UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the SecuritiesExchange Act of 1934
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Filed by a Party other than the Registrant | ☐ |
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☐ | Preliminary Proxy Statement |
☐ | Confidential, For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to § 240.14a-12 |
TOWERSTREAM CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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(4) | Date Filed: |
TOWERSTREAM CORPORATION
88 SILVA LANE
TECH IV
MIDDLETOWN, RHODE ISLAND 02842
Telephone: (401) 848-5848
NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS
The annual meetingSpecial Meeting of the stockholders of Towerstream Corporation (the “Company”) will be held on Tuesday, December 13, 2016,February 8, 2017, at 9:10:00 a.m. Eastern Standard TimeA.M. local time at 88 Silva Lane, Tech IV, Middletown, Rhode Island 02842 for the purposes of:of considering the following proposals:
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3. | To transact such other business as may properly come before the meeting or any adjournments thereof. |
Only stockholders of record of our common stock, our Series D Convertible Preferred Stock, our Series E Convertible Preferred Stock and our Series F Convertible Preferred Stock at the close of business on November 3, 2016January 5, 2017 will be entitled to attend and vote at the meeting.meeting, subject to beneficial ownership limitations governing the Series D Convertible Preferred Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock. A list of all stockholders entitled to vote at the annual meetingSpecial Meeting will be available at the principal office of the Company for the ten days prior to December 13, 2016.February 8, 2017. The list will be arranged in alphabetical order and show the address and number of shares held by each stockholder. It will be available for examination by any stockholder for any purpose germane to the annual meeting.Special Meeting. The proxy materials will be furnishedmailed to stockholders on or about November 9, 2016.
January 6, 2017.
| By Order of the Board of Directors
Chairman |
WHETHER OR NOT YOU PLAN ON ATTENDING THE MEETING IN PERSON, PLEASE VOTE AS PROMPTLY AS POSSIBLE TO ENSURE THAT YOUR VOTE IS COUNTED.
TOWERSTREAM CORPORATION
88 SILVA LANE
TECH IV
MIDDLETOWN, RHODE ISLAND 02842
Telephone:(401) 848-5848
PROXY STATEMENT
ANNUALSPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ONTUESDAY, DECEMBER 13, 2016February 8, 2017.
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Towerstream Corporation (referred to as the “Company”, “we,” “us,” or “our”) for use at the annual meetingSpecial Meeting of the Company’s stockholders to be held at 88 Silva Lane, Tech IV, Middletown, Rhode Island 02842 on Tuesday, December 13, 2016,February 8, 2017 at 9:10:00 a.m. Eastern Standard TimeA.M. local time and at any adjournments thereof. Whether or not you expect to attend the meeting in person, please vote your shares as promptly as possible to ensure that your vote is counted. The proxy materials will be furnishedmailed to stockholders on or about November 9, 2016.January 6, 2017.
REVOCABILITY OF PROXY AND SOLICITATION
Any stockholder executing a proxy that is solicited hereby has the power to revoke it prior to the voting of the proxy. Revocation may be made by attending the annual meetingSpecial Meeting and voting the shares of stock in person, or by delivering to the Secretary of the Company at the principal office of the Company prior to the annual meetingSpecial Meeting a written notice of revocation or a later-dated, properly executed proxy. Solicitation of proxies may be made by directors, officers and other employees of the Company by personal interview, telephone, facsimile transmittal or electronic communications. No additional compensation will be paid for any such services. This solicitation of proxies is being made by the Company which will bear all costs associated with the mailing of this proxy statement and the solicitation of proxies.
RECORD DATE
Holders of record of our common stock, our Series D Convertible Preferred Stock, our Series E Convertible Preferred Stock and our Series F Convertible Preferred Stock at the close of business on November 3, 2016,January 5, 2017 will be entitled to receive notice of, to attend and to vote at the meeting.
ACTION TO BE TAKEN UNDER PROXY
Unless otherwise directed by the giver of the proxy, the persons named in the form of proxy, namely, Philip Urso, our Interim Chief Executive Officer and Chairman, Arthur Giftakis, our Chief Operating Officer, and Frederick Larcombe, our Chief Financial Officer, or either one of them who acts, will vote:
| ● | FOR granting the |
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| ● | According to their judgment, on the transaction of such matters or other business as may properly come before the meeting or any adjournments thereof. |
Should any nominee named herein for election as a director become unavailable for any reason, it is intended that the persons named in the proxy will vote for the election of such other person in his stead as may be designated by the Board of Directors. The Board of Directors is not aware of any reason that might cause any nominee to be unavailable.
WHO IS ENTITLED TO VOTE; VOTE REQUIRED; QUORUM
As of November 3, 2016,January 5, 2017, the record date, there were 8,830,71518,308,979 shares of common stock issued and outstanding, 1,233 shares of Series D Convertible Preferred Stock issued and outstanding, 500,000 shares of Series E Convertible Preferred Stock and 1,233 shares of Series F Convertible Preferred Stock issued and outstanding, which constitute all of the outstanding capital stock of the Company. Holders of common stock are entitled to one vote for each share of common stock held by them.
Holders of Series D Convertible Preferred Stock are entitled to one vote for each share of Series D Convertible Preferred Stock held by them, on an as converted basis, on all matters voted on by holders of common stock, but not in excess of the Series D Beneficial Ownership Limitation (as defined herein). The Company is prohibited from effecting the conversion of the Series D Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 9.99%, in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series D Convertible Preferred Stock (the “Series D Beneficial Ownership Limitation”). All shares of common stock and Series D Convertible Preferred Stock shall vote together as a single class.One investor beneficially owns 973,437 shares of common stock and all of our outstanding shares of Series D Convertible Preferred Stock, Series E Convertible Preferred Stock, and Series F Convertible Stock.Taking into account conversion limitations, the Series D Convertible Preferred Stock are convertible into 950,597 shares of common stock that can be voted by the holders thereof as of the record date.
Holders of Series E Convertible Preferred Stock are entitled to one vote for each share of Series E Convertible Preferred Stock held by them, on an as converted basis, on all matters voted on by holders of common stock, but not in excess of the Series E Beneficial Ownership Limitation (as defined herein). The Company is prohibited from effecting the conversion of the Series E Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 9.99%, in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series E Convertible Preferred Stock (the “Series E Beneficial Ownership Limitation”). All shares of common stock and Series E Convertible Preferred Stock shall vote together as a single class.One investor beneficially owns 973,437 shares of common stock and all of our outstanding shares of Series D Convertible Preferred Stock, Series E Convertible Preferred Stock, and Series F Convertible Stock. Taking into account conversion limitations, and conversion of the Series D Convertible Preferred Stock as described above, none of the Series E Convertible Preferred Stock is convertible into shares of common stock that can be voted by the holders thereof as of the record date.
Holders of Series F Convertible Preferred Stock are entitled to one vote for each share of Series F Convertible Preferred Stock held by them, on an as converted basis, on all matters voted on by holders of common stock, but not in excess of the Series F Beneficial Ownership Limitation (as defined herein). The Company is prohibited from effecting the conversion of the Series F Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 9.99%, in the aggregate, of the issued and outstanding shares of the Company’s common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series F Convertible Preferred Stock (the “Series F Beneficial Ownership Limitation”). All shares of common stock and Series F Convertible Preferred Stock shall vote together as a single class.One investor beneficially owns 973,437 shares of common stock and all of our outstanding shares of Series D Convertible Preferred Stock, Series E Convertible Preferred Stock, and Series F Convertible Stock. Taking into account conversion limitations, and conversion of the Series D Convertible Preferred Stock as described above, none of the Series F Convertible Preferred Stock is convertible into shares of common stock that can be voted by the holders thereof as of the record date.
A majority of the outstanding shares (4,415,358 shares),of capital stock 9,629,789 shares, present in person or represented by proxy, will constitute a quorum at the meeting. For purposes of the quorum and the discussion below regarding the vote necessary to take stockholder action, stockholders of record who are present at the annual meetingSpecial Meeting in person or by proxy and who abstain, including brokers holding customers’ shares of record who cause abstentions to be recorded at the meeting, are considered stockholders who are present and entitled to vote and are counted towards the quorum. Only stockholders of record at the close of business on January 5, 2017 are entitled to receive notice of, to attend, and to vote at the special meeting. Information about the stockholdings of our directors and executive officers is contained in the section of this proxy statement entitled “Security Ownership of Certain Beneficial Owners and Management.”
Brokers holding shares of record for customers generally are not entitled to vote on “non-routine” matters, unless they receive voting instructions from their customers. As used herein, “uninstructed shares” means shares held by a broker who has not received voting instructions from its customers on a specific proposal. A “broker non-vote” occurs when a nominee holding uninstructed shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that non-routine matter. In connection with the treatment of abstentions and broker non-votes, (i) the election of directors (Proposal No. 1), (ii) the approval of the 2016 PlanReverse Stock Split (Proposal No. 3)1) and (iii)(ii) the approval of an amendment to the EIP (Proposal No. 4)2) are considered “non-routine” matters. Accordingly, brokers are not entitled to vote uninstructed shares with respect to Proposals No. 1, No. 3,Proposal No.1 and No. 4. The proposed ratification of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016 (Proposal No. 2) is considered a “routine” matter. Accordingly, brokers are entitled to vote uninstructed shares only with respect to Proposal No. 2.
Under Delaware state law and provisions of the Company’s Certificate of Incorporation and By-Laws, as amended, the vote required for the election of directors is a plurality of the votes of the issued and outstandingWe strongly encourage you to provide voting instructions to brokers holding shares of common stock present in person or represented by proxyorder to ensure your shares will be voted at the annual meeting of stockholders and entitled to vote on the election of directors. This means that the nominees who receive the most votes will be elected to the open director positions. Abstentions, broker non-votes and other shares that are not voted in person or by proxy will not be includedSpecial Meeting in the vote count to determine if a plurality of shares voted are in favor of each nominee.manner you desire.
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS
Why am I receiving these materials?
Towerstream Corporation has made these materials available to you through delivery by mail of printed versions of these materials, in connection with the Company’s solicitation of proxies for use at the annual meetingSpecial Meeting of stockholders to be held on December 13, 2016February 8, 2017 at 9:10:00 a.m. Eastern Standard TimeA.M. local time at 88 Silva Lane, Tech IV, Middletown, Rhode Island.Island 02842. These materials describe the proposals on which the Company would like you to vote and also give you information on these proposals so that you can make an informed decision. We are furnishingmailing our proxy materials on or about November 9, 2016January 6, 2017 to all stockholders of record entitled to vote at the annual meeting.Special Meeting.
What is included in these materials?
These materials include:include this proxy statement, the proxy card or the voter instruction form for the Special Meeting.
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What is the proxy card?
The proxy card enables you to appoint Philip Urso, our Interim Chief Executive Officer and Chairman, Arthur Giftakis, our Chief Operating Officer, and Frederick Larcombe, our Chief Financial Officer, as your representative at the annual meeting.Special Meeting. By completing and returning a proxy card, you are authorizing these individuals to vote your shares at the annual meetingSpecial Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the annual meeting.Special Meeting.
What items will be voted on?
You are being asked to vote on thesethe following specific proposals:
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We will also transact any other business that properly comes before the annual meeting.Special Meeting.
How does the Board of Directors recommend that I vote?
Our Board of Directors unanimously recommends that you vote your shares:
| ● | FOR granting the |
| ● | FOR |
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Who can vote at the annual meeting of stockholders?
As of November 3, 2016, there were 8,830,715 shares of common stock issued and outstanding, which constitute all of the outstanding capital stock of the Company. There were 39 common stockholders of record. Beneficial owners of our common stock hold their shares at brokerage firms and other financial institutions. Holders of common stock are entitled to one vote for each share of common stock held by them.
Only stockholders of record at the close of business on November 3, 2016 are entitled to receive notice of, to attend, and to vote at the annual meeting. Each share is entitled to one vote. Information about the stockholdings of our directors and executive officers is contained in the section of this proxy statement entitled “Security Ownership of Certain Beneficial Owners and Management.”
What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Most of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially in street name.
Stockholder of Record
If on November 3, 2016,January 5, 2017 your shares were registered directly in your name with our transfer agent, Equity Stock Transfer LLC, you are considered a stockholder of record with respect to those shares, and the proxy materials, including a proxy card, were sent directly to you by the Company, including a proxy card.Company. As the stockholder of record, you have the right to direct the voting of your shares by returning the proxy card to us.us, including voting over the Internet. Whether or not you plan to attend the annual meeting,Special Meeting, if you do not vote over the Internet, please complete, date, sign and return a proxy card to ensure that your vote is counted.
Beneficial Owner of Shares Held in Street Name
If on November 3, 2016,January 5, 2017 your shares were held in an account at a brokerage firm, bank, broker-dealer, or other nominee holder, then you are considered the beneficial owner of shares held in “street name,” and the proxy materials, including a voter instruction form, were forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting.Special Meeting. As the beneficial owner, you have the right to direct that organization on how to vote the shares held in your account. However, since you are not the stockholder of record, you may not vote these shares in person at the annual meetingSpecial Meeting unless you receive a valid proxy from the organization. If you arerequest printed copies of the beneficial owner of shares held in “street name,”proxy materials by mail, you will receive a voter instruction form.
How doDo I vote?Vote?
Stockholders of Record. If you are a stockholder of record, you may vote by any of the following methods:
| ● | Via the Internet. You may vote by proxy via the Internet by following the instructions |
| ● | By Telephone.You may vote by calling the toll free number found on the proxy card. |
| ● | By Mail.You may vote by completing, signing, dating and returning your proxy card in the pre-addressed, postage-paid envelope provided. |
| ● | In Person.You may attend and vote at the |
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters, such as Proposal No. 2 but cannot vote on non-routine matters such as ProposalsProposal No. 1 and Proposal No. 3, and No. 4.2. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”We strongly encourage you to provide voting instructions to brokers holding shares in order to ensure your shares will be voted at the Special Meeting in the manner you desire.
If you are a beneficial owner of shares held in street name, you may vote by any of the following methods:
| ● | Via the Internet. You may vote by proxy via the Internet by following the instructions |
| ● | By Telephone.You may vote by proxy by calling the toll free number found on the voter instruction form. |
| ● | By Mail.You may vote by proxy by filling out the voter instruction form and returning it in the pre-addressed, postage-paid envelope provided. |
| ● | In Person.If you are a beneficial owner of shares held in street name and you wish to vote in person at the |
What if I change my mind after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the annual meeting.Special Meeting. You may vote again on a later date via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the annual meetingSpecial Meeting will be counted), by signing and returning a new proxy card or a voter instruction form with a later date, or by attending the annual meetingSpecial Meeting and voting in person. However, your attendance at the meeting will not automatically revoke your proxy unless you vote again at the meeting or specifically request that your prior proxy be revoked by delivering to the Company’s Secretary at 88 Silva Lane, Tech IV, Middletown, Rhode Island 02842 a written notice of revocation prior to the annual meeting.Special Meeting.
Please note, however, that if your shares are held of record by an organization, you must instruct them that you wish to change your vote by following the procedures on the voter instruction form provided to you by the organization. If your shares are held in street name, and you wish to attend the annual meetingSpecial Meeting and vote at the annual meeting,Special Meeting, you must bring to the annual meetingSpecial Meeting a legal proxy from the organization holding your shares, confirming your beneficial ownership of the shares and giving you the right to vote your shares.
How are proxies voted?
All valid proxies received prior to the annual meetingSpecial Meeting will be voted. All shares represented by a proxy will be voted and, where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder’s instructions.
What happens if I do not give specific voting instructions?
Stockholders of Record. If you are a stockholder of record and you:
| ● | indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board of Directors, or |
| ● | sign and return a proxy card without giving specific voting instructions, |
then the proxy holders will vote your shares in the manner recommended by the Board of Directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the annual meeting.Special Meeting. We strongly encourage you to provide voting instructions to ensure your shares will be voted at the Special Meeting in the manner you desire.
Beneficial Owners of Shares Held in Street Name.If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters, such as (i) the ratification of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016 (Proposal No. 2), but cannot vote on non-routine matters, which includeincludes: (i) granting the electionBoard of directors (Proposal No. 1), (ii)Directors the approvalauthority, in its sole direction, in determining a higher stock price that may be required to meet the listing qualifications for one of the 2016 Plannational stock exchanges, to approve the Reverse Stock Split (Proposal No. 3)1) and (iii)(ii) approve the approval of an amendment to the EIP (Proposal No. 4)2) . Accordingly, brokers are not entitled to vote uninstructed shares with respect to Proposal No.1 and Proposal No.2.We strongly encourage you to provide voting instructions to brokers holding shares in order to ensure your shares will be voted at the Special Meeting in the manner you desire.
Do I have dissenters’ right of appraisal?
Holders of shares of our common stock do not have appraisal rights under Delaware Law or under the governing documents of the Company.Company in connection with the proposals.
How many votes are required to elect the nominated persons to our Board of Directors?approve Proposal No. 1?
The affirmative vote of a pluralitymajority of the votes cast atshares outstanding on the meeting of the stockholders by the holders of sharesrecord date of common stock, entitledSeries D Convertible Preferred Stock, on as "as converted" basis, subject to vote in the electionconversion limitations, Series E Convertible Preferred Stock, on as "as converted" basis, subject to conversion limitations, and Series F Convertible Preferred Stock, on as "as converted" basis, subject to conversion limitations, are required to elect each director. This meansapprove granting the Board of Directors the authority, in its sole direction, in determining a higher stock price that may be required to meet the nominees who receivelisting qualifications for one of the most votes will be electednational stock exchanges, to approve the open director positions, to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified.Reverse Stock Split.
How many votes are required to ratify our independent public accountants?approve Proposal No. 2?
The affirmative vote of a majority of the votes cast at the meeting of the stockholdersSpecial Meeting by the holders of shares of common stock, entitledSeries D Convertible Preferred Stock, on as "as converted" basis, subject to voteconversion limitations, Series E Convertible Preferred Stock, on as "as converted" basis, subject to conversion limitations, and Series F Convertible Preferred Stock, on as "as converted" basis, subject to conversion limitations, are required to ratify Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
How many votes are required to approvethe Company’s 2016 Plan?
The affirmative vote of a majority of the votes cast at the meeting of the stockholders by the holders of shares of common stock entitled to vote are required to approve the 2016 Plan.
How many votes are required to approvean amendment to the Company’s EIP?
The affirmative vote of a majority of the votes cast at the meeting of the stockholders by the holders of shares of common stock entitled to vote are required to approve an amendment to the EIP.
Is my vote kept confidential?
Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except:
| ● | as necessary to meet applicable legal requirements; |
| ● | to allow for the tabulation and certification of votes; and |
| ● | to facilitate a successful proxy solicitation. |
Occasionally, stockholders provide written comments on their proxy cards, which may be forwarded to the Company’s management and the Board of Directors.
Do any of the Company’s officers and directors have any interest in matters to be acted upon?
The members of our board of directors and our executive officers do not have any interest in any proposal that is not shared by all other stockholders of the Company, other than (i) Proposal No. 1, the election to our board of the four (4) nominees set forth herein and (ii) Proposal No. 4,2, the authorization of an amendment to the EIP to increase the number of shares available for issuance thereunder, as members of our Board of Directors and our executive officers will be eligible for equity incentive awards and otherwise to participate in our EIP.
Where do I find the voting results of the annual meeting?Special Meeting?
We will announce voting results at the annual meetingSpecial Meeting and also in our Current Report on Form 8-K, which we anticipate filing by December 19, 2016.within four (4) business days of the Special Meeting.
Who can help answer my questions?
You can contact our corporate headquarters at Towerstream Corporation, 88 Silva Lane, Middletown, RIRhode Island 02842, by phone at 401-848-5848 or by sending a letter to Arthur Giftakis, ourthe Company’s Secretary, with any questions about any proposal described in this proxy statement or how to execute your vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of our common stock as of November 3, 2016January 5, 2017 by:
● | each person known by us to beneficially own more than 5% of our common stock (based solely on our review of SEC filings); | |
| ● | each of our directors; |
| ● | each of our named executive officers listed in the section entitled “Summary Compensation Table” under Executive Compensation; and |
| ● | all of our directors and executive officers as a group. |
As of November 3, 2016, no person is known to us to beneficially own more than 5% of our common stock. The percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of, with respect to the security. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Towerstream Corporation, 88 Silva Lane, Tech IV, Middletown, Rhode Island 02842, unless otherwise indicated. As of November 3, 2016,January 5, 2017 there were 8,830,71518,308,979 shares of our common stock outstanding.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class (1) | |
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Directors and Named Executive Officers: |
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Philip Urso | 143,464 | (2) | 1.6% |
William J. Bush | 47,557 | (3) | * |
Howard L. Haronian, M.D. | 98,627 | (4) | 1.1% |
Paul Koehler | 46,201 | (5) | * |
Arthur G. Giftakis | 73,378 | (6) | * |
Frederick Larcombe | - |
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All directors and executive officers as a group (6 persons) | 409,227 | (2)(3)(4)(5)(6) | 4.5% |
Jeffrey Thompson (7) | 18,340 | (8) | * |
Joseph Hernon (9) | 19,002 | (10) | * |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class (1) | ||||||
5% Stockholders: | ||||||||
HS Contrarian Investments, LLC (2) | 1,924,034 | (3) | 9.99 | % | ||||
68 Fiesta Way | ||||||||
Fort Lauderdale, FL 33301 | ||||||||
Directors and Named Executive Officers: | ||||||||
Philip Urso | 194,964 | (4) | 1.1 | % | ||||
William J. Bush | 70,223 | (5) | * | |||||
Howard L. Haronian, M.D. | 121,293 | (6) | * | |||||
Paul Koehler | 68,867 | (7) | * | |||||
Arthur G. Giftakis | 128,628 | (8) | * | |||||
Frederick Larcombe | - | - | ||||||
All directors and executive officers as a group (6 persons) | 583,975 | (4)(5)(6)(7)(8) | 3.1 | % | ||||
Jeffrey Thompson (9) | 18,340 | (10) | * | |||||
Joseph Hernon (11) | 19,002 | (12) | * |
* Less than 1%.
(1) | Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of |
(2) | John Stetson is the Managing Member of HS Contrarian Investments, LLC and in such capacity, is deemed to hold voting and dispositive power of the securities held by HS Contrarian Investments, LLC. |
(3) | Includes |
(4) | Includes 126,031 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days. Excludes 5,195 shares of common stock held in a trust for the benefit of Mr. Urso’s minor children, of which Mr. Urso is not a trustee. Mr. Urso disclaims beneficial ownership of the shares held in that trust. |
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(5) | Includes |
(6) | Includes |
(7) | Includes 68,083 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days. |
(8) | Includes 128,578 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days. |
| Resigned from all positions with the Company in February 2016. |
| Consists of 18,340 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days. |
| Resigned from all positions with the Company in June 2016. |
| Consists of 19,002 shares of common stock issuable upon the exercise of options that are currently exercisable or exercisable within 60 days. |
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Information about the Nominees
Our By-laws currently specify that the number of directors shall be at least one and no more than 15 persons, unless otherwise determined by a vote of the majority of the Board of Directors (the “Board”). Our Board currently consists of four persons and all of them have been nominated by the Company to stand for re-election. Each director is elected or nominated to the Board until the following annual meeting of stockholders and until his successor has been elected and qualified or until the director’s earlier resignation or removal.
The following table, and biographical information below, shows for each nominee his age, his principal occupation for at least the last five years, his present position with the Company, the year in which he was first elected or appointed as director (each serving continuously since first elected or appointed), and his directorships with other companies whose securities are registered with the SEC.
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(1) Member of our Audit Committee.
(2) Member of our Compensation Committee.
(3) Member of our Nominating Committee.
The biographies below include information related to service by the persons below to Towerstream Corporation and our subsidiary, Towerstream I, Inc. On January 4, 2007, we merged with and into a wholly-owned Delaware subsidiary for the sole purpose of changing our state of incorporation to Delaware. On January 12, 2007, a wholly-owned subsidiary of ours completed a reverse merger with and into a private company, Towerstream Corporation, with Towerstream Corporation (the private company) being the surviving company and becoming a wholly-owned subsidiary of ours. Upon closing of the merger, we discontinued our former business and succeeded to the business of Towerstream Corporation as our sole line of business. At the same time, we also changed our name to Towerstream Corporation and, our newly acquired subsidiary, Towerstream Corporation, changed its name to Towerstream I, Inc.
Philip Urso co-founded Towerstream I, Inc. in December 1999 with Jeffrey M. Thompson. Mr. Urso has served as a director and chairman since inception and as chief executive officer from inception until November 2005. Since February 2016, Mr. Urso has served as Interim Chief Executive Officer. Since becoming a public entity in January 2007, Mr. Urso has been our chairman and a director. In 1995, Mr. Urso co-founded eFortress and served as its president through 1999. From 1983 until 1997, Mr. Urso owned and operated a group of radio stations. In addition, Mr. Urso co-founded the regional cell-tower company, MCF Communications, Inc. Mr. Urso was appointed to the Board due to his significant experience in the wireless broadband and tower industries, his familiarity with the Company, as well as his extensive business management expertise.
Howard L. Haronian, M.D.has served as a director of Towerstream I, Inc. since inception in December 1999. Since becoming a public entity in January 2007, Dr. Haronian has been a director. Dr. Haronian is an interventional cardiologist and has been president of Cardiology Specialists, Ltd. of Rhode Island since 1994. Dr. Haronian has served on the clinical faculty of the Yale School of Medicine since 1994. Dr. Haronian graduated from the Yale School of Management Program for Physicians in 1999. Dr. Haronian has directed the Cardiac Catheterization program at The Westerly Hospital since founding the program in 2003. Dr. Haronian was appointed to the Board due to his extensive knowledge of the Company’s operations since its founding and his executive level experience at other organizations.
Paul Koehlerhas over 25 years of business experience in ethanol and renewable electricity industries. At Pacific Ethanol, Mr. Koehler has led the grain and co-product division since 2011 and corporate development since joining the company in 2005. Prior to joining Pacific Ethanol, he served as Director of Business Development for PPM Energy, Inc., leading PPM's efforts to develop and acquire several wind power projects. Mr. Koehler was also a co-founder of ReEnergy, one of the companies acquired by Pacific Ethanol. Mr. Koehler also has worked for Portland General Electric and Enron in electricity trading, marketing, and commodity risk management. Mr. Koehler has a BA from the Honors College at the University of Oregon.
William J. Bush has been a director since January 2007. Since January 2010, Mr. Bush has served as the chief financial officer of Borrego Solar Systems, Inc., which is one of the nation’s leading financiers, designers and installers of commercial and government grid-connected solar electric power systems. From October 2008 to December 2009, Mr. Bush served as the chief financial officer of Solar Semiconductor, Ltd., a private vertically integrated manufacturer and distributor of quality photovoltaic modules and systems targeted for use in industrial, commercial and residential applications with operations in India helping it reach $100 million in sales in its first 15 months of operation. Prior to that, Mr. Bush served as chief financial officer and corporate controller for a number of high growth software and online media companies as well as being one of the founding members of Buzzsaw.com, Inc., a spinoff of Autodesk, Inc. Prior to his work at Buzzsaw.com, Mr. Bush served as corporate controller for Autodesk, Inc. (NasdaqGM: ADSK), the fourth largest software applications company in the world. His prior experience includes seven years in public accounting with Ernst & Young, and PricewaterhouseCoopers. Mr. Bush holds a B.S. degree in Business Administration from U.C. Berkeley and is a certified public accountant. Mr. Bush was appointed to the Board because he has significant experience in finance.
Directorships
Except as otherwise reported above, none of our directors held directorships in other reporting companies or registered investment companies at any time during the past five years.
Family Relationships
Except for Howard L. Haronian, M.D. and Philip Urso, who are cousins, there are no family relationships among our directors or executive officers.
Involvement in Certain Legal Proceedings
To our knowledge, during the last ten years, none of our directors and executive officers (including those of our subsidiaries) has:
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There are no material proceedings to which any director, officer or affiliate, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, affiliate, or security holder is a party adverse to us or has a material interest adverse to the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the SEC. Based solely on our review of copies of such reports and representations from our executive officers and directors, we believe that our executive officers and directors complied with all Section 16(a) filing requirements during the year ended December 31, 2015.
Board Leadership Structure and Risk Oversight
Currently, the positions of Interim Chief Executive Officer and Chairman of the Board are held by one individual, Philip Urso. Although no formal policy currently exists, the Board has determined that, at present, Mr. Urso is able to devote his time to both the daily execution of the Company’s business strategies and to the long-term strategic direction of the Company.
Our Audit Committee is primarily responsible for overseeing our risk management processes on behalf of our Board. The Audit Committee receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our Company’s assessment of risks. In addition, the Audit Committee reports regularly to the full Board which also considers our risk profile. The Audit Committee and the full Board focus on the most significant risks facing our Company and our Company’s general risk management strategy, and also ensure that risks undertaken by our Company are consistent with the Board’s tolerance for risk. While the Board oversees our Company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach to address the risks facing our Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related parties can include any of our directors or executive officers, certain of our stockholders and their immediate family members. Each year, we prepare and require our directors and executive officers to complete Director and Officer Questionnaires identifying any transactions with us in which the officer or director or their family members have an interest. This helps us identify potential conflicts of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with the interests of the Company as a whole. Our code of ethics and business conduct requires all directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify our Audit Committee of the Board of Directors, which is responsible for considering and reporting to the Board any questions of possible conflicts of interest of Board members. Our code of ethics and business conduct further requires pre-clearance before any employee, officer or director engages in any personal or business activity that may raise concerns about conflict, potential conflict or apparent conflict of interest.
At no time during the last fiscal year ended December 31, 2015 did any executive officer, director or any member of these individuals’ immediate families, any corporation or organization with whom any of these individuals is an affiliate or any trust or estate in which any of these individuals serves as a trustee or in a similar capacity or has a substantial beneficial interest been indebted to the Company or was involved in any transaction in which the amount exceeded $120,000 and such person had a direct or indirect material interest.
In evaluating related party transactions and potential conflicts of interest, our Chief Financial Officer and/or Chairman of the Audit Committee apply the same standards of good faith and fiduciary duty they apply to their general responsibilities. They will approve a related party transaction only when, in their good faith judgment, the transaction is in the best interest of the Company.
Director Independence
We believe that each of William J. Bush, Howard L. Haronian, M.D., and Paul Koehler are independent directors, as provided in NASDAQ Marketplace Rule 5605(a)(2).
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF ITS NOMINEES.
Board Committees
Since January 2007, the standing committees of our Board consist of an Audit Committee, a Compensation Committee and a Nominating Committee. Each member of our committees is “independent” as such term is defined under and required by the federal securities laws and the rules of the NASDAQ Stock Market. The charters of each of the committees have been approved by our Board and are available on our website atwww.towerstream.com.
Audit Committee
The Audit Committee is comprised of three directors: William J. Bush, Howard L. Haronian, M.D., and Paul Koehler. Mr. Bush is the Chairman of the Audit Committee. The Audit Committee met four times during the fiscal year ended December 31, 2015. The Audit Committee’s duties include recommending to our Board the engagement of independent auditors to audit our financial statements and to review our accounting and auditing principles. The Audit Committee reviews the scope, timing and fees for the annual audit and the results of audit examinations performed by independent public accountants, including their recommendations to improve our system of accounting and our internal control over financial reporting. The Audit Committee oversees the independent auditors, including their independence and objectivity. However, the committee members are not acting as professional accountants or auditors, and their functions are not intended to duplicate or substitute for the activities of management and the independent auditors. The Audit Committee is empowered to retain independent legal counsel and other advisors as it deems necessary or appropriate to assist the Audit Committee in fulfilling its responsibilities, and to approve the fees and other retention terms of the advisors. Each of our Audit Committee members possesses an understanding of financial statements and generally accepted accounting principles. The Board has determined that Mr. Bush is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The designation of Mr. Bush as an “audit committee financial expert” will not impose on him any duties, obligations or liability that are greater than those that are generally imposed on him as a member of our Audit Committee and Board, and his designation as an “audit committee financial expert” will not affect the duties, obligations or liability of any other member of our Audit Committee or Board.
Compensation Committee
The Compensation Committee is comprised of two directors: Howard L. Haronian, M.D., and William J. Bush. Dr. Haronian is the Chairman of the Compensation Committee. The Compensation Committee met four times during the fiscal year ended December 31, 2015. The Compensation Committee has certain duties and powers as described in its charter, including but not limited to, periodically reviewing and approving our salary and benefits policies, compensation of executive officers, administering our stock option plans and recommending and approving grants of stock options under such plans.
Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation Committee is a current or former officer or employee of our Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee.
Nominating Committee
The Nominating Committee is comprised of two directors: Howard L. Haronian, M.D., and Paul Koehler. Dr. Haronian is Chairman of the Nominating Committee. The Nominating Committee met two times during the fiscal year ended December 31, 2015. The Nominating Committee considers and makes recommendations on matters related to the practices, policies and procedures of the Board and takes a leadership role in shaping our corporate governance. As part of its duties, the Nominating Committee assesses the size, structure and composition of the Board and its committees, and coordinates the evaluation of Board performance. The Nominating Committee also acts as a screening and nominating committee for candidates considered for election to the Board.
Director Nominations
Part of our Nominating Committee’s duties is to screen and nominate candidates considered for election to our Board. In this capacity, it concerns itself with the composition of the Board with respect to depth of experience, balance of professional interests, required expertise and other factors. The Nominating Committee evaluates prospective nominees identified on its own initiative or referred to it by other Board members, management, stockholders or external sources and all self-nominated candidates. The Nominating Committee uses the same criteria for evaluating candidates nominated by stockholders and self-nominated candidates as it does for those proposed by other Board members, management and search companies.
The Nominating Committee values diversity as a factor in selecting individuals nominated to serve on the Board. Although the Board prefers a mix of backgrounds and experience among its members, it does not follow any ratio or formula to determine the appropriate mix, nor is there any specific policy on diversity. The Nominating Committee uses its judgment to identify nominees whose backgrounds, attributes and experiences, taken as a whole, will contribute to a high standard of service for the Board.
Meetings of the Board of Directors and Committees
During the fiscal year ended December 31, 2015, the Board held four meetings and acted by written consent on two occasions, the Audit Committee held four meetings and acted by written consent on zero occasions, the Compensation Committee held five meetings and acted by written consent on zero occasions, and the Nominating Committee held two meetings and acted by written consent on zero occasions. Each incumbent director attended or participated in all of the meetings of the Board and the Committees on which he served during the fiscal year.
Policy Regarding Attendance at Annual Meetings of Stockholders
Our Board has adopted a policy which states that each director is expected to attend annual meetings of its stockholders. Last year, all of our directors attended the annual meeting of stockholders. We expect that all of our directors will attend this year’s annual meeting.
Director Compensation Table
The following table summarizes the compensation awarded during the fiscal year ended December 31, 2015 to our directors who are not named executive officers in the summary compensation table below:
Name | Fees Earned or Paid in Cash | Option Awards (1)(2) | Total | |||||||||
Philip Urso | $ | 75,500 | $ | 47,733 | $ | 123,233 | ||||||
Howard L. Haronian, M.D. | $ | 55,000 | $ | 47,733 | $ | 102,733 | ||||||
Paul Koehler | $ | 50,000 | $ | 47,733 | $ | 97,733 | ||||||
William J. Bush | $ | 55,000 | $ | 47,733 | $ | 102,733 |
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Narrative Disclosure to Director Compensation Table
The table entitled “Director Compensation Table” above quantifies the value of the different forms of compensation of each of the directors for services rendered during fiscal 2015. The primary elements of each director’s total compensation reported in the table are cash fees earned and stock option awards.
In October 2015, Philip Urso, the Chairman of the Board of Directors, expanded his day to day involvement in the Company’s activities to include daily operation of the Company and subsequently was appointed Interim Chief Executive Officer on February 16, 2016 to advise the Board of Directors on cost cutting measures, strategic planning and other opportunities. The Company provided Mr. Urso with compensation, effective October 2015, of $10,167 per month, a car allowance no greater than $1,000 per month and payment for healthcare insurance. As a result, Mr. Urso no longer is considered an “independent” director and is ineligible for annual awards under the Company’s 2008 Non-Employee Directors Compensation Plan.
Mr. Urso was appointed Interim Chief Executive Officer on February 16, 2016 and on March 4, 2016, the Company modified the terms of Mr. Urso’s compensation as follows:
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Effective April 2016, the Board of Directors amended the cash compensation payable to non-employee directors under the 2008 Non-Employee Directors Compensation Plan. Under the revised plan, each non-employee director receives a monthly $2,083 cash fee. Committee chairmen receive an additional monthly $417 cash fee. The Board did not amend the equity compensation issuable under the plan, and each non-employee director shall continue to receive annual grants on June 1 of ten-year options to purchase 2,500 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant that vest monthly over a one-year period.
Effective August 3, 2016, each independent director was issued ten year options to purchase 6,000 shares of common stock under the 2007 Incentive Stock Plan at an exercise price equal to the fair market value of the common stock on the date of grant. The shares were fully vested on the date of grant.
Pursuant to the 2008 Non-Employee Directors Compensation Plan in effect on December 31, 2015, which has subsequently been amended as described above, each non-employee director was entitled to receive periodic grants of ten-year options to purchase 2,500 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant and that vests monthly over a one-year period. An initial grant was made upon such non-employee director’s election or appointment to our Board and thereafter annually on the first business day in June, subject to such director remaining on the Board. Non-employee directors also receive $50,000 per annum in cash. In connection with the additional responsibilities associated with such positions, the Chairman of the Board was entitled to receive an additional $10,000 per year, and the Chairman of the Audit and Compensation Committees were each entitled to receive an additional $5,000 per year.
Code of Ethics and Business Conduct
Our Board has adopted a code of ethics and business conduct that establishes the standards of ethical conduct applicable to all directors, officers and employees of Towerstream Corporation. The code of ethics and business conduct addresses, among other things, conflicts of interest, compliance with disclosure controls and procedures, and internal control over financial reporting, corporate opportunities and confidentiality requirements. The Audit Committee is responsible for applying and interpreting our code of ethics and business conduct in situations where questions are presented to it. There were no amendments or waivers to the code of ethics and business conduct in fiscal 2015. Our code of ethics and business conduct is available for review on our website atwww.towerstream.com. We will provide a copy of our code of ethics and business conduct free of charge to any person who requests a copy. Requests should be directed by e-mail to Frederick Larcombe, our Chief Financial Officer, at flarcombe@towerstream.com, or by mail to Towerstream Corporation, 88 Silva Lane, Middletown, Rhode Island 02842, or by telephone at (401) 848-5848.
Stockholder Communication with Directors
Our Board has established procedures for stockholders or other interested parties to send communications to the Board. Such parties can contact the Board by electronic mail atBoard@towerstream.com.
AUDIT COMMITTEE REPORT
The following Audit Committee Report shall not be deemed to be “soliciting material,” “filed” with the SEC, or subject to the liabilities of Section 18 of the Exchange Act. Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933, as amended, or the Exchange Act, that might incorporate by reference future filings, including this proxy statement, in whole or in part, the following Audit Committee Report shall not be incorporated by reference into any such filings.
The Audit Committee is comprised of three independent directors (as defined under Rule 5605(a)(2) of the NASDAQ Stock Market). The Audit Committee operates under a written charter adopted by the Board of Directors on January 12, 2007, which can be found in the Corporate Governance section of our website, www.towerstream.com, and is also available in print to any stockholder upon request to the Corporate Secretary.
We have reviewed and discussed with management the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2015.
We have reviewed and discussed with management and Marcum LLP, our independent registered public accounting firm, the quality and the acceptability of the Company’s financial reporting and internal controls.
We have discussed with Marcum LLP, the overall scope and plans for their audit as well as the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
We have discussed with management and Marcum LLP, such other matters as required to be discussed with the Audit Committee under Statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board (the “PCAOB”) in Rule 3200T, and other auditing standards generally accepted in the United States, the corporate governance standards of the NASDAQ Stock Market and the Audit Committee’s Charter.
We have received and reviewed the written disclosures and the letter from Marcum LLP, required by applicable requirements of the PCAOB regarding Marcum LLP’s communications with the Audit Committee concerning independence, and have discussed with Marcum LLP, their independence from management and the Company.
Based on the review and discussions referred to above, we recommended to the Board of Directors that the audited financial statements be included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the SEC.
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EXECUTIVE OFFICERS
The following table sets forth information regarding our executive officers. Officers are elected annually by the Board of Directors and serve at the discretion of the Board.
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Philip Urso. Biographical information regarding Mr. Urso is provided above under Board of Directors.
Arthur G. Giftakis has served as our Chief Operating Officer since February 2016. Prior to his appointment as Chief Operating Officer, Mr. Giftakis served as the Company’s senior vice president of engineering and operations since January 2014 and as vice president of engineering and operations since 2003. Prior to his position with the Company, Mr. Giftakis served as the director of sales engineering at Sockeye Networks and Navisite. In addition, Mr. Giftakis was the director of data communications at Bell Atlantic for ten years.
Frederick Larcombehas served as our Chief Financial Officer since June 2016. He has been a principal of Your CFO Solution, a group of seasoned financial professionals since 2008, and has provided senior financial leadership services on an outsourced basis to several companies in various industries during that period. He has served as Chief Financial Officer of Rittenhouse Foods, Inc. (a private food distribution company) from 2015 to the present and as Chief Financial Officer of InterCore, Inc. (OTCPink: ICOR) (a publicly-held developer of software to monitor driver fatigue) from 2010 to the present. He also served as Chief Financial Officer of Taft & Partners, LP (a professional services firm) from 2012 to 2016 and as Chief Financial Officer of iBio, Inc. (NYSE: IBIO) (a publicly-held biopharmaceutical company) from 2009 to 2011. Mr. Larcombe began his career with PriceWaterhouseCoopers. Mr. Larcombe received a Bachelor of Science degree in Accounting from Seton Hall University, was designated a Certified Public Accountant in New Jersey (currently inactive), and is an alumnus of the Executive Development Program at Harvard Business School.
EXECUTIVE COMPENSATION
Compensation Committee Report
Under the rules of the Securities and Exchange Commission (“SEC”), this Compensation Committee Report is not deemed to be incorporated by reference by any general statement incorporating thisproxy statement by reference into any filings with the SEC.
The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on this review and these discussions, the Compensation Committee recommended to the Board of Directors that the following Compensation Discussion and Analysis be included in this proxy statement.
| Submitted by the Compensation Committee William J. Bush |
Compensation Discussion and Analysis
The following discussion and analysis of compensation arrangements of our named executive officers for 20152015 should be read together with the compensation tables and related disclosures set forth below.
We believe our success depends on the continued contributions of our named executive officers. Personal relationships and experience are very important in our industry. Our named executive officers are primarily responsible for many of our critical business development relationships. The maintenance of these relationships is critical to ensuring our future success as is experience in managing these relationships. Therefore, it is important to our success that we retain the services of these individuals and prevent them from competing with us should their employment with us terminate.
General Philosophy
Our overall compensation philosophy is to provide an executive compensation package that enables us to attract, retain and motivate executive officers to achieve our short-term and long-term business goals. The goals of our compensation program are to align remuneration with business objectives and performance, and to enable us to retain and competitively reward executive officers who contribute to the long-term success of the Company. We attempt to pay our executive officers competitively in order that we will be able to retain the most capable people in the industry. In making executive compensation and other employment compensation decisions, the Compensation Committee considers achievement of certain criteria, some of which relate to our performance and others of which relate to the performance of the individual employee. Awards to executive officers are based on achievement of Company and individual performance criteria.
The Compensation Committee will evaluate our compensation policies on an ongoing basis to determine whether they enable us to attract, retain and motivate key personnel. To meet these objectives, the Compensation Committee may from time to time increase salaries, award additional stock grants or provide other short and long-term incentive compensation to executive officers and other employees.
Compensation Program & Forms of Compensation
We provide our executive officers with a compensation package consisting of base salary, bonus, equity incentives and participation in benefit plans generally available to other employees. In setting total compensation, the Compensation Committee considers individual and company performance, as well as market information regarding compensation paid by other companies in our industry.
Base Salary. Salaries for our executive officers are initially set based on negotiation with individual executive officers at the time of recruitment and with reference to salaries for comparable positions in the industry for individuals of similar education and background to the executive officers being recruited. We also consider the individual’s experience, reputation in the industry and expected contributions to the Company. Base salary is continuously evaluated by competitive pay and individual job performance. In each case, we take into account the results achieved by the executive, their future potential, scope of responsibilities and experience, and competitive salary practices. At times, our executive officers have elected to take less than market salaries. These salaries were subject to increases to base salary that is comparable with his role and responsibilities when compared to companies of comparable size in similar locations.
Bonuses.We design our bonus programs to be both affordable and competitive in relation to the market. Our bonus program is designed to motivate employees to achieve overall goals. Our programs are designed to avoid entitlements, to align actual payouts with the actual results achieved and to be easy to understand and administer. The Compensation Committee and the executive officer work together to establish targets and goals for the executive officer. Upon completion of the fiscal year, the Compensation Committee assesses the executive officer’s performance and, with input from management, determines the achievement of the bonus targets and the amount to be awarded within the parameters of the executive officer’s agreement with us.
Equity-Based Rewards
We design our equity programs to be both affordable and competitive in relation to the market. We monitor the market and applicable accounting, corporate, securities and tax laws and regulations, and adjust our equity programs as needed. Stock options and other forms of equity compensation are designed to reflect and reward a high level of sustained individual performance over time. We design our equity programs to align employees’ interests with those of our stockholders.
Timing of Equity Awards
The Board of Directors has authorized the Compensation Committee to approve stock option grants to our executive officers. Stock options are generally granted at scheduled meetings of the Compensation Committee. The exercise price of a newly granted option is the closing price of our common stock on the date of grant.
Benefits Programs
We design our benefits programs to be both affordable and competitive in relation to the market while conforming with local laws and practices. We monitor the market, local laws and practices and adjust our benefits programs as needed. We design our benefits programs to provide an element of core benefits, and to the extent possible, offer options for additional benefits, and balance costs and cost sharing between us and our employees.
Tax and Accounting Considerations
In the review and establishment of our compensation programs, we consider the anticipated accounting and tax implications to us and our executives.
Section 162(m) of the Internal Revenue Code imposes a limit on the amount of compensation that we may deduct in any one year with respect to our chief executive officer and each of our next four most highly compensated executive officers, unless certain specific and detailed criteria are satisfied. Performance-based compensation, as defined in the Internal Revenue Code, is fully deductible if the programs are approved by stockholders and meet other requirements. We believe that grants of equity awards under our incentive-based equity option plans may qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting us to receive a federal income tax deduction, if applicable, in connection with such awards. In general, we have determined that we will not seek to limit executive compensation so that it is deductible under Section 162(m). However, from time to time, we monitor whether it might be in our interests to structure our compensation programs to satisfy the requirements of Section 162(m). We seek to maintain flexibility in compensating our executives in a manner designed to promote our corporate goals and therefore our Compensation Committee has not adopted a policy requiring all compensation to be deductible. Our Compensation Committee will continue to assess the impact of Section 162(m) on our compensation practices and determine what further action, if any, is appropriate.
Role of Executives in Executive Compensation Decisions
The Board of Directors and our Compensation Committee generally seek input from our executive officers when discussing the performance of, and compensation levels for, executives. The Compensation Committee also works with our Chief Executive Officer and our Chief Financial Officer to evaluate the financial, accounting, tax and retention implications of our various compensation programs. None of our executives participates in deliberations relating to their compensation.
2015 Bonus Payments
In October 2015, Mr. Thompson received a $75,000 bonus upon the execution of the third amendment to his employment agreement.
See “Employment Agreements and Change-in-Control Agreements” below for a discussion of our employment agreement with Mr. Thompson and our employment arrangement with Mr. Hernon.
2016 Bonus Criteria
The Compensation Committee is presently evaluating the structure of the bonus program for 2016. We intend that the bonus program will be both affordable and competitive in relation to the market and be designed to motivate employees to achieve overall corporate goals. The program shall be structured to avoid entitlements, to align actual payouts with the actual results achieved and to be easy to understand and administer.
Compensation Risk Management
We have considered the risk associated with our compensation policies and practices for all employees, and we believe we have designed our compensation policies and practices in a manner that does not create incentives that could lead to excessive risk taking that would have a material adverse effect on us.
The Role of Stockholder Say-on-Pay Votes
The Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”). The Compensation Committee will consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the named executive officers.
Summary Compensation Table
The following table summarizes the annual and long-term compensation paid to our former Chief Executive Officer and our other most highly compensated executive officers who were serving at the end of 2015, whom we refer to collectively in this proxy statement as the “named executive officers”officers��, and changes effected by the Company since that time. In February 2016, Jeffrey Thompson, our former Chief Executive Officer and director, resigned from all positions with the Company and the Company appointed Philip Urso as his successor to serve as Interim Chief Executive Officer and appointed Arthur Giftakis to serve as Chief Operating Officer of the Company. In June 2016, Joseph Hernon, our Chief Financial Officer, resigned from all positions with the Company and the Company appointed Frederick Larcombe as his successor. During 2016, Mr. Urso, Mr. Giftakis and Mr. Larcombe became additional “named executive officers” of the Company. The obligation of the Company for payment of historical levels of cash compensation to executives, which the Company had been contractually obligated to pay pursuant to its employment agreements with executives, has been replaced with policies intending to align the interests of named executive officers with the interests of stockholders with reduced emphasis on cash compensation and bonuses.
Name and Principal Position |
| Year |
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| Option Awards (1) |
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Jeffrey M. Thompson |
| 2015 |
| $ | 475,000 |
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| $ | 75,000 |
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| $ | 79,373 | (2) |
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| $ | 629,373 |
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President and Chief Executive Officer* |
| 2014 |
| $ | 373,277 |
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| $ | 240,800 |
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| $ | 79,992 | (3) |
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| $ | 694,069 |
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| 2013 |
| $ | 330,000 |
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| $ | 297,500 |
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| $ | 73,209 | (4) |
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| $ | 700,709 |
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Joseph P. Hernon** |
| 2015 |
| $ | 325,000 |
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| $ | - |
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| $ | 54,913 | (5) |
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| $ | 379,913 |
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Chief Financial Officer |
| 2014 |
| $ | 279,569 |
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| $ | 108,125 |
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| $ | 48,945 | (6) |
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| $ | 436,639 |
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| 2013 |
| $ | 250,000 |
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| $ | 170,000 |
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| $ | 115,570 | (7) |
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| $ | 535,570 |
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Arthur Giftakis*** |
| 2015 |
| $ | 168,173 |
|
| $ | 40,000 |
|
| $ | 18,271 | (8) |
|
| $ | 226,444 |
|
Chief Operating Officer |
| 2014 |
| $ | 143,269 |
|
| $ | 25,000 |
|
| $ | 13,332 | (9) |
|
| $ | 181,601 |
|
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| 2013 |
| $ | 118,025 |
|
| $ | 24,875 |
|
| $ | 85,262 | (10) |
|
| $ | 228,162 |
|
* | Resigned from all positions with the Company in February 2016. All options issued to Jeffrey Thompson referenced below vested February 2016 in connection with the separation agreement between Mr. Thompson and the Company. |
** | Resigned from all positions with the Company in June 2016. Certain of the options issued to Joseph Hernon referenced above were forfeited in June 2016 in connection with his resignation from the Company. |
*** | Appointed Chief Operating Officer in February 2016. Prior to his appointment as Chief Operating Officer, Mr. Giftakis served as the Company’s senior vice president of engineering and operations since January 2014 and as vice president of engineering and operations since 2003. |
| (1) | Based upon the aggregate grant date fair value calculated in accordance with the Stock Compensation Topic of the Financial Accounting Standards Board Accounting Standards Codification. Our policy and assumptions made in the valuation of share-based payments are contained in Note 12 to our December 31, 2015 financial statements. |
| (2) | On July 30, 2015, Mr. Thompson received a ten-year option to purchase 2,708 shares of common stock at an exercise price of $31.00 per share in recognition of services performed during 2015. These options vest quarterly over a year period with the first tranche vesting on October 30, 2015. |
On September 11, 2015, Mr. Thompson received a ten-year option to purchase 2,500 shares of common stock at an exercise price of $26.20 per share in recognition of services performed during 2015. These options vest one half immediately and the remaining half on a quarterly basis over a year period with the first tranche vesting on December 11, 2015. | ||
On November 23, 2015, Mr. Thompson received a ten-year option to purchase 1,667 shares of common stock at an exercise price of $9.20 per share in recognition of services performed during 2015. These options vest quarterly over a year period with the first tranche vesting on February 23, 2016. |
| (3) | On July 22, 2014, Mr. Thompson received a ten-year option to purchase 1,563 shares of common stock at an exercise price of $33.40 per share in recognition of services performed during 2014. These options vest monthly over a two-year period with the first tranche vesting on August 22, 2014. |
On September 26, 2014, Mr. Thompson received a ten-year option to purchase 3,750 shares of common stock at an exercise price of $26.80 per share in recognition of services performed during 2014. These options vest quarterly over a two-year period with the first tranche vesting on December 26, 2014. |
| (4) | On February 25, 2013, Mr. Thompson received a ten-year option to purchase 2,500 shares of common stock at an exercise price of $52.40 per share in recognition of services performed during 2013. These options were fully vested and exercisable upon issuance. |
| (5) | On July 30, 2015, Mr. Hernon received a ten-year option to purchase 1,354 shares of common stock at an exercise price of $31.00 per share in recognition of services performed during 2015. These options vest quarterly over a year period with the first tranche vesting on October 30, 2015.
On September 11, 2015, Mr. Hernon received a ten-year option to purchase 2,500 shares of common stock at an exercise price of $26.20 per share in recognition of services performed during 2015. These options vest one half immediately and the remaining half on a quarterly basis over a year period with the first tranche vesting on December 11, 2015. |
Grants of Plan-Based Awards
The following table summarizes the stock option awards granted to our named executive officers during the year ended December 31, 2015:
There were no restricted stock awards granted to our named executive officers during the year ended December 31, 2015.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the outstanding equity awards to our named executive officers as of December 31, 2015. All options issued to Jeffrey Thompson referenced below vested February 2016 in connection with the separation agreement between Mr. Thompson and the Company. Certain of the options issued to Joseph Hernon referenced below were forfeited in June 2016 in connection with his resignation from the Company.
Option Exercises and Stock Vested
The following table summarizes, with respect to our named executive officers, all options that were exercised and restricted stock vested during fiscal 2015:
Employment Agreements and Change-in-Control Agreements
In December 2007, we entered into an employment agreement, as amended through 2015, with Jeffrey M. Thompson, our principal executive officer, which was terminated in February 2016.
We entered into a separation agreement with Mr. Thompson on February 12, 2016 pursuant to which Mr. Thompson resigned from all positions with the Company and its subsidiaries, and as a member of the Board of Directors. Among other terms and conditions, the separation agreement provides for (i) the mutual release of claims, liabilities and causes of action by Mr. Thompson and the Company, (ii) payment of $277,083, an amount approximately equal to the remaining term of Mr. Thompson's employment agreement which was to expire in October 2016, (iii) vesting of option and other stock incentive awards held by Mr. Thompson and (iv) a three-month non-competition period and a
In May 2008, Joseph P. Hernon joined the Company as Chief Financial Officer. His employment with the Company terminated in June 2016.
We entered into a separation agreement with Mr. Hernon on June 3, 2016 pursuant to which Mr. Hernon resigned from all positions with the Company and its subsidiaries. Among other terms and conditions, the Separation Agreement provided for (i) the mutual release of claims, liabilities and causes of action by Mr. Hernon and the Company, (ii) payment of three months of base salary, or an aggregate of $81,250, in a lump sum payment due July 1, 2016, (iii) vesting of option and other stock incentive awards held by Mr. Thompson and (iv) a three-month non-competition period and a twelve-month non-solicitation period. The separation agreement became effective eight days following its execution.
The following table summarizes the compensation awarded during the fiscal year ended December 31, 2015 to our directors who are not named executive officers in the summary compensation table below:
Narrative Disclosure to Director Compensation Table The table entitled “Director Compensation Table” above quantifies the value of the different forms of compensation of each of the directors for services rendered during fiscal 2015. The primary elements of each director’s total compensation reported in the table are cash fees earned and stock option awards. In October 2015, Philip Urso, the Chairman of the Board of Directors, expanded his day to day involvement in the Company’s activities to include daily operation of the Company and subsequently was appointed Interim Chief Executive Officer on February 16, 2016 Mr. Urso was appointed Interim Chief Executive Officer on February 16, 2016 and on March 4, 2016, the Company modified the terms of Mr. Urso’s compensation as follows:
Effective April 2016, the Board of Directors amended the cash compensation payable to non-employee directors under the 2008 Non-Employee Directors Compensation Plan. Under the revised plan, each non-employee director receives a monthly $2,083 cash fee. Committee chairmen receive an additional monthly $417 cash fee. The Board did not amend the equity compensation issuable under the plan, and each non-employee director shall continue to receive annual grants on June 1 of ten-year options to purchase 2,500 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant that vest monthly over a one-year period. Effective August 3, 2016, each independent director was issued ten year options to purchase 6,000 shares of common stock under the 2007 Incentive Stock Plan at an exercise price equal to the fair market value of the common stock on the date of grant. The shares were fully vested on the date of grant. Pursuant to the 2008 Non-Employee Directors Compensation Plan in effect on December 31, 2015, which has subsequently been amended as described above, each non-employee director was entitled to receive periodic grants of ten-year options to purchase 2,500 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant and that vests monthly over a one-year period. An initial grant was made upon such non-employee director’s election or appointment to our Board and thereafter annually on the first business day in June, subject to such director remaining on the Board. Non-employee directors also receive $50,000 per annum in cash. In connection with the additional responsibilities associated with such positions, the Chairman of the Board was entitled to receive an additional $10,000 per year, and the Chairman of the Audit and Compensation Committees were each entitled to receive an additional $5,000 per year. Effective December 1, 2016, the Board of Directors amended the monthly cash compensation for its independent directors to $5,000 per month (restoring such compensation to pre-April 2016 levels when the Company instituted a temporary reduction to $2,083 per month), and authorized a one-time cash award of $25,000 to William J. Bush, an independent director, as compensation for Mr. Bush’s efforts in implementing the Company’s On December 18, 2016, the Compensation Committee of the Board of Directors authorized the creation of a compensation pool for members of the Board of Directors, senior management, and key employees in the event of a sale of the Company or all or substantially all of its assets for gross proceeds equal to or exceeding $50 million. The Board of Directors in its sole discretion shall determine if and how to allocate payout amounts up to an aggregate of 10% of such gross proceeds in cash, kind, or a combination of the foregoing among individual recipients after a review of the specific facts and circumstances in the event of such a sale. The Company has not entered into any definitive agreements relating to the sale of the Company or its assets. PROPOSAL NO. 1
Our Board of Directors has adopted resolutions to authorize the Board, in its sole direction, to amend the Company’s Certificate of Incorporation to effect the Reverse Stock Split of our issued and outstanding common stock, to meet the listing requirements of one of the national stock exchanges as described below and directing such proposal to be submitted to the holders of our common stock, Series D Convertible Preferred Stock, Series E Convertible Preferred Stock and Series F Convertible Preferred Stock for their approval.
The
Our Board of Directors reserves the right to elect to abandon the Reverse Stock Split, including any or all proposed reverse stock split ratios, if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders. Depending on the ratio for the Reverse Stock Split determined by our Board of Directors, no less than two and no more than twenty shares of existing common stock, as determined by our Board of Directors, will be combined into one share of common stock. Any fractional shares will be rounded up to the next whole number. The amendment to our Certificate of Incorporation to effect the Reverse Stock Split, if any, will include only the Reverse Stock Split ratio determined by our Board of Directors to be in the best interests of our stockholders and all of the other proposed amendments at different ratios will be abandoned. Background and Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split Our Board of Directors is submitting the Reverse Stock Split to our stockholders for approval with the primary intent of increasing the market price of our common stock to enhance our ability to meet the initial listing requirements of either The NASDAQ Capital Market or NYSE MKT LLC and to make our common stock more attractive to a broader range of institutional and other investors. The Company currently does not have any plans, arrangements or understandings, written or oral, to issue any of the authorized but unissued shares that would become available as a result of the Reverse Stock Split. In addition to increasing the market price of our common stock, the Reverse Stock Split would also reduce certain of our costs, as discussed below. Accordingly, for these and other reasons discussed below, we believe that effecting the Reverse Stock Split is in the Company’s and our stockholders’ best interests. We believe that the Reverse Stock Split will enhance our ability to obtain an initial listing on either The NASDAQ Capital Market or NYSE MKT LLC. The NASDAQ Capital Market requires, among other items, an initial bid price of least $4.00 per share and following initial listing (subject to certain exceptions), maintenance of a continued price of at least $1.00 per share. The NYSE MKT LLC requires, among other items, an initial bid price of least $3.00 per share and following initial listing, maintenance of a continued price of at least $1.00 per share. Reducing the number of outstanding shares of our common stock should, absent other factors, increase the per share market price of our common stock, although we cannot provide any assurance that our minimum bid price would remain following the Reverse Stock Split over the minimum bid price requirement of any such stock exchange. Reducing the number of outstanding shares of our common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split or that the market price of our common stock will not decrease in the future. Additionally, we cannot assure you that the market price per share of our common stock after a Reverse Stock Split will increase in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. Procedure for Implementing the Reverse Stock Split The Reverse Stock Split, if approved by our stockholders, would become effective upon the filing (the “Effective Time”) of a certificate of amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware. The exact timing of the filing of the certificate of amendment that will effect the Reverse Stock Split will be determined by our Board of Directors based on its evaluation as to when such action will be the most advantageous to the Company and our stockholders. In addition, our Board of Directors reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the amendment to the Company’s Certificate of Incorporation, our Board of Directors, in its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders to proceed with the Reverse Stock Split. If a certificate of amendment effecting the Reverse Stock Split has not been filed with the Secretary of State of the State of Delaware by the close of business on February 8, 2018, our Board of Directors will abandon the Reverse Stock Split. Effect of the Reverse Stock Split on Holders of Outstanding Common Stock Depending on the ratio for the Reverse Stock Split determined by our Board of Directors, a minimum of two and a maximum of twenty shares of existing common stock will be combined into one new share of common stock. The table below shows, based on the 18,308,979 shares of common stock outstanding as of the record date, the number of outstanding shares of common stock (excluding Treasury shares) that would result from the listed hypothetical reverse stock split ratios (without giving effect to the treatment of fractional shares):
The actual number of shares issued after giving effect to the Reverse Stock Split, if implemented, will depend on the Reverse Stock Split ratio that is ultimately determined by our Board of Directors. The Reverse Stock Split will affect all holders of our common stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company, except that as described below in “Fractional Shares,” record holders of common stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will be rounded up to the next whole number. In addition, the Reverse Stock Split will not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares). The Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares. After the Effective Time, our common stock will have new Committee on Uniform Securities Identification Procedures (CUSIP) numbers, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers will need to be exchanged for stock certificates with the new CUSIP numbers by following the procedures described below. After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Securities Exchange Act of 1934, as amended. Our common stock will continue to be listed on the OTCQB under the symbol “TWER”, subject to any decision of our Board of Directors to list our securities on another stock exchange. Beneficial Holders of Common Stock (i.e. stockholders who hold in street name) Upon the implementation of the Reverse Stock Split, we intend to treat shares held by stockholders through a bank, broker, custodian or other nominee in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers, custodians or other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our common stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. Stockholders who hold shares of our common stock with a bank, broker, custodian or other nominee and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees. Registered “Book-Entry” Holders of Common Stock (i.e. stockholders that are registered on the transfer agent’s books and records but do not hold stock certificates) Certain of our registered holders of common stock may hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not have stock certificates evidencing their ownership of the common stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts. Stockholders who hold shares electronically in book-entry form with the transfer agent will not need to take action (the exchange will be automatic) to receive whole shares of post-Reverse Stock Split common stock, subject to adjustment for treatment of fractional shares. Holders of Certificated Shares of Common Stock Stockholders holding shares of our common stock in certificated form will be sent a transmittal letter by our transfer agent after the Effective Time. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s) representing shares of our common stock (the “Old Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole shares of post-Reverse Stock Split common stock (the “New Certificates”). No New Certificates will be issued to a stockholder until such stockholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No stockholder will be required to pay a transfer or other fee to exchange his, her or its Old Certificates. Stockholders will then receive a New Certificate(s) representing the number of whole shares of common stock that they are entitled as a result of the Reverse Stock Split, subject to the treatment of fractional shares described below. Until surrendered, we will deem outstanding Old Certificates held by stockholders to be cancelled and only to represent the number of whole shares of post-Reverse Stock Split common stock to which these stockholders are entitled, subject to the treatment of fractional shares. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates. If an Old Certificate has a restrictive legend on the back of the Old Certificate(s), the New Certificate will be issued with the same restrictive legends that are on the back of the Old Certificate(s). STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO. Fractional Shares We do not currently intend to issue fractional shares in connection with the Reverse Stock Split. Therefore, we will not issue certificates representing fractional shares. In lieu of issuing fractions of shares, we will round up to the next whole number. Effect of the Reverse Stock Split on Employee Plans, Options, Restricted Stock Awards and Units, Warrants, and Convertible or Exchangeable Securities Based upon the Reverse Stock Split ratio determined by the Board of Directors, Accounting Matters The proposed amendment to the Company’s Certificate of Incorporation will not affect the par value of our common stock per share, which will remain $0.001 par value per share. As a result, as of the Effective Time, the total of the stated capital attributable to common stock and the No Going Private Transaction Notwithstanding the decrease in the number of outstanding shares following the implementation of the Reverse Stock Split, the Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Securities Exchange Act of 1934, and Certain Federal Income Tax Consequences of the Reverse Stock Split The following summary describes certain material U.S. federal income tax consequences of the Reverse Stock Split to holders of our common stock: Unless otherwise specifically indicated herein, this summary addresses the tax consequences only to a beneficial owner of our common stock that is a citizen or individual resident of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District of Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our common stock (a “U.S. holder”). A trust may also be a U.S. holder if (1) a U.S. court is able to exercise primary supervision over administration of such If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the This summary is PLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION. U.S. Holders The Vote Required The affirmative vote of The Board of Directors unanimously recommends a
TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE THEREUNDER TO 2,521,347 FROM1,435,000
The Company's 2016 Equity Incentive Plan (the “EIP”) was approved by our Board on August 3, 2016 and
We are seeking stockholder approval of the Second Amendment to increase the number of shares issuable pursuant to the EIP to
Upon stockholder approval, an additional
Approval of the Second Amendment will permit the Company to continue to use and offer incentives to eligible participants in order to motivate and reward those providing services to the Company or any subsidiary.
Vote Required
HOUSE HOLDING OF MATERIALS
In some instances, only one copy of
WHERE YOU CAN FIND MORE INFORMATION The Company files annual, quarterly and current reports, proxy statements and other information with the Commission. You can read and copy any materials that the Company files with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information about the operation of the SEC’s Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains a Web site that contains information we file electronically with the Commission, which you can access over the Internet atwww.sec.gov. The Company is incorporating by reference its Annual Report on Form 10-K filed on March 18, 2016, its Annual Report on Form 10-K/A filed on April 29, 2016, its Quarterly Report on Form 10-Q filed on November 14, 2016 and its Quarterly Report on Form 10-Q/A filed on November 14, 2016. You should rely only on the information contained in, or incorporated by reference as an exhibit to, this Proxy Statement. We have not authorized anyone else to provide you with different information. You should not assume that the information in this Proxy Statement is accurate as of any date other than January 5, 2017, or such earlier date as is expressly set forth herein. OTHER BUSINESS
The Board of Directors knows of no business to be brought before the
Dated:
APPENDIX A
CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF TOWERSTREAM CORPORATION Towerstream Corporation, organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify:
“C. Upon the filing and effectiveness (the “Effective Time”) pursuant to the Delaware General Corporation Law of this
FIFTH: This Certificate of Amendment shall be effective upon filing with the IN WITNESS WHEREOF, said corporation has caused this certificate to
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CONTROL NUMBER: Signature
Signature, Date,
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.
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT!
Dear Stockholder:
We cordially invite you to attend the
Please read the proxy statement which describes the proposals and presents other important information and complete, sign and return your proxy promptly in the enclosed envelope.
PROXY
THISPROXYISSOLICITEDONBEHALFOFTHEBOARDOFDIRECTORS
TOWERSTREAM CORPORATION
The undersigned hereby appoints Philip Urso,Arthur Giftakis and Frederick Larcombe, and each of them, as proxies,
In their discretion, the proxy is authorized to vote upon any other matter that may properly come before the meeting or any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED, FOR
(continued and to bemarked,dated and signed,on the other side) |