☐ | Preliminary Proxy Statement | ||
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ý | Definitive Proxy Statement | ||
☐ | Definitive Additional Materials | ||
☐ | Soliciting Material Pursuant to §240.14a-12 |
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☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
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2:23, 2019
301
9, 2019
23, 2019
301
1. | Election of Frank D. Bracken, III, Henry B. Ellis, Daniel R. Lockwood, |
2. | Ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
3. | Amendment of our Amended and Restated 2016 Incentive Plan to increase the number of shares available for issuance under such plan, provide for further annual automatic increases in the number of shares available for issuance, and extend the term of such plan; and |
4. | Transaction of such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting. |
301
23, 2019
1. | To elect Frank D. Bracken, III, Henry B. Ellis, Daniel R. Lockwood, |
2. | To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the year ending December 31, |
3. | To amend our Amended and Restated 2016 Incentive Plan to increase the number of shares available for issuance under such plan, provide for further annual automatic increases in the number of shares available for issuance, and extend the term of such plan; and |
4. | To transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting. |
We know of no other business that will be presented at the Annual Meeting. If any other matter properly comes before the stockholders for a vote at the Annual Meeting, however, the proxy holders named on the Company’s proxy card will vote your shares in accordance with their best judgment.
1. | FOR the election of Frank D. Bracken, III, Henry B. Ellis, Daniel R. Lockwood, |
2. | FOR the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
3. | FOR the amendment of our Amended and Restated 2016 Incentive Plan to increase the number of shares available for issuance under such plan, provide for further annual automatic increases in the number of shares available for issuance, and extend the term of such plan. |
shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the Internet Notice or proxy materials, contact Broadridge Financial Solutions, Inc. (“Broadridge”) via telephone at1-800-579-1639, via internet atwww.proxyvote.com, or via email atsendmaterial@proxyvote.com.
atsendmaterial@proxyvote.com.
MEETINGS?
QUESTIONS AND ANSWERS ABOUT THE 2017 ANNUAL MEETING OF STOCKHOLDERS
* | by |
* | by Internet-You can vote over the Internet atwww.proxyvote.com by following the instructions on the Internet Notice or proxy card; or |
* | by Mail-You can vote by mail by signing, dating and mailing the proxy card, which you may have received by mail. |
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m., Central Time, on May 24, 2018.
23, 2019.
* | by submitting a duly executed proxy bearing a later date; |
* | by granting a subsequent proxy through the Internet or telephone; |
* | by giving written notice of revocation to the Secretary of Lonestar prior to or at the Annual Meeting; or |
* | by voting in person at the Annual Meeting. |
Your most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote in person at the Annual Meeting.
QUESTIONS AND ANSWERS ABOUT THE 2017 ANNUAL MEETING OF STOCKHOLDERS
Proposal | Votes | Effect of Votes Abstentions and | ||
| A director nominee will be elected to the Board if the votes of the Company’s Class A Common Stock and SeriesA-1 Preferred Stock, voting together as a single class and with the SeriesA-1 Preferred Stock voting on anas-converted basis, cast “FOR” the nominee exceed the votes cast “AGAINST” the nominee. | Abstentions and brokernon-votes will have no effect. | ||
| The favorable vote of a majority of the votes cast affirmatively or negatively by holders of the Company’s shares of Class A Common Stock and SeriesA-1 Preferred Stock, voting together as a single class and with the SeriesA-1 Preferred Stock voting on anas-converted basis. | Abstentions will have no effect. We do not expect any brokernon-votes on this proposal. | ||
| The favorable vote of a majority of the votes cast affirmatively or negatively by holders of the Company’s shares of Class A Common Stock and SeriesA-1 Preferred Stock, voting together as a single class and with the SeriesA-1 Preferred Stock voting on anas-converted basis. | Abstentions and brokernon-votes will have no effect. |
QUESTIONS AND ANSWERS ABOUT THE 2017 ANNUAL MEETING OF STOCKHOLDERS
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR the election of the |
Name | Age | Served as a Director Since | Position(s) with Lonestar | |||||
Frank D. Bracken, III | 54 | 2012 | Chief Executive Officer and Director | |||||
Henry B. Ellis | 68 | 2016 | Director | |||||
Daniel R. Lockwood | 60 | 2014 | Director | |||||
John H. Murray | 71 | 2016 | Director | |||||
Phillip Z. Pace | 54 | 2017 | Director | |||||
Matthew B. Ockwood | 34 | 2017 | Director | |||||
Stephen H. Oglesby | 68 | 2017 | Director | |||||
John H. Pinkerton | 64 | 2015 | Chairman | |||||
Dr. Christopher Rowland | 63 | 2013 | Director | |||||
Randy L. Wolsey | 68 | 2017 | Director |
Name | Age | Served as a Director Since | Position(s) with Lonestar | |||
Frank D. Bracken, III..................................................................... | 55 | 2012 | Chief Executive Officer and Director | |||
Henry B. Ellis................................................................................. | 69 | 2016 | Director | |||
Daniel R. Lockwood...................................................................... | 61 | 2014 | Director | |||
Phillip Z. Pace................................................................................ | 55 | 2017 | Director | |||
Matthew B. Ockwood.................................................................... | 35 | 2017 | Director | |||
Stephen H. Oglesby........................................................................ | 69 | 2017 | Director | |||
John H. Pinkerton........................................................................... | 65 | 2015 | Chairman | |||
Randy L. Wolsey............................................................................ | 69 | 2017 | Director |
FRANK D. BRACKEN, III | Age |
HENRY B. ELLIS | Age |
DANIEL R. LOCKWOOD | Age |
PROPOSAL 1—ELECTION OF DIRECTORS
management experience and is considered one of the industry’s leading experts in Shale Operations. We believe that Mr. Lockwood’s engineering and management experience in the oil and gas industry qualifies him for service on our board of directors.
MATTHEW B. OCKWOOD | Age |
John H. Murray has served as a director since October 2016. Mr. Murray isCo-Founder, Executive Chairman and Chief Compliance Officer of Ecofin Limited, roles he has held since its incorporation in June 1991. Before founding Ecofin Limited, John headed the corporate finance department and was a member of the management committee of Swiss Bank Corporation’s London- based investment banking business. Prior to joining Swiss Bank Corporation, he worked for Morgan Stanley Group Inc. holding various corporate finance positions in the firm’s offices in New York, London, Sydney and Melbourne, an office which he headed. Mr. Murray is anon-executive director of the Ecofin Vista Long/Short Fund Limited and the Ecofin Global Renewable Infrastructure Fund Limited and of the BlackRock Frontiers Investment Trust plc. Mr. Murray earned his BA in Economics from Williams College and an MBA from Harvard Business School. We believe that Mr. Murray’s financial experience in the investment banking industry qualifies him for service on our board of directors.
|
STEPHEN H. OGLESBY | Age |
PHILLIP Z. PACE | Age |
PROPOSAL 1—ELECTION OF DIRECTORS
JOHN H. PINKERTON | Age |
RANDY L. WOLSEY | Age |
Dr. Christopher Rowland has served as a director of Lonestar since January 2013. He is also director of Special Situations for Ecofin Limited where he is responsible for monitoring and realizing investments. Prior to joining Ecofin Limited in 2006, Dr. Rowland formed and led equity research teams over a20-year period at several investment banks, including Merrill Lynch and Dresdner Klienwort Benson. Apart from his career as a research analyst, Dr. Rowland spent time setting up an alternative generator to buy coal-fired power stations in 1993. He has a Ph.D. for his research into the economics of UK oil taxation and holds a MSc (Economics) from the University of London and a BSc in Economics from the University of Bath. We believe that Dr. Rowland’s academic background in oil economics and his professional experience in finance and energy investment qualify him to serve on our board of directors.
|
The Board of Directors unanimously recommends a vote FOR the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm. |
2018.
Fee Category | 2017 | 2016 | ||||||
Audit Fees | $ | 722,709 | $ | 704,611 | ||||
Audit-Related Fees | — | — | ||||||
Tax Fees | $ | 169,725 | $ | 152,082 | ||||
All Other Fees | — | — | ||||||
Total Fees | $ | 892,434 | $ | 856,693 |
Fee Category | 2018 | 2017 | ||||||
Audit Fees......................................................................................................................................... | $ | 796,750 | $ | 779,709 | ||||
Audit-Related Fees............................................................................................................................ | — | — | ||||||
Tax Fees............................................................................................................................................ | 169,675 | 169,725 | ||||||
All Other Fees................................................................................................................................... | — | — | ||||||
Total Fees.......................................................................................................................................... | $ | 966,425 | $ | 949,434 |
2017.
2017.
described above.
The Board of Directors unanimously recommends a vote FOR the Plan |
* | As of December 31, 2018, a total of 840,776 shares remained available for issuance under the A&R 2016 Plan. This represented approximately 2.1% of our outstanding shares (on a fully converted basis). As of the Record Date, there were 921,458 shares remaining available for issuance under the A&R 2016 Plan. |
* | Following grants made in early 2019, we had nearly exhausted the number of shares available for issuance under the A&R 2016 Plan and did not have shares available to make any additional meaningful awards to any executives or key employees. Therefore, if additional shares are not approved, we will lose an important compensation tool aligned with shareholder interests to attract, motivate and retain highly qualified talent. |
* | The total aggregate equity value of the 800,000 initial additional authorized shares being requested under the A&R 2016 Plan, based on the closing price for our Class A Common Stock on December 31, 2018 of $3.65 per share is $2,920,000. |
* | Based on the number of shares of our Class A Voting Common Stock outstanding on an as-converted basis as of December 31, 2018 (24,645,825 shares outstanding plus 91,784 shares of Series A-1 Preferred Stock outstanding, which are convertible into 15,297,333 shares of Class A Common Stock, for a total of 39,943,158 shares of Class A Common Stock (including the Series A-1 Preferred Stock on an as-converted basis), the 3% annual increase in the number of authorized shares being requested under the A&R 2016 Plan would have resulted in an additional 1,198,295 shares authorized for issuance under the A&R 2016 Plan each year for a period of 10 years, noting that this amount will increase or decrease each year based on changes in our outstanding shares of Class A Voting Common Stock, on an as-converted basis. Assuming the number of our outstanding shares of Class A Voting Common Stock remains constant over the 10 year period, an additional 11,982,947 shares would become available for issuance over the life of the A&R 2016 Plan, which shares, based on the closing price for our Class A Common Stock on December 31, 2018 of $3.65 per share, have an aggregate value of $43,737,757. |
* | As of December 31, 2018, our end-of-year overhang rate, calculated by dividing (i) the number of shares subject to equity awards outstanding at the end of the fiscal year plus the number of shares remaining available for issuance under the A&R 2016 Plan by (ii) the number of Company shares outstanding at the end of the fiscal year on a fully diluted basis (including outstanding warrants), was approximately 7.4%. If approved, the issuance of the initial additional 800,000 shares to be reserved under the A&R 2016 Plan would dilute the holdings of shareholders by an additional 2.0% on a fully diluted basis, based on the number of shares of our Class A Common Stock outstanding as of December 31, 2018 and each additional annual increase in the shares to be reserved under the A&R 2016 Plan will further dilute the holdings of shareholders by up to an additional approximately 3% each year for the 10 year life of the Plan based on the number of shares of our Class A Common Stock outstanding as of December 31, 2018. If the Plan Amendment is approved, we expect our overhang at the end of fiscal year 2018 will be approximately 9.4% on a fully diluted basis (including the initial 800,000 shares that will be reserved for issuance under the A&R 2016 Plan upon approval of the Plan Amendment, but not including the annual increases thereafter). We believe this amount, along with the annual increases in the share reserve, to be appropriate in light of market competitive equity compensation levels, taking into account our current circumstances. |
KEY FEATURES OF THE A&R 2016 PLAN
* | Without shareholder approval, the A&R 2016 Plan prohibits any alteration or amendment that operates to increase the total number of shares of that may be issued under the plan (other than adjustments in connection with certain corporate reorganizations and other events) or to change the designation or class of persons eligible to receive awards under the plan. |
* |
* | The A&R 2016 Plan does not have single-trigger accelerated vesting provision for change in control. |
* | Awards may not be repriced, replaced or regranted through cancellation or modification without shareholder approval if the effect would be to reduce the exercise price for the shares under the award. |
* | A grant-date fair value limit of $500,000 per year will apply to awards to non-employee directors, with certain exceptions. Additional annual award limits will also apply for other participants. For additional information, see the discussion below under “Description of the A&R 2016 Plan-Award Limits.” |
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
ADDITIONAL INFORMATION ABOUT THE A&R 2016 PLAN
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
limitations imposed under the A&R 2016 Plan, Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), stock exchange rules and other applicable laws. The plan administrator has the authority to take all actions and make all determinations under the A&R 2016 Plan, to interpret the A&R 2016 Plan and award agreements and to adopt, amend and repeal rules for the administration of the A&R 2016 Plan as it deems advisable. The plan administrator also has the authority to determine which eligible service providers receive awards, grant awards and set the terms and conditions of all awards under the A&R 2016 Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the A&R 2016 Plan.
* | Stock Options. Stock options may be granted under the A&R 2016 Plan, including both incentive stock options andnon-qualified stock options, which provide the holder a right to purchase shares of Class A Common Stock at a specified exercise price. The exercise price per share for each stock option will be set by the plan administrator, but will not be less than the fair market value on the date of the grant (or 110% of the price of an incentive stock option in the case of an individual who, on the date of the grant, owns or is deemed to own shares representing more than 10% of the stock of the Company). The term of any option award may not be longer than ten years (or five years in the case of an incentive stock option granted to a 10% stockholder of the Company). The plan administrator will determine the time period for exercise of each award, including the time period for exercise following a termination of service by the recipient, subject to theten-year limitation. |
* | Stock Appreciation Rights. The plan administrator is authorized to grant stock appreciation rights (“SARs”) to eligible recipients in its discretion, on such terms and conditions as it may determine, consistent with the A&R 2016 Plan. A stock appreciation right entitles the holder to exercise the stock appreciation right to acquire shares of the Company’s Class A Common Stock upon exercise within a specified time period from the date of the grant. Subject to the provisions of the stock appreciation right award agreement, the recipient may receive from the Company an amount determined by multiplying the difference between the price per share of the stock appreciation right and the value of the share on the date of exercise by the number of shares of Class A Common Stock subject to the award. The maximum term for which stock appreciation rights may be exercisable under the A&R 2016 Plan is ten years. |
* |
|
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
each award. Such awards will be subject to restrictions and other terms and conditions as are established by the plan administrator. Upon issuance of restricted stock, recipients generally have the rights of a stockholder with respect to such shares, subject to the limitations and restrictions established by the plan administrator in the individual award agreement. Such rights generally include the right to receive dividends and other distributions in relation to the award. |
* | Restricted Stock Units. The A&R 2016 Plan authorizes awards of restricted stock units to eligible individuals in amounts and at purchase prices and upon such other terms and conditions as are established by the plan administrator for each award. Restricted stock unit awards entitle recipients to acquire shares of the Company’s Class A Common Stock in the future under certain conditions. Holders of restricted stock units generally have no rights of ownership or as stockholders in relation to the award, unless and until the restrictions lapse and the restricted stock unit award vests in accordance with the terms of the grant. Restricted stock units may be accompanied by the right to receive the equivalent value of dividends paid on shares of the Company’s Class A Common Stock prior to the delivery of the underlying shares (i.e., dividend equivalent rights). The plan administrator may provide that settlement of restricted stock units will occur upon or as soon as reasonably practicable after the restricted stock units vest or will instead be deferred, on a mandatory basis or at the participant’s election, in a manner intended to comply with Section 409A of the Code. |
* | Other Stock or Cash Based Awards. Other stock or cash-based awards are awards of cash, fully vested shares of the Company’s Class A Common Stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of the Company’s Class A Common Stock. Other stock or cash-based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation otherwise payable to any individual who is eligible to receive awards. The plan administrator will determine the terms and conditions of other stock or cash-based awards, including any purchase price, performance goals (which may be based on performance criteria), transfer restrictions and vesting conditions. |
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
A&R 2016 Plan also permits the plan administrator to provide for objectively determinable adjustments to the applicable performance criteria in setting such performance goals.
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
Moreover, the following is only a summary of United States federal income tax consequences. Actual tax consequences to participants may be either more or less favorable than those described below depending on the participant’s particular circumstances.
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
time, less the amount paid, if any, by the participant for the restricted stock. If a Section 83(b) election is made, no additional income will be recognized by the participant upon the lapse of restrictions on the restricted stock, but, if the restricted stock is subsequently forfeited, the participant may not deduct the income that was recognized pursuant to the Section 83(b) election at the time of the receipt of the restricted stock.
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
Generally speaking, Section 409A does not apply to incentive stock options,non-discountednon-qualified non-discounted non-qualified stock options and stock appreciation rights if no deferral is provided beyond exercise, or restricted stock.
Group | Number of Restricted Stock Units Outstanding as of December 31, 2017 | Number of Stock Appreciation Rights Outstanding as of December 31, 2017 | ||||||
All current executive officers | 338,409 | 310,000 | ||||||
All current directors who are not executive officers | 100,000 | 100,000 | ||||||
All employees who are not current executive officers | 290,500 | 280,000 | ||||||
Former Employees | — | — | ||||||
Total | 728,909 | 690,000 |
Group | Number of Restricted Stock Units Outstanding as of December 31, 2018 (1) | Number of Stock Appreciation Rights Outstanding as of December 31, 2018 (2) | ||||
Frank D. Bracken, III, Chief Executive Officer.............................. | 190,000 | 250,000 | ||||
Barry D. Schneider, Chief Operating Officer.................................. | 105,000 | 135,000 | ||||
Gregory R. Packer, Vice President, General Counsel & Corporate Secretary........................................................................... | 42,045 | 12,500 | ||||
All current executive officers.......................................................... | 101,000 | 92,500 | ||||
All current directors who are not executive officers....................... | 160,000 | 200,000 | ||||
All employees who are not current executive officers.................... | 404,500 | 312,500 | ||||
Total................................................................................................. | 1,002,545 | 1,002,500 |
(1) | In addition to the amounts shown in this column, the following individuals and groups have received the following number of restricted stock units that vested prior to December 31, 2018: Mr. Bracken: 60,000; Mr. Schneider: 30,000; Mr. Packer: 11,363; All current executive officers: 24,000; Current directors who are not executive officers: 40,000; and All employees who are not current executive officers: 120,200. |
(2) | In addition to the amounts shown in this column, the following individuals and groups have received the following number of stock appreciation rights that vested prior to December 31, 2018: Mr. Bracken: 60,000; Mr. Schneider: 30,000; All current executive officers: 24,000; Current directors who are not executive officers: 40,000; and All employees who are not current executive officers: 112,000. |
Plan Category | Number of securities to be issued upon vesting of restricted stock and exercise (a) | Weighted-average exercise price of outstanding options, warrants and rights(2) (b) | Number of securities remaining (c) | |||||||||
Equity compensation plans approved by | 728,909 | $ | 7.20 | 1,471,091 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 728,909 | $ | 7.20 | 1,471,091 |
Plan Category | Number of securities to be issued upon vesting of restricted stock and exercise of stock appreciation rights(1) (a) | Weighted-average exercise price of outstanding options, warrants and rights(2) (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3) (c) | |||||||
Equity compensation plans approved by security holders.................................................. | 1,011,046 | $ | 6.30 | 1,850,776 | ||||||
Equity compensation plans not approved by security holders................................................... | — | — | — | |||||||
Total........................................................................ | 1,011,046 | $ | 6.30 | 1,850,776 |
(1) | Amount shown includes 0 shares issuable upon exercise of outstanding stock appreciation rights, which generally may be settled either in stock or in cash at the holder’s election. The number of shares issuable was determined based upon our closing stock price on December |
PROPOSAL 3—INCENTIVE PLAN AMENDMENT
(2) | Amount shown reflects the weighted average exercise price of outstanding stock appreciation rights, of which there were |
(3) | Amount shown includes |
Name | Age | Position | ||||
Frank D. Bracken, III.1....................................................... | 55 | Chief Executive Officer and Director | ||||
Barry D. Schneider2........................................................... | 56 | Chief Operating Officer | ||||
Jason N. Werth3................................................................... | 43 | Chief | ||||
Jana Payne4......................................................................... | 57 | Vice | ||||
Gregory R. Packer5............................................................. | ||||||
| 39 | Vice President, General Counsel & Corporate Secretary | ||||
Thomas H. Olle6.................................................................. | 64 | Vice President-Reservoir Engineering |
1 | See biography on page |
2 | Barry D. Schneider is our Chief Operating Officer. Mr. Schneider has served in this position since May 2014. Prior to joining us, Mr. Schneider held the position of Vice |
3 | Jason N. Werth is our Chief |
4 | Jana Payne was appointed our Vice |
EXECUTIVE OFFICERS
5 | Gregory R. Packer was appointed our Vice President, General Counsel & Corporate Secretary in October 2017. Prior to his appointment, Mr. Packer held the position of Senior Vice President, General Counsel & Corporate Secretary of Howard Energy Partners, a midstream company with operations in the Eagle Ford shale, Marcellus shale and Permian Basin from 2013 to 2017. Before joining Howard Energy, Mr. Packer practiced corporate and securities law at Latham & Watkins LLP, where he represented public and private companies and private equity sponsors in a wide range of transactions, including company formation, private and public mergers and acquisitions, as well as accessing equity and debt markets through private and public offerings, including initial public offerings. Mr. Packer is a graduate of the University of Chicago Law School, where he was a Lowenstein Scholar. Prior to attending law school, Mr. Packer obtained both Master’s and Bachelor’s degrees in accounting from Brigham Young University, where he was a G. Roger Victor Scholar. |
6 | Thomas H. Olle is our Vice President-Reservoir Engineering. Mr. Olle has served in this position since May 2017. Prior to that, Mr. Olle served as our Senior Vice President-Operations from August 2010. Mr. Olle has over 35 years of oil and gas industry experience in multiple facets of the business, such as reservoir management and management of unconventional resource development projects including horizontal well field development and tertiary recovery projects. Mr. Olle also has significant experience with reserve evaluation and reporting, production engineering and operations, and business development functions including acquisitions, divestitures and new ventures. During his tenure at Encore Acquisition Company, Mr. Olle served as Vice President-Strategic Solutions and also held executive positions responsible for asset management and engineering. He also served as Senior Engineering Advisor for Burlington Resources from December 1985 to March 2002 and District Reservoir Engineer for Southland Royalty Company from May 1982 to December 1985. Mr. Olle holds a Bachelor’s of Science in Mechanical Engineering with Highest Honors from the University of Texas in Austin. |
On October 26, 2016, we entered into a Board Representation Agreement with EF Realisation (the “Board Representation Agreement”). Under the Board Representation Agreement, for as long as EF Realisation owns 15% or more of the issued and outstanding shares of our Class A Common Stock, it has the right to nominate up to, but no more than, two directors (each, a “Designee”) to serve on the Board and for as long as EF Realisation owns at least 10% but less than 15% of our issued and outstanding shares of Class A Common Stock, it has the right to nominate up to, but no more than, one director to serve on the Board. EF Realisation currently has the right to designate two nominees and has designated Christopher Rowland and John H. Murray for election to our Board. If a vacancy is created on the Board as a result of the death, disability, retirement, resignation or removal of any Designee, EF Realisation has the right to nominate a replacement director.
In addition, the Board considered that an individual who sold the Company a piece of property adjacent to the Company’s corporate headquarters in February 2019 was indebted to certain trusts that name the children of Mr. Pinkerton as beneficiaries. The Company believes that a portion of the proceeds of this sale have been used to repay such debts outstanding, though the Company has no interest or influence over any particular outcome.
CORPORATE GOVERNANCE
Name | Audit & Risk | Compensation | Nominating and Corporate Governance | |||
Frank D. Bracken, | — | — | — | |||
Henry B. | Chair | — | X | |||
Daniel R. | — | — | — | |||
| — | — | — | |||
Stephen H. Oglesby................................................................................... | X | — | X | |||
| — | |||||
| X | — | ||||
| — | |||||
| Chair | Chair | ||||
| ||||||
Randy L. | X | X | — |
CORPORATE GOVERNANCE
* | appointing, retaining, overseeing, approving the compensation of, and assessing the independence of our independent registered public accounting firm and any other registered public accounting firm that may be engaged for audit, attestation and related services; |
* | reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; |
* | discussing the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; |
* | discussing with the independent registered public accounting firm audit problems or difficulties; |
* | discussing our risk assessment and management policies; |
* | reviewing and approving related person transactions; |
* | reviewing and pre-approving audit and non-audit services proposed to be performed by the independent registered public accounting firm, as further described on page 15 of this proxy statement; and |
* | establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting or auditing matters. |
The Audit and Risk Committee charter is available on our website at www.lonestarresources.com. The members of the Audit and Risk Committee are Mr. Ellis, Mr. Oglesby and Mr. Wolsey, all of whom meet the independence requirements under Rule10A-3 promulgated under the Exchange Act and the Nasdaq Rules, including those related to Audit and Risk Committee membership. Mr. Ellis serves as the Chairperson of the Audit and Risk Committee. The members of our Audit and Risk Committee meet the requirements for financial literacy under the applicable Nasdaq Rules. Our Board has determined that Mr. Ellis is an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of RegulationS-K.
2018.
* | reviewing and setting or making recommendations to the Board regarding the compensation of the CEO and the other executive officers; |
* | reviewing and approving or making recommendations of the Board regarding our cash and equity incentive plans and arrangements; |
* | reviewing and making recommendations to our Board with respect to director compensation; and |
* | reviewing and discussing with management our compensation disclosures if required by SEC rules. |
Pursuant to the Compensation Committee’s charter, which is available on our website atwww.lonestarreources.com, the Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. The Compensation Committee may delegate its authority under its charter to a subcommittee as it deems appropriate from time to time. The Compensation Committee has the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it deems appropriate, including the authority to request any officer, employee or adviser of the Company to meet with the Compensation Committee or any advisers engaged
CORPORATE GOVERNANCE
by the Compensation Committee. In addition to the foregoing and other authority expressly delegated to the Compensation Committee in the charter, the Compensation Committee may also exercise any other powers and carry out any other responsibilities consistent with the charter, the purposes of the Compensation Committee, the Company’s bylaws and applicable Nasdaq Rules.
2018.
* | identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board, except where the Company is legally required by contract, bylaw or otherwise to provide third parties with the right to designate directors, including pursuant to the SPA (for so long as such agreement is in effect); |
* | reviewing, at least annually, the Board committee structure and, except where the Company is legally required by contract, bylaw or otherwise to provide third parties with the right to designate directors to serve on committees of the Board, including pursuant to the SPA (for so long as such agreement is in effect), recommending to the Board for its approval directors to serve as members of each committee; |
* | overseeing the periodic self-evaluations of management and the Board and its committees; and |
* | developing and recommending to our Board a set of corporate governance guidelines and principles. |
The Nominating and Corporate Governance Committee charter is available on our website atwww.lonestarresources.com. Our Nominating and Corporate Governance Committee consists of Mr. Ellis, Mr. Oglesby, and Mr. Pinkerton, with Mr. Pinkerton serving as the Chair.Chairperson. All members of our Nominating and Corporate Governance Committee qualify as independent under the Nasdaq Rules. The Nominating and Corporate Governance Committee has the authority to consult with outside advisors or retain search firms to assist in the search for qualified candidates or consider director candidates recommended by our stockholders.
* | Frank D. Bracken, III, Chief Executive Officer; |
* | Barry D. Schneider, Chief Operating Officer; and |
* | Gregory R. Packer, Vice President, General Counsel & Corporate Secretary. |
Our compensation committee strives to align Lonestar’s compensation strategy with company performance and stockholder interests and ensure that it is equitable for participants. Compensation for named executive officers includes a fixed component (consisting of base salaries, 401(k) plan contributions and other health and welfare benefits), discretionary annual cash bonus opportunities and long-term equity incentive awards, and such other benefits as discussed below.
Name and Principal Position Frank D. Bracken, III Chief Executive Officer Barry D. Schneider Chief Operating Officer Thomas H. Olle Vice President—Reservoir Engineering20172018 and 2016.2017: Year Salary
($) Bonus
($) Stock
Awards(1)
($) Option
Awards(1)
($) All Other
Compensation
($) Total ($) 2017 600,000 600,000 (5) 900,000 467,454 23,987 (2) 2,591,441 2016 600,000 300,000 — — 454,603 (2) 1,354,603 2017 420,000 315,000 (5) 450,000 233,727 30,274 (3) 1,449,001 2016 420,000 210,000 — — 30,702 (3) 660,702 2017 304,167 75,000 (5) 150,000 77,909 20,200 (4) 627,276 2016 350,000 75,000 — — 20,200 (4) 445,200 Name and Principal Position Year Salary ($) Bonus ($) All Other Compensation ($) Total ($) Frank D. Bracken, III 2018 600,000 446,000 219,000 2,195,742 Chief Executive Officer......................... 2017 600,000 600,000 900,000 467,454 23,987 2,591,441 Barry D. Schneider 2018 420,000 267,600 131,400 1,271,999 Chief Operating Officer......................... 2017 420,000 315,000 450,000 233,727 30,274 1,449,001 2018 300,000 111,500 27,375 674,875 (1) Amounts reflect the full grant-date fair value of restricted stock units (shown under the heading Stock Awards) and stock appreciation rights (shown under the heading Option Awards) in each case granted during 20172018 in accordance with FASB ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all stock awards and option awards made to executive officers in Note 12 of our consolidated financial statements included in our Annual Report on Form10-K for the year ended December 31, 2017.2018.(2) For 2017,2018, includes $9,987$7,742 for executive medical coverage, $14,000 representing Mr. Bracken’s auto allowance and $0$9,000 representing company matchedcompany-matched 401(k) contributions. For 2016, includes $440,033 special payment to assist with tax obligations as a result of stock compensation awarded in 2013, $570 for executive medical coverage, $14,000 representing Mr. Bracken’s auto allowance.(3) For 2017, includes $7,6742018, $9,999 for executive medical coverage, $12,000 representing Mr. Schneider’s auto allowance and $10,600$11,000 representing company matched 401(k) contributions. For 2016, includes $8,102 for executive medical coverage, $12,000 representing Mr. Schneider’s auto allowance and $10,600 representing company matchedcompany-matched 401(k) contributions.
EXECUTIVE AND DIRECTOR COMPENSATION
(4) | For |
(5) | Amount shown reflects annual bonuses for services in |
2018.
EXECUTIVE AND DIRECTOR COMPENSATION
Code of 1986, as amended (the “Code”). The Company supplements the employee’s contribution by providing a matching contribution of 100% of up to the first 4% contributed by each employee. This matching contribution is deposited on each semi-monthly payroll and is 100% vested to the employee’s account.
The following table reflects information regarding outstanding restricted stock unit awards and stock appreciation rights awards held by our named executive officers as of December 31, 2017. None of our named executive officers hold any option awards.
Option Awards(1) | Stock Awards(2) | |||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Stock Appreciation Rights (#) Exercisable | Number of Securities Underlying Unexercised Stock Appreciation Rights (#) Unexercisable | Exercise Price of Stock Appreciation Rights ($) | Stock Appreciation Rights: Expiration Date | Number of Units That Have Not Vested | Market Value of Units That Have Not Yet Vested(3) | |||||||||||||||||||||
Frank D. Bracken, III | 2/23/2017 | 150,000 | 0 | 7.20 | 2/23/2022 | 150,000 | 595,500 | |||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||
Barry D. Schneider | 2/23/2017 | 75,000 | 0 | 7.20 | 2/23/2022 | 75,000 | 297,750 | |||||||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||||||||||
Thomas H. Olle | 2/23/2017 | 25,000 | 0 | 7.20 | 2/23/2022 | 25,000 | 99,250 | |||||||||||||||||||||
Vice President—Reservoir Engineering |
Option Awards(1) | Stock Awards(2) | |||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Stock Appreciation Rights (#) Exercisable | Number of Securities Underlying Unexercised Stock Appreciation Rights (#) Unexercisable | Exercise Price of Stock Appreciation Rights ($) | Stock Appreciation Rights: Expiration Date | Number of Units That Have Not Vested | Market Value of Units That Have Not Yet Vested ($)(3) | |||||||||||||
Frank D. Bracken..................... | 4/6/2018 | — | 100,000 | 4.46 | 4/6/2023 | 100,000 | 365,000 | |||||||||||||
Chief Executive Officer | 2/23/2017 | 60,000 | 90,000 | 7.20 | 2/23/2022 | 90,000 | 328,500 | |||||||||||||
Barry D. Schneider................... | 4/6/2018 | — | 60,000 | 4.46 | 4/6/2023 | 60,000 | 219,000 | |||||||||||||
Chief Operating Officer | 2/23/2017 | 30,000 | 45,000 | 7.20 | 2/23/2022 | 45,000 | 164,250 | |||||||||||||
Gregory R. Packer.................... | 4/6/2018 | — | 12,500 | 4.46 | 4/6/2023 | 25,000 | 91,250 | |||||||||||||
Vice President, General Counsel & Corporate Secretary | 10/16/17 | — | — | — | — | 17,045 | 62,214 |
(1) | Reflects the number of outstanding |
(2) | The restricted stock units shown in the table above for Mr. Bracken, Mr. Schneider, and Mr. |
EXECUTIVE AND DIRECTOR COMPENSATION
(3) | Represents the market value of each award based on the closing price of |
Names Henry B. Ellis Daniel R. Lockwood John H. Murray Matthew B. Ockwood Stephen H. Oglesby Phillip Z. Pace John H. Pinkerton(3) Dr. Christopher Rowland Randy L. Wolsey20172018 provided eachnon-employee director compensation with a fixed fee and, for the chairman of the board of directors, a grant of restricted stock units and stock appreciation rights for his service. The following table sets forth the compensation earned by eachnon-employee Directors during our fiscal year ended December 31, 2017.2018. Fees Earned or Paid in Cash ($)(1) Stock Awards ($)(2) Option Awards
($)(2) Total
($) 60,000 — — 60,000 50,000 — — 50,000 50,000 — — 50,000 — — — — 50,000 — — 50,000 — — — — — 350,000 312,000 662,000 50,000 — — 50,000 50,000 — — 50,000 Names Total ($) Henry B. Ellis.............................................................................. 60,000 — — 60,000 Daniel R. Lockwood................................................................... 50,000 — — 50,000 38,630 — — 38,630 Matthew B. Ockwood................................................................. — — — — Stephen H. Oglesby..................................................................... 50,000 — — 50,000 Phillip Z. Pace............................................................................. — — — — — 446,000 219,097 665,097 38,630 — — 38,630 Randy L. Wolsey......................................................................... 50,000 — — 50,000 (1) Represents the cash portion of the annual board fees and chair fees. (2) Amounts reflect the full grant-date fair value of restricted stock units and stock appreciation rights granted during 20172018 in accordance with FASB ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all stock awards and option awards made to executive officers in Note 12 of our consolidated financial statements included in our Annual Report on Form10-K for the year ended December 31, 2017.2018.(3) As described in this proxy statement under the heading “Board Composition”, each of John H. Murray and Dr. Christopher Rowland submitted their resignations to the Board on October 10, 2018 and October 9, 2018, respectively. (4) 2017,2018, Mr. Pinkerton was granted 100,000 restricted stock units and 100,000 stock appreciation rights. The restricted stock units and stock appreciation rights each vest 40% on February 23, 2018,April 6, 2019, 30% on February 23, 2019April 6, 2020 and 30% on February 23, 2020.April 6, 2021. The exercise price of the stock appreciation rights is $7.20,$4.46, and the stock appreciation rights expire on February 22, 2022.April 6, 2023. As of December 31, 2018, Mr. Pinkerton held 160,000 unvested restricted stock units and 200,000 stock appreciation rights.
Name Of Beneficial Owner | Number of Shares of Class A Common Stock Beneficially Owned | Percentage of Outstanding Class A Common Stock | Number of Shares of SeriesA-1 Preferred Stock Beneficially Owned | Percentage of Outstanding SeriesA-1 Preferred Stock | Percentage of Outstanding Class A Common Stock and SeriesA-1 Preferred Stock on an As-Converted Basis | |||||||||||||||
5% or Greater Stockholders | ||||||||||||||||||||
Chambers Energy Capital III, LP1 | — | — | 85,857 | 100 | % | 36.7 | % | |||||||||||||
EF Realisation2 | 4,174,259 | 16.9 | % | — | — | 10.7 | % | |||||||||||||
Leucadia National Corporation3 | 4,478,488 | 17.8 | % | — | — | 11.4 | % | |||||||||||||
Sanchez Energy Corporation4 | 1,500,000 | 6.1 | % | — | — | 3.9 | % | |||||||||||||
NorthPointe Capital, LLC5 | 1,455,198 | 5.9 | % | — | — | 3.7 | % | |||||||||||||
Named Executive Officers and Directors | ||||||||||||||||||||
Frank D. Bracken, III6 | 89,923 | * | — | — | * | |||||||||||||||
Barry D. Schneider6 | 64,252 | * | — | — | * | |||||||||||||||
Thomas H. Olle6 | 39,911 | * | — | — | * | |||||||||||||||
Directors (other than Mr. Bracken) | ||||||||||||||||||||
Henry B. Ellis | 35,714 | * | — | — | * | |||||||||||||||
Daniel Lockwood | 8,982 | * | — | — | * | |||||||||||||||
John H. Murray7 | 59,009 | * | — | — | * | |||||||||||||||
Matthew B. Ockwood | — | — | — | — | — | |||||||||||||||
Stephen H. Oglesby | 10,000 | * | — | — | * | |||||||||||||||
Phillip Z. Pace | — | — | — | — | — | |||||||||||||||
John H. Pinkerton6 | 140,700 | * | — | — | * | |||||||||||||||
Dr. Christopher Rowland8 | 77,438 | * | — | — | * | |||||||||||||||
Randy L. Wolsey | 15,000 | * | — | — | * | |||||||||||||||
All executive officers and directors as a group (14 persons) | 566,249 | 2.3 | % | — | — | 1.5 | % |
Names of Beneficial Owner | Number of Shares of Class A Common Stock Beneficially Owned | Percentage of Outstanding Class A Common Stock | Number of Shares of Series A-1 Preferred Stock Beneficially Owned | Percentage of Outstanding Series A-1 Preferred Stock | Percentage of Outstanding Class A Common Stock and Series A-1 Preferred Stock on an As-Converted Basis | ||||||||||
5% or Greater Stockholders | |||||||||||||||
Chambers Energy Capital III, LP1............................. | — | — | 93,849 | 100% | 38.7% | ||||||||||
Jefferies Financial Group Inc.2.................................. | 4,478,488 | 18.1% | — | — | 11.1% | ||||||||||
B. Riley Financial, Inc.3............................................. | 2,430,251 | 9.8% | — | — | 6.0% | ||||||||||
Sanchez Energy Corporation4.................................... | 1,500,000 | 6.1% | — | — | 3.7% | ||||||||||
Named Executive Officers and Directors | |||||||||||||||
Frank D. Bracken, III5............................................... | 200,664 | * | — | — | * | ||||||||||
Barry D. Schneider5................................................... | 120,949 | * | — | — | * | ||||||||||
Gregory R. Packer5.................................................... | 18,698 | * | — | — | * | ||||||||||
Directors (other than Mr. Bracken) | |||||||||||||||
Henry B. Ellis............................................................ | 40,000 | * | — | — | * | ||||||||||
Daniel Lockwood...................................................... | 31,205 | * | — | — | * | ||||||||||
Matthew B. Ockwood................................................ | — | — | — | — | — | ||||||||||
Stephen H. Oglesby................................................... | 10,000 | * | — | — | * | ||||||||||
Phillip Z. Pace........................................................... | — | — | — | — | — | ||||||||||
John H. Pinkerton6..................................................... | 180,700 | * | — | — | * | ||||||||||
Randy L. Wolsey........................................................ | 15,000 | * | — | — | * | ||||||||||
All executive officers and directors as a group (13 persons).................................................................... | 706,238 | 2.9% | — | — | 1.7% |
* | Less than one percent. |
1 | Based on a Schedule |
2 | Based on a Schedule |
3 | Based on a Schedule 13G filed by B. Riley Financial, Inc. (“BRF”), B. Riley Capital Management, LLC (“BRCM”), BRC Partners Management GP, LLC (“BRPGP”), BRC Partners Opportunity Fund, LP (“BRPLP”), BR Dialectic Capital Management, LLC (“BR Dialectic”) and Dialectic Antithesis Partners, LP (“Dialectic” and, collectively with BRF, BRCM, BRPGP, BRPLP and BR Dialectic, “B.Riley”) on January 23, 2019, (i) BRF reports shared voting and dispositive power with respect to 2,430,251 shares, (ii) BRCM reports shared voting and dispositive power with respect to 2,430,251 shares (iii) BRPGP reports shared voting and dispositive power with respect to 556,353 shares, (iv) BRPLP reports shared voting and dispositive power with respect to 556,353 shares, (v) BR Dialectic reports shared voting and dispositive power with respect to 1,873,898 shares and (vi) Dialectic reports shared voting and dispositive power with respect to 1,873,898 shares. BRPGP is the general partner of BRPLP and BRCM is an investment advisor to BRPLP. BR Dialectic is the general partner of and an investment advisor to Dialectic, BR Dialectic is a wholly-owned subsidiary of BRCM, and BRF is the parent company of BRCM. BRF is the parent company of BRCM. The address of (i) each BRCM, BRPGP and BRPLP is 11100 Santa Monica Blvd., Suite 800, Los Angeles, California 90025, (ii) each of BR Dialectic and Dialectic is 119 Rowayton Avenue, 2nd Floor, Norwalk, Connecticut 06853 and (iii) BRF is 21255 Burbank Blvd., Suite 400, Woodland Hills, CA 91367. |
4 | Based on a Schedule 13G filed by Sanchez Energy Corporation and SN UR Holdings, LLC on November 9, 2017, consists of 1,500,000 shares directly held by SN UR Holdings, LLC, which is a wholly-owned subsidiary of Sanchez Energy Corporation. Sanchez Energy Corporation and SN UR Holdings, LLC each have shared voting and investment power over these shares. The address of Sanchez National Corporation and SN UR Holdings, LLC is 1000 Main Street, Suite 3000, Houston, Texas 77002. |
5 | Each of Mr. Bracken, Mr. Schneider, Mr. |
CERTAIN RELATIONSHIPS
of the Company’s Class A Common Stock, on anas-converted basis, the Approved Holders will have the right to designate one director to the Board. Pursuant to the terms described above, Chambers currently has the right to designate two nominees and have designated Matthew B. Ockwood and PhilipPhillip Z. Pace for election to our Board. If a vacancy is created on the Board as a result of the death, disability, retirement, resignation or removal of any Designee, the Approved Holders have the right to nominate a replacement director.
LEUCADIA
EF REALISATION
On October 26, 2016, we entered into a Board Representation Agreement with EF Realisation. Under the Board Representation Agreement, for as long as EF Realisation owns 15% or more of the issued and outstanding shares of our Class A Common Stock, it has the right to nominate up to, but no more than, two directors to serve on the Board and for as long as EF Realisation owns at least 10% but less than 15% of our issued and outstanding shares of Class A Common Stock, it has the right to nominate up to, but no more than, one director to serve on the Board.
On October 26, 2016, we entered into a Registration Rights Agreement (the “EF Realisation RRA”) with EF Realisation, pursuant to which we agreed to register for resale Class A Common Stock held by EF Realisation. Pursuant to the EF Realisation RRA, the Company has agreed to provide to EF Realisation certain customary demand and piggyback registration rights relating to EF Realisation’s ownership of Company stock. The EF Realisation RRA contains customary terms and conditions, including certain customary indemnification obligations.
CERTAIN RELATIONSHIPS
2018.
filed late.
2019.
301
paid by the Participant for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will, as applicable, become or again be available for Award grants under the Plan. Further, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award and/or to satisfy any applicable tax withholding obligation (including Shares retained by the Company from the Award being exercised or purchased and/or creating the tax obligation) will, as applicable, become or again be available for Award grants under the Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not count against the Overall Share Limit.
The Administrator will determine the number of Shares covered by each Option and Stock Appreciation Right, the exercise price of each Option and Stock Appreciation Right and the conditions and limitations applicable to the exercise of each Option and Stock Appreciation Right. A Stock Appreciation Right will entitle the Participant (or other person entitled to exercise the Stock Appreciation Right) to receive from the Company upon exercise of the exercisable portion of the Stock Appreciation Right an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the exercise price per Share of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose and payable in cash, Shares valued at Fair Market Value or a combination of the two as the Administrator may determine or provide in the Award Agreement.
Agreement. In addition, unless the Administrator provides otherwise, if any dividends or distributions are paid in Shares, or consist of a dividend or distribution to holders of Common Stock of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid.
amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, Change in Control, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, other similar corporate transaction or event, other unusual or nonrecurring transaction or event affecting the Company or its financial statements or any change in any Applicable Laws or accounting principles, the Administrator, on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event (except that action to give effect to a change in Applicable Law or accounting principles may be made within a reasonable period of time after such change) and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Award granted or issued under the Plan, (y) to facilitate such transaction or event or (z) give effect to such changes in Applicable Laws or accounting principles:
assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the share price of Common Stock, including any Equity Restructuring or any securities offering or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up to sixty days before or after such transaction.
use of one of the foregoing methods if one or more of the exercise methods below is permitted, (ii) to the extent permitted by the Administrator, in whole or in part by delivery of Shares, including Shares retained from the Award creating the tax obligation, valued at their Fair Market Value, (iii) if there is a public market for Shares at the time the tax obligations are satisfied, unless the Company otherwise determines, (A) delivery (including telephonically to the extent permitted by the Company) of a notice that the Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon exercise of the Award and that the broker has been directed to deliver promptly to the Company sufficient funds to satisfy the tax obligations, or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to satisfy the tax withholding; provided that such amount is paid to the Company at such time as may be required by the Administrator, or (iv) to the extent permitted by the Company, any combination of the foregoing payment forms approved by the Administrator. If any tax withholding obligation will be satisfied under clause (ii) of the immediately preceding sentence by the Company’s retention of Shares from the Award creating the tax obligation and there is a public market for Shares at the time the tax obligation is satisfied, the Company may elect to instruct any
Stockholder, the exercise price will not be less than 110% of the Fair Market Value on the Option’s grant date, and the term of the Option will not exceed five years. All Incentive Stock Options will be subject to and construed consistently with Section 422 of the Code. By accepting an Incentive Stock Option, the Participant agrees to give prompt notice to the Company of dispositions or other transfers (other than in connection with a Change in Control) of Shares acquired under the Option made within (i) two years from the grant date of the Option or (ii) one year after the transfer of such Shares to the Participant, specifying the date of the disposition or other transfer and the amount the Participant realized, in cash, other property, assumption of indebtedness or other consideration, in such disposition or other transfer. Neither the Company nor the Administrator will be liable to a Participant, or any other party, if an Incentive Stock Option fails or ceases to qualify as an “incentive stock option” under Section 422 of the Code. Any Incentive Stock Option or portion thereof that fails to qualify as an “incentive stock option” under Section 422 of the Code for any reason, including becoming exercisable with respect to Shares having a fair market value exceeding the $100,000 limitation under Treasury RegulationSection 1.422-4, will be aNon-Qualified Stock Option.
the sum of (i) 3,800,000 Shares and (ii) an annual increase on the first day of each calendar year beginning January 1, 2020 and ending on and including January 1, 2024, equal to the lesser of (A) 3% of the aggregate number of shares of Common Stock outstanding on an as-converted basis on the final day of the immediately preceding calendar year and (B) such smaller number of Shares as is determined by the Board.
all of convertible securities to Common Stock, (m) any business interruption event, (n) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles, or (o) the effect of changes in other laws or regulatory rules affecting reported results.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement and 2017 Annual Report is/are available at www.proxyvote.com.
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