;
(iii)
correcting any defect, supplying any omission, or reconciling or clarifying any
inconsistency in the Plan or any Award agreement;
(iv)
accelerating the vesting, or extending the post-termination exercise term, or
waiving restrictions, of Awards at any time and under such terms and conditions
as it deems appropriate;
(v)
interpreting the Plan and any Award agreements;
(vi)
making all other decisions relating to the operation of the Plan;
and
(vii)
adopting such plans or subplans as may be deemed necessary or appropriate to
provide for the participation by non-U.S. employees of the Company and its
Subsidiaries and Affiliates, which plans and/or subplans shall be attached
hereto as appendices.
The
Committee may adopt such rules or guidelines, as it deems appropriate to
implement the Plan. The Committee’s determinations under the Plan
shall be final and binding on all persons. The Committee’s decisions
and determinations need not be uniform and may be made selectively among
Participants in the Committee’s sole discretion. The Committee’s
decisions and determinations will be afforded the maximum deference provided by
applicable law.
(c) Indemnification. To
the maximum extent permitted by applicable law, each member of the Committee, or
of the Board, or any persons (including without limitation Employees and
Officers) who are delegated by the Board or Committee to perform administrative
functions in connection with the Plan, shall be indemnified and held harmless by
the Company against and from (i) any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Award agreement, and (ii) from any and all
amounts paid by him or her in settlement thereof, with the Company’s approval,
or paid by him or her in satisfaction of any judgment in any such claim, action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company’s Certificate of Incorporation or Bylaws, by contract, as a
matter of law, or otherwise, or under any power that the Company may have to
indemnify them or hold them harmless.
SECTION
4. GENERAL.
(a) General
Eligibility. Only Employees, Consultants, Directors and
Non-Employee Directors shall be eligible for designation as Awardees by the
Committee.
(b) Incentive Stock
Options. Only Awardees who are common-law employees of the
Company, a Parent or a Subsidiary shall be eligible for the grant of
ISOs. In addition, an Awardee who is a 10-Percent Shareholder shall
not be eligible for the grant of an ISO unless the requirements set forth in
Section 422(c)(5) of the Code are satisfied. If and to the extent
that any Shares are issued under a portion of any Option that exceeds the
$100,000 limitation of Section 422 of the Code, such Shares shall not be treated
as issued under an ISO notwithstanding any designation otherwise. Certain
decisions, amendments, interpretations and actions by the Committee and certain
actions by a Participant may cause an Option to cease to qualify as an ISO
pursuant to the Code and by accepting an Option the Participant agrees in
advance to such disqualifying action.
(c)
Restrictions on
Shares. Any Shares issued pursuant to an Award shall be
subject to such rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions shall
apply in addition to any restrictions that may apply to holders of Shares
generally and shall also comply to the extent necessary with applicable
law. In no event shall the Company be required to issue fractional
Shares under this Plan.
(d) Beneficiaries. A
Participant may designate one or more beneficiaries with respect to an Award by
timely filing the prescribed form with the Company. A beneficiary
designation may be changed by filing the prescribed form with the Company at any
time before the Participant’s death. If no beneficiary was designated
or if no designated beneficiary survives the Participant, then after a
Participant’s death any vested Award(s) shall be transferred or distributed to
the Participant’s estate.
(e) Performance
Conditions. The Committee may, in its discretion, include
performance conditions in any Award. If performance conditions are
included in Awards to Covered Employees that are intended to qualify as
performance-based compensation under Code Section 162(m), then such Awards will
be subject to the achievement of Performance Goals that shall be established and
administered pursuant to the requirements of Code Section 162(m) and as
described in this Section 4(e). Before any Shares underlying an Award
or any Award payments are released to a Covered Employee with respect to a
Performance Period, the Committee shall certify in writing that the Performance
Goals for such Performance Period have been satisfied. Without
limitation, the approved minutes of a Committee meeting shall constitute such
written certification. With respect to Awards that are intended to
qualify as performance-based compensation under Code Section 162(m), the
Committee may adjust the evaluation of performance under a Performance Goal (to
the extent permitted by Code Section 162(m)) to remove the effects of certain
events including but not limited to the following:
(i) asset
write-downs or discontinued operations,
(ii) litigation
or claim judgments or settlements,
(iii)
the effect of changes in or provisions under tax law, accounting
principles or other such laws or provisions affecting reported
results,
(iv) reorganizations
or restructuring programs or divestitures or acquisitions, and
(v) extraordinary
non-recurring items as described in applicable accounting principles and/or
items of gain, loss or expense determined to be extraordinary or unusual in
nature or infrequent in occurrence.
Notwithstanding
satisfaction of any completion of any Performance Goal, to the extent specified
at the time of grant of an Award, the amount of cash, the number of Shares,
Options, SARs, Stock Units or other benefits granted, issued, retainable and/or
vested under an Award on account of satisfaction of such Performance Goals may
be reduced by the Committee on the basis of such further considerations as the
Committee in its sole discretion shall determine. Awards with
performance conditions that are granted to Awardees who are not Covered
Employees or any Awards to Covered Employees which are not intended to qualify
as performance-based compensation under Code Section 162(m) need not comply with
the requirements of Code Section 162(m).
(f) Stockholder
Rights. A Participant, or a transferee of a Participant, shall
have no rights as a stockholder (including without limitation voting rights or
dividend or distribution rights) with respect to any Common Stock covered by an
Award until such person becomes entitled to receive such Common Stock, has
satisfied any applicable withholding or tax obligations relating to the Award
and has been issued the applicable stock certificate by the
Company. No adjustment shall be made for cash or stock dividends or
other rights for which the record date is prior to the date when such
certificate is issued, except as expressly provided in Section 11.
(g) Termination of
Service. Unless the applicable Award agreement or employment
agreement provides otherwise (and in such case, the Award or employment
agreement shall govern as to the consequences of a termination of Service for
such Awards), the following rules shall govern the vesting, exercisability and
term of outstanding Awards held by a Participant in the event of termination of
such Participant’s Service (in all cases subject to the term of the Option or
SAR as applicable):
(i) if
the Service of a Participant is terminated for Cause, then all Options, SARs,
unvested portions of Stock Units and unvested portions of Restricted Stock
Grants shall terminate and be forfeited immediately without consideration as of
the Termination Date (except for repayment of any amounts the Participant had
paid to the Company to acquire Shares underlying the forfeited
Awards);
(ii) if
the Service of Participant is terminated for any reason other than for Cause, or
other than due to death or Disability, then the vested portion of his/her
then-outstanding Options/SARs may be exercised by such Participant or his or her
personal representative within three months after the Termination Date and all
unvested portions of any outstanding Awards shall be forfeited without
consideration as of the Termination Date (except for repayment of any amounts
the Participant had paid to the Company to acquire Shares underlying the
forfeited Awards); or
(iii) if
the Service of a Participant is terminated due to death or Disability, the
vested portion of his/her then-outstanding Options/SARs may be exercised within
twelve months after the Termination Date and all unvested portions of any
outstanding Awards shall be forfeited without consideration as of the
Termination Date (except for repayment of any amounts the Participant had paid
to the Company to acquire Shares underlying the forfeited Awards). In
the event of a termination of an Employee’s Service due to Disability, an
unexercised ISO will be treated as an NSO commencing as of one year and one day
after such Termination Date.
(h) Code Section
409A. Notwithstanding anything in the Plan to the contrary,
the Plan and Awards granted hereunder are intended to comply with the
requirements of Code Section 409A and shall be interpreted in a manner
consistent with such intention. If upon a Participant’s “separation
from service” within the meaning of Code Section 409A, he/she is then a
“specified employee” (as defined in Code Section 409A), then solely to the
extent necessary to comply with Code Section 409A and avoid the imposition of
taxes under Code Section 409A, the Company shall defer payment of “nonqualified
deferred compensation” subject to Code Section 409A payable as a result of and
within six (6) months following such separation from service under this Plan
until the earlier of (i) the first business day of the seventh month following
the Participant’s separation from service, or (ii) ten (10) days after the
Company receives written notification of the Participant’s death. Any
such delayed payments shall be made without interest.
(i) Suspension or Termination of
Awards. If at any time (including after a notice of exercise
has been delivered) the Committee (or the Board), reasonably believes that a
Participant has committed an act of Cause (which includes a failure to act), the
Committee (or Board) may suspend the Participant’s right to exercise any Option
or SAR (or payment of a Cash Award or vesting of Restricted Stock Grants or
Stock Units) pending a determination of whether there was in fact an act of
Cause. If the Committee (or the Board) determines a Participant has
committed an act of Cause, neither the Participant nor his or her estate shall
be entitled to exercise any outstanding Option or SAR whatsoever and all of
Participant’s outstanding Awards shall then terminate without
consideration. Any determination by the Committee (or the Board) with
respect to the foregoing shall be final, conclusive and binding on all
interested parties.
(j) Electronic
Communications. Subject to compliance with applicable law
and/or regulations, an Award agreement or other documentation or notices
relating to the Plan and/or Awards may be communicated to Participants by
electronic media.
(k) Unfunded
Plan. Insofar as it provides for Awards, the Plan shall be
unfunded. Although bookkeeping accounts may be established with
respect to Participants who are granted Awards under this Plan, any such
accounts will be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets which may at any time be
represented by Awards, nor shall this Plan be construed as providing for such
segregation, nor shall the Company or the Committee be deemed to be a trustee of
stock or cash to be awarded under the Plan.
(l)
Liability of
Company. The Company (or members of the Board or Committee)
shall not be liable to a Participant or other persons as to: (i) the
non-issuance or sale of Shares as to which the Company has been unable to obtain
from any regulatory body having jurisdiction the authority deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder; and (ii) any unexpected or adverse tax consequence or any tax
consequence expected, but not realized, by any Participant or other person due
to the grant, receipt, exercise or settlement of any Award granted
hereunder.
(m) Reformation. In
the event any provision of this Plan shall be held illegal or invalid for any
reason, such provisions will be reformed by the Board if possible and to the
extent needed in order to be held legal and valid. If it is not
possible to reform the illegal or invalid provisions then the illegality or
invalidity shall not affect the remaining parts of this Plan, and this Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included.
(n) References. References
to statutory and/or regulatory provisions or definitions will also be deemed to
refer to their successor provisions or definitions as applicable.
(o) Director
Fees. If the Board affirmatively determines to implement this
Section 4(o), then each Non-Employee Director may be awarded either a Restricted
Stock Grant or Stock Units in accordance with the terms and conditions contained
in this Section 4(o).
(1)
Participation Elections. Each Non-Employee Director may elect to
receive a Restricted Stock Grant (or Stock Units) under the Plan in lieu of
payment of a portion of his or her annual retainer. Such an election
may be for any dollar or percentage amount equal to at least 50% of the
Non-Employee Director's annual retainer (up to a limit of 100% of the annual
retainer of Non-Employee Directors). The election must be made prior
to the beginning of the annual board of directors cycle which shall be any
twelve month continuous period designated by the Board (the "Board Cycle") and
such election may need to be made earlier as necessary to comply with Code
Section 409A. Any amount of the annual retainer not elected to be
received as a Restricted Stock Grant or Stock Units shall be payable in cash in
accordance with the Company's standard payment procedures.
(2)
Grants of Stock. As soon as reasonably practicable following the
commencement of each Board Cycle, each Non-Employee Director who has timely made
the election described in Section 4(o)(1) with respect to that Board Cycle shall
be granted a number of Shares pursuant to a Restricted Stock Grant (or Stock
Units) having a Fair Market Value on the date of grant equal to 100% of the
amount of the annual retainer elected to be received as a Restricted Stock Grant
(or Stock Units) under Section 4(o)(1) for such Board Cycle, rounded down to the
nearest full Share. Such Restricted Stock Grant (or Stock Units) will
be evidenced by an executed Restricted Stock Grant Agreement (or Stock Unit
Agreement) between the Company and the electing Non-Employee
Director. Such Restricted Stock Grant (or Stock Units) will be fully
vested at grant.
(3) Other
Terms. Shares (or Stock Units) granted under this Section 4(o) shall
otherwise be subject to the terms of the Plan applicable to Non-Employee
Directors or to Participants generally (other than provisions specifically
applying only to Employees).
(p) No Re-Pricing of Options or
SARs. Notwithstanding anything to the contrary, outstanding
Options or SARs may not be Re-Priced without the approval of Company
stockholders.
(q) Successor
Provision. Any reference to a statute, rule or regulation, or
to a section of a statute, rule or regulation, is a reference to that statute,
rule, regulation, or section as amended from time to time, both before and after
the Adoption Date and including any successor provisions.
SECTION
5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.
(a) Basic
Limitation. The Common Stock issuable under the Plan shall be
authorized but unissued Shares or treasury Shares. Subject to
adjustment as provided in Sections 5(b) and 11, the aggregate number of Shares
reserved for Equity Awards under the Plan shall not exceed 6,000,000
Shares. The aggregate number of Shares that may be issued in
connection with ISOs under the Plan shall not exceed 6,000,000
Shares.
(b) Share
Utilization. If Equity Awards are forfeited or are terminated
for any reason other than being exercised, then the Shares underlying such
Equity Awards shall again become available for Equity Awards under the
Plan. If SARs are exercised or Stock Units are settled in Shares,
then only the number of Shares (if any) actually issued in settlement of such
SARs or Stock Units shall reduce the number of Shares available under Section
5(a) and the balance shall again become available for Equity Awards under the
Plan. If a Participant pays the Exercise Price by net exercise or by
surrendering previously owned Shares (or by stock attestation) and/or, as
permitted by the Committee, pays any withholding tax obligation with respect to
an Equity Award by electing to have Shares withheld or surrendering previously
owned Shares (or by stock attestation), the surrendered Shares and the Shares
withheld to pay taxes shall be available for issuance under the Plan and shall
not count toward the maximum number of shares that may be issued under the Plan
as set forth in Section 5(a). Any Shares that are delivered and any
Equity Awards that are granted by, or become obligations of, the Company, as a
result of the assumption by the Company of, or in substitution for, outstanding
awards previously granted by another entity (as provided in Sections 6(e), 8(f),
9(g) or 10(h)) shall not be counted against the Share limits specified in
Sections 5(a) and 5(d).
(c) Dividend
Equivalents. Any dividend equivalents distributed under the
Plan shall not be applied against the number of Shares available for Equity
Awards.
(d) Code Section 162(m)
Limits. For so long as: (x) the Company is a “publicly held
corporation” within the meaning of Code Section 162(m) and (y) the deduction
limitations of Code Section 162(m) are applicable to the Covered Employees, then
the limits specified below in this Section 5(d) shall be applicable to Awards
issued under the Plan that are intended to qualify as performance-based
compensation under Code Section 162(m).
(i) Share Limit for Equity
Awards. No Awardee shall receive Equity Awards during any
Fiscal Year in excess of the aggregate amount of 1,000,000 Shares, whether such
Equity Awards are in the form of Options, SARs, Restricted Stock Grants and/or
Stock Units. The foregoing limit shall be increased to 1,750,000 Shares with respect to
Equity Awards granted to an Awardee during the Fiscal Year of the Awardee’s
commencement of employment with the Company.
(ii) Dollar Limit for Cash
Awards. The maximum aggregate value of Cash Awards that may be
received by any one Awardee with respect to any individual Fiscal Year is
$1,000,000.
SECTION
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option
Agreement. Each Grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions that
are not inconsistent with the Plan (including without limitation any performance
conditions). The provisions of the various Stock Option Agreements
entered into under the Plan need not be identical. The Stock Option
Agreement shall also specify whether the Option is an ISO and if not specified
then the Option shall be an NSO.
(b) Number of
Shares. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for adjustment of
such number in accordance with Section 11.
(c) Exercise
Price. An Option’s Exercise Price shall be established by the
Committee and set forth in a Stock Option Agreement. Except with
respect to outstanding stock options being assumed or Options being granted in
exchange for cancellation of outstanding options granted by another issuer as
provided under Section 6(e), the Exercise Price of an Option shall not be less
than 100% of the Fair Market Value (110% for ISO Grants to 10-Percent
Shareholders) on the date of Grant.
(d) Exercisability and
Term. Each Stock Option Agreement shall specify the date when
all or any installment of the Option is to become vested and/or
exercisable. The Stock Option Agreement shall also specify the term
of the Option; provided that the term of an Option shall in no event exceed ten
years from the date of Grant (and may be for a shorter period of time than ten
years). No Option can be exercised after the expiration date
specified in the applicable Stock Option Agreement. A Stock Option
Agreement may provide for accelerated vesting in the event of the Participant’s
death, or Disability or other events. Notwithstanding the previous sentence, an
ISO that is granted to a 10-Percent Shareholder shall have a maximum term of
five years. Notwithstanding any other provision of the Plan, no
Option can be exercised after the expiration date provided in the applicable
Stock Option Agreement. A Stock Option Agreement may permit an
Optionee to exercise an Option before it is vested (an “early exercise”),
subject to the Company’s right of repurchase at the original Exercise Price of
any Shares acquired under the unvested portion of the Option which right of
repurchase shall lapse at the same rate the Option would have vested had there
been no early exercise. In no event shall the Company be required to
issue fractional Shares upon the exercise of an Option and the Committee may
specify a minimum number of Shares that must be purchased in any one Option
exercise.
(e)
Modifications or Assumption
of Options. Within the limitations of the Plan, the Committee
may modify, extend or assume outstanding stock options or may accept the
cancellation of outstanding stock options (whether granted by the Company or by
another issuer) in return for the grant of new Options for the same or a
different number of Shares and at the same or a different Exercise
Price. For avoidance of doubt, the Committee may not Re-Price
outstanding Options without approval from the Company's
stockholders. No modification of an Option shall, without the consent
of the Optionee, impair his or her rights or obligations under such
Option.
(f)
Assignment
or Transfer of Options. Except as otherwise provided in the
applicable Stock Option Agreement and then only to the extent permitted by
applicable law, no Option shall be transferable by the Optionee other than by
will or by the laws of descent and distribution. Except as otherwise
provided in the applicable Stock Option Agreement, an Option may be exercised
during the lifetime of the Optionee only by Optionee or by the guardian or legal
representative of the Optionee. No Option or interest therein may be
assigned, pledged or hypothecated by the Optionee during his or her lifetime,
whether by operation of law or otherwise, or be made subject to execution,
attachment or similar process.
SECTION
7. PAYMENT FOR OPTION SHARES.
(a)
General
Rule. The entire Exercise Price of Shares issued upon exercise
of Options shall be payable in cash at the time when such Shares are purchased
by the Optionee, except as follows and if so provided for in an applicable Stock
Option Agreement:
(i) In
the case of an ISO granted under the Plan, payment shall be made only pursuant
to the express provisions of the applicable Stock Option
Agreement. The Stock Option Agreement may specify that payment may be
made in any form(s) described in this Section 7.
(ii) In
the case of an NSO granted under the Plan, the Committee may, in its discretion
at any time, accept payment in any form(s) described in this Section
7.
(b) Surrender of
Stock. To the extent that this Section 7(b) is made applicable
to an Option in a Stock Option Agreement, payment for all or any part of the
Exercise Price may be made with Shares which have already been owned by the
Optionee for such duration as shall be specified by the
Committee. Such Shares shall be valued at their Fair Market Value on
the date when the new Shares are purchased under the Plan.
(c) Cashless
Exercise. To the extent that this Section 7(c) is made
applicable to an Option in a Stock Option Agreement, payment for all or a part
of the Exercise Price may be made through Cashless Exercise.
(d) Net
Exercise. To the extent that this Section 7(d) is made
applicable to an Option in a Stock Option Agreement, payment for all or a part
of the Exercise Price may be made through a “net exercise” arrangement pursuant
to which the number of Shares issued to the Optionee in connection with the
Optionee’s exercise of the Option will be reduced by the Company’s retention of
a portion of such Shares. Upon such a net exercise of an Option, the
Optionee will receive a net number of Shares that is equal to (i) the number of
Shares as to which the Option is being exercised minus (ii) the quotient
(rounded down to the nearest whole number) of the aggregate Exercise Price of
the Shares being exercised divided by the Fair Market Value of a Share on the
Option exercise date. The number of Shares covered by clause (ii)
will be retained by the Company and not delivered to the Optionee. No
fractional Shares will be created as a result of a net exercise and the Optionee
must contemporaneously pay for any portion of the aggregate Exercise Price that
is not covered by the Shares retained by the Company under clause
(ii).
(e) Other Forms of
Payment. To the extent that this Section 7(e) is made
applicable to an Option in a Stock Option Agreement, payment may be made in any
other form that is consistent with applicable laws, regulations and rules and
approved by the Committee.
SECTION
8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
(a) SAR
Agreement. Each Grant of a SAR under the Plan shall be
evidenced by a SAR Agreement between the Participant and the
Company. Such SAR shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions that
are not inconsistent with the Plan (including without limitation any performance
conditions). A SAR Agreement may provide for a maximum limit on the
amount of any payout notwithstanding the Fair Market Value on the date of
exercise of the SAR. The provisions of the various SAR Agreements
entered into under the Plan need not be identical. SARs may be
granted in consideration of a reduction in the Participant’s other
compensation.
(b) Number of
Shares. Each SAR Agreement shall specify the number of Shares
to which the SAR pertains and is subject to adjustment of such number in
accordance with Section 11.
(c) Exercise
Price. Each SAR Agreement shall specify the Exercise
Price. Except with respect to outstanding stock appreciation rights
being assumed or SARs being granted in exchange for cancellation of outstanding
stock appreciation rights granted by another issuer as provided under Section
8(f), the Exercise Price of a SAR shall not be less than 100% of the Fair Market
Value on the date of Grant.
(d) Exercisability and
Term. Each SAR Agreement shall specify the date when all or
any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR which shall not exceed ten
years from the date of Grant (and may be for a shorter period of time than ten
years). No SAR can be exercised after the expiration date specified
in the applicable SAR Agreement. A SAR Agreement may provide for
accelerated exercisability in the event of the Participant’s death, or
Disability or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Participant’s
Service. A SAR may be included in an ISO only at the time of Grant
but may be included in an NSO at the time of Grant or at any subsequent time,
but not later than six months before the expiration of such NSO. A
SAR granted under the Plan may provide that it will be exercisable only in the
event of a Change in Control.
(e)
Exercise of
SARs. If, on the date when a SAR expires, the Exercise Price
under such SAR is less than the Fair Market Value on such date but any portion
of such SAR has not been exercised or surrendered, then such SAR may
automatically be deemed to be exercised as of such date with respect to such
portion to the extent so provided in the applicable SAR agreement. Upon exercise
of a SAR, the Participant (or any person having the right to exercise the SAR
after Participant’s death) shall receive from the Company (i) Shares, (ii) cash
or (iii) any combination of Shares and cash, as the Committee shall
determine. The amount of cash and/or the Fair Market Value of Shares
received upon exercise of SARs shall, in the aggregate, be equal to the amount
by which the Fair Market Value (on the date of surrender) of the Shares subject
to the SARs exceeds the Exercise Price of the Shares.
(f)
Modification or Assumption
of SARs. Within the limitations of the Plan, the Committee may
modify, extend or assume outstanding stock appreciation rights or may accept the
cancellation of outstanding stock appreciation rights (including stock
appreciation rights granted by another issuer) in return for the grant of new
SARs for the same or a different number of Shares and at the same or a different
Exercise Price. For avoidance of doubt, the Committee may not
Re-Price outstanding SARs without approval from the Company's
stockholders. No modification of a SAR shall, without the consent of
the Participant, impair his or her rights or obligations under such
SAR.
(g) Assignment or Transfer of
SARs. Except as otherwise provided in the applicable SAR
Agreement and then only to the extent permitted by applicable law, no SAR shall
be transferable by the Participant other than by will or by the laws of descent
and distribution. Except as otherwise provided in the applicable SAR
Agreement, a SAR may be exercised during the lifetime of the Participant only by
the Participant or by the guardian or legal representative of the
Participant. No SAR or interest therein may be assigned, pledged or
hypothecated by the Participant during his or her lifetime, whether by operation
of law or otherwise, or be made subject to execution, attachment or similar
process.
SECTION
9. TERMS AND CONDITIONS FOR RESTRICTED STOCK GRANTS.
(a) Time, Amount and Form of
Awards. Awards under this Section 9 may be granted in the form
of a Restricted Stock Grant.
(b) Restricted Stock Grant
Agreement. Each Grant of a Restricted Stock Grant under the
Plan shall be evidenced by a Restricted Stock Grant Agreement between the
Participant and the Company. Each Restricted Stock Grant shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions that are not inconsistent with the Plan
(including without limitation any performance conditions). The
provisions of the Restricted Stock Grant Agreements entered into under the Plan
need not be identical.
(c) Payment for Restricted Stock
Grants. Restricted Stock Grants may be issued with or without
cash consideration under the Plan.
(d) Vesting
Conditions. Each Restricted Stock Grant may or may not be
subject to vesting. Vesting shall occur, in full or in installments,
upon satisfaction of the conditions specified in the Restricted Stock Grant
Agreement. A Restricted Stock Grant Agreement may provide for
accelerated vesting in the event of the Participant’s death, or Disability or
other events.
(e) Assignment or Transfer of
Restricted Stock Grants. Except as provided in
Section 14, or in a Restricted Stock Grant Agreement, or as required by
applicable law, a Restricted Stock Grant awarded under the Plan shall not be
anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor’s process, whether voluntarily, involuntarily or by
operation of law. Any act in violation of this Section 9(e) shall be
void. However, this Section 9(e) shall not preclude a Participant
from designating a beneficiary who will receive any vested outstanding
Restricted Stock Grant Awards in the event of the Participant’s death, nor shall
it preclude a transfer of vested Restricted Stock Grant Awards by will or by the
laws of descent and distribution.
(f) Voting and Dividend
Rights. The holder of a Restricted Stock Grant (irrespective
of whether the Shares subject to the Restricted Stock Grant are vested or
unvested) awarded under the Plan shall have the same voting, dividend and other
rights as the Company’s other stockholders. A Restricted Stock Grant
Agreement, however, may require that the holder of such Restricted Stock Grant
invest any cash dividends received in additional Shares subject to the
Restricted Stock Grant. Such additional Shares subject to the
Restricted Stock Grant shall be subject to the same conditions and restrictions
as the Restricted Stock Grant with respect to which the dividends were
paid. Such additional Shares subject to the Restricted Stock Grant
shall not reduce the number of Shares available for issuance under Section
5.
(g) Modification or Assumption
of Restricted Stock Grants. Within the limitations of the
Plan, the Committee may modify or assume outstanding stock awards or may accept
the cancellation of outstanding stock awards (including stock granted by another
issuer) in return for the grant of new Restricted Stock Grants for the same or a
different number of Shares. No modification of a Restricted Stock
Grant shall, without the consent of the Participant, impair his or her rights or
obligations under such Restricted Stock Grant.
SECTION
10. TERMS AND CONDITIONS OF STOCK UNITS.
(a) Stock Unit
Agreement. Each Grant of Stock Units under the Plan shall be
evidenced by a Stock Unit Agreement between the Participant and the
Company. Such Stock Units shall be subject to all applicable terms
and conditions of the Plan and may be subject to any other terms and conditions
that are not inconsistent with the Plan (including without limitation any
performance conditions). The provisions of the various Stock Unit
Agreements entered into under the Plan need not be identical. Stock
Units may be granted in consideration of a reduction in the Participant’s other
compensation.
(b) Number of
Shares. Each Stock Unit Agreement shall specify the number of
Shares to which the Stock Unit Grant pertains and is subject to adjustment of
such number in accordance with Section 11.
(c) Payment for
Awards. To the extent that an Award is granted in the form of
Stock Units, no cash consideration shall be required of the Award
recipients.
(d) Vesting
Conditions. Each Grant of Stock Units may or may not be
subject to vesting. Vesting shall occur, in full or in installments,
upon satisfaction of the conditions specified in the Stock Unit
Agreement. A Stock Unit Agreement may provide for accelerated vesting
in the event of the Participant’s death, or Disability or other
events.
(e) Voting and Dividend
Rights. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded
under the Plan may, at the Committee’s discretion, carry with it a right to
dividend equivalents. Such right entitles the holder to be credited
with an amount equal to all cash dividends paid on one Share while the Stock
Unit is outstanding. Dividend equivalents may be converted into
additional Stock Units. Settlement of dividend equivalents may be
made in the form of cash, in the form of Shares, or in a combination of
both. Prior to distribution, any dividend equivalents which are not
paid shall be subject to the same conditions and restrictions as the Stock Units
to which they attach.
(f) Form and Time of Settlement
of Stock Units. Settlement of vested Stock Units may be made
in the form of (a) cash, (b) Shares or (c) any combination of both, as
determined by the Committee. The actual number of Stock Units
eligible for settlement may be larger or smaller than the number included in the
original Award. Methods of converting Stock Units into cash may
include (without limitation) a method based on the average Fair Market Value of
Shares over a series of trading days. Except as otherwise provided in
a Stock Unit Agreement or a timely completed deferral election, vested Stock
Units shall be settled within thirty days after vesting. The
distribution may occur or commence when all vesting conditions applicable to the
Stock Units have been satisfied or have lapsed, or it may be deferred, in
accordance with applicable law, to a later specified date. The amount
of a deferred distribution may be increased by an interest factor or by dividend
equivalents. Until an Award of Stock Units is settled, the number of
such Stock Units shall be subject to adjustment pursuant to Section
11.
(g) Creditors’
Rights. A holder of Stock Units shall have no rights other
than those of a general creditor of the Company. Stock Units
represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Stock Unit Agreement.
(h) Modification or Assumption
of Stock Units. Within the limitations of the Plan, the
Committee may modify or assume outstanding stock units or may accept the
cancellation of outstanding stock units (including stock units granted by
another issuer) in return for the grant of new Stock Units for the same or a
different number of Shares. No modification of a Stock Unit shall,
without the consent of the Participant, impair his or her rights or obligations
under such Stock Unit.
(i) Assignment or Transfer of
Stock Units. Except as provided in Section 14, or in a Stock
Unit Agreement, or as required by applicable law, Stock Units shall not be
anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor’s process, whether voluntarily, involuntarily or by
operation of law. Any act in violation of this Section 10(i) shall be
void. However, this Section 10(i) shall not preclude a Participant
from designating a beneficiary who will receive any outstanding vested Stock
Units in the event of the Participant’s death, nor shall it preclude a transfer
of vested Stock Units by will or by the laws of descent and
distribution.
SECTION
11. ADJUSTMENTS.
(a) Adjustments. In
the event of a subdivision of the outstanding Shares, a declaration of a
dividend payable in Shares, a declaration of a dividend payable in a form other
than Shares in an amount that has a material effect on the price of Shares, a
combination or consolidation of the outstanding Shares (by reclassification or
otherwise) into a lesser number of Shares, a stock split, a reverse stock split,
a reclassification or other distribution of the Shares without the receipt of
consideration by the Company, of or on the Common Stock, a recapitalization, a
combination, a spin-off or a similar occurrence, the Committee shall make
equitable and proportionate adjustments to:
(i) the
maximum aggregate number of Shares specified in Section 5(a);
(ii) the
number and kind of securities available for Equity Awards (and which can be
issued as ISOs) under Section 5;
(iii) the
limits on Equity Awards issued under the Plan that are intended to qualify as
performance-based compensation under Code Section 162(m) under Section
5(d);
(iv) the
number and kind of securities covered by each outstanding Equity
Award;
(v) the
Exercise Price under each outstanding SAR and Option; and
(vi) the
number and kind of outstanding securities issued under the Plan.
(b) Participant
Rights. Except as provided in this Section 11, a Participant
shall have no rights by reason of any issue by the Company of stock of any class
or securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any
class. If by reason of an adjustment pursuant to this Section 11, a
Participant’s Equity Award covers additional or different shares of stock or
securities, then such additional or different shares and the Equity Award in
respect thereof shall be subject to all of the terms, conditions and
restrictions which were applicable to the Equity Award and the Shares subject to
the Equity Award prior to such adjustment.
(c) Fractional
Shares. Any adjustment of Shares pursuant to this Section 11
shall be rounded down to the nearest whole number of Shares. Under no
circumstances shall the Company be required to authorize or issue fractional
shares and no consideration shall be provided as a result of any fractional
shares not being issued or authorized.
SECTION
12. EFFECT OF A CHANGE IN CONTROL.
(a) Merger or
Reorganization. In the event that the Company is a party to a
merger or other reorganization, outstanding Awards shall be subject to the
agreement of merger or reorganization. Such agreement may provide,
without limitation, for the assumption of outstanding Awards by the surviving
corporation or its parent, for their continuation by the Company (if the Company
is a surviving corporation), for accelerated vesting or for their cancellation
with or without consideration, in all cases without the consent of the
Participant.
(b) Acceleration. In
the event that a Change in Control occurs with respect to the Company and there
is no assumption or continuation of Equity Awards pursuant to Section 12(a), the
Committee may in its discretion provide that all Equity Awards shall vest and
become exercisable as of immediately before such Change in Control.
SECTION
13. LIMITATIONS ON RIGHTS.
(a) Retention
Rights. Neither the Plan nor any Award granted under the Plan
shall be deemed to give any individual a right to remain an Employee, Consultant
Director or Non-Employee Director or to receive any other Awards under the Plan.
The Company and its Parents and Subsidiaries and Affiliates reserve the right to
terminate the Service of any person at any time, and for any reason, subject to
applicable laws, the Company’s Certificate of Incorporation and Bylaws and a
written employment agreement (if any).
(b) Regulatory
Requirements. Any other provision of the Plan notwithstanding,
the obligation of the Company to issue Shares or other securities under the Plan
shall be subject to all applicable laws, rules and regulations and such approval
by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Shares or other
securities pursuant to any Equity Award prior to the satisfaction of all legal
requirements relating to the issuance of such Shares or other securities, to
their registration, qualification or listing or to an exemption from
registration, qualification or listing.
(c) Dissolution. To
the extent not previously exercised or settled, Options, SARs, Stock Units and
unvested Restricted Stock Grants shall terminate immediately prior to the
dissolution or liquidation of the Company and be forfeited to the
Company.
(d) Clawback
Policy. The Company may (i) cause the cancellation of any
Award, (ii) require reimbursement of any Award by a Participant and (iii) effect
any other right of recoupment of equity or other compensation provided under
this Plan or otherwise in accordance with Company policies and/or applicable law
(each, a “Clawback Policy”). In addition, a Participant may be
required to repay to the Company certain previously paid compensation, whether
provided under this Plan or an Award Agreement or otherwise, in accordance with
the Clawback Policy.
SECTION
14. TAXES.
(a) General. A
Participant shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with
his or her Award. The Company shall not be required to issue any
Shares or make any cash payment under the Plan until such obligations are
satisfied.
(b) Share
Withholding. The Committee in its discretion may permit a
Participant to satisfy all or part of his or her withholding or income tax
obligations by having the Company withhold all or a portion of any Shares that
otherwise would be issued to him or her or by surrendering all or a portion of
any Shares that he or she previously acquired (or by stock
attestation). Such Shares shall be valued based on the value of the
actual trade or, if there is none, the Fair Market Value as of the previous
day. Any payment of taxes by assigning Shares to the Company may be
subject to restrictions, including, but not limited to, any restrictions
required by rules of the SEC. The Committee may also, in its
discretion, permit a Participant to satisfy withholding or income tax
obligations (up to the maximum amount permitted by applicable law) related to an
Award through a sale of Shares underlying an Equity Award or, in the case of
Options, through a net exercise or Cashless Exercise.
SECTION
15. DURATION AND AMENDMENTS.
(a) Term of the
Plan. The Plan, as set forth herein, is conditioned upon and
subject to the approval of the Company’s stockholders and is effective on the
Adoption Date. No settlement of Awards or exercise of Options or SARs
may occur before the Stockholder Approval Date. If the Company’s
stockholders do not approve the Plan on or before the first anniversary of the
Adoption Date, then the Plan shall terminate and be null and void and any Awards
granted under the Plan shall be then forfeited without
consideration. In any event, the Plan shall terminate no later than
on the day before the tenth anniversary of the Adoption Date and may be
terminated on any earlier date pursuant to this Section 15. This Plan
will not in any way affect outstanding awards that were issued under the Prior
Equity Plans or other Company equity compensation plans.
(b) Right to Amend or Terminate
the Plan. The Board may amend or terminate the Plan at any
time and for any reason. No Awards shall be granted under the Plan
after the Plan’s termination. An amendment of the Plan shall be
subject to the approval of the Company’s stockholders only to the extent
required by applicable laws, regulations or rules. In addition, no
such amendment or termination shall be made which would impair the rights of any
Participant, without such Participant’s written consent, under any
then-outstanding Award, provided that no such Participant consent shall be
required with respect to any amendment or alteration if the Committee determines
in its sole discretion that such amendment or alteration either (i) is required
or advisable in order for the Company, the Plan or the Award to satisfy or
conform to any law or regulation or to meet the requirements of any accounting
standard, or (ii) is not reasonably likely to significantly diminish the
benefits provided under such Award, or that any such diminishment has been
adequately compensated. In the event of any conflict in terms between
the Plan and any Award agreement, the terms of the Plan shall prevail and
govern.
SECTION
16. EXECUTION.
To record
the adoption of the Plan by the Board, the Company has caused its duly
authorized Officer to execute this Plan on behalf of the Company.
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NTN
BUZZTIME, INC.
By: ___________________________
Title: __________________________
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