sst-202406110001805833FALSE12/3100018058332024-06-112024-06-110001805833us-gaap:CommonStockMember2024-06-112024-06-110001805833sst:RedeemableWarrantsMember2024-06-112024-06-11
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
June 11, 2024
System1, Inc.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| Delaware | | 001-39331 | | 92-3978051 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (I.R.S. Employer Identification Number) |
| | | | |
4235 Redwood Avenue Marina Del Rey, California | | | | 90066 |
(Address of principal executive offices) | | | | (Zip Code) |
(310) 924-6037(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| | | | | |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Class A Common Stock, $0.0001 par value per share | | SST | | New York Stock Exchange |
| Redeemable warrants, each whole warrant exercisable for one Class A Common Stock share at an exercise price of $11.50 per share | | SST.WS | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 3.03 Material Modification to Rights of Security Holders.
To the extent required by this Item 3.03 of Form 8-K, the information contained in Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.03.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
2024 Stock Appreciation Rights Plan
On June 11, 2024, System1, Inc. (the “Company” or “System1”) held its Annual Meeting of Stockholders (the “2024 Annual Meeting”). At the 2024 Annual Meeting, the Company’s stockholders considered and approved, among other things, the System1, Inc. 2024 Stock Appreciation Rights Plan (the “SARs Plan”). The SARs Plan was previously approved, subject to stockholder approval, by the Company’s board of directors (the “Board”) prior to the submission to the Company’s stockholders for approval at the 2024 Annual Meeting. The SARs Plan became effective immediately upon the closing of the 2024 Annual Meeting.
A summary of the terms of the SARs Plan is set forth in the Company’s definitive proxy statement for the 2024 Annual Meeting filed by the Company with the Securities and Exchange Commission (the “SEC”) on April 28, 2024 (the “Proxy Statement”) in the section titled “Proposal 3—Approval of The System1, Inc. Stock Appreciation Rights Proposal” beginning on page 18 of the Proxy Statement, which is incorporated herein by reference. Such summary and the foregoing description are qualified in their entirety by reference to the text of the SARs Plan, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
At the 2024 Annual Meeting, the Company’s stockholders considered and approved, among other things, a proposed amendment (the “Charter Amendment”) to the System1, Inc. Certificate of Incorporation (the “Charter Amendment Proposal”). The Charter Amendment Proposal was previously approved, subject to stockholder approval, by the Company’s Board prior to the submission to the Company’s stockholders for approval at the 2024 Annual Meeting. The Charter Amendment became effective upon the filing of the Charter Amendment with the Secretary of State of the State of Delaware on June 11, 2024.
The description of the Charter Amendment and the general effect of the Charter Amendment upon the rights of holders of System1’s Class C Common Stock are included in the supplementary proxy materials filed by the Company with the SEC on May 31, 2024 (the “Proxy Statement Supplement”) under the section titled “Proposal 4—Approval of an Amendment to the Company’s Certificate of Incorporation” beginning on page 8 of the Proxy Statement Supplement, which is incorporated herein by reference. The foregoing description of the Charter Amendment and the description incorporated by reference from the Proxy Statement Supplement are qualified in their entirety by reference to the text of such Charter Amendment, which is filed as Exhibit 3.1 hereto, and incorporated herein by reference.
Item 5.07 Submission of Matters to a Vote of Security Holders.
At the 2024 Annual Meeting, 84,285,075 shares of the Company’s Class A common stock and Class C common stock were represented in person or by proxy, constituting approximately 94% of the Company’s total outstanding shares of common stock as of April 25, 2024, the record date for the 2024 Annual Meeting, and constituting a quorum for the transaction of business at the 2024 Annual Meeting. At the 2024 Annual Meeting, the following four proposals were submitted to the stockholders and the Company’s inspector of elections certified the vote tabulations indicated below. For more information about the proposals, please refer to the Proxy Statement and Proxy Statement Supplement.
Proposal 1 - Election of Class II Directors
The individuals listed below were each elected to serve on the Board for a three-year term expiring at the Company’s 2027 Annual Meeting of Stockholders, or until his or her successor is duly elected and qualified.
The final report of the votes with respect to Proposal 1 was as follows:
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Nominee for Director | Votes For | Votes Against | Votes Abstained/Withheld | Broker Non-Votes |
Moujan Kazerani | 73,359,856 | 0 | 3,808,170 | 7,117,049 |
Frank Martire Jr. | 73,948,278 | 0 | 3,219,748 | 7,117,049 |
Charles Ursini | 76,575,744 | 0 | 592,282 | 7,117,049 |
Proposal 2 - Ratification of the Independent Registered Public Accounting Firm
On June 4, 2024, the Company filed a Current Report on Form 8-K announcing that the Audit Committee of the Board approved the appointment of Deloitte & Touche LLP ("D&T") as the Company's independent registered public accounting firm for the Company's fiscal year ending December 31, 2024, and to dismiss PricewaterhouseCoopers LLP ("PwC") as the Company's independent registered public accounting firm, effective as of June 4, 2024.
As a result of the dismissal of PwC, the Company withdrew Proposal 2 from the 2024 Annual Meeting agenda, which requested that the Company’s stockholders ratify the appointment of PwC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024. In conjunction with the Annual Meeting of Stockholders to be held in 2025, the Company intends to ask stockholders to ratify the appointment of D&T as the Company’s independent registered public accounting firm to audit the Company’s financial statements for the year ending December 31, 2025.
Proposal 3 – Approve the 2024 System1, Inc. Stock Appreciation Rights Plan
Proposal 3, was a management proposal to approve the SARs Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder.
The final report of the votes with respect to Proposal 3, which was approved by the Company’s stockholders, was as follows:
| | | | | | | | | | | |
Votes For | Votes Against | Votes Abstained/Withheld | Broker Non-Votes |
73,096,399 | 4,026,776 | 44,851 | 7,117,049 |
Proposal 4 – Approve the Amendment to System1, Inc. Certificate of Incorporation
Proposal 4, was a management proposal to approve an Amendment to the System1, Inc. Certificate of Incorporation.
The final report of the votes with respect to Proposal 4, which was approved by the Company’s stockholders, was as follows:
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Votes For | Votes Against | Votes Abstained/Withheld | Broker Non-Votes |
70,887,234 | 14,807 | 6,265,985 | 7,117,049 |
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| | | | | | | | |
| Exhibit No. | | Description |
| |
| 3.1 | | |
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| 10.1 | | |
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| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | System1, Inc. |
| | | |
| Date: June 13, 2024 | | | By: | /s/ Daniel J. Weinrot |
| | | Name: | Daniel J. Weinrot |
| | | Title: | General Counsel & Corporate Secretary |
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SYSTEM1, INC.
System1, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify as follows:
FIRST: That resolutions were duly adopted by the Board of Directors of the Corporation recommending and declaring advisable that the Certificate of Incorporation of the Corporation be amended and that such amendments be submitted to the stockholders of the Corporation for their consideration, as follows:
RESOLVED, that Section 17(y) of the Certificate of Incorporation of the Corporation, as amended and/or restated to date, be amended and restated in its entirety to read as follows:
“(y) “OpCo” means S1 Holdco, LLC, a Delaware limited liability company (“Existing OpCo”), or any successor thereto (including, without limitation, any new holding entity which becomes the parent of Existing OpCo, and whose equity interests have substantially the same rights and are subject to substantially the same terms and conditions as the equity interests of Existing OpCo).”
RESOLVED, that Section 17(z) of the Certificate of Incorporation of the Corporation, as amended and/or restated to date, be amended and restated in its entirety to read as follows:
“(z) “OpCo Operating Agreement” means the limited liability company operating agreement (or equivalent governing document) of OpCo, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.”
SECOND: That, at an annual meeting of stockholders of the Corporation, the aforesaid amendment was duly adopted by the stockholders of the Corporation.
THIRD: That, the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.
[Signature page follows]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Executive Officer on this 11th day of June, 2024.
SYSTEM1, INC., a Delaware corporation
By: /s/ Michael Blend
Name: Michael Blend
Title: Chairman and Chief Executive Officer
SYSTEM1, INC.
2024 STOCK APPRECIATION RIGHTS PLAN
1.Purpose. The purpose of this System1, Inc. 2024 Stock Appreciation Rights Plan (this “Plan”) is to enhance the ability of System1, Inc. (together with any successor, the “Company”) to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. Any capitalized term that is used but not defined in the Plan will have the meaning provided to such term in the System1, Inc. 2022 Incentive Award Plan, as amended and/or restated from time to time (the “2022 Plan”).
2.Stock Available for Awards.
a.Number of Shares. Subject to adjustment under Article VIII of the 2022 Plan (as incorporated herein by reference), and further subject to the terms of this Section 2, the maximum number of shares of Class A common stock of the Company (“Shares”) that may be issued pursuant to awards of Stock Appreciation Rights granted under the Plan (“Awards”) shall be 23,800,000 Shares (the “Share Limit”). Shares issued under the Plan may consist of authorized but unissued Shares, Shares purchased on the open market or treasury Shares.
b.Share Recycling. If all or any part of an Award expires, lapses or is terminated, exchanged for or settled in cash, surrendered, repurchased, canceled without having been fully exercised/settled or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant (as defined below) for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will, as applicable, become or again be available for Award grants under the Plan. However, notwithstanding the foregoing or anything herein to the contrary, Shares delivered to the Company by a Participant (whether by actual delivery, attestation or net settlement of any Award) to satisfy the applicable strike price of an Award and/or to satisfy any applicable tax withholding obligation with respect to an Award (including Shares retained by the Company from the Award being exercised and/or creating the tax obligation) will not, in any case, become or again be available for Award grants under the Plan. Notwithstanding anything to the contrary contained herein, Shares subject to an Award that are not issued in connection with the stock settlement of the Award on exercise thereof shall not be added to the Shares authorized for grant under Section 2(a) and shall not be available for future grants of Awards.
3.Awards of Stock Appreciation Rights.
a.Eligibility. Service Providers are eligible to be granted Awards under the Plan, subject to the limitations described herein (each Service Provider granted an Award under the Plan, a “Participant”).
b.Award Agreements. Each Award shall be evidenced by an Award Agreement entered into by and between the applicable Participant and the Company, which shall include the terms and conditions of the Award, subject to the limitations of the Plan.
c.General. Subject to the limitations of the Plan (including for clarity, the vesting conditions set forth in Section 3(e) below), the Administrator shall determine the number of Shares covered by each Award and the terms, conditions and limitations applicable each Award of Stock Appreciation Rights. A Stock Appreciation Right will entitle the Participant (or other person entitled to exercise the Stock Appreciation Right) to receive from the Company, upon exercise of the exercisable portion of the Stock Appreciation Right, an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the strike price per each Share of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose, and which amount shall be payable in cash, Shares valued at Fair Market Value or a combination of the two, as the Administrator may determine or provide in the applicable Award Agreement.
d.Strike Price; Duration. The Administrator will establish each Stock Appreciation Right’s strike price and term and specify the strike price and term in the Award Agreement. The strike price will not be less than 100% of
the Fair Market Value on the grant date of the Stock Appreciation Right and the term of any Stock Appreciation Right shall not exceed seven (7) years.
e.Vesting Conditions.
i.General. Each Award of Stock Appreciation Rights granted under the Plan shall vest and become exercisable as follows, subject to and conditioned upon the applicable Participant’s continued status as a Service Provider through the applicable Vesting Date (as defined below):
1.Twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche I SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period commencing on or after the applicable date of grant equals or exceeds $50,000,000;
2.Twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche II SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period commencing on or after the applicable date of grant equals or exceeds $60,000,000;
3.Twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche III SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period commencing on or after the applicable date of grant equals or exceeds $70,000,000; and
4.The remaining twenty-five percent (25%) of the Stock Appreciation Rights subject to the Award (the “Tranche IV SARs”) shall vest if the Company’s Adjusted EBITDA for any trailing twelve (12)-month period commencing on or after the applicable date of grant equals or exceeds $80,000,000.
ii. Vesting Dates. The actual date on which any Stock Appreciation Rights subject to an Award vest in accordance with Section 3(e)(i) above shall be the first date following the grant date of such Award on which the Administrator certifies attainment of the applicable Adjusted EBITDA goal, which shall be no later than thirty (30) days following the date on which the Company files its Annual Report on Form 10-K or Quarterly Report on Form 10-Q with the Securities and Exchange Commission with respect to which such determination has been made by the Administrator (any such date, a “Vesting Date”) and which, for clarity, shall only occur during the thirty (30)-day window following the filing of an Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable.
iii. Adjusted EBITDA. “Adjusted EBITDA” means, with respect to any particular period, the Company’s net income (loss) before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expenses, dividends or other distributions to equity holders, expense associated with revaluation of any warrants, costs associated with acquisitions or dispositions, deferred compensation, management fees, minority interest expense, restructuring charges, impairment and certain segment-specific adjustments, and such other adjustments as may be appropriate to accurately reflect performance, in each case, as determined by the Administrator.
iv. Exercisability. Except as otherwise determined by the Administrator and set forth in the applicable Award Agreement, Stock Appreciation Rights that become vested and exercisable in accordance with this Section 3(e) shall remain vested and exercisable until such Stock Appreciation Rights expire or terminate pursuant to Section 3(f).
f.Termination of Service; Expiration. Except as otherwise determined by the Administrator and set forth in the applicable Award Agreement, each Award of Stock Appreciation Rights granted under the Plan shall be subject to termination, forfeiture and expiration as follows (and, for the avoidance of doubt, Stock Appreciation Rights may not be exercised to any extent by anyone following the date on which such Stock Appreciation Rights terminate, are forfeited or expire, as applicable):
i.Termination of Service.
1.General. If a Participant incurs a Termination of Service for any reason prior to any applicable Vesting Date, the Participant will forfeit all then-unvested Stock Appreciation Rights subject to such Award upon such Termination of Service.
2.For Cause. Notwithstanding anything to the contrary herein, if a Participant incurs a Termination of Service for Cause, the Participant will forfeit all Stock Appreciation Rights subject to such Award (whether or not then-vested) upon such Termination of Service as of the start of business on the date of such Termination of Service.
ii. Expiration.
1.Any then-outstanding and unvested Tranche I SARs subject to an Award will expire and be forfeited by the Participant on the fourth (4th) anniversary of the applicable date of grant.
2.Any then-outstanding and unvested Tranche II SARs subject to an Award will expire and be forfeited by the Participant on the fifth (5th) anniversary of the applicable date of grant.
3.Any then-outstanding and unvested Tranche III SARs subject to an Award will expire and be forfeited by the Participant on the sixth (6th) anniversary of the applicable date of grant.
4.Any then-outstanding SARs subject to an Award (whether vested or unvested) will expire and be forfeited by the Participant on the seventh (7th) anniversary of the applicable date of grant.
g.Exercise. Vested Stock Appreciation Rights may be exercised by delivering to the Company (or its Agent) a written notice of exercise, in any form approved by the Administrator (which may be electronic and provided through the online platform maintained by an Agent), signed or submitted by the person authorized to exercise the Stock Appreciation Right, together with payment in full of the required amount(s) for any applicable taxes. Unless the Administrator otherwise determines, a Stock Appreciation Right may not be exercised for a fraction of a Share.
4.Miscellaneous.
a.Certain Incorporations. The terms and conditions set forth in Article III (“Administration and Delegation”), Article VIII (“Adjustments for Changes in Common Stock and Certain Other Events”), Article IX (“General Provisions Applicable to Awards”), and Article X (“Miscellaneous”) of the 2022 Plan, but excluding each of Section 9.6 (“Amendment of Award; Repricing”), Section 10.3 (“Effective Date and Termination of Plan”) and Section 10.4 (“Amendment of Plan”), together with any successor provisions to any of the foregoing (other than Sections 10.3 and 10.4), are hereby incorporated into the Plan as if first set forth herein and shall be applicable to the Plan and all Awards hereunder. For clarity, (i) Shares subject to or delivered in respect of Awards hereunder shall not be counted for any purposes of determining the number of Shares available under the Overall Share Limit, Article IV of the 2022 Plan or otherwise under the 2022 Plan, and (ii) Shares subject to or delivered in respect of Awards under the 2022 Plan shall not be counted for any purposes of determining the number of Shares available under the Share Limit contained in Section 2(a) above or otherwise under the Plan.
b.Amendment of Award; Repricing. The Administrator may amend, modify or terminate any outstanding Award, including by substituting another Award of the same or a different type or changing the exercise or settlement date. The Participant’s consent to such action will be required unless (i) the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Award, and/or (ii) the change is permitted under Article VIII of the 2022 Plan or pursuant to Section 8.6 of the 2022 Plan. Notwithstanding the foregoing or anything in the Plan to the contrary, the Administrator may not, without the approval of the stockholders of the Company, (A) reduce the strike price per share of outstanding Stock Appreciation Rights or (B) cancel outstanding Stock Appreciation Rights in exchange for cash or other Awards with a strike price per share that is less than the strike price per share of the original Stock Appreciation Rights.
c.Effective Date and Term of Plan. Unless earlier terminated by the Board, the Plan will become effective on the date on which the Company’s stockholders approve the Plan (the “Effective Date”) and will remain in effect until the tenth anniversary of the Effective Date, but Awards previously granted may extend beyond that date in accordance with the Plan. If the Plan is not approved by the Company’s stockholders, the Plan will not become effective and no Awards will be granted under the Plan.
d.Amendment of Plan. The Board may amend, suspend or terminate the Plan at any time; provided that no amendment, other than (a) as permitted by the applicable Award Agreement, (b) as provided under Sections 10.6 and 10.15 of the 2022 Plan, or (c) an amendment to increase the Share Limit, may materially and adversely affect any Award outstanding at the time of such amendment without the affected Participant’s consent. No Awards may be granted under the Plan during any suspension period or after the Plan’s termination. Awards outstanding at the time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination. The Board will obtain stockholder approval of any Plan amendment (as a condition to the effectiveness of any such Plan amendment): (i) if such Plan Amendment (x) adjusts or otherwise modifies any Adjusted EBITDA dollar threshold set forth in Section 3(e)(i) (other than adjustments or modifications made pursuant to Article VIII (“Adjustments for Changes in Common Stock and Certain Other Events”) of the 2022 Plan) or (y) extends the maximum term of exercisability of any Awards that may be granted hereunder, and/or (ii) to the extent necessary to comply with Applicable Laws.
e.Tax Withholding. Without limiting the provisions of Section 9.5 of the 2022 Plan (as incorporated herein), the Company and its Affiliates shall be entitled to deduct and withhold from any amounts payable under the Plan or any Award Agreement all federal, state, local and/or foreign taxes as the Administrator determines to be legally required pursuant to any applicable laws or regulations. In addition, the Administrator may require a Participant, as a condition to the payment of any Award, to satisfy any such withholding obligations by tendering a cash payment to the Company.
f.No Limitations on Company Action. For the avoidance of doubt, neither the existence of the Plan nor any Award hereunder shall create or be deemed to create any obligation on the part of the Company to seek the consent of any Participant or any other person in order to take or refrain from taking any action.
g.Governing Law. The Plan and all Awards will be governed by and interpreted in accordance with the laws of the State of Delaware, disregarding any state’s choice-of-law principles requiring the application of a jurisdiction’s laws other than the State of Delaware.
h.Claw-back Provisions. All Awards (including, without limitation, any proceeds, gains or other economic benefit actually or constructively received by a Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of the Company’s Policy for Recovery of Erroneously Awarded Compensation (the “Recovery Policy”) and any other claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with Applicable Laws, as and to the extent set forth in the Recovery Policy, such other claw-back policy or the Award Agreement.
i.Titles and Headings. The titles and headings in the Plan are for convenience of reference only and, if any conflict, the Plan’s text, rather than such titles or headings, will control.
* * * * *