(7) | This information is based solely on the notice of intent to nominate directors provided to the Company on October 5, 2016 by MAZ Partners, which provides beneficial ownership as of that date. (8) | Includes 227,500100,000 shares of common stockCommon Stock issuable upon the exercise of stock options granted to Mr. WinoskiIsaman that may be exercised within 60 days of November 16, 2012.11, 2016. |
(9) | Includes (i) 40,000105,000 shares of common stock held by Mr. Dur and (ii) 10,000 shares of common stockCommon Stock issuable upon the exercise of stock options granted to Mr. Dur that may be exercised within 60 days of November 16, 2012.11, 2016. |
(10) | Includes (i) 20,000166,667 shares of common stock held Mr. Anthony and (ii) 40,000 shares of common stockCommon Stock issuable upon the exercise of stock options granted to Mr. AnthonySammons that may be exercised within 60 days of November 16, 2012.11, 2016. |
| | (11) | Includes 1,338,3341,365,834 shares of common stockCommon Stock issuable upon the exercise of stock options granted to our directors and officers.Named Executive Officers that may be exercised within 60 days of November 11, 2016. Does not include shares of Common Stock owned by nominees for director. |
Set forth below is information for the fiscal years indicated relating to the compensation of (i) each person who served as our principal executive officer or principal financial officer during fiscal 2012,2016, (ii) theour most highly compensated executive officer other than the principal executive officer and principal financial officer who was serving in such position as an executive officer at the end of March 31, 2012fiscal 2016 and (iii) an individual who would have been included in the tables below as one of our most highly compensated executive officers but for the fact that he was not an executive officer at March 31, 2012 (collectively,2016. Collectively, such individuals are referred to as our “"Named Executive Officers”)."
Name and Position | | Fiscal
Year
| | Salary ($) | | Bonus
($)(1)
| | Option
Awards ($)(2)
| | All Other
Compensation ($)
| | Total ($) | | | | | | | | | | | | | | | James Molinaro,
Chief Executive Officer
Name and Position | | Fiscal Year | | Salary ($) | | Bonus ($) | | Option Awards ($)(1) | | All Other Compensation ($) | | Total ($) | | Alexander Shen, Chief Executive Officer (2) | | | 2016 2015 2014 | | $275,000 $211,538 - | | $206,250 $165,000 - | | $33,054 - - | | $ 1,716(5) $58,996(5) - | | $516,020 $437,434 - | | Thomas Sammons, Chief Financial Officer (3) | | | 2016 2015 2014 | | $195,865 - - | | $100,000 - - | | $27,684 - - | | $47,149(6) - - | | $370,698 - - | | Richard Fitzgerald, Former Chief Financial Officer (4) | | | 2016 2015 2014 | | $142,039 $259,700 $259,700 | | - - - | | $7,191 $81,933 $77,227 | | $2,600(7) $4,800(7) $4,800(7) | | $151,830 $346,433 $341,727 | |
| | | 2012
2011
| | 330,000
205,385
| | 82,500
123,750
| | 306,667
65,927
| | —
—
| | 719,167
395,062
| Richard Fitzgerald,
Chief Financial Officer
| | | 2012
2011
| | 245,000
225,000
| | 40,000
76,500
| | 103,197
32,702
| | 4,400 (5)
—
| | 392,597
334,202
| Robert Francis,
President and General Manager – Ranor (3) (6)
| | | 2012
2011
| | 33,542
—
| | —
—
| | —
—
| | $2,500
—
| | 33,542
—
| Stanley A. Youtt,
Former Chief Executive Officer – Ranor (4)
| | | 2012
2011
| | 220,000
220,000
| | —
74,800
| | —
—
| | —
—
| | 220,000
294,800
|
(1) | Bonus payments for each of Messrs. Molinaro, Fitzgerald and Youtt were determined by our board of directors in its discretion and paid in June, 2012. |
(2)(1) | These amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. Key assumptions in calculating these amounts are outlined in Note 1312 to our March 31, 2012 financial statements includedConsolidated Financial Statements in our previously filed Annual Report on Form 10-K for the fiscal year endended March 31, 2012.2016. |
(3)(2) | On June 23, 2014, Mr. Francis becameShen was appointed to the position of President and General Manager of the Company's subsidiary, Ranor, effective February 8, 2012. His employment agreement provides forInc., with an initialannual base salary of $230,000, which may be adjusted at$275,000. Effective November 17, 2014, Mr. Shen was appointed as the discretionCompany's Chief Executive Officer while also continuing to serve as President of Ranor. | (3) | On October 23, 2015, Mr. Sammons was appointed to the position of Chief Financial Officer of the Compensation Committee.Company with an annual base salary of $200,000. |
(4) | Mr. YouttFitzgerald served as chief executive officerChief Financial Officer of Ranorthe Company until February 8, 2012.October 23, 2015. Upon his resignation, he transitioned into a consulting role with the Company. |
(5) | Other compensation paid to Mr. Shen in fiscal 2016 includes reimbursement of temporary living expenses of $1,716. Other compensation paid to Mr. Shen in fiscal 2015 includes a primary residence relocation allowance of $35,000 plus reimbursement of temporary living expenses of $23,996. | (6) | Other compensation paid to Mr. Sammons in fiscal 2016 includes a primary residence relocation allowance of $35,000, plus reimbursement of temporary living expenses of $12,149. | (7) | Mr. Fitzgerald received an automobile allowance of $400 per month from May 1, 2011 through March 31, 2012.month. |
(6) | Mr. Francis received a relocation allowance of $1,250 per month from February 8, 2012 through March 31, 2012. |
Outstanding Equity Awards at Fiscal Year-End Table
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price | | Option Expiration Date | James Molinaro (1) | | | 333,333 | | | | 666,667 | | | $ | 0.70 | | Aug. 4, 2020 | | | | -- | | | | 250,000 | | | $ | 1.96 | | April 18, 2021 | | | | | | | | | | | | | | | Richard Fitzgerald(1)(2) | | | 150,000 | | | | -- | | | $ | 0.49 | | Mar. 22, 2019 | | | | 50,000 | | | | 100,000 | | | $ | 0.70 | | Aug. 4, 2020 | | | | -- | | | | 100,000 | | | $ | 1.96 | | April 18, 2021 | | | | | | | | | | | | | | | Robert Francis | | | -- | | | | -- | | | | -- | | | | | | | | | | | | | | | | | Stanley Youtt | | | -- | | | | -- | | | | -- | | |
| Option Awards | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price | | Option Expiration Date | | | | | | | | | | | | | | | Alexander Shen (1) | | | 333,333 | | | | 666,667 | | | $ | 0.08 | | August 11, 2025 | Thomas Sammons (2) | | | 166,667 | | | | 333,333 | | | $ | 0.17 | | January 20, 2026 |
(1) | Options granted to Mr. Molinaro and Mr. FitzgeraldShen on August 4, 2010 and April 19, 201112, 2015 vest in three equal annual installments beginning on the first anniversary date of the option grant.grant date. |
(2) | Options granted to Mr. FitzgeraldSammons on March 23, 2009,January 21, 2016 vest in three equal annual installments beginning on the first anniversary date of the option grant.grant date. |
In accordance with the 2006 Plan, all options previously granted to Mr. Fitzgerald expired in accordance with their terms on January 23, 2016.
Employment and Executive Consulting Agreements
At March 31, 2012,2016, we had employment and other compensation-related agreements with each of our Named Executive Officers.
James S. MolinaroAlexander Shen Employment Agreement
We executed an employment agreement with Mr. Molinaro’s serviceShen on November 17, 2014 (the "CEO Employment Agreement") to engage Mr. Shen for the position of Chief Executive Officer. The terms of the CEO Employment Agreement provide that Mr. Shen will report directly to our board of directors and others at the direction of the board at such time and in such detail as the board shall reasonably require and his duties and responsibilities shall consist of such powers, duties and responsibilities as are customary for the office of Chief Executive Officer of a company similar in size and stature to the Company. Pursuant to the CEO Employment Agreement, Mr. Shen receives an annual base salary of $275,000 and was awarded a one-time grant of options to purchase 1,000,000 shares of Common Stock, which vest in three equal amounts on the date of grant and each of the subsequent two anniversaries of the date of grant. The exercise price of the options is equal to the market price as of the grant date. Mr. Shen is also eligible for an annual cash performance bonus based upon our financial performance as determined by our board of directors and targeted at up to 60% of Mr. Shen's annual base salary. The CEO Employment Agreement provided that the Company was required to pay no less than one-half of the targeted bonus amount for fiscal 2015. Mr. Shen is entitled to participate fully in our employee benefit plans and programs. Mr. Shen will also be reimbursed for reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties and responsibilities as Chief Executive Officer. Under the terms of the CEO Employment Agreement, Mr. Shen is also entitled to temporary living expenses and a relocation allowance of $35,000 at the time of his relocation to the Westminster, Massachusetts area.
Pursuant to the terms of the CEO Employment Agreement and subject to Mr. Shen's execution of a release of claims in favor of the Company, in the event we terminate Mr. Shen's employment without "cause" (as defined in the CEO Employment Agreement) or Mr. Shen resigns his employment for "good reason" (as defined in the CEO Employment Agreement) at any time during the six month period following a change in control, we will be required to pay Mr. Shen an amount equal to one year of his base salary paid in equal installments in accordance with our payroll policies. We may terminate the CEO Employment Agreement for cause at any time upon seven days written notice, during which period Mr. Shen may contest his termination before our board of directors. Mr. Shen will have the obligation not to disclose our confidential information or trade secrets to anyone following termination of the CEO Employment Agreement. Mr. Shen is also subject to a covenant not to compete with us for a period of 12 months following termination of the CEO Employment Agreement.
Thomas Sammons Employment Agreement
On March 31, 2016, we entered into an Employment Agreement with Thomas Sammons (the "Sammons Employment Agreement"), which is effective as of January 20, 2016 and governs Mr. Sammons's employment as our Chief Executive Officer began on July 21, 2010 and is governed by the terms of an offer letter executed by Mr. Molinaro and us dated July 15, 2010 (the “Offer Letter”).Financial Officer. Pursuant to the Offer Letter,Sammons Employment Agreement, Mr. Molinaro willSammons will: (i) receive an annual base salary of $300,000 (subject$200,000; (ii) receive an award of stock options to adjustment by our boardpurchase 500,000 shares of directors from timeCommon Stock pursuant to time)2006 Plan with an exercise price equal to the fair market value of the Common Stock on the grant date and willwhich shall vest in substantially equal amounts on the date of initial grant and each of the subsequent two anniversaries of the date of grant; and (iii) be eligible to receivefor an annual cash performance bonus of up to 50% of his then-current base salary. In addition, on August 4, 2010, we grantedsalary, subject to goals and objectives set by the Chief Executive Officer and our board of directors. Under the Sammons Employment Agreement, Mr. Molinaro an optionSammons also will be eligible to purchase 1,000,000 shares of Common Stock underparticipate in Company benefits provided to other senior executives as well as benefits available to Company employees generally. Under the 2006 Plan (the “Option Grant”), with an exercise price of $0.70, the closing price per share of Common Stock on the date of grant. The Option Grant will vest in substantially equal annual installments on eachterms of the first three anniversariesSammons Employment Agreement, Mr. Sammons is also entitled to temporary living expenses and a relocation allowance of $35,000 at the datetime of grant, and will expire on August 4, 2020.his relocation to the Westminster, Massachusetts area.
The Offer LetterSammons Employment Agreement also provides for certain severance payments to Mr. MolinaroSammons in the event of his termination. IfSubject to Mr. MolinaroSammons execution of a release of claims in favor of the Company, if Mr. Sammons is terminated other thanwithout "cause" (as defined in the Sammons Employment Agreement) or Mr. Sammons terminates his employment for “cause”, or because of his death or disability (or if Mr. Molinaro resigns for “good reason”),"good reason" (as defined in the Sammons Employment Agreement) at any time during the six month period following a change in control, he will be entitled to receive 12 months of continued paymentcontinuation of his then-current annual base salary as well as reimbursement for payments for continued health benefits under our health plans for twelve months. If Mr. Molinaro’s employment is terminated under such circumstances, and such termination occurs between the date we enter into a letter of intent pursuant to which it would consummate a change of control and the date that is 31 days after the consummation of such change of control, Mr. Molinaro will be entitled to the same severance payments but for an 18 month periodmonths following termination and all unvested shares underlying the Option Grant at the time of termination will become immediately vested upon such termination. Under the Offer Letter, “cause” is defined to include, without limitation, (i) Mr. Molinaro’s insubordination or failure to apply best efforts to his employment duties; (ii) his conviction of, or plea of nolo contendere to, any felony or crime involving dishonesty, fraud or moral turpitude; (iii) neglect of his employment duties or failure to perform those duties to the satisfaction of our board of directors that is not cured within 30 days of notice thereof; and (iv) his negligent (or worse) misconduct in connection with his duties that violates our code of conduct, code of ethics or other policies. Mr. Molinaro’s resignation within 60 days of the occurrence of any of the following, without his consent, constitutes “good reason” under the Offer Letter: (i) a material reduction in Mr. Molinaro’s then-current base salary; (ii) a breach of the Offer Letter by us that is not cured within 30 days of notice thereof; or (iii) a material and adverse change in his duties, authority or responsibilities that is not cured within 30 days.
In addition to the compensation and severance arrangements described above, the Offer LetterSammons Employment Agreement contains customary provisions relating to confidentiality and non-competition, and provides for the execution of an At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement (the “Confidentiality Agreement”), which was executed by us and(i) prohibiting Mr. Molinaro on July 21, 2010. The Confidentiality Agreement (i) prohibits Mr. MolinaroSammons from divulging to third parties or using our confidential information whether developed by him or not, without our prior consent;trade secrets of the Company; (ii) confirmsconfirming that all intellectual work products generated by Mr. MolinaroSammons during the term of his employment with us, including, without limitation, writings, processes, drawings and diagrams,the Company are the sole property of us;the Company; and (iii) prohibitsprohibiting Mr. MolinaroSammons from competing against us,the Company, including by soliciting ourthe Company's employees or its current or prospective clients, until the one year anniversary of the later of the termination of his employment and the receipt of his last severance payment. On April 19, 2011, our board of directors approved an annual base salary of $330,000 for Mr. Molinaro, effective retroactively as of April 1, 2011. Additionally, we granted to Mr. Molinaro an option to purchase 250,000 shares of Common Stock under the 2006 Plan, with an exercise price of $1.96, the closing price per share of Common Stock on the date of grant. Mr. Molinaro’s April 19, 2011 option will vest in substantially equal annual installments on each of the first three anniversaries of the date of grant, and will expire on April 18, 2021.
Stanley A. Youtt Employment Agreement
In February 2006, contemporaneously with our acquisition of Ranor, Ranor entered into an employment agreement with Stanley A. Youtt pursuant to which he would serve as Ranor’s chief executive officer for a term of three years ending on February 28, 2009. In February 2009, we and Mr. Youtt renewed his agreement at the annual rate of $220,000 on terms comparable to the original agreement. In February 2012, Mr. Youtt’s employment agreement was amended (as amended, the “Letter Agreement”) to reflect his transition to Executive Vice President of Special Projects and CEO Emeritus of Ranor. Pursuant to the Letter Agreement, Mr. Youtt will serve as Ranor’s Executive Vice President of Special Projects effective February 8, 2012 for an initial term of three months; thereafter, the Letter Agreement and the terms of employment set forth therein, will renew automatically for one-month terms until either party notifies the other of its desire to terminate the employment relationship. We and Ranor, on the one hand, and Mr. Youtt, on the other hand, retain the right to terminate the Letter Agreement and the employment relationship at any time, including during the initial three-month term, by providing written notice of such termination to the non-terminating party 30 days in advance of the desired termination date. The Letter Agreement provides that Mr. Youtt will receive the same compensation and benefits as he received in his former capacity, including an annual base salary of $220,000, health insurance, and reimbursement of periodic travel-associated expenses pursuant to Ranor’s normal travel and expense policies.
The Letter Agreement confirms certain payments to Mr. Youtt upon termination, as contemplated by the original employment agreement. Upon termination of his employment for any reason and subject to Mr. Youtt signing a general release, Ranor will pay Mr. Youtt amounts consistent with his then-current annual base salary rate (less any applicable deductions) on a weekly basis commencing with the first payroll cycle following the termination of his employment, in accordance with Ranor’s customary payroll practices. Ranor will also provide for the continuation of Mr. Youtt’s then-current health and medical benefits for a period of one year after the termination of his employment.
On February 22, 2012, Mr. Youtt provided us with 30 days' advance notice terminating the Letter Agreement as of March 23, 2012.
Richard F. Fitzgerald Employment Agreementand Separation Agreements
We executed an employment agreement (the “CFO Employment Agreement”)with Mr. Fitzgerald on March 23, 2009 (the "Fitzgerald Employment Agreement") to engage Mr. Fitzgerald for the position of chief financial officer.Chief Financial Officer. The terms of the CFOFitzgerald Employment Agreement provideprovided that Mr. Fitzgerald shall report directly to our board of directors and our chief executive officerChief Executive Officer and his duties include, but are not limited to,included directing the preparation of budgets, financial forecasts and strategic planning, as well as establishing major economic objectives and policies for us and ensuring compliance with SEC reporting obligations.
Upon his execution of the CFOFitzgerald Employment Agreement, Mr. Fitzgerald received a signing bonus of $25,000. Pursuant to the CFOFitzgerald Employment Agreement, Mr. Fitzgerald receivesreceived an annual base salary of $195,000 and was awarded a one-time grant of options to purchase 150,000 shares of Common Stock, which vestvested in three equal parts over three years. The exercise price of the options was equal to the market price as of the grant date.date or $0.49 per share. Mr. Fitzgerald iswas also eligible for an annual cash performance bonus based upon our financial performance as determined by our board of directors. Mr. Fitzgerald iswas entitled to participate fully in our employee benefit plans and programs. Mr. Fitzgerald willwas also be reimbursed for reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties and responsibilities as chief financial officer.
We may terminate the CFO Employment Agreement at any time without “cause,” as defined therein. In the event of a termination without cause, we will be required to pay Mr. Fitzgerald an amount equal to one year of his base salary paid in equal installments in accordance with our payroll policies. We may terminate the CFO Employment Agreement for cause at any time upon seven days written notice, during which period Mr. Fitzgerald may contest his termination beforeChief Financial Officer. On June 4, 2012, our board of directors approved an annual base salary of $259,700 for Mr. Fitzgerald, effective as of July 1, 2012.
On March 19, 2014, our board of directors approved an award of 90,000 shares of restricted Common Stock to Mr. Fitzgerald under the 2006 Plan. On August 12, 2015, our board of directors approved the vesting of all 90,000 shares of restricted Common Stock. In connection with the vesting of the restricted common stock, Mr. Fitzgerald surrendered 22,500 shares of the vested Common Stock to the Company to satisfy tax withholding obligations in connection with the vesting.
Upon terminationOn October 23, 2015, Mr. Fitzgerald resigned as Chief Financial Officer of the CFO EmploymentCompany. On June 21, 2016, we entered into a Termination, Separation and Release Agreement (the "Separation Agreement") with Mr. Fitzgerald. The Separation Agreement is dated and effective as of June 14, 2016. The Separation Agreement concludes Mr. Fitzgerald's employment relationship with the Company. Pursuant to the Separation Agreement, Mr. Fitzgerald will haveprovide services as a consultant to the obligationCompany until October 23, 2016, as set forth in the Separation Agreement, and the Company will pay Mr. Fitzgerald, in scheduled installments through May 2017, an aggregate amount of $216,666.70. In addition, the Company will pay up to $7,953.65 for legal expenses incurred by Mr. Fitzgerald in connection with negotiating and entering into the Separation Agreement. Mr. Fitzgerald's covenants contained in the Fitzgerald Employment Agreement not to disclose our confidential information or trade secrets to anyone following termination of the CFO Employment Agreement. Mr. Fitzgerald is also subject to a covenantand not to compete with us for a period of 12 months following termination of the CFOFitzgerald Employment Agreement were reaffirmed in the Separation Agreement.
In addition to the compensation arrangements described above, the Separation Agreement contains customary provisions relating to non-disparagement and includes provisions for a general release of claims. On April 19, 2011, our board of directors approved an annual base salary of $245,000 for Mr. Fitzgerald, effective retroactively as of April 1, 2011. Additionally, we granted to Mr. Fitzgerald an option to purchase 100,000 shares of Common Stock under the 2006 Plan, with an exercise price of $1.96, the closing price per share of Common Stock on the date of grant. Mr. Fitzgerald’s April 19, 2011 option will vest in substantially equal annual installments on each of the first three anniversaries of the date of grant, and will expire on April 18, 2021.
On July 31, 2010, our board of directors approved an annual base salary of $225,000 for Mr. Fitzgerald, effective retroactively as of April 1, 2010. Additionally, we granted to Mr. Fitzgerald an option to purchase 150,000 shares of Common Stock under our 2006 Plan (the “CFO Option Grant”), with an exercise price of $0.70, the closing price per share of Common Stock on the date of grant. The CFO Option Grant will vest in substantially equal annual installments on each of the first three anniversaries of the date of grant, and will expire on August 4, 2020.
Robert Francis Employment Agreement
Ranor executed an employment agreement (the “Francis Employment Agreement”) on January 27, 2012, to engage Mr. Francis for the position of President and General Manager of Ranor. The terms of the Francis Employment Agreement provide that Mr. Francis shall report directly to our board of directors and our chief executive officer.
Pursuant to the Francis Employment Agreement, Mr. Francis receives an annual base salary of $230,000 and was awarded a one-time grant of options to purchase 50,000 shares of Common Stock, which vest in three equal parts over three years. The exercise price of the options was equal to the market price as of the grant date. Mr. Francis was also granted a relocation stipend of $1,250 per month beginning on February 8, 2012 and ending on August 7, 2013. Mr. Francis is also eligible for an annual cash performance bonus based upon our financial performance of as determined by our board of directors. Mr. Francis is entitled to participate fully in our employee benefit plans and programs. Mr. Francis will also be reimbursed for reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties and responsibilities.
We may terminate the Francis Employment Agreement at any time during the six months following a change in control without “cause,” as defined therein. In the event of a termination without cause upon a change in control, we will be required to pay Mr. Francis an amount equal to six months of his base salary paid in equal installments in accordance with our payroll policies. If the Francis Employment Agreement is terminated for any reason other than for “cause” or “good reason” following a change in control, Mr. Francis will only be entitled to payment of accrued and unpaid base salary through the date of the cessation of the employment.
Upon termination of the Francis Employment Agreement, Mr. Francis will have the obligation not to disclose our confidential information or trade secrets to anyone following such termination. Mr. Francis is also subject to a covenant not to compete with us for a period of one year following termination of the Francis Employment Agreement.
2006 Long-Term Incentive Plan
Under our 2006 Long-Term Incentive Plan, as amended (the “the 2006 Plan,”), each newly elected independent director receivesreceived at the time of his election, stock options with a five-year optionterm of five years to purchase 50,000 shares of Common Stock at an exercise price equal to the fair market value of the Common Stock on the date of his or her election. The option vestsThese options vested as to 30,000 shares of Common Stock on the date of grant and 10,000 shares of Common Stock on each of the first and second anniversaries of the grant date. The 2006 Plan also provideprovided for an annual option grant of 10,000 shares of Common Stock to directors beginning on July 1 after the third anniversary of a director’sdirector's election to our board of directors. OfAs of November 11, 2016, there were outstanding options that were issued under the 3,300,0002006 Plan to purchase 1,958,500 shares of Common Stock covered by the 2006 Plan, aswith a weighted-average exercise price of November 16, 2012, there were outstanding options to purchase 2,440,666 shares of Common Stock, which$0.587. This amount included options to purchase 342,500347,500 shares of Common Stock issued to our independent directors and options to purchase 1,655,0001,500,000 shares of Common Stock issued to our executive officers.
The following table summarizes the equity compensation plans under which our securities may be issued as of March 31, 2012.
Plan Category | Number of securities to be issued upon exercise of outstanding options and warrants | | Weighted-average exercise price of outstanding options and warrants | | Number of securities remaining available for future issuance under equity compensation plans | Equity compensation plans approved by security holders | 2,415,666 | | $ | 1.040 | | 403,840 | Equity compensation plan not approved by security holders | 100,000 | | $ | 1.65 | | N/A |
Pursuant to its terms, the 2006 Plan terminated on February 23, 2016, provided that any awards outstanding on such date will continue to be governed by the terms and conditions of the 2006 Plan and the applicable award agreement.
Compensation Policies and Practices and Risk Management One of the responsibilities of the Compensation Committee is to ensure that our compensation programs are structured so as to discourage inappropriate risk-taking. We believe that our existing compensation practices and policies for all employees, including executive officers, mitigate against this risk by, among other things, providing a meaningful portion of total compensation in the form of equity incentives. These equity incentives are awarded with either staggered or cliff vesting over several years, so as to promote long-term rather than short-term financial performance and to encourage employees to focus on sustained stock price appreciation. In addition, our existing compensation policies attempt to discourage employees from taking excessive risks to achieve individual performance objectives such as annual cash incentive compensation and long termlong-term incentive compensation which are based upon balanced company-wide, business unit and individual performance and base salaries structured so as to be consistent with an employee’semployee's responsibilities and general market practices. The Compensation Committee is responsible for monitoring our existing compensation practices and policies and investigating applicable enhancements to align our existing practices and policies with avoidance or elimination of risk and the enhancement of long-term stockholder value.
RELATED PARTY TRANSACTIONS
On December 20, 2010, the Company, through its wholly-owned subsidiary, Ranor, purchased the property located in Westminster, MA, pursuant to a Purchase and Sale Agreement, by and among the former owner of the property WM Realty (an entity controlled by one of the Company’s directors), and Ranor. This transaction terminated the relationship between the Company and WM Realty. As such, WM Realty was not included in the Company’s consolidated financial statements after March 31, 2011.
The property included a 125,000 sq. ft. manufacturing facility recently expanded to 145,000 sq. ft. that serves as Ranor’s primary operating location. Pursuant to the Purchase and Sale Agreement, Ranor paid WM Realty $4,275,000 for the property, which price was based on independent, third-party real estate appraisals obtained by the Company. Under the Purchase and Sale Agreement, the parties agreed to share equally in the $91,448 prepayment penalty associated with early termination of the mortgage that encumbered the property and which was paid off in full in connection with the closing under the Purchase and Sale Agreement. In addition, the Purchase and Sale Agreement provided for the early termination of Ranor’s lease of the property from WM Realty, pursuant to which Ranor had been paying annual rent of $450,000. For the year ended March 31, 2011, WM Realty had a net loss of $36,206 and made capital distributions of $1.3 million.
On November 15, 2010, WCMC leased approximately 1,000 sq. ft. of office space from an affiliate of Cleantech Solutions International (“CSI”) to serve as its primary corporate offices in Wuxi, China. The lease has an initial two-year term and rent under the lease with the CSI affiliate is approximately $17,000 on an annual basis. In addition to leasing property from an affiliate of CSI, the Company subcontracts fabrication and machining services from CSI through their manufacturing facility in Wuxi, China and such subcontracted services are overseen by the Company personnel co-located at CSI in Wuxi, China. We view CSI as a related party because a holder of approximately 18% of the fully diluted equity interest of CSI is also the holder of approximately 36% of the fully diluted equity interest of the Company. WCMC is also subcontracting manufacturing services from other Chinese manufacturing companies on comparable terms as those it has with CSI. The Company paid $1.7 million to CSI for materials and manufacturing services in fiscal 2012.
Related Party Transaction Policy
All transactions with related parties are subject to approval by the Audit Committee. As part of its review of related party transactions, the Audit Committee generally seeks to obtain evidence regarding whether the terms of the related party transaction are market-based. The Audit Committee relies on such information, in addition to other transaction-specific factors, in its review and approval of related party transactions. Related Party Transactions
We are not aware of any transactions, since the beginning of the last fiscal year, or any proposed transactions, in which the Company was a party, where the amount involved exceeded $120,000 and in which a 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. VIII. PROPOSAL TWO – RATIFICATION OF THE SELECTION OF KPMGMARCUM LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMFOR THE FISCAL YEAR ENDING MARCH 31, 20132017 The Audit Committee has selected KPMGMarcum LLP (“("KPMGMarcum”") as our independent registered public accounting firm for the fiscal year ending March 31, 2013.2017. The Audit Committee has recommended that the stockholders vote for ratification of the appointment of KPMGMarcum as our independent registered public accounting firm. A representative of KPMGMarcum is expected to attend the Annual Meeting and withwill have the opportunity to make a statement and/or respond to appropriate questions from shareholdersstockholders present at the Annual Meeting. Neither our bylawsby-laws nor other governing documents or laws require stockholder ratification of the appointment of KPMGMarcum as our independent registered public accounting firm. However, the Audit Committee is submitting the appointment of KPMGMarcum to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain that firm.Marcum. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of our stockholders. The affirmative vote of the majority of the votes represented by the holders of shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the appointment of KPMG.Marcum.
Our board of directors recommends a vote “FOR” the ratification of the selection of KPMGOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE SELECTION OF MARCUM LLP as our independent registered public accounting firm for the fiscal year ending MarchAS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 2013.2017. |
IX. AUDIT COMMITTEE REPORT The Audit Committee Report that follows shall not be deemed to "soliciting material" or "filed" with the SEC and shall not be deemed to be incorporated by reference into any filing made by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general statement contained in any such filing incorporating this proxy statementProxy Statement by reference, except to the extent we incorporate such Report by specific reference. The In fulfilling its responsibilities with respect to the Company's audited financial statements for the year ended March 31, 2016, the Audit Committee of our board of directors has:took the following actions:
Reviewed and discussed the audited financial statements with management; management and Marcum; | • | Discussed with Marcum the matters required by the applicable requirements of the Public Company Accounting Oversight Board concerning the conduct of the audit; and | | • | Received the written disclosures and the letter from Marcum regarding its communications with the Audit Committee concerning independence, as required by the Public Company Accounting Oversight Board, and has discussed with Marcum the firm's independence. |
Discussed with KPMG LLP and Tabriztchi & Co., CPA, P.C., our independent registered public accounting firms,Management is responsible for the fiscal year ended March 31, 2012preparation, presentation and March 31, 2011, respectively,integrity of our financial statements, accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations, including the effectiveness of internal control over financial reporting. Marcum was responsible for performing an independent audit of our financial statements and expressing an opinion as to their conformity with generally accepted accounting principles. Marcum had full access to the Audit Committee to discuss any matters required to be discussed by auditing standards that govern communications with audit committees; and they deem appropriate.Received the written disclosures and the letter from KPMG LLP and Tabriztchi & Co., CPA, P.C. as required by the Public Company Accounting Oversight Board, and has discussed its independence with KPMG LLP and Tabriztchi & Co., CPA, P.C.
In reliance upon the review and discussions referred to above, the Audit Committee recommended to our board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended March 31, 2012.2016.
The Audit Committee Michael R. Holly, Chairman Leonard M. Anthony Philip A. DurRobert G. Isaman
Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act or the Exchange Act that might incorporate this proxy statement or future filings with the SEC, in whole or in part, the above report shall not be deemed to be “soliciting material” or “filed” with the SEC and shall not be deemed to be incorporated by reference into any such filing.
AUDITPRINCIPAL ACCOUNTANT FEES
The following is a summary of fees for professional services rendered by KPMG and our former independent registered public accounting firm, Tabriztchi & Co., CPA, P.C. (“Tabriztchi”),Marcum for the years ended March 31, 20122016 and 2011:2015:
| | Year ended March 31, | | | | 2016 | | | 2015 | | Audit fees | | $ | 219,426 | | | $ | 201,135 | | Audit related fees | | | 15,000 | | | | 67,549 | | Tax fees | | | - | | | | - | | Total | | $ | 234,426 | | | $ | 268,684 | |
| | Year ended March 31, | | | | 2012 | | | 2011 | | Audit fees | | $ | 264,000 | | | $ | 91,555 | | Audit related fees | | | 16,500 | | | | 7,000 | | Tax fees | | | 94,000 | | | | 9,287 | | All other fees | | | -- | | | | -- | | Total | | $ | 374,500 | | | $ | 107,842 | |
Audit fees. Audit fees represent fees for professional services performed by KPMG and TabriztchiMarcum for the audit of our annual financial statements and the review of our quarterly financial statements, as well as services that are normally provided in connection with statutory and regulatory filings or engagements.
Audit-related fees. Audit-related fees represent fees for assurance and related services performed by KPMG and TabriztchiMarcum that are reasonably related to the performance of the audit or review of our financial statements and not reported under "Audit Fees."are traditionally performed by the independent registered public accounting firm. These services include services related to the annual audit of our 401(k) savings plan and consultation with respect to financial reporting and accounting standards.special procedures required to meet certain regulatory requirements.
Tax fees. TaxThere were no fees represent feespaid to Marcum for tax compliance services performed by KPMG and Tabriztchi. Duringfor the yearfiscal years ended March 31, 2012, KPMG2016 and Tabriztchi provided support services related to an IRS audit.2015.
All other fees. There were no other fees paid to KPMG and TabriztchiMarcum for the yearfiscal years ended March 31, 20122016 and March 31, 2011.2015.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee’sCommittee's policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The independent registered public accounting firm and our management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. All services provided by the independent registered public accounting firm in fiscal 2016 and fiscal 2015 were pre-approved by the Audit Committee.
X. PROPOSAL THREE - REVERSE STOCK SPLITIn connection with the meeting of the Company’s stockholders held in 2011 (the “2011 Annual Meeting”), our board of directors recommended, and the stockholders approved, an amendment to our Certificate of Incorporation to effect a reverse stock split of our Common Stock at an exchange ratio of no greater than 1-for-2, at any time prior to the one year anniversary of such meeting, the implementation and timing of which was subject to the discretion of our board of directors. According to the terms of the proposal approved at the 2011 Annual Meeting, our board of directors’ authority to implement the amendment to our Certificate of Incorporation and to effectuate the reverse stock split expired on September 15, 2012.
APPROVAL OF THE TECHPRECISION 2016 EQUITY INCENTIVE PLAN Our board of directors, did not implementupon the amendmentrecommendation of the Compensation Committee, approved the 2016 Plan on November 10, 2016, subject to approval by our Certificatestockholders at the Annual Meeting. The 2016 Plan will succeed the 2006 Plan and will apply to awards granted after the Annual Meeting. We have designed the 2016 Plan to reflect our commitment to having best practices in both compensation and corporate governance. The 2016 Plan provides for a share reserve of Incorporation5,000,000 shares of Common Stock, or approximately 17.3% of the shares of Common Stock outstanding as approved byof November 11, 2016. Approval of the stockholders prior2016 Plan is desired to the expiration of its authority to do so. Our board of directorscontinue our company-wide equity compensation program. The defense and aerospace contract manufacturing business is again seeking the authority to implement such an amendment. As such, our board of directors has adopted, declared advisable and is submittinghighly competitive for stockholder approval a similar amendment to our Certificate of Incorporation to effect a reverse stock splittalent at all levels of our Common Stock at an exchange ratio no greater than 1-for-2, such ratio to be determined by our board of directors, at any time prior to the one year anniversary of this Annual Meeting, the implementation and timing of whichorganization. Equity compensation is subject to the discretiona critical component of our board of directors. By voting in favor of Proposal Three,compensation program. If stockholders do not approve the 2016 Plan, then we believe the Company will be approving an amendment toat a competitive disadvantage within our Certificate of Incorporation in order to effect a reverse stock split of our outstanding Common Stock at an exchange ratio no greater than 1-for-2, such ratio to be determined by our board of directors (the “Reverse Stock Split”). Our board of directors believes that stockholder approval of a range of ratios (as opposed to approval of a specified ratio) provides our board of directors with maximum flexibility to achieve the purposes of the Reverse Stock Split and, therefore, is in the best interests of the Company and its stockholders. After the receipt of stockholder approval of this amendment, our board of directors will thereafter have the ability at any time prior to the one year anniversary of the Annual Meeting to unilaterally give effect to this amendment, and thereafter, the amendment will be filed with the Secretary of State of the State of Delaware. Pursuant to the law of our state of incorporation, Delaware, our board of directors must adopt any amendment to our Certificate of Incorporation and submit the amendment to our stockholders for their approval. The affirmative vote of a majority of the outstanding shares of common stock is required to approve Proposal Three. Upon implementation of the reverse stock split, up to two shares of outstanding Common Stock will be automatically converted into one share of Common Stock.
industry. Our board of directors believes that the Reverse2016 Plan is essential to our success and in motivating executives and other employees to strive to enhance our growth and profitability. OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE TECHPRECISION CORPORATION 2016 EQUITY INCENTIVE PLAN. |
Equity compensation is fundamental to our compensation philosophy and core objectives of pay for performance, sustaining and strengthening the business, and aligning employees with stockholders. The purposes of the 2016 Plan are to: (a) enable the Company and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. Shares Available under the 2016 Plan In the event that this Proposal No. 3 is not approved, we do not anticipate that we can grant options to any potential new employees. Without a stockholder-approved equity plan, we would rely on cash-settled awards as our sole method of incentive-based compensation. We believe this would not be in our stockholders' best interests as it would remove incentives aligning our employees and our senior leaders with stockholders to drive firm-wide performance and create long-term stockholder value. At the time of its expiration on February 23, 2016, there were 764,006 shares available for grant under the 2006 Plan. During the year ended March 31, 2016, we granted approximately 1,530,000 shares from the 2006 Plan as part of our regular grant program to our senior executives and non-employee directors, and we believe the shares proposed to be reserved under the 2016 Plan will be sufficient for the next five years. The 5,000,000 shares for which we are seeking approval are necessary in order to allow us to continue our equity compensation program as we have with recent annual grants. We recognize that some stockholders focus on the potential dilutive effect of a company's equity plan. Aggregate potential dilution is intended to be a measure of the total potential stockholder dilution posed by an equity plan, which we calculate on a "fully-diluted" basis by dividing (a) outstanding equity grants plus shares available for future grant, by (b) the total common shares outstanding plus outstanding equity grants plus shares available for future equity grants. Based on the total number of outstanding equity awards and the number of shares of Common Stock Splitthat are issued and outstanding as of November 11, 2016, the total potential stockholder dilution resulting from issuing all shares authorized under the 2016 Plan, if approved, plus the Company's outstanding equity grants would be approximately 14.8%. Below is an effective meansa summary of increasing the per share marketpotential dilution associated with the proposed 2016 Plan. The shares listed in the table are as of November 11, 2016. | | Share Allocation & Potential Dilution from Incentive Plan | | Requested Shares under 2016 Plan (including outstanding and unexercised options issued under the 2006 Plan) | | | 5,000,000 | | Shares of Common Stock Issued and Outstanding | | | 28,824,593 | | Total Shares | | | 33,824,593 | | Potential Dilution including 2016 Plan | | | 14.8 | % |
Upon the approval of the 2016 Plan by the stockholders of the Company and the filing of a registration statement with the SEC covering the offering of securities under the 2016 Plan, the Company intends to grant to Alexander Shen, the Company's Chief Executive Officer, a combination of shares of Common Stock and options such that, assuming the exercise of all options, Mr. Shen's grant will represent 1,000,000 shares of Common Stock. These shares of Common Stock and options are being granted to Mr. Shen in satisfaction of a grant of 1,000,000 stock options that our board of directors authorized to be made to Mr. Shen in January 2016. Since the time that our board of directors authorized this grant, the Company has not had sufficient shares available under the 2006 Plan to effectuate the grant and therefore deferred the making of such grant. To account for the appreciation in the value of the Common Stock underlying this grant in the time since the authorization of the grant, our board of directors determined that Mr. Shen would be granted a combination of shares of Common Stock and options, rather than only options. The specific mix of shares of Common Stock and options to be granted to Mr. Shen will be determined based on the closing price of our Common Stock in orderas reported by the OTC Bulletin Board on the date of grant. The exercise price of the options to achievebe granted to Mr. Shen will be the minimum per share stockclosing price necessary to qualify for listingof our Common Stock as reported by the OTC Bulletin Board on well-recognized stock exchanges, suchthe date of grant. Based on the closing price of our Common Stock as Nasdaq. Our boardreported by the OTC Bulletin Board of directors will only effect the Reverse$0.52 on November 10, 2016, Mr. Shen's grant would be composed of 634,615 shares of Common Stock Split in connectionand 365,385 options with an applicationexercise price of $0.52, though the actual number of shares of Common Stock and options to listbe granted to Mr. Shen and their aggregate value are subject to changed based on the closing price of our Common Stock on a stock exchange. It will not effect the Reverse Stock Split for any other purpose. The formdate of grant. Assuming the stockholders of the proposed amendmentCompany approve the 2016 Plan, the Company expects the conditions to our Certificate of Incorporation to effect the Reverse Stock Split is attached to this Proxy Statement as Appendix A (the “Certificate of Amendment”)be satisfied and the following discussiongrant to occur on the date of the Annual Meeting.
Other than with respect to the grant to Mr. Shen described above, because our Compensation Committee has discretion to grant future awards of a design and amount determined in its discretion, (i) it is not possible at present to specify the persons to whom awards will be granted under the 2016 Plan in the future or the amounts and types of individual grants and (ii) data regarding awards to be granted under the 2016 Plan may be of limited relevance to stockholders' consideration and voting on this proposal. However, it is anticipated that, among others, all of our current executive officers and non-employee directors, including our Named Executive Officers, will receive awards under the 2016 Plan. Accordingly, a new plan benefits table is not required or provided as part of this proposal. Interest of Certain Persons in the 2016 Plan Stockholders should understand that our executive officers and non-employee directors may be considered to have an interest in the approval of the 2016 Plan because they may in the future receive awards under it. Nevertheless, our board of directors believes that it is important to provide incentives and rewards for superior performance and the retention of experienced executive officers and directors by implementing the 2016 Plan. A summary of the principal provisions of the 2016 Plan is set forth below. The summary is qualified in its entirety by reference to the full text of the Certificate2016 Plan, a copy of Amendment.which is attached as Appendix A to this Proxy Statement. All capitalized terms used in this "2016 Plan Summary" section but not otherwise defined in this Proxy Statement shall have the meanings ascribed to them in the 2016 Plan. Purpose. The purposes of the 2016 Plan are to: (a) enable the Company and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. Shares Subject to the Plan. Subject to adjustment as provided in the 2016 Plan, the maximum number of shares of Common Stock that may be issued in respect of Awards under the 2016 Plan is 5,000,000 shares (inclusive of Awards issued under the 2006 Plan that remain outstanding as of the effective date of the 2016 Plan), all of which shares may be issued in respect of Incentive Stock Options. Any shares of Common Stock issued under the 2016 Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares. Any shares of Common Stock issued by the Company through the assumption or substitution of outstanding grants in connection with the acquisition of another entity shall not reduce the maximum number of shares available for delivery under the 2016 Plan. In the event of any stock dividend, recapitalization, forward stock split or reverse stock split, reorganization, division, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other similar corporate transaction or event that affects our Common Stock, the Compensation Committee shall make appropriate adjustment in the number and kind of shares authorized by the 2016 Plan and covered under outstanding awards as it determines appropriate and equitable. Shares of our Common Stock subject to awards that expire unexercised or are otherwise forfeited shall again be available for awards under the 2016 Plan. Annual Limits. In accordance with the requirements under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), the maximum number of shares of Common Stock underlying awards (including options, restricted stock, restricted stock units and performance awards) that may be granted during a calendar year to any individual participant shall be 20% of the Plan Limit. Eligibility. Employees, directors, consultants, and other individuals who provide services to the Company or its affiliates are eligible to be granted awards under the 2016 Plan (any such person who is granted an award under the 2016 Plan, a "Participant"); provided, however, that only employees of the Company or any parent company or subsidiary of the Company are eligible to be granted Incentive Stock Options. As of November 10, 2016, approximately 100 employees and five non-employee directors will be eligible to participate in the 2016 Plan. As of November 10, 2016, the closing price of our Common Stock was $0.52 per share. Plan Administration. The 2016 Plan shall be administered by the Compensation Committee. Any action of the Compensation Committee in administering the 2016 Plan shall be final, conclusive and binding on all persons, including the Company, its subsidiaries, affiliates, their respective employees, directors, consultants, and other individuals who provide services to the Company or its affiliates, persons claiming rights from or through Participants, and stockholders of the Company. The Compensation Committee will have full authority to grant awards under the 2016 Plan and determine the terms of such awards. Awards. The 2016 Plan authorizes the award of stock options, restricted stock awards, restricted stock units, and performance awards. The terms of an award will be set forth by the Compensation Committee in an individual award agreement. Options. An option entitles the holder to purchase from us a stated number of shares of Common Stock. The award agreement shall state whether such grant is an Incentive Stock Option ("ISO") or a Non-Qualified Stock Option ("NQO"). An ISO may only be granted to an employee of ours or our affiliates (provided applicable law so permits). The Compensation Committee will specify the number of shares of Common Stock subject to each option and the exercise price for such option, provided that the exercise price may not be less than the fair market value (as such term is defined in the 2016 Plan) of a share of Common Stock on the date the option is granted. Notwithstanding the foregoing, if ISOs are granted to any 10% stockholder, the exercise price shall not be less than 110% of the fair market value of a share of Common Stock on the date the ISO is granted. All options shall be exercisable in accordance with the terms of the applicable award agreement. The maximum term of an option shall be determined by the Compensation Committee on the date of grant but shall not exceed 10 years (or 5 years in the case of ISOs granted to any 10% stockholder). In the case of ISOs, the aggregate fair market value (determined as of the date of grant) of the Common Stock with respect to which such ISOs become exercisable for the first time during any calendar year cannot exceed $100,000. ISOs granted in excess of this limitation will be treated as NQOs. If a Participant terminates employment with us (or our affiliates) due to death or disability, the Participant's unexercised options may be exercised, to the extent they were exercisable on the termination date, for a period of twelve (12) months from the termination date or until the expiration of the original term of the option, if shorter. If the Participant terminates employment with us (or our affiliates) for cause (as such term is defined in the 2016 Plan), all unexercised options (whether vested or unvested) shall terminate and be forfeited on the termination date. If the Participant's employment terminates for any other reason, any vested but unexercised options may be exercised by the Participant, to the extent exercisable at the time of termination, for a period of three months from the termination date (or such time as specified by the Compensation Committee at the time of grant) or until the expiration of the original term of the option, whichever period is shorter. Unless otherwise provided by the Compensation Committee, any options that are not exercisable at the time of termination of employment shall terminate and be forfeited on the termination date. Restricted Stock. A restricted stock award is a grant of shares of Common Stock, which may or may not be subject to forfeiture restrictions during a restriction period. The Compensation Committee will determine the price, if any, to be paid by the Participant for each share subject to a restricted stock award. The Compensation Committee may condition the expiration of the restriction period, if any, upon: (i) the Participant's continued service over a period of time with us or our affiliates; (ii) the achievement by the Participant, us or our affiliates of any other performance goals set by the Compensation Committee; or (iii) any combination of the above conditions as specified in the award agreement. If the specified conditions are not attained, the Participant will forfeit the portion of the restricted stock award with respect to which those conditions are not attained, and the underlying Common Stock will be forfeited to us. At the end of the restriction period, if the conditions, if any, have been satisfied, the restrictions imposed will lapse with respect to the applicable number of shares of Common Stock. During the restriction period, a Participant will have the right to vote the shares of Common Stock underlying the restricted stock, however, unless otherwise provided by the Compensation Committee, all dividends will remain subject to restriction until the shares of Common Stock with respect to which the dividend was issued lapses. Our board of directors may, in its discretion, may electaccelerate the vesting and delivery of shares of restricted stock. Restricted Stock Units ("RSUs"). RSUs are granted in reference to filea specified number of shares of Common Stock and entitle the Certificate of Amendment upon receipt of stockholder approval if it determines, in its discretion,holder to proceed with the Reverse Stock Split. In determining whether to effect the Reverse Stock Splitreceive, following the receiptholder's continued service over a specified period of stockholder approval, our boardtime or upon achievement of directors may consider, among other things, factorsspecific performance goals established by the Compensation Committee or any combination of the above as set forth in the applicable award agreement, one share of Common Stock for each such as:
| · | the historical trading price and trading volume of our Common Stock; |
| · | the aggregate market value of our Common Stock then held by non-affiliates; |
| · | the then prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for our Common Stock; |
| · | our ability to satisfy the initial listing requirements of well recognized stock exchanges; | share covered by the RSU. Performance Awards. The Company may grant options, restricted stock or RSUs with vesting conditioned based upon the achievement of specified performance goals. Performance goals may be linked to a variety of factors including the Participant's completion of a specified period of employment or service with us or an affiliated company. Additionally, performance goals can include objectives stated with respect to us, an affiliated company or a business unit and are limited to one or more of the following: | · | specified levels of or increases in revenue, operating income, pre-tax earnings or income, return on capital, equity measures/ratios (on a gross, net, pre-tax or post-tax basis), including basic earnings per share, diluted earnings per share, total earnings, operating earnings, earnings growth, EBIT, EBITDA, or operational cash flow; |
| · | completion of acquisitions or business expansion; |
| · | our stockholders’ equity at such time;operating efficiency; |
| · | implementation or completion of critical projects or related milestones; |
| · | distribution center productivity levels; |
| · | customer service levels; |
| · | customer or employee satisfaction; |
| · | development of new markets; |
| · | improvement in or attainment of operating expense levels; |
| · | improvement in or attainment of capital expense levels; |
| · | the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, the Company's bank debt or other public or private debt or financial obligations; |
| · | the attainment of a certain level of, reduction of, or other specified objectives with regard to limiting the level in or increase in all or a portion of controllable expenses or costs or other expenses or costs; |
| · | individual objectives; and |
| · | budget and expense management. |
| · | the shares of our Common Stock available for issuance in the future; |
| · | the nature of our operations; and |
| · | prevailing general market and economic conditions. |
Reverse stock splits generally cause2016 Plan), the stock price per share to rise because there are lessCompensation Committee may, on a Participant-by-Participant basis (i) accelerate the vesting of some or all outstanding common shares that represent the entire equity of the Company. An increased stock price may encourage investor interestoptions and improve the marketability and liquidity of our Common Stock. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Our board of directors believes that the anticipated higher market price resulting from the Reverse Stock Split may reduce, to some extent, the negative effects on the liquidity and marketability of our Common Stock inherent in some of the policies and practices of these institutional investors and brokerage firms described above. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. Our board of directors also believes that the Reverse Stock Split is an effective means of increasing the per share market price of our common stock in order to achieve the minimum per share stock price necessary to qualify for listing on well recognized stock exchanges.
Our board of directors would effect the Reverse Stock Split only upon our board of directors’ determination that the Reverse Stock Split would be in our and our stockholders’ best interests following stockholder approval. If our board of directors were to effect the Reverse Stock Split, our board of directors would determine the exact exchange ratio for the Reverse Stock Split (which will be with an exchange ratio no greater than 1-for-2), set the timing for the Reverse Stock Split and file the Certificate of Amendment. No further action on the part of stockholders is required to either implement or abandon the Reverse Stock Split. If our board of directors determines to implement the Reverse Stock Split, we will publicly announce,terminate such options immediately prior to the effective datechange in control, provided the Participant has been given prior written notice of the Reverse Stock Split, additional details regardingchange in control and of the Reverse Stock Split. If our boardCompensation Committee's intention to cancel the options, (ii) fully vest and/or accelerate some or all of directors does not implement the Reverse Stock Splitrestriction period for any awards, (iii) terminate the award immediately prior to the one year anniversarychange in control, provided the Participant has been given prior written notice of the Annual Meeting,change in control and the authority granted in this proposalCompensation Committee's intention to implementcancel the Reverse Stock Splitaward, further provided, however, that during such notice period, the Participant will terminate. The boardbe able to give notice of directors reserves its right to elect not to proceed, and to abandon, the Reverse Stock Split if it determines, in its sole discretion, that this proposal is no longer in our best interests.
If our boardaward that will become vested upon the change in control (with the actual exercise being contingent on the occurrence of directors werethe change in control), (iv) after giving the Participant a chance to effect the Reverse Stock Split, there can be no assurance that ourexercise any outstanding options, terminate any or all of such unexercised options, (v) cancel any outstanding awards with respect to all shares of Common Stock will be listed on anyfor which the award remains unexercised or for which the award is subject to forfeiture in exchange for a cash payment equal to the excess (if any) of the fair market value of the award over the exercise price of an option, or the unpaid purchase price (if any) of restricted stock, exchange. Further, regardless of where our Common Stock is traded, there is no assurance(vi) require that the trading price of our Common Stock will continue at a level in proportion toaward be assumed by the reductionsuccessor corporation or that awards for shares or other interest in the numbersuccessor corporation with equivalent value be substituted for such award, or (vii) take such other action as the Compensation Committee deems reasonable under the circumstances to permit the participant to realize the value of outstanding shares resulting from the Reverse Stock Split. Accordingly, the total market capitalization of our Common Stock after the proposed Reverse Stock Split may be lower than the total market capitalization before the proposed Reverse Stock Split.award.
Additionally, the liquidity of our Common Stock could be affected adversely by the reduced number of shares outstanding after the Reverse Stock Split. Although our board of directors believes that a higher stock price may help generate investor interest, there can be no assurance that the Reverse Stock Split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the decreased liquidity that may result from having fewer shares outstanding may not be offset by increased investor interest in our Common Stock. The market price of our Common Stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding.
PROPOSAL FOUR – ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS The Reverse Stock Split will not be effective until such time thatWe are asking our board of directors electsstockholders to implement it. The Reverse Stock Split would become effective atvote to approve, on an advisory basis, the time specified in the Certificate of Amendment, which we expect to be the date of filing of the Certificate of Amendment with the Secretary of State of the State of Delaware. On the effective date, shares of Common Stock issued and outstanding immediately prior thereto will be combined and converted, automatically and without any action on the part of the stockholders, into new shares of Common Stock in accordance with an exchange ratio no greater than 1-for-2, such ratio to be determined by our board of directors. If our board of directors does not implement the Reverse Stock Split prior to the one year anniversary of the Annual Meeting, stockholder approval would be required again prior to the implementation of any reverse stock split.
After the effective date of any Reverse Stock Split, each stockholder will own fewer sharescompensation of our Common Stock. However,Named Executive Officers as disclosed in this Proxy Statement, including the Reverse Stock Split will affect all of our stockholders uniformlysection titled "Executive Compensation," and will not affect any stockholder’s percentage ownership interests in us, exceptrelated material as required pursuant to the extent that the Reverse Stock Split results in any of our stockholders owning a fractional share as described below. Proportionate voting rights and other rights and preferences of the holders of our Common Stock will not be affected by the Reverse Stock Split other than as a result of the payment of cash in lieu of fractional shares. Further, the number of stockholders of record will not be affected by the Reverse Stock Split, except to the extent that any stockholder holds only a fractional share interest and receives cash for such interest after the Reverse Stock Split, as discussed below.
The Reverse Stock Split is likely to result in some stockholders owning “odd−lots” of fewer than 100 shares of Common Stock. Brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions on “round−lots” of even multiples of 100 shares.
The Reverse Stock Split would not change the number of authorized shares of the Common Stock as designated by our Certificate of Incorporation. Therefore, because the number of issued and outstanding shares of Common Stock would decrease, the number of shares remaining available for issuance under our authorized pool of Common Stock would increase. These additional shares of our Common Stock would be available for issuance from time to time for corporate purposes such as raising additional capital, acquisitions of companies or assets and sales of stock or securities convertible into or exercisable for our Common Stock. We believe that the availability of the additional shares will provide us with the flexibility to meet business needs as they arise and to take advantage of favorable opportunities. If we issue additional shares for any of these purposes, the ownership interest of our current stockholders would be diluted. Although we continually examine potential acquisitions of companies or assets or other favorable opportunities, there are no current arrangements to issue any additional shares of our Common Stock for such purposes.
This proposal has been prompted solely by the business considerations discussed in the preceding paragraphs. Our board of directors will only effect the Reverse Stock Split in connection with an application to list our Common Stock on a stock exchange. Nevertheless, the additional shares of our Common Stock that would become available for issuance if the Reverse Stock Split is effected could also be used by our management to oppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management, including transactions that are favored by a majority of the stockholders or in which the stockholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner. For example, without further stockholder approval, our board of directors could sell shares of our Common Stock in a private transaction to purchasers who would oppose a takeover or favor our current board of directors. Our board of directors is not aware of any pending takeover or other transactions that would result in a change in control of the Company, and the proposal was not adopted to thwart any such efforts.
Our Common Stock is currently registered under Section 1214A of the Securities Exchange Act of 1934, as amended (the “"Exchange Act”"), . This proposal, commonly known as a "Say-On-Pay" proposal, gives our stockholders the opportunity to express their views on our Named Executive Officer compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and we are subjectthe philosophy, policies and practices described in this Proxy Statement.
This vote is advisory, and therefore not binding on the Company, the Compensation Committee or our board of directors. Our board of directors and the Compensation Committee value the opinions of the stockholders and to the periodic reporting requirementsextent there is any significant vote against the Named Executive Officer compensation as disclosed in this Proxy Statement, we will consider our stockholders' concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. We believe that the policies and procedures articulated in the "Executive Compensation" section of this Proxy Statement are effective in achieving the Exchange Act. The Reverse Stock Split would not affectCompany's goals and that the registrationexecutive compensation reported in this Proxy Statement was appropriate and aligned with fiscal 2016 results. Before voting, we encourage our stockholders to read the "Executive Compensation" section of this Proxy Statement for additional details about our Common Stock under the Exchange Actexecutive compensation programs and Named Executive Officer compensation in any material way.fiscal 2016. We are asking stockholders to indicate their support for our Named Executive Officer compensation as described in this Proxy Statement.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. |
PROPOSAL FIVE – ADVISORY VOTE ON WHETHER THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS SHOULD OCCUR EVERY ONE, TWO OR THREE YEARS In addition, all outstanding options and warrants to purchase shares of our Common Stock would be adjusted as a result of the Reverse Stock Split, as required by the terms of those securities. In particular, the number of shares issuable upon the exercise of each instrument would be reduced, and the exercise price per share, if applicable, would be increased,As discussed in accordance with the terms of each instrument and based on the exchange ratio of the Reverse Stock Split. The number of shares reserved for issuance under our existing stock option and equity incentive plans would be reduced proportionally based on the exchange ratio of the Reverse Stock Split.
Treatment of Fractional Shares
No fractional shares would be issued if, as a result of the Reverse Stock Split, a stockholder would otherwise become entitled to a fractional share. Instead, we would pay to the stockholder, in cash, the value of any fractional share arising from the Reverse Stock Split. The cash payment would equal the closing sale price per share of our Common Stock as reported on the OTC Bulletin Board on the last trading day preceding the effective date of the Reverse Stock Split multiplied by the number of pre-split shares of our Common Stock held by the stockholder that would otherwise have been exchanged for such fractional share. No transaction costs would be assessed to stockholders for the cash payment. Stockholders would not be entitled to receive interest for their fractional shares.
If you do not hold sufficient shares of our Common Stock to receive at least one share of Common Stock following the Reverse Stock Split and you want to hold our Common Stock after the Reverse Stock Split, you may do so by taking either of the following actions far enough in advance so that it is completed before the Reverse Stock Split is effected:
| · | purchase a sufficient number of shares of our Common Stock so that you would hold at least that number of shares of our Common Stock in your account prior to the implementation of the Reverse Stock Split that would entitle you to receive at least one share of our Common Stock on a post-split basis; or |
| · | if applicable, consolidate your accounts so that you hold at least that number of shares of our Common Stock in one account prior to the Reverse Stock Split that would entitle you to at least one share of our Common Stock on a post-split basis. Shares held in registered form (that is, shares held by you in your own name on our share register maintained by our transfer agent) and our Common Stock held in “street name” (that is, shares held by you through a bank, broker or other nominee) for the same investor would be considered held in separate accounts and would not be aggregated when implementing the Reverse Stock Split. Also, shares held in registered form, but in separate accounts by the same investor, would not be aggregated when implementing the Reverse Stock Split. |
After the Reverse Stock Split, our then-current stockholders would have no further ownership interest in us with respect to their fractional shares. A person otherwise entitled to a fractional share would not have any voting, dividend or other rights in respect of their fractional share except to receive the cash payment as described above. Such cash payments would reduce the number of post-split stockholders to the extent that there are stockholders holding one pre-split share. Reducing the number of post-split stockholders, is not the purpose of this proposal.
Stockholders should be aware that, under the escheat laws of the various jurisdictions where stockholders reside, where we are domiciled and where the funds for fractional shares would be deposited, sums due to stockholders in payment for fractional shares that are not timely claimed after the effective date may be required to be paid to the designated agent for each such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds have to seek to obtain them directly from the state to which they were paid.
Effect on Non-Registered Stockholders
Non-registered stockholders holding our Common Stock through a bank, broker or other nominee should note that such banks, brokers or other nominees may have different procedures for processing the consolidation than those that would be put in place by us for registered stockholders, and their procedures may result, for example, in differences in the precise cash amount being paid by such nominees in lieu of a fractional share. If you hold your shares with such a bank, broker or other nominee and if you have questions in this regard, you are encouraged to contact your nominee.
Book-Entry Shares and Payment for Fractional Shares
The combination of and reduction in the number of our outstanding shares of Common Stock as a result of the Reverse Stock Split would occur automatically on the effective date without any action on the part of our stockholders. Our registered stockholders may hold some or all of their shares electronically in book-entry form. These stockholders will not have stock certificates evidencing their ownership of common stock. They are, however, provided with a statement reflecting the number of shares of our Common Stock registered in their accounts.
Stockholders who hold registered shares of our Common Stock in book-entry form do not need to take any action to receive post-Reverse Stock Split shares of our Common Stock in registered book-entry form or the cash payment in lieu of any fractional interest, if applicable. These stockholders will have their pre-Reverse Stock Split shares exchanged automatically and a statement will be mailed to them upon exchange indicating the number of shares owned by such stockholders following the Reverse Stock Split. A check will also be mailed to such stockholders’ registered address as soon as practicable after the effective date of the Reverse Stock Split. By signing and cashing this check, such stockholders will warrant that they owned the shares of our Common Stock for which they received the cash payment.
Exchange of Stock Certificates and Payment for Fractional Shares
IfProposal No. 4, our board of directors decides to effectvalues the Reverse Stock Split, we will file the Certificate of Amendment with the Secretary of State of the State of Delaware. The Reverse Stock Split will become effective at the time specified in the Certificate of Amendment, which we expect to be the date of filing of the Certificate of Amendment, and which we refer to as the “Effective Date.”
As soon as practicable after the Effective Date, transmittal forms will be mailed to each holder of record of certificates for sharesinput of our Common Stock to be used in forwarding such certificates for surrender in exchange for any cash payment due for fractional shares and, if so electedstockholders regarding the Company's executive compensation practices. As contemplated by the holder, new certificates representingDodd-Frank Wall Street Reform and Consumer Protection Act, stockholders are also invited to express their views, on an advisory (non-binding) basis, on how frequently advisory votes on the number of sharescompensation of our Common Stock held byNamed Executive Officers, such stockholder following the Reverse Stock Split. Our transfer agentas Proposal No. 4, will act as exchange agent for purposes of implementing the payment in lieu of fractional shares and exchanging stock certificates. The transmittal forms will be accompanied by instructions specifying other details of the exchange. Upon receipt of the transmittal form, each stockholder should surrender the certificates representing shares of our Common Stock prior to the Reverse Stock Split in accordance with the applicable instructions. No new certificates and no payments in lieu of fractional shares will be issued to a stockholder until the stockholder has surrendered his or her outstanding stock certificate(s) together with the properly completed and executed transmittal form to the exchange agent.
The par value per share of our Common Stockoccur. By voting on this Proposal No. 5, stockholders may indicate whether they would remain unchanged at $0.0001 per share after the Reverse Stock Split. As a result, on the Effective Date of the Reverse Stock Split, the stated capitalprefer an advisory vote on our balance sheet attributable to our Common Stock would be reduced proportionally, based on the actual exchange ratioNamed Executive Officer compensation once every year, every two years, or every three years.
After careful consideration of the Reverse Stock Split, from its present amount, and the additional paid-in capital account would be credited with the amount by which the stated capital is reduced. The loss per share and net book value per share would be increased because there would be fewer shares of our Common Stock outstanding. We do not anticipate that any other accounting consequences would arise as a result of the Reverse Stock Split. In connection with the approval of the Reverse Stock Split, stockholders of the Company will not have a right to dissent and obtain payment for their shares under Delaware law or our Certificate of Incorporation or bylaws.
Notwithstanding the decrease in the number of outstanding shares following the Reverse Stock Split,this Proposal No. 5, our board of directors does not intendhas determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for the Company at this transactiontime, and therefore our board of directors recommends that you vote for the advisory vote on our Named Executive Officer compensation to occur every year.
You may cast your advisory vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstaining from voting. Approval of the frequency of an advisory vote on the compensation of our Named Executive Officers will require the affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, assuming a quorum is present. In the event that none of the options of every one year, every two years or every three years for the frequency of the vote on the compensation of our Named Executive Officers receives the required vote for approval, the frequency that receives the highest number of votes will be considered by our board of directors to be the first step in a seriesstockholders' preference, as expressed on an advisory basis. Stockholders are not voting to approve or disapprove of plans or proposalsthe board of directors' recommendation of a “going private transaction” withinfrequency of three years. Rather, stockholders are voting their shares in favor of their preferred frequency for future stockholder advisory votes on our Named Executive Officer compensation. Because this vote is advisory and not binding on the meaningCompany or our board of Rule 13e-3directors, our board of directors may decide that it is in the Exchange Act.best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to our compensation programs. A scheduling vote similar to this will occur at least once every six years.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR A FREQUENCY OF ONCE EVERY YEAR FOR THE FREQUENCY OF STOCKHOLDER ADVISORY VOTES ON OUR NAMED EXECUTIVE OFFICER COMPENSATION. Certain of our officers and directors have an interest in Proposal Three as a result of their ownership of shares of our Common Stock, as set forth above in the section entitled “Security Ownership of Certain Beneficial Owners and Management.” However, we do not believe that our officers or directors have interests in Proposal Three that are different from or greater than those of any other of our stockholders.
The following is a summary of the material United States federal income tax consequences of the Reverse Stock Split to U.S. holders (as defined below) of our Common Stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”). Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in United States federal income tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service (“IRS”), with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.
This summary assumes that you hold our Common Stock as a “capital asset” within the meaning of the Code (generally property held for investment). This summary does not address the tax considerations arising under the laws of any foreign, state or local jurisdiction, or United States federal tax considerations other than income taxation. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
| · | banks, insurance companies, or other financial institutions; |
| · | persons subject to the alternative minimum tax; |
| · | tax-exempt organizations; |
| · | partnerships or other pass-through entities; |
| · | persons that are not “U.S. holders” (as defined below); |
| · | dealers in securities or currencies; |
| · | regulated investment companies or real estate investment trusts; | | | | · | traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; |
| · | certain former citizens or long-term residents of the United States; | | |
| · | persons who hold our Common Stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; or |
| · | persons deemed to sell our Common Stock under the constructive sale provisions of the Code. |
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT OR THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE UNITED STATES FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
U.S. Holder
For purposes of this discussion, a U.S. holder is any beneficial owner of our Common Stock that for United States federal income tax purposes is:
| · | citizen or resident of the United States; | | | | · | a corporation created or organized in or under the laws of the United States, or any political subdivision thereof (including the District of Columbia); |
| · | an estate the income of which is subject to United States federal income taxation regardless of its source; and |
| · | a trust if either a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust, or the trust has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for United States federal income tax purposes.
|
If a partnership holds our Common Stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our Common Stock, you should consult your tax advisor.
Tax Consequences of the Reverse Stock Split Generally
Except as provided below with respect to cash received in lieu of fractional shares, a U.S. holder generally will not recognize any gain or loss as a result of the Reverse Stock Split. A U.S. holder’s aggregate tax basis in our Common Stock received in the Reverse Stock Split generally will equal such holder’s aggregate tax basis in our Common Stock surrendered in the Reverse Stock Split reduced by any amount allocable to a fractional share of post-Reverse Stock Split Common Stock for which cash is received. The holding period for the shares of our Common Stock received in the Reverse Stock Split generally will include the holding period for the shares of our Common Stock surrendered in the Reverse Stock Split.
Cash received in lieu of fractional shares
A U.S. holder that receives cash in lieu of a fractional share of our Common Stock in the Reverse Stock Split generally will be treated as having received such fractional shares and then as having received such cash in redemption of such fractional shares. A U.S. holder generally will recognize gain or loss measured by the difference between the amount of cash received and the portion of the basis of the pre-Reverse Stock Split Common Stock allocable to such fractional shares. Such gain or loss generally will constitute capital gain or loss and will be long-term capital gain or loss if the U.S. holder’s holding period in our Common Stock exchanged therefore was greater than one year as of the date of the exchange. The deductibility of capital losses is subject to limitations.
Backup Withholding
Certain U.S. holders may be subject to 28% backup withholding tax on any cash received in the Reverse Stock Split in lieu of a fractional share of our Common Stock. Backup withholding will not apply, however, to a U.S. holder that comes within certain exempt categories and, when required, demonstrates this fact, or provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. A U.S. holder that does not provide its correct taxpayer identification number may also be subject to penalties imposed by the IRS. Backup withholding is not an additional tax. Any amount paid as backup withholding will be allowed as a refund or credit against the U.S. holder’s federal income tax liability, provided the required information is timely furnished to the IRS.
Our board of directors recommends a vote “FOR” Proposal Three to approve an amendment to our Certificate of Incorporation to effect a reverse stock split of our Common Stock at an exchange ratio no greater than 1-for-2, such ratio to be determined by our board of directors, at any time prior to the one year anniversary of the Annual Meeting, the implementation and timing of which shall be subject to the discretion of our board of directors. |
Other Business to be Conducted at the Annual Meeting
We know of no other matters to be acted upon at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares they represent XI. OTHER MATTERSaccording to their best judgment.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, requires our directors, executive officers and persons who own more than 10% of our Common Stock to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other of our equity securities. To our knowledge, during the fiscal year ended March 31, 2012,since April 1, 2015, all reports required to be filed pursuant to Section 16(a) were filed on a timely basis,, except for Forms 4 related to the grant of 10,000 options to purchase Common Stock granted on July 1, 2012 to each of Messrs. Holly and Winowski and Forms 4 related to the grant of 250,000 and 100,000 options to purchase Common Stock granted on April 19, 2012 to Mr. Molinaro and Mr. Fitzgerald, respectively. We understand that Forms 4 regarding the transactions will be filed as soon as practicable.following:
· | Leonard Anthony filed a Form 4 on July 22, 2015 for a transaction that occurred on July 1, 2015; | · | Philip Dur filed a Form 4 on July 22, 2015 for a transaction that occurred on July 1, 2015; | | · | Michael Holly filed a Form 4 on July 22, 2015 for a transaction that occurred on July 1, 2015; | · | Alexander Shen filed a Form 4 on September 14, 2015 for a transaction that occurred on August 12, 2015; | · | Richard Fitzgerald filed a Form 4 on September 14, 2015 for a transaction that occurred on August 12, 2015; | · | Thomas Sammons filed a Form 4 on April 8, 2016 for a transaction that occurred on January 21, 2016; and | · | Robert Isaman filed a Form 4 on September 12, 2016 for transactions that occurred on July 6 and 7, 2016. |
Stockholder Proposals for the 20132017 Annual Meeting Stockholders may nominate director candidates and make proposals to be considered at the 2013Company's 2017 Annual Meeting.Meeting of Stockholders (the "2017 Annual Meeting"). In accordance with our bylaws,by-laws, any stockholder nominations of one or more candidates for election as directors at the 20132017 Annual Meeting or any other proposal for consideration at the 20132017 Annual Meeting must be received by us at the address set forth below, together with certain information specified in our bylaws between September 6by-laws, not less than 60 days (October 9, 2017) nor more than 90 days (September 9, 2017) prior to the first anniversary of the preceding year's annual meeting of stockholders, 2013; provided, however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, such nomination or proposal must be received by the Company no later than the later of 70 days prior to the date of such annual meeting and October 6, 2013.the 10th day following the day on which public disclosure of the date of such annual meeting was made. In addition to being able to present proposals for consideration at the 20132017 Annual Meeting, stockholders may also be able to have their proposals included in our proxy statement and form of proxy for the 20132017 Annual Meeting. In order to have a stockholder proposal included in the proxy statement and form of proxy, the proposal must be delivered to us at the address set forth below not later than August 7, 2013,10, 2017, and the stockholder must otherwise comply with the applicable requirements of the SEC requirements and our bylaws.by-laws. If the stockholder complies with these requirements for inclusion of a proposal in our proxy statement and form of proxy, the stockholder need not comply with the notice requirements described in the preceding paragraph. The form of proxy issued with our 2013 proxy statement will confer discretionary authority to vote for or against any proposal made by a stockholder at our 2013 Annual Meeting and which is not included in our proxy statement. However, such discretionary authority may not be exercised if the stockholder proponent has given to our Secretary notice of such proposal between September 6, 2013 and October 6, 2013 and certain other conditions provided for in the SEC’s rules have been satisfied.
A copy of the full text of the bylaw provisions of our by-laws discussed above may be obtained by writing to our corporate secretary and all notices and nominations referred to above must be sent to our corporate offices at the following address: TechPrecision Corporation, 3477 Corporate Parkway, Suite 140, Center Valley, Pennsylvania 18034,1 Bella Drive, Westminster, MA 01473, Attention: Corporate Secretary. Expenses Relating to this Proxy Solicitation We will pay all expenses relating to this proxy solicitation. In addition to this solicitation by mail, our directors, officers, directors, and employees may solicit proxies in person or by telephone, facsimile, or personal callelectronic transmission without extra compensation for that activity. We also expect to reimburse banks, brokers and other persons for reasonable out-of-pocket expenses in forwarding proxy material to beneficial owners of our stock and obtaining the proxies of those owners. We regularly retain the services of Hayden IR to assist with our investor relations and other stockholder communications issues. Hayden IR may assist in the solicitation of proxies but will not receive any additional compensation for these services. In addition, proxies may be solicited on our behalf
The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements for two or more stockholders sharing the same address by directors, officers or employees in person or by telephone, facsimile, electronic transmissiondelivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as "householding," potentially means extra convenience for stockholders and by mail. None of these persons will receive any extra compensationcost savings for doing this. TechPrecision. Some banks, brokers and other nominee record holders may follow the practice of sending only one copy of TechPrecision's Proxy Statement to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders.
CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
TECHPRECISION CORPORATION
If you prefer, we will promptly deliver a separate copy of the document to you if you request one by writing or calling as follows: TechPrecision Corporation, (the “Corporation1 Bella Drive, Westminster, MA 01473”), a corporation organized and existing under and by virtueAttention: Corporate Secretary; Telephone 978-874-0591. If you want to receive separate copies of the General Corporation LawProxy Statement in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact us at the address and phone number above. Where You Can Find More Information We file annual, quarterly and current reports, proxy statements and other information with the SEC. These SEC filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at www.sec.gov or at www.techprecision.com. Upon request of any stockholder, a copy of TechPrecision's Annual Report on Form 10-K for the fiscal year ended March 31, 2016, including a list of the State of Delaware (the “exhibits thereto, may be obtained, without charge, by writing to TechPrecision Corporation, DGCL1 Bella Drive, Westminster, MA 01473”), does hereby certify: FIRST. Upon the filing and effectiveness (the “Split Effective Time”) pursuant to the DGCL of this Certificate of Amendment to the Certificate of Incorporation, every []* issued and outstanding share[s] of the Corporation’s common stock, par value $0.0001 per share, as of the date and time immediately preceding the Split Effective Time (the “Old Shares”), shall automatically be combined into one (1) validly issued, fully paid and non−assessable share of common stock without any further action by the Corporation or the holder thereof, subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”). In lieu of any fractional shares to which a holder would otherwise be entitled, the Corporation shall pay cash equal to the product of (i) the closing sale price per share of the common stock as reported by the Over-the-Counter bulletin board on the last trading day preceding the date of the Split Effective Time (the “Split Effective Date”) by (ii) the number of Old Shares held by such holder that would otherwise have been exchanged for such fractional share interests.
SECOND. Each holder of record of a certificate which immediately prior to the Split Effective Date represents Old Shares (the “Old Certificates”) shall be entitled to receive upon surrender of such Old Certificates to the Corporation’s transfer agent for cancellation, a certificate (the “New Certificates”) representing the number of whole shares of common stock into and for which the shares formerly represented by such Old Certificates so surrendered are exchangeable plus a cash payment in place of the fractional share as described above. From and after the Split Effective Date, Old Certificates shall represent only the right to receive New Certificates pursuant to the provisions hereof.
THIRD. That a resolution was duly adopted by unanimous written consent of the directors of the Corporation, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth the above mentioned amendment to the Certificate of Incorporation and declaring said amendment to be advisable.
FOURTH. That this amendment was duly authorized by the holders of a majority of the voting stock of the Corporation entitled to vote at a duly authorized meeting of the stockholders of the Corporation. Said amendment was duly adopted in accordance with the provisions of the General Corporation Law.
IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation has been signed by the Chief Executive Officer of the Corporation this ___ day of ______, 20___.
TECHPRECISION CORPORATION
By: _____________________________
___________________
* - Final split ratio, no greater than 1-for-2, to be determined by the Board of Directors pursuant to authority granted by stockholders, as described in the accompanying proxy statement.
Attention: Corporate Secretary.
Whether or not you expect to be present at the Annual Meeting, please sign and return the enclosed proxy promptly. Your vote is important. | By order of the board of directors of TECHPRECISION CORPORATION | | | | | | | | Alexander Shen | November 14, 2016 | Chief Executive Officer | | |
TECHPRECISION CORPORATION
2016 EQUITY INCENTIVE PLAN
SECTION 1. Purpose; Definitions. The purposes of the Techprecision Corporation 2016 Equity Incentive Plan (the "Plan") are to: (a) enable Techprecision Corporation (the "Company") and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. For purposes of the Plan, the following terms will have the meanings defined below, unless the context clearly requires a different meaning: (a)"Affiliate" means, with respect to a Person, a Person that directly or indirectly controls, is controlled by, or is under common control with such Person. (b)"Applicable Law" means the legal requirements relating to the administration of and issuance of securities under stock incentive plans, including, without limitation, the requirements of state corporations law, federal, state and foreign securities law, federal, state and foreign tax law, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted. (c)"Award" means an award of Options, Restricted Stock, Restricted Stock Units or Performance Awards made under this Plan. (d)"Award Agreement" means, with respect to any particular Award, the written document that sets forth the terms of that particular Award. (e)"Board" means the Board of Directors of the Company, as constituted from time to time. (f)"Cause" means with respect to any Participant, unless otherwise defined in the Participant's employment agreement, service agreement or signed offer letter: (i) the Participant's habitual intoxication or drug addiction; (ii) the Participant's violation of the Company's written policies, procedures or codes including, without limitation, those with respect to harassment (sexual or otherwise) and ethics; (iii) the Participant's refusal or willful failure by the Participant to perform such duties as may reasonably be delegated or assigned to him, consistent with his position; (iv) the Participant's willful refusal or willful failure to comply with any requirement of the Securities and Exchange Commission or any securities exchange or self-regulatory organization then applicable to the Company; (v) the Participant's willful or wanton misconduct in connection with the performance of his or her duties including, without limitation, breach of fiduciary duties; (vi) the Participant's breach (whether due to inattention, neglect, or knowing conduct) of any of the material provisions of his or her employment or service agreement, if any; (vii) the Participant's conviction of, guilty, no contest or nolo contendere plea to, or admission or confession to any felony (other than driving while intoxicated or driving under the influence of alcohol) or any act of fraud, misappropriation, embezzlement or any misdemeanor involving moral turpitude; (viii) the Participant's dishonesty detrimental to the best interest of the Company; (ix) the Participant's involvement in any matter which, in the opinion of the Company's Chief Executive Officer (or, in the case of the Chief Executive Officer, the Committee), is reasonably likely to cause material prejudice or embarrassment to the Company's business; or (x) solely in the case of a Non-Employee Director, any other action by the Participant which the Committee determines constitutes "cause." Notwithstanding the foregoing, if a Participant and the Company (or any of its Affiliates) have entered into an employment agreement, consulting agreement or other similar agreement that specifically defines "cause," then with respect to such Participant, "Cause" shall have the meaning defined in such other agreement. (g)"Change in Control" shall mean the occurrence of any of the following events: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total power to vote for the election of directors of the Company; (ii) during any twelve month period, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 1(g)(i), Section 1(g)(iii), Section 1(g)(iv) or Section 1(g)(v) hereof) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period of whose election or nomination for election was previously approved, cease for any reason to constitute a majority thereof; (iii) the merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to 50% or more of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); (iv) the sale or other disposition of all or substantially all of the assets of the Company; (v) a liquidation or dissolution of the Company or (vi) acceptance by shareholders of the Company of shares in a share exchange if the shareholders of the Company immediately before such share exchange do not or will not own directly or indirectly immediately following such share exchange more than fifty percent (50%) of the combined voting power of the outstanding voting securities of the entity resulting from or surviving such share exchange in substantially the same proportion as their ownership of the voting securities outstanding immediately before such share exchange. Notwithstanding anything in the Plan or an Award Agreement to the contrary, if an Award is subject to Section 409A of the Code, no event that, but for the application of this paragraph, would be a Change in Control as defined in the Plan or the Award Agreement, as applicable, shall be a Change in Control unless such event is also a "change in control event" as defined in Section 409A of the Code. (h)"Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. (i)"Committee" means the committee designated by the Board to administer the Plan under Section 2. To the extent required under Applicable Law, the Committee shall have at least two members and each member of the Committee shall be a Non-Employee Director and an Outside Director. (j)"Director" means a member of the Board. (k)"Disability" means a condition rendering a Participant Disabled. (l)"Disabled" will have the same meaning as set forth in Section 22(e)(3) of the Code. (m)"Exchange Act" means the Securities Exchange Act of 1934, as amended. (n)"Fair Market Value" means, as of any date, the value of a Share determined as follows: (i) if the Shares are listed on any established stock exchange or a national market system, including, without limitation, the Nasdaq Global Select Market, the Fair Market Value of a Share will be the closing sales price for such stock as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Shares) at the close of regular hours trading on the day of determination; (ii) if the Shares are regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for Shares at the close of regular hours trading on the day of determination; or (iii) if Shares are not traded as set forth above, the Fair Market Value will be determined in good faith by the Committee taking into consideration such factors as the Committee considers appropriate, such determination by the Committee to be final, conclusive and binding. Notwithstanding the foregoing, in connection with a Change in Control, Fair Market Value shall be determined in good faith by the Committee, such determination by the Committee to be final conclusive and binding. (o)"Incentive Stock Option" means any Option intended to be an "Incentive Stock Option" within the meaning of Section 422 of the Code. (p)"Non-Employee Director" will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission. (q)"Non-Qualified Stock Option" means any Option that is not an Incentive Stock Option. (r)"Normal Retirement" means retirement from active employment with the Company and any Subsidiary or Affiliate on or after age 65 or such other age as is designated by the Company, Subsidiary or Affiliate as the normal retirement age. (s)"Outside Director" means a member of the Board who meets the definition of an "outside director" under Section 162(m) of the Code. (t)"Option" means any option to purchase Shares (including an option to purchase Restricted Stock, if the Committee so determines) granted pursuant to Section 5 hereof. (u)"Parent" means, in respect of the Company, a "parent corporation" as defined in Sections 424(e) of the Code. (v)"Participant" means an employee, consultant, Director, or other service provider of or to the Company or any of its respective Affiliates to whom an Award is granted (w)"Performance Award" means any Award that, pursuant to Section 9, is granted, vested and/or settled upon the achievement of specified performance conditions. (x)"Performance Goals" means a goal that must be met by the end of a period specified by the Committee (but that is substantially uncertain of being met before the grant of the Award) based upon, at the Committee's discretion: (i) specified levels of or increases in revenue, operating income, pre-tax earnings or income, return on capital, equity measures/ratios (on a gross, adjusted, net, pre-tax or post tax basis), including basic earnings per share, diluted earnings per share, total earnings, earnings growth, earnings before interest and taxes, or EBIT, and earnings before interest, taxes, depreciation and amortization, EBITDA or operational cash flow; (ii) completion of acquisitions or business expansion; (iii) operating efficiency; (iv) implementation or completion of critical projects or related milestones, (v) gross margin; (vi) inventory shrink; (vii) vendor allowances; (viii) inventory turns; (ix) inventory levels; (x) distribution center productivity levels; (xi) customer service levels; (xii) customer or employee satisfaction; (xiii) employee recruiting and development; (xiv) development of new markets; (xv) financial ratios; (xvi) strategic initiatives; (xvii) improvement in or attainment of operating expense levels; (xviii) improvement in or attainment of capital expense levels; (xix) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, the Company's bank debt or other public or private debt or financial obligations; (xx) the attainment of a certain level of, reduction of, or other specified objectives with regard to limiting the level in or increase in all or a portion of controllable expenses or costs or other expenses or costs; (xxi) individual objectives; (xxii) budget and expense management; and/or (xxiii) such other items the Committee determines to be relevant; and any combination of the foregoing. The Committee shall have discretion to determine the specific targets with respect to each of these categories of Performance Goals. (y)"Person" means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or other entity or association. (z)"Plan" means the Techprecision Corporation 2016 Equity Incentive Plan herein set forth, as amended from time to time. (aa)"Prior Plan" means Techprecision Corporation 2006 Long-Term Incentive Plan. (bb)"Restricted Stock" means Shares that are subject to restrictions pursuant to Section 7 hereof. (cc)"Restricted Stock Unit" means a right granted under and subject to restrictions pursuant to Section 8 hereof. (dd)"Shares" means shares of the Company's common stock, par value $0.01, subject to substitution or adjustment as provided in Section 3(c) hereof. (ee)"Subsidiary" means, in respect of the Company, a subsidiary company as defined in Sections 424(f) and (g) of the Code. SECTION 2. Administration. The Plan shall be administered by the Committee. Any action of the Committee in administering the Plan shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, Affiliates, their respect employees, the Participants, persons claiming rights from or through Participants and stockholders of the Company. The Committee will have full authority to grant Awards under this Plan and determine the terms of such Awards. Such authority will include the right to: (a)select the individuals to whom Awards are granted (consistent with the eligibility conditions set forth in Section 4); (b)determine the type of Award to be granted; (c)determine the number of Shares, if any, to be covered by each Award; (d)establish the terms and conditions of each Award; (e) �� subject to Section 9, establish the performance conditions relevant to any Award and certify whether such performance conditions have been satisfied; (f)approving forms of agreements (including Award Agreements) for use under the Plan; (g)determine whether and under what circumstances an Option may be exercised without a payment of cash under Section 5(d); (h)accelerate the vesting or exercisability of an Award and to modify or amend each Award, subject to Section 10; and (i)extend the period of time for which an Option is to remain exercisable following a Participant's termination of service to the Company from the limited period otherwise in effect for that Option to such greater period of time as the Committee deems appropriate, but in no event beyond the expiration of the term of the Option. The Committee will have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable; to establish the terms and form of each Award Agreement; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent it deems necessary to carry out the intent of the Plan. The Committee may delegate to one or more officers of the Company the authority to grant Awards to Participants who are not subject to the requirements of Section 16 of the Exchange Act or Section 162(m) of the Code and the rules and regulations thereunder, provided that the Committee shall have fixed the total number of Shares subject to such delegation. Any such delegation shall be subject to the applicable corporate laws of the Commonwealth of Pennsylvania. The Committee may revoke any such allocation or delegation at any time for any reason with or without prior notice. No Director will be liable for any good faith determination, act or omission in connection with the Plan or any Award. SECTION 3. Shares Subject to the Plan. (a)Shares Subject to the Plan. Subject to adjustment as provided in Section 3(c) of the Plan, the maximum number of Shares that may be issued in respect of Awards under the Plan is 5,000,000 Shares (inclusive of Awards issued under the Prior Plan that remain outstanding as of the effective date of the Plan ) (the "Plan Limit"), all of which Shares may be issued in respect of Incentive Stock Options. Any shares issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares. Any shares issued by the Company through the assumption or substitution of outstanding grants in connection with the acquisition of another entity shall not reduce the maximum number of shares available for delivery under the Plan. In accordance with the requirements under Section 162(m) of the Code, the maximum number of Shares underlying Awards (including Options, Restricted Stock, Restricted Stock Units and Performance Awards) that may be granted during a calendar year to any individual Participant shall be twenty percent (20%) of the Plan Limit. (b)Effect of the Expiration or Termination of Awards. If and to the extent that an Option expires, terminates or is canceled or forfeited for any reason without having been exercised in full, the Shares associated with that Option will again become available for grant under the Plan. Similarly, if and to the extent an Award of Restricted Stock or Restricted Stock Units is canceled or forfeited for any reason, the Shares subject to that Award will again become available for grant under the Plan. Shares withheld in settlement of a tax withholding obligation associated with an Award, or in satisfaction of the exercise price payable upon exercise of an Option, will not become available for grant under the Plan. (c)Other Adjustment. In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, stock dividend, dividend in kind, or other like change in capital structure (other than ordinary cash dividends) to shareholders of the Company, or other similar corporate event or transaction affecting the Shares, the Committee, to prevent dilution or enlargement of Participants' rights under the Plan, shall, in such manner as it may deem equitable, substitute or adjust, in its sole discretion, the number and kind of shares that may be issued under the Plan or under any outstanding Awards, the number and kind of shares subject to outstanding Awards, the exercise price, grant price or purchase price applicable to outstanding Awards, and/or any other affected terms and conditions of this Plan or outstanding Awards. The Committee shall not make any adjustment that would adversely affect the status of any Award that is "performance-based compensation" under Section 162(m) of the Code. (d)Change in Control. Notwithstanding anything to the contrary set forth in the Plan, upon any Change in Control, the Committee may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following actions contingent upon the occurrence of that Change in Control: (i)cause any or all outstanding Awards to become vested and immediately exercisable (as applicable), in whole or in part; (ii)cause any outstanding Option to become fully vested and immediately exercisable for a reasonable period in advance of the Change in Control and, to the extent not exercised prior to that Change in Control, cancel that Option upon closing of the Change in Control; (iii)cancel any unvested Award or unvested portion thereof, with or without consideration; (iv)cancel any Award in exchange for a substitute award; (v)redeem any Restricted Stock or Restricted Stock Unit for cash and/or other substitute consideration with value equal to Fair Market Value of an unrestricted Share on the date of the Change in Control; (vi)cancel any Option in exchange for cash and/or other substitute consideration with a value equal to: (A) the number of Shares subject to that Option, multiplied by (B) the difference, if any, between the Fair Market Value per Share on the date of the Change in Control and the exercise price of that Option; provided, that if the Fair Market Value per Share on the date of the Change in Control does not exceed the exercise price of any such Option, the Committee may cancel that Option without any payment of consideration therefor; (vii)take such other action as the Committee shall determine to be reasonable under the circumstances; and/or (viii)notwithstanding any provision of this Section 3(d), in the case of any Award subject to Section 409A of the Code, such Award shall vest and be distributed only in accordance with the terms of the applicable Award Agreement and the Committee shall only be permitted to use discretion to the extent that such discretion would be permitted under Section 409A of the Code. In the discretion of the Committee, any cash or substitute consideration payable upon cancellation of an Award may be subjected to (i) vesting terms substantially identical to those that applied to the cancelled Award immediately prior to the Change in Control, or (ii) earn-out, escrow, holdback or similar arrangements, to the extent such arrangements are applicable to any consideration paid to stockholders in connection with the Change in Control. SECTION 4. Eligibility. Employees, Directors, consultants, and other individuals who provide services to the Company or its Affiliates are eligible to be granted Awards under the Plan; provided, however, that only employees of the Company, any Parent or a Subsidiary are eligible to be granted Incentive Stock Options. SECTION 5. Options. Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options. The Award Agreement shall state whether such grant is an Incentive Stock Option or a Non-Qualified Stock Option. Any Option granted under the Plan will be in such form as the Committee may at the time of such grant approve. The Award Agreement evidencing any Option will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion: (a)Option Price. The exercise price per Share under an Option will be determined by the Committee and will not be less than 100% of the Fair Market Value of a Share on the date of the grant. However, any Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, will have an exercise price per Share of not less than 110% of Fair Market Value per Share on the date of the grant. (b)Option Term. The term of each Option will be fixed by the Committee, but no Option will be exercisable more than 10 years after the date the Option is granted. However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, may not have a term of more than 5 years. No Option may be exercised by any Person after expiration of the term of the Option. (c)Exercisability. Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined by the Committee. (d)Method of Exercise. Subject to the terms of the applicable Award Agreement, the exercisability provisions of Section 5(c) and the termination provisions of Section 6, Options may be exercised in whole or in part from time to time during their term by the delivery of written notice to the Company specifying the number of Shares to be purchased. Such notice will be accompanied by payment in full of the purchase price, either by certified or bank check, or such other means as the Committee may accept. The Committee may, in its sole discretion, permit payment of the exercise price of an Option in the form of previously acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised or through means of a "net settlement," whereby the Option exercise price will not be due in cash and where the number of Shares issued upon such exercise will be equal to: (A) the product of (i) the number of Shares as to which the Option is then being exercised, and (ii) the excess, if any, of (a) the then current Fair Market Value per Share over (b) the Option exercise price, divided by (B) the then current Fair Market Value per Share. No Shares will be issued upon exercise of an Option until full payment therefor has been made. A Participant will not have the right to distributions or dividends or any other rights of a stockholder with respect to Shares subject to the Option until the Participant has given written notice of exercise, has paid in full for such Shares, if requested, has given the representation described in Section 15(a) hereof and fulfills such other conditions as may be set forth in the applicable Award Agreement. (e)Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under the Plan and/or any other plan of the Company, its Parent or any Subsidiary will not exceed $100,000. For purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted. To the extent any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option. (f)Termination of Service. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after the time of grant, Options will be subject to the terms of Section 6 with respect to exercise upon or following termination of employment or other service. SECTION 6. Termination of Service. Unless otherwise specified with respect to a particular Option in the applicable Award Agreement or otherwise determined by the Committee, any portion of an Option that is not exercisable upon termination of service will expire immediately and automatically upon such termination and any portion of an Option that is exercisable upon termination of service will expire on the date it ceases to be exercisable in accordance with this Section 6. (a)Termination by Reason of Death. If a Participant's service with the Company or any Affiliate terminates by reason of death, any Option held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of his or her death or on such accelerated basis as the Committee may determine at or after grant, by the legal representative of the estate or by the legatee of the Participant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee , then one year from the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option. (b)Termination by Reason of Disability or Retirement. If a Participant's service with the Company or any Affiliate terminates by reason of Disability or Normal Retirement, any Option held by such Participant may thereafter be exercised by the Participant or his personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then one year from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option; provided, however, that, if the Participant dies within such one year period (or such other period as the Committee shall specify), any unexercised Option held by such Participant shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one year from the date of such death or until the expiration of the stated term of such Option, whichever period is shorter. In the event of termination of employment by reason of Disability or Normal Retirement, if an Incentive Stock Option is exercised after the expiration of the maximum exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Non-Qualified Stock Option. (c)Cause. If a Participant's service with the Company or any Affiliate is terminated for Cause: (i) any Option, or portion thereof, not already exercised will be immediately and automatically forfeited as of the date of such termination, and (ii) any Shares for which the Company has not yet delivered share certificates will be immediately and automatically forfeited and the Company will refund to the Participant the Option exercise price paid for such Shares, if any. (d)Other Termination. If a Participant's service with the Company or any Affiliate terminates for any reason other than death, Disability, Normal Retirement, or Cause, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Committee may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then three months (or seven months in the case of a person subject to the reporting and short-swing profit provisions of Section 16 of the Exchange Act) from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option. SECTION 7. Restricted Stock. (a)Issuance. Restricted Stock may be issued either alone or in conjunction with other Awards. The Committee will determine the time or times within which Restricted Stock may be subject to forfeiture, and all other conditions of such Awards. The purchase price for Restricted Stock may, but need not, be zero. The prospective recipient of an Award of Restricted Stock will not have any rights with respect to such Award, unless and until such recipient has delivered to the Company an executed Award Agreement and has otherwise complied with the applicable terms and conditions of such Award. (b)Certificates. Upon the Award of Restricted Stock, the Committee may direct that a certificate or certificates representing the number of shares of Common Stock subject to such Award be issued to the Participant or placed in a restricted stock account (including an electronic account) with the transfer agent and in either case designating the Participant as the registered owner. The certificate(s) representing such shares shall be physically or electronically legended, as applicable, as to sale, transfer, assignment, pledge or other encumbrances during the Restriction Period and if issued to the Participant, returned to the Company, to be held in escrow during the Restriction Period. As a condition to any Award of Restricted Stock, the Participant may be required to deliver to the Company a share power, endorsed in blank, relating to the Shares covered by such Award. (c)Restrictions and Conditions. The Award Agreement evidencing the grant of any Restricted Stock will incorporate the following terms and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion: (i)During a period commencing with the date of an Award of Restricted Stock and ending at such time or times as specified by the Committee (the "Restriction Period"), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Stock awarded under the Plan. The Committee may condition the lapse of restrictions on Restricted Stock upon the continued employment or service of the recipient, the attainment of specified individual or corporate performance goals, or such other factors as the Committee may determine, in its sole and absolute discretion. (ii)While any Share of Restricted Stock remain subject to restriction, the Participant will have, with respect to the Restricted Stock, the right to vote the Shares, but will not have the right to receive any cash distributions or dividends prior to the lapse of the Restriction Period underlying such Shares unless otherwise provided under the applicable Award Agreement or as determined by the Committee. If any cash distributions or dividends are payable with respect to the Restricted Stock, the Committee, in its sole discretion, may require the cash distributions or dividends to be subjected to the same Restriction Period as is applicable to the Restricted Stock with respect to which such amounts are paid, or, if the Committee so determines, reinvested in additional Restricted Stock to the extent Shares are available under Section 3(a) of the Plan. A Participant shall not be entitled to interest with respect to any dividends or distributions subjected to the Restriction Period. Any distributions or dividends paid in the form of securities with respect to Restricted Stock will be subject to the same terms and conditions as the Restricted Stock with respect to which they were paid, including, without limitation, the same Restriction Period. (iii)Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant's service with the Company and its Affiliates terminates prior to the expiration of the applicable Restriction Period, the Participant's Restricted Stock that then remains subject to forfeiture will then be forfeited automatically. SECTION 8. Restricted Stock Units. Subject to the other terms of the Plan, the Committee may grant Restricted Stock Units to eligible individuals and may, in its sole and absolute discretion, impose conditions on such units as it may deem appropriate, including, without limitation, continued employment or service of the recipient or the attainment of specified individual or corporate performance goals. Each Restricted Stock Unit shall be evidenced by an Award Agreement in the form that is approved by the Committee and that is not inconsistent with the terms and conditions of the Plan. Each Restricted Stock Unit will represent a right to receive from the Company, upon fulfillment of any applicable conditions, an amount equal to the Fair Market Value (at the time of the distribution) of one Share. Distributions may be made in Shares. All other terms governing Restricted Stock Units, such as vesting, time and form of payment and termination of units shall be set forth in the applicable Award Agreement. The Participant shall not have any shareholder rights with respect to the Shares subject to a Restricted Stock Unit Award until that Award vests and the Shares are actually issued thereunder. Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant's service with the Company terminates prior to the Restricted Stock Unit Award vesting, the Participant's Restricted Stock Units that then remain subject to forfeiture will then be forfeited automatically. SECTION 9. Performance Based Awards. (a)Performance Awards Generally. The Committee may grant Performance Awards in accordance with this Section 9. Performance Awards may be denominated as a number of Shares or specified number of other Awards, which may be earned upon achievement or satisfaction of such Performance Goals as may be specified by the Committee. In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the vesting or settlement of the Award upon the achievement or satisfaction of such Performance Goals as may be specified by the Committee. (b)Adjustments to Performance Goals. The Committee may provide, at the time Performance Goals are established, that adjustments will be made to those performance goals to take into account, in any objective manner specified by that committee, the impact of one or more of the following: (A) gain or loss from all or certain claims and/or litigation and insurance recoveries, (B) the impairment of tangible or intangible assets, (C) stock-based compensation expense, (D) restructuring activities reported in the Company's public filings, (E) investments, dispositions or acquisitions, (F) loss from the disposal of certain assets, (G) gain or loss from the early extinguishment, redemption, or repurchase of debt, (H) changes in accounting principles, or (I) any other item, event or circumstance that would not cause an Award to fail to constitute "qualified performance-based compensation" under Section 162(m) of the Code (to the extent such Award is intended to be "qualified performance-based compensation"). An adjustment described in this Section may relate to the Company or to any subsidiary, division or other operational unit of the Company or its Affiliates, as determined by the committee at the time the performance goals are established. Any adjustment shall be determined in accordance with generally accepted accounting principles and standards, unless such other objective method of measurement is designated by the committee at the time performance objectives are established. In addition, adjustments will be made as necessary to any performance criteria related to the Company's stock to reflect changes in corporate capitalization, including a recapitalization, stock split or combination, stock dividend, spin-off, merger, reorganization or other similar event or transaction affecting the Company's equity. (c)Other Terms of Performance Awards. The Committee may specify other terms pertinent to a Performance Award in the applicable Award Agreement, including terms relating to the treatment of that Award in the event of a Change in Control prior to the end of the applicable performance period. The Participant shall not have any shareholder rights with respect to the Shares subject to a Performance Award until the Shares are actually issued thereunder. Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant's service with the Company terminates prior to the Performance Award vesting, the Participant's Performance Award or portion thereof that then remains subject to forfeiture will then be forfeited automatically. SECTION 10. Amendments and Termination. The Board may amend, alter or discontinue the Plan at any time. However, except as otherwise provided in Section 3, no amendment, alteration or discontinuation will be made which would impair the rights of a Participant with respect to an Award without that Participant's consent or which, without the approval of such amendment within 365 days of its adoption by the Board by the Company's stockholders in a manner consistent with Treas. Reg. § 1.422-3 (or any successor provision), would: (i) increase the total number of Shares reserved for issuance hereunder, or (ii) change the persons or class of persons eligible to receive Awards. SECTION 11. Repricing Programs. The Board may, in its discretion, implement any cancellation/re-grant program pursuant to which outstanding Options under the Plan are cancelled and new Options are granted in replacement with a lower exercise or base price per share without obtaining shareholder approval. SECTION 12. Conditions Upon Grant of Awards and Issuance of Shares. (a)The implementation of the Plan, the grant of any Award and the issuance of Shares in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the Company's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the Shares issuable pursuant to those Awards. (b)No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Applicable Law, including the filing and effectiveness of the Form S-8 registration statement for the Shares issuable under the Plan, and all applicable listing requirements of any stock exchange on which Shares are then listed for trading. SECTION 13. Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant under the Plan shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any party, other than the Company, any Subsidiary or Affiliate, or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the Participant or his or her guardian or legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, provide that Awards or other rights or interests of a Participant granted pursuant to the Plan (other than an Incentive Stock Option) be transferable, without consideration, to immediate family members (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate family members and to partnerships in which such family members are the only partners. The Committee may attach to such transferability feature such terms and conditions as it deems advisable. In addition, a Participant may, in the manner established by the Committee, designate a beneficiary (which may be a person or a trust) to exercise the rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant. A beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional restrictions deemed necessary or appropriate by the Committee. SECTION 14. Withholding. No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to such amount. The minimum required withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company will have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. SECTION 15. Liability of Company. (a)Inability to Obtain Authority. If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory body having jurisdiction for the sale of any Shares under this Plan, and such authority is deemed by the Company's counsel to be necessary to the lawful issuance of those Shares, the Company will be relieved of any liability for failing to issue or sell those Shares. (b)Grants Exceeding Allotted Shares. If Shares subject to an Award exceed, as of the date of grant, the number of Shares which may be issued under the Plan without additional shareholder approval, that Award will be contingent with respect to such excess Shares, on the effectiveness under Applicable Law of a sufficient increase in the number of Shares subject to this Plan. (c)Rights of Participants and Beneficiaries. The Company will pay all amounts payable under this Plan only to the applicable Participant, or beneficiaries entitled thereto pursuant to this Plan. The Company will not be liable for the debts, contracts, or engagements of any Participant or his or her beneficiaries, and rights to cash payments under this Plan may not be taken in execution by attachment or garnishment, or by any other legal or equitable proceeding while in the hands of the Company. SECTION 16. Adjustment; Repayment of Incentive Bonuses. All awards made under the Plan (whether vested or unvested) are subject to rescission, cancellation or recoupment, in whole or in part, under any current or future "clawback" or similar policy of the Company that is applicable to the Participant. SECTION 17. General Provisions. (a)The Board may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Board believes are appropriate. (b)All certificates for Shares or other securities delivered under the Plan will be subject to such share-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the Securities Act of 1933, as amended, the Exchange Act, any stock exchange upon which the Shares are then listed, and any other Applicable Law, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (c)Nothing contained in the Plan will prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required. (d)Neither the adoption of the Plan nor the execution of any document in connection with the Plan will: (i) confer upon any employee or other service provider of the Company or an Affiliate any right to continued employment or engagement with the Company or such Affiliate, or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment or engagement of any of its employees or other service providers at any time. SECTION 18. Effective Date of Plan. The Plan will become effective as of the date the Plan is approved by the Board; provided, however, that all Options intended to be Incentive Stock Options will automatically be converted into Non-Qualified Stock Options if the Plan is not approved by the Company's stockholders within one year (365 days) of its adoption by the Board in a manner consistent with Treas. Reg. § 1.422-5. SECTION 19. Term of Plan. Unless the Plan shall theretofore have been terminated in accordance with Section 10, the Plan shall terminate on the 10-year anniversary of the effective date, and no Awards under the Plan shall thereafter be granted. SECTION 20. Invalid Provisions. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any Applicable Law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein. SECTION 21. Governing Law. The Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the state of Delaware, without regard to the application of the principles of conflicts of laws. SECTION 22. Notices. Any notice to be given to the Company pursuant to the provisions of this Plan must be given in writing and addressed, if to the Company, to its principal executive office to the attention of its Chief Financial Officer (or such other Person as the Company may designate in writing from time to time), and, if to a Participant, to the address contained in the Company's personnel files, or at such other address as that Participant may hereafter designate in writing to the Company. Any such notice will be deemed duly given: if delivered personally or via recognized overnight delivery service, on the date and at the time so delivered; if sent via telecopier or email, on the date and at the time telecopied or emailed with confirmation of delivery; or, if mailed, (5) days after the date of mailing by registered or certified mail.
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
TECHPRECISION CORPORATION
| MAIL – Mark, sign and date your proxy card and return it in the postage-paid envelope provided | | | | |
☐ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ☐ | Please mark your votes like this | ☒ |
PROXY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED IN FAVOR OF ELECTING EACH OF THE EIGHT NOMINEES TO THE BOARD OF DIRECTORS; "FOR" PROPOSALS 2, 3, AND 4; FOR "ONE YEAR" FOR PROPOSAL 5; AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSON NAMED AS PROXY HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLCOME BEFORE THE ANNUAL MEETING. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TECHPRECISION CORPORATION.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR": 1. Election of Directors | FOR all Nominees listed to the left | WITHHOLD AUTHORITY to vote (except as marked to the contrary for all nominees listed to the left) | | | | FOR | AGAINST | ABSTAIN | | (1) Leonard M. Anthony | | | | 3. Approve the adoption of the TechPrecision Corporation 2016 Equity Incentive Plan. | ☐ | ☐ | ☐ | | (2) Robert A. Crisafulli | | | | | | FOR | AGAINST | ABSTAIN | | (3) Philip A. Dur | ☐ | ☐ | | 4. Ratification of independent registered public accounting firm. | ☐ | ☐ | ☐ | | (4) Michael R. Holly | | | | | | FOR | AGAINST | ABSTAIN | | (5) Robert G. Isaman | | | | 5. Vote on frequency of holding future advisory votes on the compensation of TechPrecision's Named Executive Officers. | ☐ | ☐ | ☐ | | (6) Andrew A. Levy | | | | | | | | | | (7) Richard S. McGowan | | | | THE BOARD OF DIRECTORS OF TECHPRECISION RECOMMENDS A VOTE "FOR" EACH OF THE DIRECTORS NOMINATED PURSUANT TO PROPOSAL 1; "FOR" PROPOSALS 2, 3, AND 4; AND "FOR" "ONE YEAR" FOR PROPOSAL 5. | | (8) Walter M. Schenker | | | | | | | | | | (Instruction: To withhold authority to vote for any individual nominee, strike a line through that nominee's name in the list above) | | | | | | |
2. Approve ratification of appointment of Marcum LLP as the Company's independent registered public accounting firm for the fiscal year ending on March 31, 2017. | FOR ☐ | AGAINST ☐ | ABSTAIN ☐ | COMPANY ID: PROXY NUMBER: ACCOUNT NUMBER: | | | | | | | | | | | | | | | | | | | |
Signature | | Signature, if held jointly | | Date | | , 2016. |
Note Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer, please give title as such.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held December, 8, 2016
The proxy statement and our 2016 Annual Report to Stockholders are available at http://www. techprecision.com/reports_and_proxy.html
☐ FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED ☐ PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TECHPRECISION CORPORATION
The undersigned appoints Alexander Shen and Thomas Sammons, and each of James S. Molinaro and Richard F. Fitzgeraldthem, as proxy,proxies, each with the power to appoint his substitute, and authorizes each of them to represent and to vote, as designated on the reverse hereof, all of the shares of common stock of TechPrecision Corporation held of record by the undersigned at the close of business on November 16, 201211, 2016 at the Annual Meeting of Stockholders of TechPrecision CorporationCorporation. to be held on December 5, 2012 at the offices of Pepper Hamilton LLP, located at the New York Times Building, 37th Floor, 620 Eighth Avenue, New York, New York 10018-14058, 2016, or at any adjournment thereof. The Board of Directors of Techprecision Corporation recommends a vote “FOR” each of the directors nominated pursuant to Proposal 1, and “FOR” Proposals 2 and 3:
| For all
nominees
listed to the left
| Withhold Authority
to vote (except as marked to the contrary for all nominees listed to the
left)
| 1. Election of Directors | £ | £ | (01) Philip A. Dur | | | (02) Michael R. Holly | | | (03) James S. Molinaro | | | (04) Robert G. Isaman | | | (05) Andrew A. Levy | | | (06) Leonard M. Anthony | | | | | | (Instruction: To withhold authority to vote for any individual nominee, strike a line through that nominee’s name in the list above) |
| For | Against | Abstain | 2. Approve ratification of appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending on March 31, 2013. | £ | £ | £ | | | | | | For | Against | Abstain | 3. Approve an amendment to our Certificate of Incorporation to effect a reverse stock split of our outstanding common stock at an exchange ratio of no greater than 1−for−2, such ratio to be determined by our board of directors, at any time prior to the one year anniversary of our 2012 annual meeting of stockholders, the implementation and timing of which shall be subject to the discretion of our board of directors. | £ | £ | £ | | | | |
Please date and sign our Proxy on the reverse side and return it promptly.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON DECEMBER 5, 2012.
The proxy statement and the annual report to stockholders are available at
http://www.techprecision.com/reports_and_proxy.html
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED.INDICATED, OR IF NO CONTRARY INDICATIONDIRECTION IS MADE, THE PROXYINDICATED, WILL BE VOTED IN FAVOR OF ELECTING EACH OF THE SIXEIGHT NOMINEES TO THE BOARD OF DIRECTORS, FORDIRECTORS; "FOR" PROPOSALS 2, 3, AND 3,4; FOR "ONE YEAR" FOR PROPOSAL 5; AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSON NAMED AS PROXY HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.DIRECTORS OF TECHPRECISION CORPORATION.
(Continued, and to be marked, dated and signed, on the reverse side) Signature | | | | Signature | | | Date | , 2012 |
Note: Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer, please give title as such.
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