Form DEF 14A Rafael Holdings, Inc. For: Jan 19

November 24, 2021 8:10 AM EST

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________

SCHEDULE 14A

________________

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant

 

Filed by a Party other than the Registrant

 

Check the appropriate box:

 

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 under Rule 14a-12

RAFAEL HOLDINGS, INC.

(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee computed on table below per Exchange Act Rule 14a-6(i)(1), and 0-11.

   

(1)

 

Title of each class of securities to which transaction applies:

       

 

   

(2)

 

Aggregate number of securities to which transactions applies:

       

 

   

(3)

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

       

 

   

(4)

 

Proposed maximum aggregate value of transaction:

       

 

   

(5)

 

Total fee paid:

       

 

 

Fee paid previously with preliminary materials.

 

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.

   

(1)

 

Amount Previously Paid:

       

 

   

(2)

 

Form, Schedule or Registration Statement No.:

       

 

   

(3)

 

Filing Party:

       

 

   

(4)

 

Date Filed:

       

 

  

 

RAFAEL HOLDINGS, INC.
520 Broad Street
Newark, New Jersey 07102
(212) 658-1450

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TIME AND DATE:

 

11:30 a.m., local time, on Wednesday, January 19, 2022.

PLACE:

 

Rafael Holdings, Inc.’s offices at 520 Broad Street, 4th Floor, Newark, New Jersey 07102.

ITEMS OF BUSINESS:

 

1.

 

To elect eight directors, each for a term of one year.

   

2.

 

To ratify the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm for the Fiscal Year ending July 31, 2022.

   

3.

 

To adopt the Rafael Holdings, Inc. 2021 Equity Incentive Plan

   

4.

 

To transact other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

RECORD DATE:

 

You can vote if you were a stockholder of record as of the close of business on November 22, 2021.

PROXY VOTING:

 

You can vote either in person at the Annual Meeting or by proxy without attending the meeting. See details under the heading “How Do I Vote?”

ANNUAL MEETING IN-PERSON ADMISSION:

 

If you are a stockholder of record, a form of personal photo identification must be presented in order to be admitted to the Annual Meeting along with a COVID-19 vaccination record card from the Center for Disease Control and Prevention (“CDC”), or proof of a negative COVID-19 test result (PCR or antigen) from within 24 hours of the Annual Meeting.. If your shares are held in the name of a bank, broker or other holder of record, you must bring with you to the Annual Meeting a brokerage statement or other written proof of ownership as of November 22, 2021, as well as a form of personal photo identification and a COVID-19 vaccination record card from the CDC or proof of a negative COVID-19 test result (PCR or antigen) from within 24 hours of the Annual Meeting).

The Company requests that any stockholder seeking to attend the Annual Meeting in person first email the Company’s investor relations department at barbara.ryan@rafaelholdings.com to RSVP.

ANNUAL MEETING DIRECTIONS:

 

You may request directions to the Annual Meeting via email at barbara.ryan@rafaelholdings.com or by calling Rafael Holdings Investor Relations at (203) 274-2825.

Important Notice Regarding the Availability of Proxy Materials for
the Rafael Holdings, Inc. Stockholders Meeting to be Held on JANUARY
19, 2022:
The Notice of Annual Meeting and Proxy Statement and the Company’s 2021 Annual Report of Form 10
-K are available at:
https://rafaelholdings.irpass.com/Annual_Reports

 

BY ORDER OF THE BOARD OF DIRECTORS

   

   

Joyce Mason

   

Corporate Secretary

Newark, New Jersey
November 24, 2021

   

 

RAFAEL HOLDINGS, INC.
520 Broad Street
Newark, New Jersey 07102
(212) 658-1450

________________________

PROXY STATEMENT

________________________

GENERAL INFORMATION

Introduction

This Proxy Statement is being furnished to the stockholders of record of Rafael Holdings, Inc., a Delaware corporation (the “Company” or “Rafael ”) as of the close of business in New York, New York on November 22, 2021, in connection with the solicitation by the Company’s Board of Directors (the “Board of Directors”) of proxies for use in voting at the Company’s 2022 Annual Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will be held on Wednesday, January 19, 2022 at 11:30 a.m., local time, at the Company’s offices at 520 Broad Street, 4th Floor, Newark, New Jersey 07102. The shares of the Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”) and Class B common stock, par value $0.01 per share (“Class B Common Stock”) present at the Annual Meeting or represented by the proxies received by Internet or mail (properly marked, dated and executed) and not revoked, will be voted at the Annual Meeting. This Proxy Statement is being mailed to the Company’s stockholders starting on or about December 2, 2021.

Solicitation and Voting Procedures

This solicitation of proxies is being made by the Company. The solicitation is being conducted by mail and by e-mail, and the Company will bear all attendant costs. These costs will include the expense of preparing and mailing proxy materials for the Annual Meeting and any reimbursements paid to brokerage firms and others for their expenses incurred in forwarding the solicitation materials regarding the Annual Meeting to the beneficial owners of the Company’s Class A Common Stock and Class B Common Stock. The Company may conduct further solicitations personally, by telephone or by facsimile through its officers, directors and employees, none of whom will receive additional compensation for assisting with the solicitation.

The close of business in New York, New York on Monday, November 22, 2021 has been fixed as the record date (the “Record Date”) for determining the holders of shares of Class A Common Stock and Class B Common Stock entitled to notice of, and to vote at, the Annual Meeting. As of the close of business on the Record Date, the Company had 19,912,790 shares issued and outstanding and entitled to vote at the Annual Meeting, consisting of 787,163 shares of Class A Common Stock and 20,699,953 shares of Class B Common Stock.

Stockholders are entitled to three votes for each share of Class A Common Stock held by them and one-tenth of one vote for each share of Class B Common Stock. The holders of Class A Common Stock and Class B Common Stock will vote as a single body on all matters presented to the stockholders. There are no dissenters’ rights of appraisal in connection with any proposal.

How Do I Vote?

You can vote either in person at the Annual Meeting or by proxy without attending the meeting.

Beneficial holders of the Company’s Class A Common Stock and Class B Common Stock as of the Record Date whose stock is held of record by another party should receive voting instructions from their bank, broker or other holder of record. If a stockholder’s shares are held through a nominee and the stockholder wants to vote at the meeting, such stockholder must obtain a proxy from the nominee record holder authorizing such stockholder to vote at the Annual Meeting.

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Stockholders of record should receive a paper copy of our proxy materials and may vote by following the instructions on the proxy card that is included with the proxy materials. As set forth on the proxy card, there are two convenient methods for holders of record to direct their vote by proxy without attending the Annual Meeting: on the Internet or by mail. To vote by Internet, visit www.voteproxy.com. To vote by mail, mark, date and sign the enclosed proxy card and return it in the postage-paid envelope provided. Holders of record may also vote by attending the Annual Meeting and voting by ballot.

All shares for which a proxy has been duly executed and delivered (by Internet or mail) and not revoked will be voted at the Annual Meeting. If a stockholder of record signs and returns a proxy card but does not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board of Directors. If any other matters are properly presented at the Annual Meeting for consideration and if you have voted your shares by Internet or mail, the persons named as proxies will have the discretion to vote on those matters for you. On the date of filing this Proxy Statement with the Securities and Exchange Commission (the “SEC”), the Board of Directors did not know of any other matters to be raised at the Annual Meeting.

How Can I Change My Vote?

A stockholder of record can revoke his, her or its proxy at any time before it is voted at the Annual Meeting by delivering to the Company (to the attention of Joyce J. Mason, Esq., Corporate Secretary) a written notice of revocation or by executing a later-dated proxy by Internet or mail, or by attending the Annual Meeting and voting in person.

If your shares are held in the name of a bank, broker, or other nominee, you must obtain a proxy executed in your favor from the holder of record (that is, your bank, broker, or nominee) to be able to vote at the Annual Meeting.

Quorum and Vote Required

The presence at the Annual Meeting of a majority of the voting power of the Company’s outstanding Class A Common Stock and Class B Common Stock (voting together), either in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Abstention votes and any broker non-votes (i.e., votes withheld by brokers on non-routine proposals in the absence of instructions from beneficial owners) will be counted as present or represented at the Annual Meeting for purposes of determining whether a quorum exists.

The affirmative vote of a majority of the voting power present (in person or by proxy) at the Annual Meeting and casting a vote on a Proposal will be required for the approval of the election of any director (Proposal No. 1), the ratification of the appointment of the Company’s independent registered public accounting firm (Proposal No. 2) and the adoption of the 2021 Equity Incentive Plan (the “2021 Plan”) (Proposal No. 3). This means that the number of votes cast “for” a Proposal must exceed the number of votes cast “against” that Proposal. Abstentions are not counted as votes “for” or “against” a nominee or Proposal No 2. Abstentions are counted as a vote “against” Proposal No. 3.

If you are a beneficial owner whose shares are held of record by a broker, you must instruct your broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (“NYSE”). In the event of a broker non-vote with respect to any proposal coming before the Annual Meeting or in the event of an abstention with respect to Proposal No. 1 or Proposal No. 2, the shares represented by the relevant proxy will not be deemed to be present and entitled to vote on those proposals for the purpose of determining the total number of shares of which a majority is required for adoption, having the practical effect of reducing the number of affirmative votes required to achieve a majority vote for such matters by reducing the total number of shares from which a majority is calculated.

If you are a beneficial owner whose shares are held of record by a broker, your broker does not have discretionary authority to vote on Proposal No. 1, Proposal No. 3 or on any stockholder proposal without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on these matters. However, if you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on the ratification of the Company’s independent registered public accounting firm (Proposal No. 2), even if the broker does not receive voting instructions from you.

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How Many Votes Are Required to Approve Other Matters?

Unless otherwise required by law or the Company’s Bylaws, the affirmative vote of a majority of the voting power represented at the Annual Meeting and entitled to vote will be required for other matters that may properly come before the meeting.

Stockholders Sharing the Same Address

We are sending only one copy of the Annual Report on Form 10-K for the Fiscal Year ended July 31, 2021 (the “2021 Annual Report”) and this Proxy Statement to stockholders of record who share the same last name and address, unless they have notified the Company that they want to continue to receive multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and printings and postage costs. However, if any stockholder residing at such address wishes to receive a separate 2021 Annual Report or Proxy Statement in the future, he or she may contact Joyce J. Mason, Esq., Corporate Secretary, Rafael Holdings, Inc., 520 Broad Street, Newark, New Jersey 07102, or by phone at (973) 438-3500, and we will promptly forward to such stockholder a separate 2021 Annual Report or Proxy Statement. The contact information above may also be used by members of the same household currently receiving multiple copies of the 2021 Annual Report and Proxy Statement in order to request that only one set of materials be sent in the future.

Fiscal Year

The Company’s fiscal year ends on July 31 of each calendar year. Each reference to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., Fiscal 2021 refers to the Fiscal Year ended July 31, 2021).

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CORPORATE GOVERNANCE

Introduction

The Company has in place a comprehensive corporate governance framework that reflects the corporate governance requirements of the Sarbanes-Oxley Act of 2002, the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended, and the corporate governance-related listing requirements of the New York Stock Exchange.

In accordance with applicable sections of the New York Stock Exchange Listed Company Manual, the Company has adopted a set of Corporate Governance Guidelines and a Code of Business Conduct and Ethics, the full texts of which are available for your review in the Governance section of our website at https://rafaelholdings.irpass.com/Governance and which also are available in print to any stockholder upon written request to the Corporate Secretary.

Director Independence

The Corporate Governance Guidelines adopted by the Board of Directors provide that a majority of the members of the Board of Directors, and each member of the Audit, Compensation and Corporate Governance Committees, must meet the independence requirements set forth therein. The full text of the Corporate Governance Guidelines, including the independence requirements, is available for your review in the Governance section of our website at https://rafaelholdings.irpass.com/Governance. For a director to be considered independent, the Board of Directors must determine that a director meets the Independent Director Qualification Standards set forth in the Corporate Governance Guidelines, which comply with the New York Stock Exchange Listed Company Manual definitions of independent, and is free from any material relationship with the Company and its executive officers. The Board of Directors considers all relevant facts and circumstances known to it in making an independence determination, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation or significant financial interest. In addition to considering all relevant information available to it, the Board of Directors uses the following categorical Independent Director Qualification Standards in determining the “independence” of its directors:

1.      During the past three years, the Company shall not have employed the director, or, except in a non-officer capacity, any of the director’s immediate family members;

2.      During the past three years, the director shall not have received, and shall not have an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

3.      (a) The director shall not be a current partner or employee of a firm that is the Company’s internal or external auditor, (b) the director shall not have an immediate family member who is a current partner of such firm, (c) the director shall not have an immediate family member who is a current employee of such firm and personally works on the Company’s audit, and (d) neither the director nor any of his or her immediate family members shall have been, within the last three years, a partner or employee of such firm and personally worked on the Company’s audit within that time;

4.      Neither the director, nor any of his or her immediate family members, shall be, or shall have been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on that company’s compensation (or equivalent) committee; and

5.      The director shall not be a current employee and shall not have an immediate family member who is a current executive officer of a company (excluding tax exempt organizations) that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of (a) $1,000,000 or (b) two percent of the consolidated gross revenues of such other company. The Corporate Governance Committee will review the materiality of such relationship to tax-exempt organizations to determine if such director qualifies as independent.

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Based on the review and recommendation of the Corporate Governance Committee, the Board of Directors has determined that each of Stephen Greenberg, Boris C. Pasche and Michael J. Weiss is independent in accordance with the Corporate Governance Guidelines and, thus, that a majority of the director nominees, and each member or nominee intended to become a member of the Audit, Compensation and Corporate Governance Committees, is independent.

The Corporate Governance Committee considered the following relationships between the Company and Dr. Michael Weiss in determining Dr. Weiss’ independence: Dr. Weiss joined the board of directors of the Company upon the spinoff from IDT Corporation (IDT) in March 2018 (the “Spin-Off”). Prior to the Spin-Off, Dr. Weiss became a 0.25% owner of the equity of CS Pharma Holdings, LLC, a limited liability company of which the Company is an effective 45% owner. Dr. Weiss was not a director or otherwise a “Related Person” of the Company at the time of the transaction. The Corporate Governance Committee determined, after considering the timing, as well as the ownership and financial interest of Dr. Weiss in CS Pharma, that the foregoing relationship did not impact Dr. Weiss’ independence. The Corporate Governance Committee (with Dr. Weiss abstaining), therefore, recommended that the Board of Directors determine that Dr. Weiss be deemed independent in accordance with the Corporate Governance Guidelines. The Board of Directors (with Dr. Weiss abstaining) accepted the Corporate Governance Committee’s recommendation.

As used herein, the term “non-employee director” shall mean any director who is not an employee of, or consultant to, the Company, and who is deemed to be independent by the Board of Directors. Therefore, Howard Jonas, Rachel Jonas and Ameet Mallik are not non-employee directors and Stephen M. Greenberg, Shannon Klinger, Mark McCamish, Boris C. Pasche, and Michael J. Weiss are non-employee directors. None of the other non-employee directors or director nominees had any relationships with the Company that the Corporate Governance Committee was required to consider when reviewing independence.

Director Selection Process

The Nominating Committee will consider director candidates recommended by the Company’s stockholders. Stockholders may recommend director candidates by contacting the Chairman of the Board as provided under the heading “Director Communications.” The Nominating Committee considers candidates suggested by its members, other directors, senior management and stockholders in anticipation of upcoming elections and actual or expected board vacancies. All candidates, including those recommended by stockholders, are evaluated on the same basis in light of the entirety of their credentials and the needs of the Board of Directors and the Company. Of particular importance is the candidate’s wisdom, integrity, ability to make independent analytical inquiries, understanding of the business environment in which the Company operates, as well as his or her potential contribution to the diversity of the Board of Directors and his or her willingness to devote adequate time to fulfill duties as a director. Under “Proposal No. 1 — Election of Directors” below, we provide an overview of each nominee’s experience, qualifications, attributes and skills that led the Nominating Committee and the Board of Directors to determine that each nominee should serve as a Director.

Director Communications

Stockholders and other interested persons seeking to communicate directly with the Board of Directors, with the lead independent director (currently Mr. Greenberg) or the non-employee directors as a group, should submit their written comments c/o Lead Independent Director at our principal executive offices, Rafael Holdings, Inc., 520 Broad Street, Newark, New Jersey 07102. The lead independent director will review any such communication at the next regularly scheduled Board meeting unless, in his or her judgment, earlier communication to the Board is warranted. If a stockholder communication raises concerns about the ethical conduct of the Company or its management, it should be sent directly to our Corporate Secretary, Joyce J. Mason, Esq., at our principal executive offices, Rafael Holdings, Inc., 520 Broad Street, Newark, New Jersey 07102. The Corporate Secretary will promptly forward a copy of any such communication to the Chairman of the Audit Committee and, if appropriate, our Chairman of the Board and they will take such actions as they deem necessary to ensure that the subject matter is addressed by the appropriate committee of the Board of Directors, by management and/or by the full Board of Directors.

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The Corporate Secretary may filter out and disregard or re-direct (without providing a copy to the directors or advising them of the communication), or may otherwise handle at his or her discretion, any director communication that falls into any of the following categories:

•        Obscene materials;

•        Unsolicited marketing or advertising material or mass mailings;

•        Unsolicited newsletters, newspapers, magazines, books and publications;

•        Surveys and questionnaires;

•        Resumes and other forms of job inquiries;

•        Requests for business contacts or referrals;

•        Material that is threatening or illegal; or

•        Any communications or materials that are not in writing.

In addition, the Corporate Secretary may handle in her discretion any director communication that can be described as an “ordinary business matter.” Such matters include the following:

•        Routine questions, service and product complaints and comments that can be appropriately addressed by management; and

•        Routine invoices, bills, account statements and related communications that can be appropriately addressed by management.

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BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors held four regularly scheduled meetings and a total of eight meetings in Fiscal 2021. In Fiscal 2021, each of the Company’s directors attended or participated in 75% or more of the aggregate of (i) the total number of regularly scheduled meetings of the Board of Directors held during the period in which each such director served as a director and (ii) the total number of regularly scheduled meetings held by all committees of the Board of Directors during the period in which each such director served on such committees.

Directors are encouraged to attend the Company’s annual meetings of stockholders, and the Company generally schedules a meeting of the Board of Directors on the same date and at the same place as the annual meeting of stockholders to encourage director attendance. All of the members constituting the Board of Directors at the time of the 2021 Annual Meeting of stockholders attended that meeting via video or telephonic conference.

Board of Directors Leadership Structure and Risk Oversight Role

Howard S. Jonas has served as Chairman of the Board since the Company’s inception. From March 8, 2018 until April 30, 2021, he also served as Chief Executive Officer. On May 1, 2021, Ameet Mallik was appointed as Chief Executive Officer of the Company. Howard S. Jonas remains Chairman of the Board and continues to provide overall leadership to the Board of Directors in its oversight function. The risk management oversight roles of the Audit, Compensation and Corporate Governance Committees discussed below, each of which are comprised solely of independent directors, provide an appropriate and effective balance to the Chairman of the Board role.

The Board of Directors, directly and through its committees, has responsibility for the oversight of risk management, including the review of the policies with respect to risk management and risk assessment. With the oversight of the full Board of Directors, the Company’s senior management is responsible for the day-to-day management of the material risks the Company faces. The Board of Directors is required to satisfy itself that the risk management process implemented by management is adequate and functioning as designed.

The New York Stock Exchange Listed Company Manual requires that the independent directors of the Company meet at least annually in executive session without the presence of non-independent directors and management. These executive sessions are held at every regularly scheduled meeting of the Board of Directors.

Stephen Greenberg, a non-employee director, has served as the “Lead Independent Director,” since March 26, 2018.

As stated above, each of the Audit, Compensation and Corporate Governance Committees oversee certain aspects of risk management and report their respective findings to the full Board of Directors on a quarterly basis, and as is otherwise needed. The Audit Committee is responsible for overseeing risk management of financial matters, financial reporting, the adequacy of the risk-related internal controls, internal investigations, and security risks, generally. The Compensation Committee oversees risks related to compensation policies and practices. The Corporate Governance Committee oversees our Corporate Governance Guidelines and governance-related risks, such as board independence, as well as senior management and director succession planning.

Board Committees

The Board of Directors established an Audit Committee, a Compensation Committee, a Corporate Governance Committee and a Nominating Committee.

Audit Committee

The Audit Committee consists of Mr. Stephen Greenberg (Chairman), Dr. Boris Pasche and Dr. Michael Weiss, and is responsible for, among other things, the appointment, compensation, removal and oversight of the work of the Company’s independent registered public accounting firm. The Audit Committee also oversees management’s performance of its responsibility for the integrity of the Company’s accounting and financial reporting and its systems of internal controls, the performance of the Company’s internal audit function and the Company’s compliance with legal and regulatory requirements. The Audit Committee operates under a written Audit

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Committee charter adopted by the Board of Directors, which can be found in the Governance section of our web site, https://rafaelholdings.irpass.com/Committees, and is also available in print to any stockholder upon request to the Corporate Secretary. The Audit Committee held four meetings during Fiscal 2021. The Board of Directors, upon recommendation of the Corporate Governance Committee, has determined that (i) all of the members of the Audit Committee are independent within the meaning of the applicable New York Stock Exchange listing standards and Rule 10A-3(b) under the Securities Exchange Act of 1934, and (ii) that Mr. Greenberg qualifies as an “audit committee financial expert” in accordance with the SEC rules.

Compensation Committee

The Compensation Committee is responsible for, among other things, reviewing, evaluating and approving all compensation arrangements for the executive officers of the Company, evaluating the performance of executive officers, administering the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) and will be responsible for administering the 2021 Plan (if adopted by the stockholders). The Compensation Committee is also responsible for recommending to the Board of Directors the compensation for Board members, such as retainers, committee and other fees, stock option, restricted stock and other stock awards, and other similar compensation as deemed appropriate. The Compensation Committee confers with the Company’s executive officers when making the above determinations. The Compensation Committee consists of Drs. Weiss (Chairman) and Pasche and Mr. Greenberg. The Compensation Committee held seven meetings during Fiscal 2021. The Compensation Committee operates under a written charter adopted by the Board of Directors, which can be found in the Governance section of our web site, https://rafaelholdings.irpass.com/Committees, and which is also available in print to any stockholder upon request to the Corporate Secretary. The Board of Directors, upon recommendation of the Corporate Governance Committee, has determined that the members of the Compensation Committee are independent within the applicable New York Stock Exchange listing standards and the categorical standards set forth above.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee has served as an officer or employee of the Company or has any relationship with the Company that is required to be disclosed under the heading “Related Person Transactions.” No executive officer of the Company served or serves on the compensation committee (or other board committee performing equivalent functions) of any company that employed or employs as an executive officer any member of the Company’s Compensation Committee.

Corporate Governance Committee

The Corporate Governance Committee is responsible for, among other things, reviewing and reporting to the Board of Directors on matters involving relationships among the Board of Directors, the stockholders and senior management. The Corporate Governance Committee (i) reviews the Corporate Governance Guidelines and other policies and governing documents of the Company and recommends revisions as appropriate, (ii) reviews any potential conflicts of interests of independent directors, (iii) reviews and monitors related person transactions, (iv) oversees the self-evaluations of the Board of Directors, the Audit Committee, the Compensation Committee and Nominating Committee and (v) reviews and determines director independence, and makes recommendations to the Board of Directors regarding director independence. The Corporate Governance Committee consists of Drs. Weiss (Chairman) and Pasche and Mr. Greenberg. The Corporate Governance Committee held six meetings in Fiscal 2021. The Corporate Governance Committee operates under a written charter adopted by the Board of Directors, which can be found in the Governance section of our web site, https://rafaelholdings.irpass.com/Committees, and which is also available in print to any stockholder upon request to the Corporate Secretary. The Board of Directors, upon recommendation of the Corporate Governance Committee, has determined that all of the members of the Corporate Governance Committee are independent within the applicable New York Stock Exchange listing standards and the categorical standards set forth above.

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Nominating Committee

The Nominating Committee is responsible for overseeing nominations to the Board of Directors, including: (i) developing the criteria and qualifications for membership on the Board of Directors, (ii) recommending candidates to fill new or vacant positions on the Board of Directors, and (iii) conducting appropriate inquiries into the backgrounds of potential candidates. A summary of new director qualifications can be found under the heading “Director Selection Process.” The Nominating Committee currently consists of Stephen Greenberg (Chairman) and Dr. Weiss. The Board of Directors has determined that both of the members of the Nominating Committee are independent within the applicable New York Stock Exchange listing standards. The Nominating Committee operates under a written charter adopted by the Board of Directors, which can be found in the Governance section of our web site, https://rafaelholdings.irpass.com/Committees, and which is also available in print to any stockholder upon request to the Corporate Secretary. The Nominating Committee held one meeting during Fiscal 2021.

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FISCAL 2021 COMPENSATION FOR NON-EMPLOYEE DIRECTORS

Annual compensation for non-employee directors for Fiscal 2021 was comprised of equity compensation, consisting of awards of restricted shares of Class B Common Stock, and cash compensation. Each of these components is described in more detail below.

Each non-employee director of the Company who attends at least 75% of the regularly scheduled meetings of the Board of Directors during a calendar year will receive an annual cash retainer of $25,000. Such payment is to be made in January of the calendar year following attendance of at least 75% of the regularly scheduled Board meetings during the preceding calendar year, and will be pro-rated based on the month for non-employee directors who join the Board of Directors or depart from the Board of Directors during the prior calendar year, if such director attended 75% of the applicable board meetings for such partial year.

Pursuant to the Company’s 2018 Plan, each non-employee member of our Board of Directors received an annual grant of restricted shares of our Class B Common Stock on each January 5th following the calendar year of service. On June 14, 2021, the 2018 Plan was amended so that for service from January 1, 2021 to June 14, 2021, each non-employee member of our Board of Directors will receive a grant of 2,100 restricted shares of our Class B Common Stock. Such grant will be made on or about January 5, 2022 and the shares will vest in full immediately upon grant. Effective June 15, 2021, each non-employee director of the Company who attends at least 75% of the regularly scheduled meetings of the Board of Directors during a calendar year will receive an annual grant of restricted shares of our Class B Common Stock equal to $50,000, which is to be calculated based on the average closing price of our Class B Common Stock during the preceding December. Such grant will vest in full immediately upon grant. The retainer and the grant will be pro-rated based on the month in which he or she joins or departs from the Board. Such grant will be made on or about January 5th and the shares will vest in full immediately upon grant.

Such payment and grant will be pro-rated based on the month for non-employee directors who join or depart from the Board of Directors during the prior year, assuming such director attended at least 75% of the regularly scheduled board meetings for such partial year. The Company’s Chief Executive Officer or Chairman of the Board may, in his sole discretion, waive the requirement of a director attending at least 75% of the applicable Board meetings to receive the annual retainer and grant in the case of mitigating circumstances.

The 2021 Plan, which is subject to stockholder approval, provides that the aggregate amount of equity and cash compensation payable to a non-employee director shall not exceed $750,000 per fiscal year, provided, however, that such amount shall not exceed $1,000,000 for the fiscal year in which a non-employee director is initially elected or appointed to the Board. The 2021 Plan does not explicitly provide for any restricted stock or option grants to non-employee directors and any such grants will be determined by the Compensation Committee.

The Compensation Committee believes that our director compensation is fair and appropriate in light of the responsibilities and obligations of our directors. The Compensation Committee will periodically review our director compensation practices. Directors do not receive any annual fees for committee services (except fees for serving on a special committee), nor are there any additional fees paid to the lead independent director or for other board or committee roles.

2021 Director Compensation Table

The following table lists the Fiscal 2021 compensation for each person who served as a non-employee director during Fiscal 2021. This table does not include compensation to Howard S. Jonas or Ameet Mallik, who serve as directors and are named executive officers, as they are not non-employee directors, and, thus, did not receive

10

compensation for their services as a director during Fiscal 2021. The table also does not include Rachel Jonas as she is not a non-employee director. Mr. Howard Jonas’ and Ameet Mallik’s compensation are set forth in the Executive Compensation section of this Proxy Statement.

Name

 

Dates of Board Service
During Fiscal 2021

 

Fees
Earned
or Paid in
Cash
($)

 

Fees
Earned
or Paid
in Stock
($)

 

Stock
Awards
(1)
($)

 

All Other Compensation
($)

 

Total
($)

Stephen Greenberg

 

08/01/2020 – 7/31/2021

 

$

25,000

 

$

 

$

95,492

 

$

 

$

120,492

Shannon Klinger

 

06/14/2021 – 7/31/2021

 

$

4,167

 

$

 

$

 

$

 

$

4,167

Mark McCamish

 

06/14/2021 – 7/31/2021

 

$

4,167

 

$

 

$

 

$

 

$

4,167

Boris C. Pasche

 

08/01/2020 – 7/31/2020

 

$

25,000

 

$

 

$

95,492

 

$

 

$

120,492

Michael J. Weiss

 

08/01/2020 – 7/31/2020

 

$

25,000

 

$

 

$

95,492

 

$

 

$

120,492

____________

(1)      Represents the (i) grant date fair value of an award of 4,203 shares of the Company’s Class B Common Stock on January 5, 2021, computed in accordance with FASB ACS Topic 718R.

Non-employee directors held the following shares of the Company’s Class B Common Stock granted for director service, and options to purchase shares of Class B Common Stock of the Company, as of July 31, 2021:

Name

 

Class B
Common
Stock

 

Options to
Purchase
Class B
Common
Stock

Stephen Greenberg

 

12,609

 

Shannon Klinger

 

 

Mark McCamish

 

 

Boris C. Pasche

 

12,609

 

Michael J. Weiss

 

12,609

 

11

RELATED PERSON TRANSACTIONS

Review of Related Person Transactions

The Board of Directors has adopted a Statement of Policy with respect to Related Person Transactions, which is administered by the Corporate Governance Committee. This policy covers any transaction or series of transactions in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000 and a Related Person has a direct or indirect material interest. Related Persons include directors, director nominees, executive officers, any beneficial holder of more than 5% of any class of the Company’s voting securities, and any immediate family member of any of the foregoing persons. The policy also covers transactions which, despite not meeting all of the criteria set forth above, would otherwise be considered material to investors based on qualitative factors, as determined by the Corporate Governance Committee with input from the Company’s management and advisors. Transactions that fall within the definition are considered by the Corporate Governance Committee for approval or other action. Based on its consideration of all of the relevant facts and circumstances, the Corporate Governance Committee will decide whether or not to approve such transactions and will approve only those transactions that are in the best interests of the Company and its stockholders. If the Company becomes aware of an existing Related Person Transaction that has not been approved under this policy, the matter will be referred to the Corporate Governance Committee. The Corporate Governance Committee will evaluate all options available, including approval, revision or termination of such transaction.

Transactions with Related Persons, Promoters and Certain Control Persons

All of the following Related Person Transactions were approved in accordance with the policy described above:

Trusts for the benefit of Howard S. Jonas’ nine children, if aggregated together, own a controlling interest in the Company. Howard S. Jonas’ total compensation during Fiscal 2021 is set forth in the Summary Compensation Table of this Proxy Statement.

On March 26, 2018, IDT spun off the Company. In connection with the spin-off, IDT and the Company entered into a Transition Services Agreement, dated March 26, 2018 (the “TSA”), pursuant to which IDT, for which Howard S. Jonas serves as the Chairman of the Board, provides certain services to the Company. Trusts for the benefit of Howard Jonas’ nine children, if aggregated together, own a controlling interest in each of the Company and IDT. The services provided by IDT under the TSA include, but are not limited to: administrative, tax and legal. IDT billed the Company a total of $415,316 under the TSA during Fiscal 2021 and $16,840 for invoices paid by IDT on the Company’s behalf. In addition, during Fiscal 2021, the Company billed IDT $57,506 for real estate advisory services provided to IDT. As of July 31, 2021, the Company owed IDT $182,257.

IDT leases space from the Company at 520 Broad Street, Newark, NJ and in Jerusalem, Israel. IDT leases approximate 80,000 square feet of office space plus parking spaces occupied by IDT at 520 Broad Street, Newark, NJ and approximately 3,600 square feet of office space in Jerusalem, Israel. IDT paid the Company $1.7 million for office rent and parking during Fiscal 2021. As of July 31, 2021, IDT owed the Company $189,053 for office rent and parking.

Genie Energy, Ltd. (“Genie”), a Company for which Howard S. Jonas serves as the Chairman of the Board, and of which Michael Stein, his son-in-law, is the Chief Executive Officer and Joyce Mason, his sister, is a director, leases office space from the Company at 520 Broad Street. Trusts for the benefit of Howard Jonas’ nine children, if aggregated together, own a controlling interest in Genie and the Company. Billings for such services totaled approximately $226,199 in Fiscal 2021. The Company charges Genie $26.21 per square foot annually for approximately 8,631 square feet of space. As of July 31, 2021, Genie had no amounts due to the Company.

Rafael Pharmaceuticals, Inc.

The Company owns 51% of the outstanding capital stock of Rafael Pharmaceuticals, Inc. (“Rafael Pharma”) (41% of the capital stock on a fully diluted basis (excluding the remainder of the warrants to purchase Rafael Pharma

12

stock held by the Company and its affiliates)). Howard S. Jonas owns an equity interest in Rafael Pharma and Ameet Mallik serves as Chairman of the Board of Rafael Pharma. The following transactions have taken place between the Company and Rafael Pharma:

•        The Company provides Rafael Pharma with administrative, finance, accounting, tax and legal services. The Company billed Rafael Pharma $480,000 during Fiscal 2021. As of July 31, 2021, Rafael Pharma owed the Company $600,000.

•        Effective September 24, 2021, the Company entered into a Line of Credit Loan Agreement (“Line of Credit Agreement”) with Rafael Pharma, which provides for loan commitments in the amount of $25,000,000. The funds loaned under the Line of Credit Agreement are to be used by Rafael Pharma in accordance with the budget that has been approved by the Company. Of the aggregate amount, $1.9 million was advanced on September 24, 2021 and the remaining amount was funded on October 1, 2021.

•        In June 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RH Merger I, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company, RH Merger II, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company and Rafael Pharma, whereby Rafael Pharma will become our wholly-owned limited liability subsidiary.

On December 7, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) for the sale of 567,437 shares of the Company’s Class B common stock at a price per share of $22.91 (which was the closing price for the Class B common stock on the New York Stock Exchange on December 4, 2020, the trading day immediately preceding the date of the SPA) for an aggregate purchase price of $13 million. In connection with the purchases, each purchaser was granted warrants to purchase an additional twenty percent (20%) of the shares of Class B common stock purchased by such purchaser. The warrants have an exercise price of $22.91 per share and expire on June 6, 2022. The Company issued warrants to purchase an aggregate of 113,487 shares of Class B common stock. Under the SPA, Genie and IDT, two entities on whose boards of directors Howard Jonas serves, each purchased 218,245 shares of Class B common stock and received warrants to purchase an additional 43,649 shares of Class B Common Stock for an aggregate consideration of $10 million.

On August 19, 2021, the Company entered into a Securities Purchase Agreement with I9Plus, LLC, an entity affiliated with Howard Jonas, whereby the Company agreed to sell to I9Plus, LLC, an aggregate of 112,561 shares of the Company’s Class B common stock at a purchase price equal to $44.42 per share, which was equal to the closing price of the Company’s Class B Common Stock on the New York Stock Exchange on August 19, 2021, resulting in aggregate gross proceeds to the Company of approximately $5.0 million.

13

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of the Company’s Class A Common Stock and Class B Common Stock by (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of the Class A Common Stock and the Class B Common Stock of the Company, (ii) each of the Company’s directors, director nominees, and the Named Executive Officers, and (iii) all directors and executive officers of the Company as a group. Unless otherwise noted in the footnotes to the table, to the best of the Company’s knowledge, the persons named in the table have sole voting and investing power with respect to all shares indicated as being beneficially owned by them and except as otherwise noted, the address of the referenced individual is c/o Rafael Holdings, Inc. 520 Broad Street, Newark, New Jersey 07102.

Unless otherwise noted, the security ownership information provided below is given as of the close of business on November 22, 2021, and all shares are owned directly. Percentage ownership information is based on the following amount of outstanding shares: 787,163 shares of Class A Common Stock and 19,912,790 shares of Class B Common Stock. The numbers reported assume the conversion of all 787,163 currently outstanding shares of Class A Common Stock into shares of Class B Common Stock.

Name

 

Number of
Shares of
Class A
Common
Stock

 

Percentage of
Ownership of
Class A
Common
Stock

 

Number of
Shares of
Class B
Common
Stock

 

Percentage of
Ownership of
Class B
Common
Stock

 

Percentage of
Aggregate
Voting
Power
δ

Howard S. Jonas
520 Broad Street
Newark, NJ 07102

       

 

 

714,105

(1)

 

3.4

%

 

*

 

         

 

   

 

   

 

   

 

The Liora Jonas Stein 2020 Florida Trust 9477 Westover Club Circle
Windermere, FL 34786

 

98,396

 

12.5

%

 

542,432

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

The Michael Jonas 2020 New Jersey Trust
20 Constitution Court
East Brunswick, NJ 08816

 

98,396

 

12.5

%

 

542,431

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

The Miriam Jonas 2020 New Jersey Trust
88 Crescent Avenue
Passaic, NJ 07055

 

98,396

 

12.5

%

 

542,431

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

The Samuel Jonas 2020 New Jersey Trust
53 Copley Avenue
Teaneck, NJ 07666

 

98,395

 

12.5

%

 

542,431

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

The Jonathan Jonas 2020 South Dakota Trust
330 South Poplar Avenue,
Suite 103 Pierre, SD 57501

 

98,395

 

12.5

%

 

542,431

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

The Joseph Jonas 2020 Alaska Trust
3000 A Street, Suite 200
Anchorage, AK 99503

 

98,395

 

12.5

%

 

542,431

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

The Rachel Jonas 2020 Nevada Trust

4465 South Jones Boulevard
Las Vegas, NV 89103

 

98,395

 

12.5

%

 

542,431

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

The Tamar Jonas 2020 Nevada Trust
1840 East Springs Road,
Suite 105 Las Vegas, NV 89119

 

98,395

 

12.5

%

 

542,431

 

 

2.7

%

 

8.0

%

         

 

   

 

   

 

   

 

Park West Asset Management LLC
900 Larkspur Landing Circle, Suite 165, Larkspur, California 94939

       

 

 

1,777,733

(2)

 

8.9

%

 

4.1

%

         

 

   

 

   

 

   

 

Ameet Mallik

       

 

 

908,497

(3)

 

4.4

%

 

2.1

%

         

 

   

 

   

 

   

 

David Polinsky

       

 

 

17,429

(4)

 

*

 

 

*

 

         

 

   

 

   

 

   

 

William Conkling

       

 

 

 

 

*

 

 

*

 

         

 

   

 

   

 

   

 

Stephen Greenberg

       

 

 

12,609

 

 

*

 

 

*

 

14

Name

 

Number of
Shares of
Class A
Common
Stock

 

Percentage of
Ownership of
Class A
Common
Stock

 

Number of
Shares of
Class B
Common
Stock

 

Percentage of
Ownership of
Class B
Common
Stock

 

Percentage of
Aggregate
Voting
Power
δ

Rachel Jonas

         

778

(5)

 

*

 

 

*

 

             

 

   

 

   

 

Shannon Klinger

         

 

 

*

 

   

 

             

 

   

 

   

 

Mark McCamish

         

 

 

*

 

   

 

             

 

   

 

   

 

Boris C. Pasche

         

12,609

 

 

*

 

 

*

 

             

 

   

 

   

 

Michael J. Weiss

         

12,609

 

 

*

 

 

*

 

             

 

   

 

   

 

All directors, Named Executive Officers and other executive officers as a group (6) persons)

         

1,678,636

(6)

 

7.9

%

 

2.7

%

____________

*        Less than 1%.

δ        Voting power represents combined voting power of Class A Common Stock (three votes per share) and Class B Common Stock (one-tenth of one vote per share). Excludes stock options.

(1)      Consists of (i) 98,820 shares of Class B Common Stock owned by the Jonas Foundation; (ii) 112,561 shares of Class B Common Stock owned by I9 Plus, LLC, (iii) 778 shares held in a custodial account for the benefit of one of Howard S. Jonas’s daughters (of which Howard S. Jonas is the custodian); (iv) 1,946 shares held by Howard S. Jonas in his IDT 401(k) plan account as of October 31, 2021; and (v) currently exercisable options to purchase 500,000 shares held by Howard S. Jonas. The foregoing does not include (I) 3,000 shares of Class B Common Stock owned by the Howard S. and Deborah Jonas Foundation, Inc., as Howard S. Jonas does not beneficially own these shares, (II) an aggregate of 5,822,139 shares of Class B Common Stock beneficially owned by trusts for the benefit of the children of Howard S. Jonas, as Howard S. Jonas does not hold or share voting or investment control over these shares, (III) 80,000 shares of the Company’s Class B Common Stock owned by the 2012 Jonas Family, LLC (Howard S. Jonas is a minority equity holder of such entity) and (IV) 787,163 shares of Class A Common Stock (which are convertible into Class B Common Stock) beneficially owned by trusts for the benefit of the children of Howard S. Jonas, as Howard S. Jonas does not hold or share voting or investment control over these shares.

(2)      Based on a Schedule 13G filed with the Securities and Exchange Commission on August 30, 2021.

(3)      Consists of 908,497 restricted shares of Class B Common Stock that vest as follows: 227,124 on May 6, 2022, 18,927 monthly commencing June 1, 2022 through April 1, 2025 and 18,928 on May 1, 2025.

(4)      Consists of (a) 12,430 shares of Class B Common Stock, (b) 4,999 restricted shares of Class B Common Stock that vest as follows: 3,333 on September 23, 2022 and 1,666 on September 23, 2023.

(5)      Does not include 98,395 shares of Class A Common Stock and 715,705 shares of Class B Common Stock owned by trusts for the benefit of Rachel Jonas, as Rachel Jonas does not hold or share voting or investment control of such shares, which are controlled by an independent trustee.

(6)      Consists of the shares and options set forth above with respect to the Named Executive Officers and directors.

15

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the securities laws of the United States, the Company’s directors, executive officers, and any persons holding more than ten percent or more of a registered class of the Company’s equity securities are required to file reports of ownership and changes in ownership, on a timely basis, with the SEC. Based on material provided to the Company, the Company believes that all such required reports were filed on a timely basis in Fiscal 2021.

16

EXECUTIVE COMPENSATION

EMPLOYMENT AGREEMENTS

Each of Ameet Mallik and William Conkling entered into employment agreements with the Company that provide for base compensation, payments, treatment of equity awards on termination of employment and various other terms of employment.

The following is a description of the material terms of the compensation provided pursuant to the employment agreements.

Ameet Mallik:    The employment agreement between Ameet Mallik and the Company, referred to as the Mallik Employment Agreement is effective as of March 5, 2021, and provides that Mr. Mallik serve as the Chief Executive Officer of the Company commencing May 1, 2021 (the “Start Date”). Mr. Mallik is entitled to receive (i) an annual base salary of $600,000 (the “Base Salary”); (ii) a signing bonus of $2,000,000 with potential of an additional contingent $400,000 dependent on certain conditions related to his current position as set forth in the Employment Agreement, (iii) annual target performance bonus of 50% of the annual base salary; (iv) an initial grant of restricted shares of the Company’s Class B Common Stock of 908,497, representing 5% of the total outstanding shares of the Company, after giving effect to the exercise, conversion, or exchange of all outstanding securities that are exercisable or exchangeable for, or convertible into, capital stock of the Company and that will vest as to one-fourth of the restricted shares or other interests granted five business days following the first anniversary of the Start Date and the remainder of the restricted shares will vest ratably on a monthly basis beginning with the thirteenth month following the Start Date and all grants will be vested by the fourth annual anniversary of the Start Date; and (v) in the event of event of a Transaction, as defined in the Mallik Employment Agreement, the Company will grant additional restricted shares of Class B common stock of the Company to Mr. Mallik so that Mr. Mallik’s equity interest in the Company represents an indirect, beneficial 5% ownership interest in Rafael Pharmaceuticals, Inc. after giving effect to the exercise, conversion, or exchange of all outstanding securities that are exercisable or exchangeable for, or convertible into, capital stock of the Company;

If Mr. Mallik’ employment is terminated due to his death or disability, as defined in the agreement, the Company shall pay Mr. Mallik (or his estate) (i) all unpaid amounts of the annual base salary, if any, to which Mr. Mallik was entitled as of the date of termination, (ii) all unpaid amounts to which Mr. Mallik was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements and (iii) to the extent not already paid, the annual bonus for the year preceding the date of termination that Mr. Mallik would have received had he remained continuously employed by the Company through the payment date of such annual bonus.

In the event Mr. Mallik’ employment is terminated by the Company for “cause”, the Company shall pay Mr. Mallik all unpaid amounts, if any, to which Mr. Mallik was entitled as of the date of termination and all unpaid amounts to which Mr. Mallik was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements.

In the event the Company terminates Mr. Mallik’ employment, other than for “cause”, or if Mr. Mallik terminates his employment for “good reason” with a termination date on or prior to the first anniversary of the Start Date and not in connection with, or within six months following, a Change in Control (as defined in the 2018 Plan) other than a Transaction, the Company shall pay Mr. Mallik all unpaid amounts, if any, to which Mr. Mallik was entitled as of the date of termination, all unpaid amounts to which Mr. Mallik was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements, and subject to Mr. Mallik’s execution and delivery of a release agreement in a form acceptable to the Company, a severance payment in the amount of $5 million through release of funds held in an escrow account. In addition, subject to receipt of the severance payment, Mr. Mallik shall forfeit all vested and unvested restricted shares of the Company.

In the event the Company terminates Mr. Mallik’ employment, other than for “cause”, or if Mr. Mallik terminates his employment for “good reason” with a termination date after the first anniversary of the Start Date and not in connection with, or within six months following, a Change in Control other than a Transaction, the Company shall pay Mr. Mallik all unpaid amounts, if any, to which Mr. Mallik was entitled as of the date of termination, all unpaid amounts to which Mr. Mallik was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements, and subject to Mr. Mallik’s execution and delivery of a release agreement in a form acceptable to the Company, a severance payment in the amount equal to (i) twelve months of base salary to be paid in twenty-four equal

17

installments, (ii) an amount equal to Mr. Mallik’s target annual performance bonus for the year the date of termination occurred and (iii) to the extent not already paid, the annual bonus for the year preceding the date of termination that Mr. Mallik would have received had he remained continuously employed by the Company through the payment date of such annual bonus.

In the event the Company terminates Mr. Mallik’ employment, other than for “cause”, or if Mr. Mallik terminates his employment for “good reason” with a termination date after the first anniversary of the Start Date and in connection with, or within six months following, a Change in Control other than a Transaction, the Company shall pay Mr. Mallik all unpaid amounts, if any, to which Mr. Mallik was entitled as of the date of termination, all unpaid amounts to which Mr. Mallik was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements, and subject to Mr. Mallik’s execution and delivery of a release agreement in a form acceptable to the Company, a severance payment in the amount equal to (i) twenty-four months of base salary to be paid in forty-eight equal installments, (ii) an amount equal to two times Mr. Mallik’s target annual performance bonus for the year the date of termination occurred and (iii) to the extent not already paid, the annual bonus for the year preceding the date of termination that Mr. Mallik would have received had he remained continuously employed by the Company through the payment date of such annual bonus.

In the event Mr. Mallik terminates his employment without “good reason” with a termination date on the first anniversary of the Start Date, the Company shall pay Mr. Mallik all unpaid amounts, if any, to which Mr. Mallik was entitled as of the date of termination, all unpaid amounts to which Mr. Mallik was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements, and subject to Mr. Mallik’s execution and delivery of a release agreement in a form acceptable to the Company, a severance payment in the amount of $5 million through release of funds held in an escrow account. In addition, subject to receipt of the severance payment, Mr. Mallik shall forfeit all vested and unvested restricted shares of the Company.

In the event Mr. Mallik terminates his employment without “good reason” with a termination date other than on the first anniversary of the Start Date, the Company shall pay Mr. Mallik all unpaid amounts, if any, to which Mr. Mallik was entitled as of the date of termination and all unpaid amounts to which Mr. Mallik was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements.

Pursuant to the agreement, Mr. Mallik has agreed not to compete with the Company for a period of one year following the termination of his employment. The agreement has a term from May 1, 2021 until terminated by either Mr. Mallik or the Company.

The agreement defines “cause” as: (i) commission of fraud, theft, embezzlement, or misappropriation of corporate assets in connection with Mr. Mallik’s employment, or conviction of a felony under the laws of the United States or any state thereof; (ii) commission of willful or grossly negligent acts or omissions which result in an assessment of a criminal or material civil penalty against Mr. Mallik, the Company, or its affiliates; (iii) commission of acts or omissions constituting gross negligence or gross misconduct in the performance of any aspect of his lawful duties or responsibilities which have or may be expected to have an adverse effect on the Company or its affiliates; (iv) willful or bad faith commission of any serious offense that results in or would reasonably be expected to result in material (1) financial or other harm or (2) negative publicity, to the Company or its affiliates; (v) the engagement in any act covered by Rule 506(d) of Regulation D under the Securities Act of 1933, as amended, and/or engaging in any act, or existence of any circumstances that would, in the reasonable judgment of the Company, be harmful to the Company’s ability to have its common stock be granted approval to list, or continue to be listed, on the NYSE, American, or Nasdaq exchanges; (vi) willful or continued failure to substantially perform the Mr. Mallik’s duties hereunder (other than any such failure resulting from Mr. Mallik’s incapacity due to physical or mental illness or disability), after written notice has been delivered to Mr. Mallik by the Company identifying the manner in which Mr. Mallik has not substantially performed Mr. Mallik’s duties. For the sake of clarity, failure to achieve certain results shall not be deemed Cause; (vii) willful or continued violation of the Company’s material rules, policies, or procedures, including without limitation, the Company’s Code of Business Conduct and Ethics that is within his material duties hereunder (other than by reason of physical or mental illness or disability) or directives of the Company’s Board of Directors, or material breach of the terms of this Agreement, of the Non-Disclosure and Non-Competition Agreement attached hereto as Schedule A; (viii) breach of any fiduciary duty owed to the Company or its affiliates that results in or would reasonably be expected to result in material (1) financial or other harm, or (2) negative publicity, to the Company or its affiliates; (ix) failure to provide to the Company,

18

within the first three (3) business days of employment, documentation that Mr. Mallik is authorized to work in the United States, in accordance with applicable law; or (x) knowing and intentional misrepresentation or concealment of material information regarding the Company from the Company’s Board.

The agreement generally defines “good reason” as: the occurrence (without Mr. Mallik’ express written consent) of (i) the assignment of Mr. Mallik to a position other than Chief Executive Officer of the Company; (ii) a change in the reporting structure such that Mr. Mallik reports to anyone other than the Board or the Chairman of the Board; (iii) a material reduction of Mr. Mallik’s duties, authority, or responsibilities; (iv) a material change in the nature of the business of the Company, provided that the expansion of the Company into additional lines of business will not constitute Good Reason hereunder; (v) a material breach of this Agreement by the Company, or (vi) a reduction in the Mr. Mallik’s Base Salary or the target amount of the Annual Bonus.

William Conkling:    Mr. Conkling and the Company entered into an employment agreement, effective as of March 7, 2021, referred to as the Conkling Employment Agreement, pursuant to which Mr. Conkling is paid an annual base salary of $450,000 to serve as the Chief Commercial Officer of the Company. On November 10, 2021, Mr. Conkling became the Company’s Chief Commercial and Business Officer. Under the Conkling Employment Agreement, Mr. Conkling is eligible to receive an annual discretionary bonus in an amount up to 40% of his annual base salary. Mr. Conkling also received a grant of options to purchase 118,409 shares of the Class B Common Stock that vest as follows: options with respect to 29,602 shares of the Class B Common Stock shall vest on the first anniversary of the grant date, options with respect to 2,467 shares of the Class B Common Stock on each of the first through thirty-fifth monthly anniversaries of the first anniversary and all the remaining options shall vest on the fourth anniversary of the grant date.

The Conkling Employment Agreement has a two-year term. During the term of the agreement, Mr. Conkling is eligible to participate in the Company’s benefit plans.

Should Mr. Conkling be terminated due to his death or disability, as defined in the Conkling Employment Agreement, Mr. Conkling (or his estate in the event of death) shall receive all unpaid amounts of the annual base salary, if any, to which Mr. Conkling was entitled as of the date of termination and (ii) all unpaid amounts to which Mr. Conkling was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements.

If Mr. Conkling is terminated by the Company for “cause” or if Mr. Conkling resigns without “good reason”, the Company shall pay Mr. Conkling all unpaid amounts, if any, to which Mr. Conkling was entitled as of the date of termination and all unpaid amounts to which Mr. Conkling was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements.

If the Company terminates Mr. Conkling without “cause”, or if Mr. Conkling resigns for “good reason”, the Company shall pay Mr. Conkling all unpaid amounts, if any, to which Mr. Conkling was entitled as of the date of termination, all unpaid amounts to which Mr. Conkling was then entitled under any employee benefit plans, pension plans, perquisites or other reimbursements, and subject to Mr. Conkling’s execution and delivery of a release agreement in a form acceptable to the Company, a severance payment in the amount equal to (i) three months of base salary in the event the termination date is on or prior to the first anniversary of the Start Date and not within six months following, a Change in Control other than a Transaction (as such term is defined in the Conkling Employment Agreement), (ii) the lesser of six months of base salary or base salary for the remainder of the term in the event the termination date is within six months following, a Change in Control other than a Transaction, or (iii) the lesser of twelve months of base salary or base salary for the remainder of the term in the event the termination date is after the first anniversary of the Start Date and not within six months following, a Change in Control other than a Transaction (as such term is defined in the Conkling Employment Agreement); provided , that in the event the Company puts into place a severance plan that applies to all executives of the Company (inclusive or exclusive of the CEO), then such severance plan shall apply.

The agreement defines “cause” as: (i) commission of fraud, theft, embezzlement, or misappropriation of corporate assets in connection with Mr. Conkling’s employment, or conviction of a felony under the laws of the United States or any state thereof; (ii) commission of willful or grossly negligent acts or omissions which result in an assessment of a criminal or material civil penalty against Mr. Conkling, the Company, or its affiliates; (iii) commission of acts or omissions constituting gross negligence or gross misconduct in the performance of any aspect of his lawful duties or responsibilities which have or may be expected to have an adverse effect on the Company or its affiliates; (iv) commission of any serious offense that results in or would reasonably be expected to result in financial harm, negative publicity or other material harm to the Company or its affiliates; (v) engaging in any act covered by

19

Rule 506(d) of Regulation D under the Securities Act of 1933, as amended, and/or engaging in any act, or existence of any circumstances that would, in the reasonable judgment of the Company, be harmful to the Company’s ability to have its common stock be granted approval to list, or continue to be listed, on the NYSE, American, or Nasdaq exchanges; (vi) willful or continued failure to substantially perform Mr. Conkling’s duties hereunder (other than any such failure resulting from Mr. Conkling’s incapacity due to physical or mental illness or disability), after written notice has been delivered to Mr. Conkling by the Company identifying the manner in which Mr. Conkling has not substantially performed Mr. Conkling’s duties; (vii) willful or continued failure to perform an act permitted by the Company’s rules, policies, or procedures, including without limitation, the Company’s Code of Business Conduct and Ethics that is within his material duties hereunder (other than by reason of physical or mental illness or disability) or directives of the Company’s Board of Directors, or material breach of the terms of this Agreement, of the Non-Disclosure and Non-Competition Agreement attached hereto as Schedule A, or Company policy; (viii) breach of any fiduciary duty owed to the Company or its affiliates; (ix) misappropriation of the Company’s or its affiliates’ funds or property; (x) extended unexcused absence; (xi) failure to provide to the Company, within the first three (3) business days of employment, documentation that Mr. Conkling is authorized to work in the United States, in accordance with applicable law; or (xii) knowing and intentional misrepresentation or concealment of material information regarding the Company from the Company’s Board and/or the Supervisor.

The agreement defines “good reason” as: the occurrence (without Mr. Conkling’ consent) of (i) a material reduction of Mr. Conkling’s duties, or (ii) relocation of Mr. Conkling’s principal place of employment more than fifty (50) miles outside of Newark, New Jersey.

On November 22, 2021, in connection with Mr. Conkling’s separation from the Company, the Company entered into a Termination Agreement providing that Mr. Conkling will receive a bonus of $90,000 in accordance with the Conkling Employment Agreement and a severance payment of $225,000 representing six months of his current base salary.

The Company does not have an employment agreement with David Polinsky or Howard Jonas.

POTENTIAL POST-EMPLOYMENT PAYMENTS

Certain of the Company’s executives with employment agreements are entitled under such agreements to payments upon termination. The discussion below is based on the employment agreements in effect as of July 31, 2021, for both Mr. Mallik and Mr. Conkling.

For Mr. Mallik, the Company’s Chief Executive Officer, if his employment is terminated (i) due to his death or disability, (ii) by the Company with or without cause, or (iii) by Mr. Mallik for any reason, Mr. Mallik (or his estate) shall be entitled to receive all unpaid amounts (A) of annual base salary, if any, to which Mr. Mallik was entitled as of the date of termination and (B) to which Mr. Mallik was then entitled under any employee benefits, perquisites or other reimbursements. In the event the Company terminates his employment other than for cause, if Mr. Mallik terminates his employment for good reason or Mr. Mallik terminates his employment without good reason, Mr. Mallik shall be paid severance in the amounts and under the terms and conditions set forth above. In the event of a Change in Control (other than a Transaction), all unvested grants vest.

For Mr. Conkling, the Company’s Chief Commercial and Business Officer if his employment is terminated (i) due to his death or disability, (ii) by the Company with or without cause, or (iii) by Mr. Conkling for any reason, Mr. Conkling (or his estate) shall be entitled to receive all unpaid amounts (A) of annual base salary, if any, to which Mr. Conkling was entitled as of the date of termination and (B) to which Mr. Conkling was then entitled under any employee benefits, perquisites or other reimbursements. In the event the Company terminates his employment other than for cause, if Mr. Conkling terminates his employment for good reason, Mr. Conkling shall be paid severance in the amounts and under the terms and conditions set forth above.

Please see the section above entitled “Employment Agreements” for more details on these payments and the employment agreements of these executive officers, generally.

The following table describes and quantifies the amount of post-termination payments that would be payable to each of the Named Executive Officers of the Company who have employment agreements in the event of termination

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of such Named Executive Officer’s employment as of July 31, 2021 under various employment-related scenarios pursuant to the employment Agreements entered into with each of the Named Executive Officers set forth in the table below utilizing a per share stock price of $50.61, the closing market price of the Company’s Class B Common Stock on July 30, 2021, the last trading day of Fiscal 2021. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different from those presented in the following table. Factors that could affect these amounts include the timing during the year of any such event, the Company’s stock price and the Named Executive Officer’s age.

Name

 

Benefit
($)

 

Death
($)

 

Disability
($)

 

Change In
Control
($)

 

By
Company
w/o Cause
($)

 

By
Company
w/Cause
($)

 

By NEO
w/o
Good
Reason
($)

 

By NEO
w/Good
Reason
($)

Ameet Mallik

 

Severance

 

 

 

 

 

 

$

5,000,000

 

 

 

$

5,000,000

   

Restricted Stock

 

 

 

$

45,979,033

(1)

 

 

 

 

 

 

   

Stock Options

 

 

 

 

 

 

 

 

 

 

 

               

 

 

 

 

 

           

 

 

William Conkling

 

Severance

 

 

 

 

 

 

$

112,500

 

 

 

$

112,500

   

Restricted Stock

 

 

 

$

1,155,672

(2)

 

 

 

 

 

 

   

Stock Options

 

 

 

 

 

 

 

 

 

 

 

____________

(1)      Represents the accelerated vesting of 908,497 restricted shares of Class B Common Stock.

(2)      Represents the value of options to purchase 118,409 shares of the Company’s Class B Common Stock with an exercise price of $40.85 per share for which vesting would be accelerated.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The table below summarizes the total compensation paid or awarded to our executive officers (the “Named Executive Officers”) by the Company during Fiscal 2021 and Fiscal 2020. Our current Chief Financial Officer and President, Patrick Fabbio, was not employed by the Company in Fiscal 2021, and accordingly, is not listed in the table below.

Name and Principal Position

 

Fiscal
Year

 

Salary(1)

 

Bonus(1)

 

Stock
Awards(2)

 

Option
Awards

 

All Other
Compensation

 

Total

Howard Jonas

 

2021

 

$

250,000

 

$

 

$

 

 

$

 

 

$

 

 

$

250,000

Chairman of the Board and Former Chief Executive Officer(3)

 

2020

 

$

250,000

 

 

 

$

 

 

$

 

 

$

 

 

$

250,000

       

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ameet Mallik

 

2021

 

$

150,000

 

$

2,075,000

 

$

45,097,791

(5)

 

$

 

 

$

 

 

$

47,332,791

Chief Executive Officer(4)

     

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 
       

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Polinsky

 

2021

 

$

223,000

 

$

100,000

 

$

80,150

(7)

 

$

 

 

$

2,000

(8)

 

$

405,150

Former Chief Financial Officer(6)

 

2020

 

$

214,500

 

$

60,000

 

$

111,650

(9)

 

$

 

 

$

2,000

(8)

 

$

388,150

       

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William Conkling

 

2021

 

$

131,250

 

$

67,500

 

$

 

 

$

3,013,509

(11)

 

$

 

 

$

3,212,259

Chief Commercial and Business Officer(10)

     

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

____________

(1)      The Company’s executive compensation structure is designed to attract and retain qualified and motivated personnel and align their interests with those of the Company and its stockholders. The Named Executive Officers are awarded bonuses based on certain accomplishments in respect of the relevant fiscal year. The Company does not target any specific proportion of total compensation in setting annual base salary and bonus compensation.

(2)      The amounts shown in these columns reflect the aggregate grant date fair value of restricted stock awards computed in accordance with FASB ASC Topic 718, which is based on the closing price of our common stock on the grant date. For a discussion of the valuation and a description of the restricted stock awards granted, please see Note 14 — Stock-Based Compensation to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the Fiscal Year ended July 31, 2021. Restricted Class B Common stockholders are entitled to receive any dividends paid on Class B Common Stock of the Company.

(3)      Howard Jonas served as Chief Executive Officer from March 8, 2018 until April 30, 2021.

(4)      Ameet Mallik has served as Chief Executive Officer since May 1, 2021.

(5)      Represents the value of the grant to Mr. Mallik on May 27, 2021 of 908,497 restricted shares of the Company’s Class B Common Stock.

(6)      David Polinsky served as Chief Financial Officer from December 2017 until September 13, 2021 and currently serves as Chief of Staff.

(7)      Represents the value of the grant to Mr. Polinsky on September 23, 2020 of 5,000 restricted shares of the Company’s Class B Common Stock.

(8)      Represents the Company’s contribution to Mr. Polinsky’s account established under the Company’s 401(k) plan.

(9)      Represents the value of the grant to Mr. Polinsky on September 23, 2019 of 5,000 restricted shares of the Company’s Class B Common Stock.

(10)    William Conkling served as Chief Commercial Officer from March 2021 to November 10, 2021 and currently serves as Chief Commercial and Business Officer.

(11)    Represents the value of the grant to Mr. Conkling on April 15, 2021 of options to purchase 118,409 shares of the Company’s Class B Common Stock.

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Outstanding Equity Awards at 2021 Fiscal Year-End

The following table provides information on the current holdings of stock options and unvested restricted shares of the Company’s Class B Common Stock by our Named Executive Officers at July 31, 2021.

 

Option Awards

 

Stock Awards

Name

 

Option
Grant
Date

 

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

 

Option
Exercise
Price
($)

 

Option
Expiration
Date

 

Number of Shares or
Units of Stock That Have Not
Vested
(#)

 

Market Value of
Shares or Units of Stock That
Have Not
Vested
(1)
($)

Howard Jonas

 

3/28/2018

 

500,000

(2)

 

 

4.90

 

3/27/2023

 

 

 

 

Ameet Malik

 

 

 

 

 

 

 

908,497

(3)

 

$

45,979,033