Document:

Exhibit
10.2

 

EXTENSION
AMENDMENT TO EXECTUIVE EMPLOYMENT AGREEMENT

 

THIS
EXTENSION AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (the “Amendment”), made this 13th day of November, 2020, is
entered into by and between Document Security Systems, Inc. (the “Company”) and Frank D. Heuszel (the “Executive”).

 

WHEREAS,
the Company and Executive entered into that certain Executive Employment Agreement dated as of August 27, 2019 (the “Employment
Agreement”), which expired on July 15, 2020 (capitalized terms used and not otherwise defined herein shall have the meanings
given to such terms in the Employment Agreement); and

 

WHEREAS,
the parties hereto desire to extend the term of the Employment Agreement and amend the Employment Agreement as set forth below.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.
Term. Section 1 of the Employment Agreement (“Term of Employment”) is hereby amended by deleting the
entire section thereof and replacing it with the following:

 

“The
Company agrees to employ Executive, and Executive agrees to work for the Company, upon the terms set forth in this Agreement,
for the period commencing on July 15, 2019 (the “Commencement Date”) and ending on December 31, 2020 (the “Term”).
This Agreement shall terminate in accordance with the provisions of Section 4, below.”

 

2.
Compensation, Benefits and Equity. Section 3.2, 3.3(a), 3.3(b) and 3.5 of the Employment Agreement (“Compensation,
Benefits and Equity”) are hereby amended by deleting the entire section thereof and replacing it with the following:

 

“3.2
Cash Performance Bonus. The Executive is eligible for a cash performance bonus with an aggregate potential annual bonus
of up to $165,000 (the “Cash Bonus”). The Cash Bonus will be calculated based upon the sum of 3% of Gross Revenue
Growth and 5% of Net Revenue Change, capped at 100% of annualized Base Salary.

 

The
calculation, administration and payment of the bonus will be determined and paid semi-annually and shall be payable within a forty-five
(45) days after the semi-annual periods of January 1, 2020, July 15, 2020 and December 31, 2020. It is intended that the Cash
Bonus calculation not include any M&A changes or financial impact, or any IP Monetization revenue or expense impact. It is
intended to be a bonus program related to growing the core businesses and improving the net operating profits of the core business
units.

 

    	1

     

    

 

3.3
Definitions

 

(a)
Gross Revenue Growth. “Gross Revenue Growth” shall mean the increase or decrease in the actual sales revenue
of Premier Packaging Corporation and DSS Digital as if the 2 entities were standalone entities, year over year, (in accordance
with generally accepted accounting principles, or GAAP) for the two 6-month periods ending as of 12/31/2019 and 6/30/2020. For
the 6-month period ending 12/31/2020, “Gross Revenue Growth” shall mean the increase or decrease in the actual sales
revenue of Premier Packaging Corporation and DSS Digital as if the 2 entities were standalone entities, year over year, (in accordance
with generally accepted accounting principles, or GAAP). The revenue growth calculation shall not include any growth increases
or decreases resulting from any new line of business, acquisition or merger of a new business, or the IP Monetization line of
business.

 

For
the sake of clarity in the bonus calculation and for example only, if the gross revenues of the relevant lines of business totaled,
as of:

 

Period
1: July 1, 2018 through December 31, 2018 = $30,400,000

Period 2: January 1, 2019 through June 30, 2019 = $20,000,000

Period 3:
July 1, 2019 through December 31, 2019 = $32,000,000

Period 4: January 1, 2020 through June 30, 2020 = $24,000,000

 

Calculation:

 

	 	■	(Period
    3 minus Period I) x .03, or ($32,000,000- $30,400,000) x.03 = $48,000.
	 	 	 
	 	■	(Period
    4 minus Period 2) x .03. or ($24.000,000- $20,000,000) x.03 = $120,000.

 

Therefore,
total bonus associated with Gross Revenue Growth= $168,000.

 

(b)
Net Income Change. “Net Revenue Change” shall mean 5% of the change in Net Income before income taxes (plus
intangible asset amortization) of Premier Packaging Corporation and DSS Digital as if the 2 entities were standalone entities,
year over year, (in accordance with generally accepted accounting principles, or GAAP) for the two 6-month periods ending as of
12/31/2019 and 6/30/2020. For the 6-month period ending 12/31/2020, “Net Revenue Change” shall mean 5% of the change
in Net Income before income taxes (plus intangible asset amortization) of Premier Packaging Corporation and DSS Digital as if
the 2 entities were standalone entities, year over year, (in accordance with generally accepted accounting principles, or GAAP).
The net income change calculation shall not include any net income change resulting from any new line of business, acquisition
or merger of a new business, or the IP Monetization line of business.

 

    	2

     

    

 

For
the sake of clarity in the bonus calculation and for example only,

 

If
the net revenues of the relevant lines of business totaled, as of:

 

Period
1: July 1, 2018 through December 31, 2018 = $1,000,000

Period
2: January 1, 2019 through June 30, 2019 = $1,600,000

Period
3: July 1, 2019 through December 31, 2019 = $1,200,000

Period
4: January 1, 2020 through June 30, 2020 = $2,000,000

 

Calculation:

 

	 	●	(Period
    3 minus Period 1) x .05, or ($1,200,000 - $1,000,000) x .05 = $10,000
	 	 	 
	 	●	(Period
    4 minus Period 2) x .05, or ($2,000,000 - $1,600,000) x .05 = $20,000

 

Therefore,
total bonus associated with Gross Revenue Growth = $30,000

 

By
adding the two components of the bonus calculation will comprise the total bonus calculation.

 

In
this example, the total bonus calculation is $198,000 [$168,000+$30,000] with maximum payable to be capped at 100% annual salary
of $165,000; Therefore $165,000.

 

3.5
Benefits. Executive shall be entitled to participate in all benefit programs and allowances that the Company establishes
and makes available to its executive employees, including eligibility for all company benefit plans, including, but not limited
to, health care coverage and 40l (k) plan, profit sharing, car allowance, cell phone and data usage payment or reimbursement,
home and office internet and computer/support equipment. The Executive understands that, except when prohibited by applicable
law, the Company’s benefit plans and fringe benefits may be amended by the Company from time to time in its sole discretion.

 

The
Executive shall be entitled to four (4) weeks of paid vacation time per year during the Term of this Agreement commencing immediately
with the execution of this Agreement. However, Executive shall not be entitled to receive payments in any kind for the accrued
but unused vacation time or carry over such accrued but unused vacation time in the next year. All other terms of the Executive’s
vacation shall be subject to the Company’s vacation policy, as it exists or is subsequently modified.

 

    	3

     

    

 

3.
Governing Law. This Amendment shall be governed by the laws of the State of New York without regards to the conflict-of-law
principles.

 

4.
Effective Date. This Amendment became effective as of July 16, 2020 (the “Effective Date”).

 

5.
Ratification. All terms and provisions of the Employment Agreement not amended hereby, either expressly or by necessary
implication, shall remain in full force and effect. From and after the Effective Date, all references to the term “Employment
Agreement” in this Amendment or the original Agreement shall include the terms contained in this Amendment.

 

6.
Counterparts. This Amendment may be executed in one or more facsimile, electronic or original counterparts, each of which
shall be deemed an original and both of which together shall constitute the same instrument.

 

[Signature
Page Follows]

 

    	4

     

    

 

IN
WITNESS WHEREOF, the Parties have set their hands hereto on the date first above written:

 

	DOCUMENT
    SECURITY SYSTEMS, INC.
	 	 
	/s/
    Heng Fai Ambrose Chan 	 
	(Signature)	 
	 	 
	Chairman	 
	(Title)	 
	 	 
	Heng
Fai Ambrose Chan	 
	(Print
    name)	 
	 	 
	EXECUTIVE
	 	 
	/s/
    Frank Heuszel	 
	(Signature)	 
	 	 
	Frank
Heuszel	 
	(Print
    name)	 

 

    	5crnc-ex43_331.htm

 

Exhibit 4.3

Description of the Registrant’s Securities Registered Pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended

The summary of the general terms and provisions of the registered securities of Cerence Inc. (“Cerence,” “we,” or “our”) set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to our Amended and Restated Certificate of Incorporation (our “certificate of incorporation”) and our Amended and Restated By-laws (our “by-laws” and, together with our certificate of incorporation, our “Charter Documents”), each of which is incorporated by reference as an exhibit to our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. We encourage you to read our Charter Documents and the applicable provisions of the General Corporation Law of the State of Delaware (the “DGCL”) for additional information.

General

Our authorized capital stock consists of 560,000,000 shares of common stock, $0.01 par value per share, and 40,000,000 shares of preferred stock, $0.01 par value per share. 

Common Stock 

Only our common stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended. 

Dividends

Holders of shares of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors (the “Board”) at its discretion out of funds legally available for that purpose, subject to the preferential rights of any preferred stock that may be outstanding. The timing, declaration, amount and payment of future dividends depends on our financial condition, earnings, capital requirements and debt service obligations, as well as legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant. Additionally, the terms of the Credit Agreement we entered into on June 12, 2020, between us, the lenders and issuing banks party thereto and Wells Fargo Bank, N.A. as administrative agent, limit our ability to pay cash dividends. Our Board makes all decisions regarding our payment of dividends from time to time in accordance with applicable law.

Voting Rights

The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders.

Other Rights

Subject to the preferential liquidation rights of any preferred stock that may be outstanding upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in our assets legally available for distribution to our stockholders.

Fully Paid

The issued and outstanding shares of our common stock are fully paid and non-assessable. Any additional shares of common stock that we may issue in the future will also be fully paid and non-assessable.

 

 

The holders of our common stock do not have preemptive rights or preferential rights to subscribe for shares of our capital stock.

Preferred Stock

Our certificate of incorporation authorizes our Board to designate and issue from time to time one or more series of preferred stock without stockholder approval. Our Board may fix and determine the preferences, limitations and relative rights of each series of preferred stock. There are no present plans to issue any shares of preferred stock.

 

No shares of preferred stock are outstanding as of the date of our Annual Report on Form 10-K with which this Exhibit 4.3 is filed as an exhibit.

Anti-Takeover Effects of Delaware Law and Provisions of our Charter Documents

Certain provisions of the DGCL and our Charter Documents contain provisions that could be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market price for the shares held by stockholders. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our Board and in the policies formulated by our Board and to discourage certain types of transactions that may involve an actual or threatened change of control.

Charter Document Provisions 

Our Charter Documents include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our Board or management team, including the following:

	
 
	
•
	
Classified Board. Our certificate of incorporation provides that, until the annual stockholder meeting in the year that is three years after October 1, 2019 (the date of our tax free spin-off from Nuance Communications), our Board will be divided into three classes, with each class consisting, as nearly as may be possible, of one-third of the total number of directors. The directors designated as Class I directors have terms expiring at the first annual meeting of stockholders, which we expect to hold in 2020. The directors designated as Class II directors have terms expiring at the following year’s annual meeting, which we expect to hold in 2021, and the directors designated as Class III directors have terms expiring at the following year’s annual meeting, which we expect to hold in 2022. Commencing with the first annual meeting following October 1, 2019, directors elected to succeed those directors whose terms then expire will be elected for a term of office to expire at the 2023 annual meeting. Beginning at the 2023 annual meeting, all of our directors will stand for election each year for annual terms, and our Board will therefore no longer be divided into three classes. Before our Board is declassified, it would take at least two elections of directors for any individual or group to gain control of our Board. Accordingly, while the classified board is in effect, these provisions could discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to control us.

 

	
 
	
•
	
Removal. Our certificate of incorporation provides that (i) prior to our Board being declassified as discussed above, our stockholders may remove directors only for cause and (ii) after our Board has been fully declassified, our stockholders may remove directors with or without cause. Removal requires the affirmative vote of holders of shares representing at least a majority of the voting power of the then-outstanding shares of all classes and series of our capital stock entitled generally to vote on the election of our directors.

 

 

 

	
 
	
•
	
Blank Check Preferred Stock. Our certificate of incorporation authorizes our Board to designate and issue, without any further vote or action by the stockholders, up to 40,000,000 shares of preferred stock from time to time in one or more series and, with respect to each such series, to fix the number of shares constituting the series and the designation of the series, the voting powers (if any) of the shares of the series, and the preferences and relative, participating, optional and other rights, if any, and any qualifications, limitations or restrictions, of the shares of such series. The ability to issue such preferred stock could discourage potential acquisition proposals and could delay or prevent a change in control.

 

	
 
	
•
	
No Stockholder Action by Written Consent. Our certificate of incorporation expressly excludes the right of our stockholders to act by written consent. Stockholder action must take place at an annual meeting or at a special meeting of our stockholders.

 

	
 
	
•
	
Special Stockholder Meetings. Our Charter Documents provide that a special meeting of our stockholders may only be called by our Board, the Chairman of our Board or our Chief Executive Officer, or at the request of holders of not less than 20% of the outstanding shares of the common stock of Cerence.

 

	
 
	
•
	
Requirements for Advance Notification of Stockholder Nominations and Proposals. Under our by-laws, stockholders of record are able to nominate persons for election to our Board or bring other business constituting a proper matter for stockholder action only by providing proper notice to our secretary. In the case of annual meetings, proper written notice must be given, generally between 90 and 120 days prior to the first anniversary of the prior year’s annual meeting as first specified in the notice of meeting (without regard to any postponements or adjournments of such meeting after such notice was first sent). In the case of special meetings, proper notice must be given no earlier than the 90th day prior to the relevant meeting and no later than the later of the 60th day prior to such meeting or the 10th day following the public announcement of the meeting. Such notice must include, among other information, certain information with respect to each stockholder nominating persons for election to the Board (including, the name and address, the number of shares directly or indirectly held by such stockholder, a description of any agreement with respect to the business to be brought before the annual meeting, a description of any derivative instruments based on or linked to the value of or return on our securities as of the date of the notice, a description of any proxy, contract or other relationship pursuant to which such stockholder has a right to vote any shares of our stock and any profit-sharing or performance-related fees that such stockholder is entitled to, based on any increase or decrease in the value of our securities, as of the date of such notice). Such notice must also include a representation that such stockholder is a holder of record of our common stock as of the date of the notice, each stockholder nominee’s written consent to being named as a nominee and to serving as a director if elected, a completed questionnaire and representation that such person has not and will not give any commitment as to how such person will act or vote if elected as a director or becomes a party to any agreement with respect to any compensation, reimbursement or indemnification in connection with service as a director, and that such person will comply with all policies applicable to directors, a description of all compensation and other monetary agreements during the past three years and a representation as to whether such stockholder intends to solicit proxies.

 

	
 
	
•
	
Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless the company’s certificate of incorporation provides otherwise. Our certificate of incorporation does not provide for cumulative voting.

 

	
 
	
•
	
Amendments to Certificate of Incorporation and By-Laws. The DGCL provides that the 

 

 

	
 
		
affirmative vote of holders of a majority of a company’s voting stock then outstanding is required to amend the company’s certificate of incorporation unless the company’s certificate of incorporation provides a higher threshold, and our certificate of incorporation does not provide for a higher threshold. Our certificate of incorporation provides that our by-laws may be amended by a majority of our Board or by the affirmative vote of holders of at least a majority of our voting stock entitled to vote in the election of directors.

 

Delaware Anti-Takeover Statute 

We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless: 

	
 
	
•
	
prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; 

	
 
	
•
	
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not for determining the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or 

	
 
	
•
	
at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our Board does not approve in advance. We also anticipate that Section 203 of the DGCL may discourage business combinations or other attempts that might result in a premium over the market price for the shares of common stock held by our stockholders. 

The provisions of Delaware law and our Charter Documents could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests. 

 

 

Exclusive Forum

 

Our certificate of incorporation provides, in all cases to the fullest extent permitted by law, that unless we consent in writing to the selection of an alternative forum, the Court of Chancery located within the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of Cerence, any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or stockholder of Cerence to Cerence or Cerence’s stockholders, any action asserting a claim arising pursuant to the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery located in the State of Delaware, any action asserting a claim governed by the internal affairs doctrine or any other action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL. However, if the Court of Chancery within the State of Delaware does not have jurisdiction, the action may be brought in any other state or federal court located within the State of Delaware. Further, this exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or the Securities Act, except that it may apply to such suits if brought derivatively on behalf of Cerence. There is, however, uncertainty as to whether a court would enforce such provision in connection with suits to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, if brought derivatively on behalf of Cerence, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.

 

Listing

 

Our common stock is listed on the NASDAQ Global Select Market, under the ticker symbol “CRNC.”

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