UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 13D

(Rule 13d-101)

 

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

RULE 13d-2(a)

 

(Amendment No. 1)^[1]

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

JULIAN SINGER

JDS1, LLC

2200 Fletcher Avenue, Suite 501

Fort Lee, New Jersey 07024

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of This Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [_].

 

__________________

^[1]      The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 86858W200

 

 CUSIP No. 86858W200

 

 

 

 

The following constitutes Amendment No. 1 to the Schedule 13D filed by the undersigned.

Item 1 of this Schedule 13D is hereby amended and restated in its entirety as follows:

This statement relates to the Common Stock, $0.0001 par value per share (the “Shares”), of Support.com, Inc., a Delaware corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 1521 Concord Pike (US 202), Suite 301, Wilmington, DE 19803.

 

Item 4 of Schedule 13D is supplemented and superseded, as the case may be, as follows:

On October 3, 2019, the Reporting Persons delivered a letter to the Issuer (the “Books and Records Demand”) demanding, pursuant to Section 220 of the Delaware General Corporation Law, inspection of the Issuer’s Books and Records (as defined therein) regarding, among other things, the decision-making process and deliberations undertaken by the Board and the Nominating and Corporate Governance Committee in connection with the implementation of the Issuer’s current Section 382 Tax Benefits Preservation Plan (the “Plan”).  The Reporting Persons state in the Books and Records Demand that they believe that the Board appears to be using its purported Section 382 purpose for the Plan as cover to obfuscate the Plan’s real intended purpose as a tool for board entrenchment.  In addition, the Reporting Persons in the Books and Records Demand seek books and records that will allow them to investigate potential mismanagement, wrongdoing and/or breaches of fiduciary duties by members of the Board or others in connection with the consideration by the Issuer of the Board candidates nominated by the Reporting Persons.  The Books and Records Demand states that despite being encouraged by the Board to submit such nominations, the Issuer did not interview any of the Reporting Persons’ highly qualified Board nominees.

The foregoing description of the Books and Records Demand does not purport to be complete and is qualified in its entirety by reference to the full text of the Books and Records Demand, which is filed as Exhibit 99.1 and is incorporated herein by reference.

The Reporting Persons acquired their positions in the Shares in the belief that the current share price does not reflect the intrinsic value of the Issuer and continues to represent an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any

of the actions discussed in this Schedule 13D, as amended. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with management and the Board, engaging in discussions with shareholders of the Issuer or other third parties about the Issuer and the Reporting Persons’ investment, making recommendations or proposals to the Issuer concerning changes to the capitalization, ownership structure, Board structure (including Board composition), potential business combinations or dispositions involving the Issuer or certain of its businesses, including transactions in which the Reporting Persons may seek to participate and potentially engage in (as a purchaser or investor), or suggestions for improving the Issuer’s financial and/or operational performance, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares, including swaps and other derivative instruments, or changing their intention with respect to any and all matters referred to in Item 4.

 

 

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: October 3, 2019

 

 

 

 

Julian Singer

JDS1, LLC

2200 Fletcher Avenue, Suite 501

Fort Lee, New Jersey 07024

10/2/2019

Support.com, Inc.

1200 Crossman Ave., Suite 210

Sunnyvale, California 94089

Attn: Chairman of the Board of Directors

REGISTERED AGENT BY OVERNIGHT DELIVERY:

Support.com, Inc.

1521 Concord Pike (US 202), Suite 301

Wilmington, Delaware 19803

Dear Chairman:

I am writing to you on behalf of myself and JDS1, LLC (collectively, “JDS Persons”).  The JDS Persons are, collectively, the beneficial owners of 929,700 shares of common stock of Support.com, Inc. (the “Company”)¹. Pursuant to Section 220 of the Delaware General Corporation Law (the “DGCL”), The JDS Persons hereby demand that the Company make available for inspection and copying the Books and Records of the Company described in Exhibit 1 attached hereto.

The JDS Persons have repeatedly engaged with the Company, as well as with the Company’s board of directors (the “Board”) and management, in an effort to obtain from the Company information regarding the analysis, discussion, considerations and process used by the Board to support the implementation of the Current Plan (as defined below), including any Section 382 studies and related work papers at both the federal and state levels (the “NOL Analysis”).

On April 20, 2016, the Company entered in that certain Section 382 Tax Benefits Preservation Plan with Computershare Trust Company, N.A. (the “Expired Plan”), pursuant to which the Company attempted to preserve certain net operating losses in light of potential Section 382 considerations.  In April 2019, the JDS Persons requested an exemption to the Expired Plan in relation to prospective additional acquisitions of shares of the Company’s common stock and also requested information from the Company about the Company’s percentage change in ownership of stock among certain shareholders over a three-year period for purposes of Section 382 analysis.  Without explanation, the Company refused to provide the requested information or communicate regarding its decision to refuse the exemption request.  On April 20, 2019, the Expired Plan expired in accordance with its terms.

---

During the same time frame, the JDS Persons were encouraged by the Board to submit Board candidate nominations for the Company’s review.  Therefore the JDS Persons submitted five highly qualified, independent candidates and corresponded with the Company in relation thereto (the “JDS Nominations Process”).  However, the Company did not interview with or make any apparent efforts whatsoever to consider the JDS Persons’ highly qualified candidates.

On August 21, 2019, the JDS Persons jointly filed a Schedule 13D in relation to their beneficial ownership in the Company’s shares representing a 4.9% interest therein.  Immediately thereafter, on August 21, 2019 the Company put in place a new Section 382 plan pursuant to that certain Section 382 Tax Benefits Preservation Plan, by and between the Company and Computershare Trust Company, N.A. (the “Current Plan”) as currently in effect. The Company established (and the Board adopted) the Current Plan for the purported but unsubstantiated purpose of protecting its ability to utilize net operating loss carryovers to reduce potential future income tax obligations. The Company has not disclosed any details of the NOL Analysis and any related steps taken by the Company or the Board in determining to establish the Current Plan.  According to the 8-K, the Current Plan was implemented “to diminish the risk that the Company could experience an “ownership change” as defined in Section 382”.  The Company did not present or make mention of any specific evidence of the NOL Analysis.

In light of the foregoing, the JDS Persons request that the Company provide the JDS Persons with Books and Records responsive to all of the purposes of the demanded inspection as set forth below.  Moreover, the JDS Persons have credible reason to believe that information of the requested nature exists, since the Company itself states in the 8-K, “the Company periodically monitors its NOLs” and therefore the Company possesses Books and Records that are in-scope and properly responsive to this letter.

The JDS Persons believe that the Board appears to be using its purported Section 382 purpose for the Current Plan as cover to obfuscate the Current Plan’s real intended purpose as a tool for board entrenchment.  Such a strategy is contrary to the best interests of the Company’s stockholders and the Board’s fiduciary duty to serve those interests.  The lack of responsive Section 382 analysis from the Company further confirms this intention.  Additionally, the Company’s actions imply that the Current Plan was enacted as a direct defensive response to the JDS Persons increased ownership position in August 2019, rather than for Section 382 purposes.  The reality of the Board’s entrenchment activities and internal tactics with respect to the Current Plan stand in stark contrast to the Company’s stated Section 382 purpose.  The JDS Persons obtained their ownership interests under the belief, and continue to believe, that the Company’s intrinsic value has not been fully realized in the Company’s current share price in light of the foregoing actions by the Company and its Board.

.2

As explained more fully below, the purposes of the demanded inspection are:

1.	To investigate potential mismanagement, wrongdoing and/or breaches of fiduciary duties by members of the Board or others in connection with the implementation of the Current Plan;

2.	To evaluate the decision-making process and deliberations undertaken by the Board and the Nominating and Corporate Governance Committee in connection with the implementation of the Current Plan;

3.	To investigate potential mismanagement, wrongdoing and/or breaches of fiduciary duties by members of the Board or others in connection with the JDS Nominations Process;

4.	To evaluate the Books and Records of the Company as evincing and demonstrating the accounting records, analysis and commentary in connection with the implementation of the Current Plan;

5.	To initiate litigation or take other appropriate action in the event certain directors or others did not properly discharge their duties to the Company and its stockholders;

6.	To assess the suitability of the members of the Board to continue in office, to assess the advisability of proposing changes in the members of the Board, and to facilitate informed voting in any election of directors;

7.	To assess the advisability of proposing governance reforms in light of the implementation of the Current Plan, including, without limitation, reforms concerning stockholder ability to approve similar and related actions; and

8.	Communicating with other stockholders regarding the foregoing.

According to 8 Del. C. § 220(b)(2), a “proper purpose” shall mean a purpose reasonably related to such person’s interest as a stockholder. Each of the above purposes is a proper purpose. Under Delaware law, it is well established that a stockholder’s “desire to investigate wrongdoing or mismanagement is a ‘proper purpose’” for a books and records demand. Seinfeld v. Verizon Commc’n Inc., 909 A.2d 117, 121 (Del. 2006) (citing Nodana Petroleum Corp. v. State ex rel. Brennan, 123 A.2d 243, 246 (Del. 1956)). Investigating mismanagement is proper “because where the allegations of mismanagement prove meritorious, investigation furthers the interest of all stockholders and should increase stockholder return.” Id. (citing Saito v. McKesson HBOC, Inc., 806 A.2d 113, 115 (Del. 2002)). The JDS Persons have the requisite “credible basis” for suspecting wrongdoing or mismanagement in connection with the NOL Analysis. Further, investigating the suitability of directors is another recognized proper purpose. See Pershing Square, L.P. v. Ceridian Corp., 923 A.2d 810, 818 (Del. Ch. 2007).  So too is communicating with stockholders about matters of corporate concern. See Devon v. Pantry Pride, Inc., 1984 WL 8250, at *2 (Del. Ch. Nov. 21, 1984). These proper purposes establish unequivocally our right to the information requested below.

3

Accordingly, the JDS Persons hereby demand the right to inspect and copy the Books and Records of the Company described in Exhibit 1. For purposes of this letter, the term “Books and Records” means all documents and other nonverbal methods and mediums of information storage of any nature whatsoever referring or relating to the listed topics, including, but not limited to, memoranda, board minutes, telephone records, diaries, data compilations, emails, text messages, instant messaging programs, communications through any mobile app and other correspondence in any form authored by or received by any of the Company’s directors, officers, or other employees or its financial advisors or other advisors.

The JDS Persons hereby demand that: (1) originals or attested copies of the documents and records described in Exhibit 1 be made available for inspection and copying by the JDS Persons, their designated representatives, or their attorneys or agents during usual business hours, beginning no later than five business days after the Company receives this letter, and continuing from day to day thereafter during usual business hours until the inspection is completed, or (2) the Company deliver copies of such records, within five business days after receipt of this letter, to the attention of the JDS Persons’ counsel, Jeffrey Kochian, of the law firm of Akin Gump Strauss Hauer & Feld LLP.  Mr. Kochian’s contact information is as follows:

Jeffrey Kochian

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY 10036

(212) 872-8069

jkochian@akingump.com

The JDS Persons will reimburse reasonable copy costs if the documents are sent to its counsel.

This demand authorizes Mr. Kochian and his partners, employees and any other persons designated by him, to conduct the inspection and copying of the Books and Records demanded, and to otherwise act on the JDS Persons’ behalf. The JDS Persons have executed a Power of Attorney designating Mr. Kochian as its agent, which is enclosed with this letter. An affidavit relating to this notice and stockholder demand pursuant to Section 220 of the DGCL has also been attached to this letter.

The DGCL requires your response to our above request within five business days of the date of this letter. Accordingly, please promptly advise Mr. Kochian in writing on or before the expiration of five business days after the date this demand is received by the Company as to where and on what dates the Books and Records demanded will be made available to the JDS Persons, their designated representatives, or their attorneys or agents. Alternatively, if the Company desires, it can provide the Books and Records demanded without the need for inspection and copying by sending complete and unredacted copies of them to the JDS Persons’ counsel. Should the Company refuse to provide the demanded Books and Records, please provide us with a detailed written explanation for the reasons behind that refusal.  In that regard, to the extent Books and Records responsive to the Demand are withheld as privileged or otherwise immune from disclosure, please provide a description of any documents withheld and information sufficient to assess any claim of privilege or other immunity.

4

This notice complies in all respects with applicable law. If, however, the Company believes that this notice is incomplete or otherwise deficient in any respect, please contact Mr. Kochian immediately so that any alleged deficiencies may be promptly addressed.

Please acknowledge receipt of this letter and the enclosures by signing and dating the enclosed copy of this letter and returning the same to the undersigned in the enclosed envelope.

I hereby affirm that the purposes for the demanded inspection as set forth above constitute a true and accurate statement of the reasons the JDS Persons seek to review the demanded books and records, and that such demand is made in good faith. These purposes are both proper and reasonably related to its interest as a stockholder of the Company.

Very truly yours,

JDS1, LLC

              By: Julian Singer

                                      Title: Managing Member

              /s/ Julian Singer

              Julian Singer

Enclosures.

Receipt acknowledged on

________________, 2019

By: __________________________

Name

Title

5

1.	All Books and Records relating to the implementation of the Current Plan, including, without limitation, all Board Materials2 related thereto.

2.	Documents and communications between or among any members of the Board, officers and/or any financial advisor or accounting firm (including, without limitation, any Section 382 study conducted by such accounting firm) of the Company related to the implementation of the Current Plan.

3.	Documents and communications sufficient to show the analysis undertaken by or on behalf of the Company related to the implementation of the Current Plan.

4.	All Books and Records relating to the JDS Nominations Process, including, without limitation, all Board Materials related thereto.

5.	Documents and communications between or among any members of the Board, officers and/or any financial advisor of the Company related to the JDS Nominations Process.

6.	Documents and communications sufficient to show the analysis undertaken by or on behalf of the Company related to the JDS Nominations Process.

7.	Any other Books and Records responsive to any of the purposes of the demanded inspection as set forth in this letter.

² The term “Board Materials” as used herein means all documents concerning, related to, provided at, considered at, discussed at, or prepared or disseminated in connection with, any regular, special, or ad hoc meeting of any Board of Directors (the “Board”) or any regular, specially created, or ad hoc committee or subcommittee of the Board, including all presentations, analyses, data, board packages, recordings, agendas, summaries, memoranda, transcripts, notes, minutes of meetings, drafts of minutes of meetings, exhibits distributed at meetings, summaries of meetings, and resolutions.

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AFFIDAVIT

STATE OF NEW JERSEY                         )

                                                                      ) ss.

COUNTY OF Bergen                                 )

I affirm the foregoing statements to be true and correct to the best of my knowledge and belief under penalty of perjury.

Dated: October 2, 2019

Julian Singer

SWORN TO AND SUBSCRIBED

before me this ______2____ day of

______October____________, 2019

______/s/_Ann Marie Lisa________

NOTARY PUBLIC

KNOW ALL BY THESE PRESENTS that the undersigned hereby constitutes, designates and appoints Jeffrey Lazar Kochian, and his partners, associates, employees and any other persons to be designated by him, as the undersigned’s true and lawful attorney-in-fact and agent for the undersigned, and in the undersigned’s name, place and stead, in any and all capacities, to conduct the inspection and copying of the books and records demanded in the enclosed Stockholder Inspection Demand pursuant to DGCL Section 220, dated October 2, 2019.

IN WITNESS THEREOF, the undersigned has executed this instrument effective as of the 2nd day of October, 2019.

JDS1, LLC

By: Julian Singer
 Title: Managing Member

Julian Singer

SWORN TO AND SUBSCRIBED

before me this ______2_____ day of

______October____________, 2019

______/s/ Ann Marie Lisa__________

NOTARY PUBLIC