Document:

lysn_ex101

  Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT AGREEMENT, entered into as of this 29th day of December
2017, by and between LIBERATED SYNDICATION INC, a Nevada
corporation with an office at 5001 Baum Blvd. Suite 770,
Pittsburgh, Pennsylvania 15213 (hereinafter called the
“Company”) and Laurie Sims (hereinafter called the
“Executive”).

 

RECITALS

 

WHEREAS, the
Executive is employed by the Company as VP of Operations
(“V.P.”) of the Company and President
(“President”) of Webmayhem Inc. (the
“Subsidiary”), and has performed duties of her
employment in a capable and efficient manner, resulting in
substantial benefit to the Company; and

 

WHEREAS, the
Company desires to assure the continued service of the Executive,
and Executive is desirous of committing herself to continued
service to the Company on the terms herein provided.

 

AGREEMENTS

 

NOW,
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged
by the parties hereto, the Company and the Executive agree as
follows:

 

1.
Employment. The
Company will employ the Executive and the Executive accepts
employment on the terms and conditions set forth in this
Agreement.

 

2.
Duties. The
Executive shall serve the Company as V.P. and President of the
Subsidiary, under the terms and conditions provided herein. The
Executive shall also serve, subject to her six-month review as set
forth in Section 4, as President of pair Networks Inc. (the
“New Subsidiary”) upon the Company’s acquisition
of the New Subsidiary. The Executive’s duties hereunder shall
include such duties as are normally incident to the positions. The
Executive shall perform her duties hereunder faithfully and to the
best of her abilities and in furtherance of the business of the
Company and to the promotion of its interests. To further perform
the Executive duties as are commonly incumbent upon that position,
the Executive agrees to travel to or work at other locations, from
time to time, as reasonable for the benefit of the company. It is
understood and acceptable that the Executive works for other
organizations and businesses outside the Company from time to
time.

 

3.
Term of Employment.
The term of the Executive’s employment hereunder shall be for
a three (3) year term beginning on January 1, 2018 and ending
December 31, 2020. On January 1, 2021, and on each January
1st
thereafter ( each such date being hereinafter referred to as a
“Renewal Date”), the term of the Executive’s
employment hereunder shall automatically be extended for an
additional one (1) year period unless the Company notifies the
Executive in writing at least ninety (90) days prior to the
applicable Renewal Date that the Company does not wish to extend
this Agreement beyond the initial three (3) year term or the
additional one (1) year term and subsequent additional one (1) year
renewals. The Executive may terminate this Agreement upon thirty
(30) days advance written notice to the Company at any point during
the Executive’s term of employment.

 

4.
Salary. The Company
agrees to pay and the Executive agrees to accept, in accordance
with the provisions contained herein, as compensation for
performance of her duties and obligations to the Company hereunder,
a salary at an annual rate set by the Chief Executive Officer of
the Company (the “CEO”), but shall in no event be less
than Two Hundred Fifty Thousand Dollars ($250,000) per year,
exclusive of the benefits described in Section 5, 6 and 7 hereof.
Such salary shall be payable in equal semi-monthly installments,
less usual, customary and the applicable government mandated
payroll deductions. The Executive’s salary and performance
are subject to review by the CEO, no later than June 30, 2018. If
the CEO determines, in his sole discretion, that the Executive is
able to perform the duties and responsibilities of President of the
New Subsidiary effectively and her other duties as V.P. and
President of the Subsidiary, then Executive’s salary shall be
increased effective July 1, 2018 to Three Hundred Thousand Dollars
($300,000) per year, exclusive of the benefits described in Section
5, 6, and 7 hereof and the one time bonus outlined below shall be
increased from one times the Executive’s highest annual
salary to two times the Executive’s highest annual salary.
The Executive’s salary shall be reviewed annually by the CEO
for possible increases. Such salary shall be payable in equal
semi-monthly installments, less usual, customary and the applicable
government mandated payroll deductions. In addition, the Company
agrees to pay and the Executive agrees to accept, in accordance
with the provisions contained herein, as compensation for
performance of her duties and obligations to the Company hereunder,
any fees or payments authorized by the CEO to be paid to the
Executive for membership on the Board or any committee thereof. All
amounts described in this Section shall be referred to in this
Agreement collectively as the Executive’s
“Salary”. The Executive shall be entitled to
participate in such bonus programs as the CEO, Board of Directors
or the compensation committee may establish in their sole
discretion. The Executive, with Board approval, shall be eligible
to receive shares of Common Stock or Options to purchase shares of
Common Stock. At the end of the initial three (3) year term of the
employment agreement, the Executive shall receive a bonus equal to
one times the Executive’s highest annual salary. This
additional (one time) bonus is earned as of the renewal date of
January 1, 2021. If the Executive leaves by her own accord and not
a “Resignation for Good Reason” as defined below, at
the end of the initial three (3) year term of the employment
agreement, the Executive shall receive a bonus equal to or greater
than one times the Executive’s highest annual
salary.

 

 

 

 

5.
Change in Control.
Whether via changes in the entity or its subsidiaries, or any
change in the Executive’s duties, titles, or capacities, the
Executive is entitled to the same salaries and benefits as if the
Executive contract had remained in force.

 

(a)
Unless the Executive unilaterally terminates her own contract, or
for other reasons, fails to complete the remainder of the three (3)
year contract, the Executive will receive the same salary and
benefits, including the bonus, as were the stipulated remunerations
for performing her duties as V.P. and President of the Subsidiary.
Such remunerations will continue to be paid for consulting and
advisory services or a re-designation to another role in the
Company as agreed to by the executive on a monthly basis for
contract duration.

 

6.
Expenses. All
reasonable travel and other expenses incidental to the rendering of
services by the Executive hereunder shall be paid by the Company in
accordance with the Company’s policies and
procedures.

 

7.
Benefits.

 

(a)
Benefit Plans. The
Executive shall be entitled to participate in all Executive benefit
plans, including, without limitation, medical, hospital, insurance,
pension and 401(k) plans hereafter adopted by the Board of
Directors of the Company or its Subsidiary for its Executive
employees and employees, and to receive any other fringe benefits
that may be made generally available to the Company’s
Executive employees from time to time.

 

(b)
Vacations. The
Executive shall be entitled to vacations each year in accordance
with the Company’s policies in effect from time to time, of
up to four (4) weeks. Vacation shall be granted on January 1 of
each calendar year of this agreement and taken on a calendar basis.
Any unused vacation at the end of the calendar year will be
forfeited and will not accrue or carry forward to the subsequent
calendar year.

 

(c)
Health Benefits.
Notwithstanding any other provision of this Agreement or any other
agreement between the Executive and the Company, the Company agrees
upon the termination of Executive’s employment for any reason
other than Cause (as hereinafter defined), or upon
Executive’s retirement from the Company, or upon the
Executive’s death while employed by the Company, the Company
shall provide at its sole cost, to Executive, and the
Executive’s spouse at the time of termination of employment
as well as applicable dependents, the same level of health care
benefits as currently provided to Executive and her family, on the
date hereof; for a term of 5 years from the date of separation of
employment unless executive is covered by another company
employment contract.

 

The
Company further agrees that in the event that the level of health
care benefits provided by the Company to its Executives is expanded
at any time prior to the occurrence of the triggering event
described in either Section 7(c)(i) or Section 7(c)(ii) hereof, the
health care benefit that is required to be provided by Section
7(c)(i) or Section 7(c)(ii) shall be at such expanded
level.

 

(8)
Termination.

 

(a)
Death. The
Executive’s employment hereunder shall terminate upon her
death

 

(b)
Cause. The Company
may terminate the Executive’s employment hereunder for Cause.
For the purpose of this Agreement, the Company shall have
“Cause” to terminate the Executive’s employment
hereunder upon (i) the willful failure of the Executive to
substantially perform her duties hereunder; (ii) the engaging by
the Executive in dishonesty or other misconduct materially
injurious to the Company; (iii) the commission by the Executive of
a felony (whether or not involving the Company); or (iv) a material
breach by the Executive of this Agreement, provided that such
breach shall not have been cured by the Executive within thirty
(30) days after written notice thereof from the Company to the
Executive. (v) Gross negligence in the performance of the duties of
the executive for the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a
copy of a resolution, duly adopted by the affirmative vote of not
less than seventy-six percent (76%) of the entire membership of the
Board of Directors of the Company at a meeting of the Board called
and held for the purpose (after thirty (30) days prior written
notice to the Executive and an opportunity for her, together with
her counsel, to be heard before the Board), finding that in the
good faith opinion of the Board the Executive was guilty of conduct
set forth above in clause (i), (ii), (iii) or (iv) of this Section
8(b) and specifying the particulars thereof in detail.

 

 

 

 

(c)
Resignation for Good
Reason. The Executive may terminate her employment hereunder
for Good Reason. For the purpose of this Agreement “Good
Reason” shall mean:

 

(1) a
material breach by the Company, by act or omission, of this
Agreement, which the Company fails to cure within thirty (30) days
after receipt of written notice from the Executive of such material
breach ( or, in the case of a material breach which the Company
cannot reasonably cure within said thirty (30) day period which the
Company fails to commence within said thirty (30) day period to
diligently cure);

 

(2)
material change by the Company of the Executive’s functions,
duties or responsibilities which change would cause the
Executive’s position with the Company to become of less
dignity, responsibility, importance, prestige or scope, including,
without limitation, a change from being V.P. of a publicly held
company; except as consultant to the Chief Executive Officer (CEO)
and or Board of Directors (BOD) in an advisory capacity as defined
in Section 5, and excluding any change to her position as President
of the New Subsidiary subject to her six-month review as set forth
in Section 4.

 

(3)
permanent assignment or reassignment by the Company of the
Executive without the Executive’s consent to another place of
employment more than 50 miles from the Executive’s current
place of employment; or

 

(4) a
reduction in the Executive’s base pay or bonus opportunity
from the previous year.

 

No such
event described above shall constitute Good Reason unless the
Executive gives timely written notice to the Company, specifying
the event relied upon for such termination of such event and the
Company has not remedied such within 30 days of the notice. The
Company and Executive, upon mutual written agreement may waive any
of the foregoing provisions which would otherwise constitute a Good
Reason.

 

(d)
Disability. If, as
a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent from her
duties hereunder on a full time basis for ninety (90) consecutive
business days, the Company may terminate the Executive’s
employment hereunder.

 

9.
Effect of
Termination.

 

(a)
Termination by the Company
for Cause or Due to Executive’s Death. If the
Executive’s employment hereunder shall be terminated due to
the Executive’s death or for Cause, the Company shall pay the
Executive her full Salary and other benefits through the date of
termination at the rate then in effect. Upon termination of the
Executive’s employment pursuant to subsections 8(a) and 8(b)
hereof, the Company shall have no further obligations to the
Executive under this Agreement, except as specified in subsection
7(c).

 

(b)
Termination by the Company
Due to the Executive’s Disability. During any period
that the Executive is prevented from performing her duties
hereunder as a result of incapacity due to physical or mental
illness, the Executive shall continue to receive her Salary and
benefits in the amounts or rates in effect upon the commencement of
her disability (less any amounts payable to the Executive under any
Company disability insurance policy or plan) until the
Executive’s employment hereunder is terminated by the Company
pursuant to Section 8(d) hereof. Upon termination of the
Executive’s employment pursuant to subsection 8(d) hereof,
the Company shall have no further obligations to the Executive
under this Agreement, except as specified in subsection
7(c).

 

(c)
Termination by the Company
without Cause or by Executive Resignation for Good Reason.
If the Executive’s employment hereunder shall be terminated
by the Company, other than for death, Cause or disability, or the
Executive Resigns for Good Reason, the Company agrees to pay as a
severance pay an amount equal to the Salary which would have been
payable over the remaining term of this Agreement or, if such
remaining term is less than twelve (12) months, then for a period
of twelve (12) months immediately following the termination. All
unvested stock options held by the Executive shall automatically
vest, all bonuses, including the one time bonus specified in
section 4, due the Executive shall be deemed earned and be paid
immediately upon termination, and all shares due the Executive
shall be immediately vested and/or all milestones achieve with all
shares issued to the Executive. The Company shall also provide to
the Executive the benefits described in Section 7(a) and Section
7(c) hereof for a term not shorter than the period that said
severance pay shall be payable. In addition, the Company shall pay
to the Executive any accrued bonus through the date of termination.
The Company’s notice of non-extension of this Agreement,
described in Section 3 hereof, shall not constitute a termination
by the Company for the purposes of this Section 9(c).

 

 

 

 

10.
Termination by Change in
Control. If, and only if, the Executive’s employment
is terminated following a Change in Control of the Company, the
provisions in Section 9(c) of this Agreement shall be followed in
addition to the provisions in Section 5 of this
agreement.

 

11.
Assignment;
Successors. The provisions of this Agreement shall survive
any Change in Control and is subject to the provisions of Section
10 hereof, if the Company shall be merged, be the subject of a
Tender Offer, or consolidated into any other corporation or if
substantially all of the assets of the Company shall be transferred
to another corporation, the provisions of this Agreement shall be
binding upon the corporation resulting from such merger or
consolidation or to which assets shall have been transferred (the
“Surviving Corporation”), and this provision shall
apply in the event of any subsequent merger, consolidation or
transfer. In any such event, the Surviving Corporation shall enter
into an agreement with the Executive whereby the Surviving
Corporation and the Executive shall agree to perform this
Agreement, including Section 10 hereof, in the same manner and to
the same extent the Company would be required to perform it if no
such merger, consolidation or transfer had taken
place.

 

12.
Agreement Not to
Compete.

 

(a) The
Executive hereby covenants and agrees that, provided the Company
makes any payments and provides any benefits which may be required
under Section 9 and 10 hereof, at no time during the
Executive’s employment by the Company, nor for a period of
six (6)months immediately following the termination thereof, will
the Executive for herself or on behalf of any other person,
partnership, company or corporation, directly or indirectly,
acquire any financial or beneficial interest in, provide consulting
services to, be employed by, contract with, or own, manage, operate
or control any business producing, manufacturing, selling,
distributing, promoting or dealing in products or services
identical or similar to the products or services of the Company or
Subsidiaries, which is defined as providing “podcast hosting
services,” or otherwise compete with the Company or
Subsidiaries in the Company’s Service Area, specifically the
northeastern Region of the United States . Nothing in this
Agreement shall prevent the Executive from holding or investing in
securities listed on a national securities exchange or sold in the
over-the-counter market.

 

(b) The
Executive hereby covenants and agrees that, provided the Company
makes any payments which may be required under Section 9 and 10
hereof, at all times during her employment by the Company, and for
six (6) months after termination of such employment, the Executive
shall not directly or indirectly contact or solicit any clients of
the Company or employ or seek to employ any person or entity
employed at that time by the Company, Subsidiary, affiliates or
licensees or otherwise encourage or entice such person or entity to
leave employment or terminate such employment.

 

(c) In
the event that this Section 12 shall be determined by arbitrators
or by any court of competent jurisdiction to be unenforceable by
reason of its extending for too great a period of time or over too
large a geographic area or over too great a range of activities, it
shall be interpreted to extend only over the maximum period of
time, geographic area or range of activities as to which it may be
enforceable.

 

13.
Confidential
Information. The Executive acknowledges that, in and as a
result of her relationship with the Company, the Executive has
access to certain Confidential Information of the Company, as
hereinafter defined. The Executive recognizes that the Confidential
Information is confidential and solely the property of the Company,
and that unauthorized disclosure or use of such Confidential
Information by the Executive will be deemed a breach of this
Agreement. The Executive agrees to use her best efforts to keep
secret and retain in the strictest confidence all Confidential
Information and confidential matters which relate to the Company,
Subsidiary or any affiliate of the Company. For purposes of this
Agreement, Confidential Information means any and all information
related to the Company and its business, including, but not limited
to, products, services, suppliers, vendors, clients, prospects,
business plans, marketing techniques, pricing, financial
information, customer lists, supplier lists, trade secrets, pricing
policies and other business affairs of the Company, Subsidiary and
any affiliate of the Company, learned by her before or after the
date of this Agreement, regardless of whether such information is
reduced to writing and/or is in existence in the date hereof. The
Executive agrees not to disclose any such Confidential Information
to anyone outside the Company, Subsidiary or any affiliates,
whether during or after her period of service with the Company,
except in the course of performing her duties hereunder. Upon
request by the Company, the Executive agrees to deliver promptly to
the Company upon termination of employment by the Company, or at
any time thereafter as the Company may request, all Company,
Subsidiary or any affiliate materials, memoranda, notes, records,
reports, manuals, drawings, designs, computer files in any media
and other documents (and all copies thereof) relating to the
Company’s, Subsidiary’s or any affiliate’s
business and all property of the Company, Subsidiary or any
affiliate of the Company, which he may then possess or have under
her control.

 

 

 

 

14.
Remedies. The
Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set­off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall
the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. Each party
shall be responsible for its own expenses and legal fees incurred
in connection with any arbitration, however, in the event that the
Executive prevails in the Arbitration, the Company agrees to pay,
all legal fees and expenses which the Executive may reasonably
incur as a result of any dispute or contest by or with the Company
regarding the validity or enforceability of, or liability under,
any provision of this Agreement, plus in each case interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the
Internal Revenue Code. In any such action brought by the parties,
the parties voluntarily agree that any and all disputes under this
Agreement, either an action at law or an action for injunctive
relief, shall be settled exclusively by arbitration as set forth
hereinafter. The Arbitrator may award any remedies or damages that
a judge could provide under the applicable statute or law. The
obligation of the Company under this Section 14 shall survive the
termination for any reason of this Agreement (whether such
termination is by the Company, by the Executive, upon the
expiration of this Agreement or otherwise).

 

15.
Arbitration. To the
extent permitted by applicable law, any controversy or dispute
arising out of, or relating to, this Agreement, or any alleged
breach hereof, the parties voluntarily agree that said disputes
shall be settled exclusively by arbitration in Pittsburgh,
Pennsylvania, in accordance with Pennsylvania law, and shall be
conducted in accordance with the Rules of the American Arbitration
Association then in effect. The parties hereby consent to the
jurisdiction of the courts of the Commonwealth of Pennsylvania and
of the United States District Court for the Western District of
Pennsylvania for all purposes in connection with the arbitration.
The arbitrator shall be selected by the Executive and Company, the
parties. In the event that the parties cannot agree on the
arbitrator within thirty (30) days following receipt by one party
of a demand for arbitration from another party, then the Arbitrator
shall be selected by the American Arbitration Association. The
Arbitrator shall convene a hearing no later than thirty (30) days
following the selection. The arbitration award shall be final and
binding upon both parties without any right of appeal by either of
the parties. Judgment may be entered and execution issued in any
court of competent jurisdiction. The Company shall pay the total
cost of the Arbitrator’s professional fees and related
expenses. The parties further agree that arbitration proceedings
must be instituted within one year after the claimed breach
occurred, and that failure to institute arbitration proceedings
within such period shall constitute an absolute bar to the
institution of any proceedings and the waiver of all
claims.

 

16.
Governing Law. This
Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of
Pennsylvania.

 

17.
Entire Agreement.
This Agreement constitutes the full and complete understanding and
agreement of the parties with respect to the subject matter hereof,
supersedes all prior understandings and agreements as to employment
of the Executive, and cannot be amended, changed, modified or
terminated without the written consent of the parties
hereto.

 

18.
Waiver of Breach.
No provision of this Agreement shall be deemed waived unless such
waiver is in writing and signed by the party making such waiver.
The waiver by either party of a breach of any term of this
Agreement shall not operate nor be construed as a waiver of any
subsequent breach thereof.

 

19.
Notices. Any notice
hereunder shall be in writing and shall be given by personal
delivery or certified or registered mail, return receipt requested,
to the following addresses:

 

If to
the Executive, to such address as the Executive may have furnished
to the Company in writing.

 

If to
the Company:

 

Chief
Financial Officer

Liberated
Syndication Inc.

5001
Baum Blvd

Suite
770

Pittsburgh, PA
15213

 

 

or to
such other address as the Company may have furnished to the
Executive in writing.

 

 

 

 

20.
Severability. If
any one or more of the provisions contained in this Agreement shall
be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired thereby.

 

21.
Headings. The
headings, titles or captions of the Sections of this Agreement are
included only to facilitate reference, and they shall not define,
limit, extend or describe the scope or intent of this Agreement or
any provision hereof; and they shall not constitute a part hereof
or affect the meaning or interpretation of this Agreement or any
part thereof.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

 

	
 

	

EXECUTIVE

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

/s/
Laurie A. Sims

	
 

	

Laurie
Sims

	
 

	
 

	
 

	

Liberated
Syndication

	
 

	
 

	
 

	
 

	
 

	

/s/
Christopher Spencer

	
 

	

Christopher
Spencer

	
 

	

Chief
Executive OfficerDocument

EXHIBIT 4.5

DESCRIPTION OF CAPITAL STOCK

The following is a description of the capital stock of IES Holdings, Inc. (the “Company”). The Common Stock and Rights of the Company (each as defined below) are registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This description does not describe every aspect of the Company’s capital stock and is subject to, and qualified in its entirety by reference to, the provisions of (i) the Company’s Second Amended and Restated Certificate of Incorporation, as amended by the Certificate of Amendment thereto, and the Certificate of Designations of Series A Junior Participating Preferred Stock,  (ii) the Company’s Amended and Restated Bylaws, and (iii) the Company’s Tax Benefit Protection Plan Agreement, each as currently in effect, each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K for the fiscal year ended September 30, 2020, of the Company, as well as applicable provisions of Delaware law.

Authorized Capital Stock

The Company’s authorized capital stock consists of 100,000,000 shares of common stock, par value $0.01 per share (the “Common Stock”), and 10,000,000 shares of preferred stock, par value $0.01 per share.

Common Stock and Restricted Common Stock

The holders of Common Stock are entitled to one vote for each share on all matters voted upon by stockholders, including the election of directors.  Our common stockholders are not entitled to vote cumulatively for the election of directors.  Holders of a majority of the shares of Common Stock entitled to vote in any election of directors may elect all of the directors standing for election.

Subject to the rights of any then-outstanding shares of preferred stock, holders of Common Stock are entitled to participate in dividends declared in the discretion of the Board of Directors out of funds legally available therefor.  We have never paid cash dividends on our Common Stock, and we do not anticipate paying cash dividends on our Common Stock in the foreseeable future.  Any future determination as to the payment of dividends will be made at the discretion of the Board of Directors and will depend upon our operating results, financial condition, capital requirements, general business conditions and other factors that the Board of Directors deems relevant.  We are also restricted under our revolving credit facility from paying cash dividends.

Holders of Common Stock are entitled to share ratably in the net assets of the Company upon liquidation after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.  Holders of Common Stock have no preemptive rights to purchase shares of the Company’s stock.  Shares of Common Stock are not subject to any redemption provisions and are not convertible into any other securities of the Company.  All outstanding shares of Common Stock are fully paid and non-assessable.

With respect to stockholders of record as of the close of business on the Record Date (as defined below), each outstanding share of Common Stock includes one preferred stock purchase right issued under our Tax Benefit Protection Plan Agreement, as described below.

The Common Stock is listed on the NASDAQ under the symbol “IESC.” 

Preferred Stock

The preferred stock may be issued from time to time by the Board of Directors as shares of one or more classes or series.  Subject to the provisions of our Second Amended and Restated Certificate of Incorporation, as amended, and limitations prescribed by law, the Board of Directors is expressly authorized to adopt resolutions to issue the shares, to fix the number of shares and to change the number of shares constituting any series, and to provide for or change the voting powers, designations, preferences and relative, participating, optional or other 

special rights, qualifications, limitations or restrictions thereof, including dividend rights (including whether dividends are cumulative), dividend rates, terms of redemption (including sinking fund provisions), redemption prices, conversion rights and liquidation preferences of the shares constituting any class or series of the preferred stock, in each case without any further action or vote by the stockholders.

One of the effects of undesignated preferred stock may be to enable the Board of Directors to render more difficult or to discourage an attempt to obtain control of the Company by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management.  The issuance of shares of preferred stock pursuant to the Board of Directors’ authority described above may adversely affect the rights of the holders of Common Stock.  For example, preferred stock we issue may rank prior to the Common Stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of Common Stock.  Accordingly, the issuance of shares of preferred stock may discourage bids for the Common Stock at a premium or may otherwise adversely affect the market price of the Common Stock.

Series A Junior Participating Preferred Stock

On November 8, 2016, the Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of our Common Stock.  The dividend was payable to the stockholders of record as of the close of business on November 18, 2016 (the “Record Date”).  The following summary of the Rights does not purport to be complete and is qualified in its entirety by reference to that certain Tax Benefit Protection Plan Agreement, dated as of November 8, 2016 (the “Rights Agreement”), between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent.  The Board of Directors adopted the Rights Agreement in an effort to protect stockholder value by attempting to protect against a possible limitation on the Company’s ability to use its net operating loss carryforwards (the “NOLs”) to reduce potential future federal income tax obligations.

The Rights

Subject to the terms, provisions and conditions of the Rights Agreement, each Right represents a right to purchase one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock, par value $0.01 per share (“Preferred Stock”), at a price of $79.30 (as the same may be adjusted, the “Purchase Price”).  The Preferred Stock may be issued in fractions of a share which, upon exercise of the Rights, would entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Preferred Stock.

Until a Right is exercised, the holder thereof, in their capacity as a Rights holder, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

Distribution Date; Acquiring Persons, Transfer of Rights

Initially, the Rights will be attached to all Common Stock certificates (or book entry shares) representing the shares outstanding on the Record Date, and no separate right certificates will be distributed.  Subject to certain exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and a “Distribution Date” will occur upon the earlier of (i) ten (10) days following a public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired, or obtained the right to acquire, beneficial ownership of 4.95% or more of the outstanding shares of Common Stock (the “Stock Acquisition Date”) and (ii) ten (10) business days following the commencement of, or the first public announcement of a person’s intention to commence, a tender offer or exchange offer that would result in a person or group beneficially owning 4.95% or more of the outstanding shares of Common Stock.  The definition of Acquiring Person excludes any Exempt Person (as defined below) and any person who would become an Acquiring Person solely as a result of an Exempt Transaction (as defined below).

Until the Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates (or book entry shares in respect of the Common Stock) and will be transferred with and only with such Common Stock certificates (or book entry shares in respect of the Common Stock), (ii) new Common Stock certificates (or book 

entry shares in respect of the Common Stock) after the Record Date will contain a notation incorporating the Rights Agreement by reference and, with respect to any uncertificated book entry shares issued after the Record Date, proper notice will be provided that incorporates the Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Common Stock (or book entry shares of Common Stock) outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate or book entry shares.

As soon as practicable after the Distribution Date, right certificates will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date.  Thereafter, the separate right certificates alone will represent the Rights.  Except as otherwise determined by the Board, only shares of Common Stock issued prior to the Distribution Date will be issued with Rights.

Exempt Persons

The following persons are “Exempt Persons” as defined under the Rights Agreement:

(i) Any person who, together with its affiliates and associates, is the beneficial owner of Common Stock, options and/or warrants exercisable for shares of Common Stock representing 4.95% or more of the shares of Common Stock outstanding on November 8, 2016 will be an “Exempt Person.” However, any such person will no longer be treated as an Exempt Person and will be deemed an Acquiring Person if such person, together with its affiliates and associates, thereafter becomes the beneficial owner of securities representing a percentage of the outstanding Common Stock that exceeds by one-half of one percent (0.5%) or more the lowest percentage of Common Stock beneficially owned by such person at any time since November 8, 2016, excluding increases in percentage ownership of Common Stock attributable to any (x) grant or adjustment of an equity compensation award to such person by the Company or (y) repurchase or redemption of Common Stock by the Company.

(ii) In addition, any person who, together with its affiliates and associates, becomes the beneficial owner of Common Stock, options and/or warrants exercisable for shares of Common Stock representing 4.95% or more of the shares of Common Stock then outstanding because of a reduction in the number of outstanding shares of Common Stock as the result of a purchase of Common Stock by the Company or any of its subsidiaries will also be an “Exempt Person.” However, any such person will no longer be treated as an Exempt Person and will be deemed an Acquiring Person if such person, together with its affiliates and associates, thereafter becomes the beneficial owner of securities representing a percentage of the outstanding Common Stock that exceeds by one-half of one percent (0.5%) or more the lowest percentage of the outstanding Common Stock beneficially owned by such person at any time since such person first beneficially owned 4.95% or more of the Common Stock, excluding increases in percentage ownership of Common Stock attributable to any (x) grant or adjustment of an equity compensation award to such person by the Company or (y) repurchase or redemption of shares of Common Stock by the Company.

(iii) In addition, any person who, together with its affiliates and associates, is the beneficial owner of Common Stock, options and/or warrants exercisable for shares of Common Stock representing 4.95% or more of the outstanding Common Stock, and whose beneficial ownership is determined by the Board, in its sole discretion, (x) not to jeopardize or endanger the unrestricted availability to the Company of its tax benefits or (y) to be in the best interests of the Company, will be an “Exempt Person.” However, any such person shall no longer be treated as an Exempt Person and will be deemed an Acquiring Person if (A) such person, together with its affiliates and associates, thereafter becomes the beneficial owner of a percentage of Common Stock that exceeds by one-half of one percent (0.5%) or more the lowest percentage of Common Stock beneficially owned by such person at any time since such person first beneficially owned 4.95% or more of the Common Stock, excluding increases in beneficial ownership of Common Stock attributable to any (I) grant or adjustment of an equity compensation award to such person by the Company or (II) repurchase or redemption of Common Stock by the Company, or (B) the Board, in its sole discretion, determines that such person’s Beneficial Ownership (together with its affiliates and associates) may jeopardize or endanger the unrestricted availability to the Company of its tax benefits or not be in the best interests of the Company.

A purchaser, assignee or transferee of shares of Common Stock (or options or warrants exercisable for Common Stock) from an Exempt Person will not thereby become an Exempt Person, except that a transferee who receives Common Stock as a bequest or inheritance from the estate of an Exempt Person shall be an Exempt Person 

so long as such transferee continues to be the beneficial owner of 4.95% or more of the then outstanding shares of Common Stock.

Exempt Transactions

The following transactions shall be “Exempt Transactions” under the Rights Agreement: any transaction that the Board determines, in its sole discretion, is exempt from the Rights Agreement, which determination shall be made in the sole and absolute discretion of the Board prior to the date of such transaction, including, without limitation, if the Board determines that (i) neither the beneficial ownership of shares of Common Stock by any person, directly or indirectly, as a result of such transaction nor any other aspect of such transaction would jeopardize or endanger the unrestricted availability to the Company of the Company’s tax benefits or (ii) such transaction is otherwise in the best interests of the Company.  In granting an exemption for an “Exempt Transaction,” the Board may require any person who would otherwise be an Acquiring Person to make certain representations or undertakings or to agree that any violation or attempted violation of such representations or undertakings will result in such consequences and subject the person to such conditions as the Board may determine in its sole discretion, including that any such violation shall result in such person becoming an Acquiring Person.

Exercisability; Expiration

The Rights are not exercisable until the Distribution Date and will expire on the earliest of (i) the close of business on December 31, 2021, (ii) the repeal of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and any successor statute or any other change of law if, as a result of such change of law, the Board determines that the Rights Agreement is no longer necessary or desirable for the preservation of certain tax benefits, and (iii) the beginning of the first taxable year of the Company to which the Board determines that certain tax benefits may not be carried forward.

If an Acquiring Person becomes the beneficial owner of 4.95% or more of the outstanding shares of Common Stock, each holder of a Right will thereafter have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash, property or other securities of the Company), having a value equal to two times the exercise price of the Right.  The exercise price is the Purchase Price times the number of shares of Common Stock associated with each Right (initially, one).  Notwithstanding any of the foregoing, following the occurrence of an Acquiring Person becoming such (a “Flip-In Event”), all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void.  However, Rights are not exercisable following the occurrence of a Flip-In Event until such time as the Rights are no longer redeemable by the Company as set forth below.

For example, at an exercise price of $85.00 per Right, each Right distributed in respect of shares of Common Stock not owned by an Acquiring Person (or by certain related parties) following a Flip-In Event would entitle its holder to purchase $170.00 worth of Common Stock (or other consideration, as noted above) for $85.00.  If the Common Stock at the time of exercise had a market value per share of $10.00 per share, the holder of each valid Right would be entitled to purchase 17 shares of Common Stock for $85.00.

Until a Right is exercised, the holder thereof, in their capacity as a Rights holder, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.  While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) of the Company as set forth above or in the event the Rights are redeemed.

Anti-Dilution Provisions

The Purchase Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the then-current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred 

Stock of evidence of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).

With certain exceptions, no adjustments in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price.  No fractional shares will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise.

Exchange

At any time after the Stock Acquisition Date, the Board may exchange the Rights (other than Rights owned by an Acquiring Person), in whole or in part, at an exchange ratio equal to one (1) share of Common Stock per Right (subject to adjustment).

Redemption

At any time until ten (10) days following the Stock Acquisition Date, the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right.  Immediately upon action by the Board ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the $0.001 redemption price.

Amendments

Other than those provisions relating to the principal economic terms of the Rights, any of the provisions of the Rights Agreement may be amended by the Board prior to the Distribution Date.  After the Distribution Date, the provisions of the Rights Agreement may be amended by the Board in order to cure any ambiguity, to make changes which do not adversely affect the interests of holders of Rights (excluding the interests of any Acquiring Person), or to shorten or lengthen any time period under the Rights Agreement; provided, however, that no amendment to lengthen the time period governing redemption shall be made at such time as the Rights are not redeemable.

Statutory Business Combination Provision

We are subject to the provisions of Section 203 of the Delaware General Corporation Law.  Section 203 provides, with certain exceptions, that a Delaware corporation may not engage in any of a broad range of business combinations with a person or an affiliate, or associate of such person, who is an “interested stockholder” for a period of three years from the date that such person became an interested stockholder unless: (1) the transaction resulting in a person becoming an interested stockholder, or the business combination, is approved by the board of directors of the corporation before the person becomes an interested stockholder, (2) upon consummation 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 shares owned by persons who are both officers and directors of the corporation, and shares held by certain employee stock ownership plans) or (3) on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two- thirds of the outstanding voting stock that is not owned by the interested stockholder.  Under Section 203, an “interested stockholder” is defined as any person who is the owner of 15% or more of the outstanding voting stock of the corporation or an affiliate or associate of the corporation and who became the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder.

A corporation may, at its option, exclude itself from the coverage of Section 203 by amending its certificate of incorporation or bylaws, by action of its stockholders, to exempt itself from coverage.  We have not adopted such an amendment to our Second Amended and Restated Certificate of Incorporation, as amended, or our Amended and Restated Bylaws.  As of September 30, 2020, Tontine was the controlling stockholder of our Common Stock.  However, as the transaction which resulted in Tontine becoming an “interested stockholder” was approved by the Board, Tontine is exempt from application of Section 203.

Limitation on Directors’ Liability

Pursuant to our Second Amended and Restated Certificate of Incorporation, as amended, and Delaware law, our directors are not liable to the Company or our stockholders for monetary damages for breach of fiduciary duty, except for liability in connection with a breach of the duty of loyalty, for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, for dividend payments or stock repurchases illegal under Delaware law or any transaction in which a director has derived an improper personal benefit.  We have entered into indemnification agreements with certain of our directors and executive officers that indemnify those persons to the fullest extent permitted by our Second Amended and Restated Certificate of Incorporation, as amended, our Amended and Restated Bylaws and the Delaware General Corporation Law.  We also have obtained directors’ and officers’ liability insurance.  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaw Provisions

Our Second Amended and Restated Certificate of Incorporation, as amended, and Amended and Restated Bylaws include provisions that may have the effect of discouraging, delaying or preventing a change in control of the Company or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the market price for the shares held by stockholders.  These provisions are summarized in the following paragraphs.

Supermajority Voting.  Our Second Amended and Restated Certificate of Incorporation, as amended, requires the approval of the holders of at least 75% of the then-outstanding shares of our capital stock entitled to vote thereon and the approval of the holders of at least 75% of the then-outstanding shares of each class of stock voting separately as a class on, among other things, certain amendments to our Second Amended and Restated Certificate of Incorporation, as amended.  Our Board of Directors may amend, alter, change or repeal our Amended and Restated Bylaws, or adopt new Bylaws by the affirmative vote of a majority of the Board of Directors at any meeting and without the assent or vote of the stockholders.  The Amended and Restated Bylaws may also be altered, amended or repealed, or new Bylaws may be adopted, upon the affirmative vote of holders of at least a majority of the shares of Common Stock entitled to vote thereon.

Authorized but Unissued or Undesignated Capital Stock.  Our authorized capital stock consists of 100,000,000 shares of Common Stock and 10,000,000 shares of preferred stock.  The authorized but unissued (and in the case of preferred stock, undesignated) stock may be issued by the Board of Directors in one or more transactions.  In this regard, our Second Amended and Restated Certificate of Incorporation, as amended, grants our Board of Directors broad power to establish the rights and preferences of authorized and unissued preferred stock.  The issuance of shares of preferred stock pursuant to our Board of Directors’ authority described above could decrease the amount of earnings and assets available for distribution to holders of Common Stock and adversely affect the rights and powers, including voting rights, of such holders and may also have the effect of delaying, deferring or preventing a change in control of the Company.  Our Board of Directors does not currently intend to seek stockholder approval prior to any issuance of preferred stock, unless otherwise required by law.

Special Meeting of Stockholders.  Our Amended and Restated Bylaws provide that special meetings of our stockholders may only be called by (1) the Chairman of the Board of Directors upon the written request of the Board of Directors pursuant to a resolution approved by a majority of the Board of Directors or (2) upon the receipt of the written request of the holders of at least 25% of the outstanding shares of our Common Stock.

Stockholder Action by Written Consent.  Our Second Amended and Restated Certificate of Incorporation, as amended, and Amended and Restated Bylaws generally provide that any action required or permitted by our stockholders must be effected at a duly called annual or special meeting of the stockholders and may not be effected by any written consent of the stockholders.

Notice Procedures.  Our Amended and Restated Bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as director and amendments to our Second Amended and Restated Certificate of Incorporation, as amended, or Amended and Restated Bylaws to be brought before annual meetings of our stockholders.  These procedures provide that notice of such stockholder proposals must be timely given in writing to our Secretary prior to the annual meeting.  Generally, to be timely, notice must be received at our principal executive offices not less than 80 days prior to an annual meeting (or if fewer than 90 days’ notice or prior public disclosure of the date of the annual meeting is given or made by the Company, not later than the tenth day following the date on which the notice of the date of the annual meeting was mailed or such public disclosure was made).  The notice must contain certain information specified in the Amended and Restated Bylaws, including a brief description of the business desired to be brought before the annual meeting and certain information concerning the stockholder submitting the proposal.

Rights Agreement

On November 8, 2016, the Board of Directors adopted the Rights Agreement in an effort to protect stockholder value by attempting to protect against a possible limitation on the Company’s ability to use NOLs to reduce potential future federal income tax obligations.  The Company has experienced and may experience in the future substantial operating losses, and under the Code and rules promulgated by the Internal Revenue Service, the Company may “carry forward” these losses in certain circumstances to effect any current and future earnings and thus reduce the Company’s federal income tax liability, subject to certain requirements and restrictions.  To the extent that the NOLs do not otherwise become limited, the Company believes that it will be able to carry forward a significant amount of NOLs, and therefore these NOLs could be a substantial asset to the Company.  However, if the Company experiences an “ownership change”, as defined in Section 382 of the Code, its ability to use the NOLs will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of that asset.

The Rights Agreement is designed to deter an acquisition of the Company’s Common Stock in excess of a threshold amount that could trigger a “change of control” within the meaning of Section 382 of the Code.  The Rights Agreement is designed to effectively dilute the ownership of any Acquiring Person through the offering of rights to the Company’s other stockholders that could be exercised upon the Acquiring Person’s acquisition of the Company’s Common Stock in excess of the threshold amount.  There can be no assurance that the Rights Agreement will be effective in deterring a change of control or protecting the NOLs.  For additional information on the rights and the Rights Agreement, see “—Series A Junior Participating Preferred Stock” above.

Anti-Takeover Effects.  While intended to reduce the risk of an “ownership change” within the meaning of Section 382 of the Code, and thereby preserve the current ability of the Company to utilize its NOLs, the Rights could have certain anti-takeover effects.  The Rights will cause substantial dilution to a person or group who becomes an Acquiring Person on terms not approved by the Board.  The Rights should not interfere with any merger or other business combination approved by the Board, because the Board may exempt such merger or business combination as an Exempt Transaction under the Rights Agreement.  In addition, the Rights may be redeemed by the Company, at a price of $0.001 per Right, at any time until ten (10) days following the Stock Acquisition Date.

Transfer Agent and Registrar

The Transfer Agent and Registrar for our Common Stock is American Stock Transfer & Trust Company.

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