(Amendment No. )
xNo fee required.¨Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.(1)Title of each class of securities to which the transaction applies:(2)Aggregate number of securities to which the transaction 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:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 19, 2018
SEPTEMBER 14, 2021
July 29, 2021 | | | By order of the Board of Directors | | |
| Austin, Texas | | | | |
| | | | /s/ William G. Stone III | |
William G. Stone III | |||||
Chief Executive Officer | |
2022
September 14, 2021
SEPTEMBER 14, 2021
August 4, 2021.
The presence, in person or by proxy, of stockholders holding at least a majority of our outstanding common stock and preferred stock (on an as-convertedentitled to common stock basis), voting together as a class,vote at the Annual Meeting will constitute a quorum for the transaction of business at our Annual Meeting. If a quorum is not present at the Annual Meeting, we expect that the meeting will be adjourned or postponed to solicit additional proxies. Your shares will be counted towards the quorum only if you submit a valid proxy or vote at the Annual Meeting.
Directors.
The affirmative vote of a majority of the votes cast of our common stock and Preferred Stock, voting together as a single class on an as-converted to common stock basis, present in person or by proxy and entitled to vote on such matter (
proposal.
Proxy Solicitation
The current Board members, each of whom is a nominee, are as follows:
NAME | | AGE | | | POSITION | | |
Robert Deutschman(1) | | 64 | | | Chairman of the Board & Nominee | | |
| 61 | | | Current Director & Nominee | | ||
| 58 | | | Current Director & Nominee | | ||
| 70 | | | Current Director & Nominee | | ||
| 47 | | | Current Director & Nominee | | ||
Michelle Sterling(6) | | | 53 | | | Current Director & Nominee | |
William G. Stone III | | 53 | | | Chief Executive Officer, Current Director & Nominee | |
(2) Chairman of Compensation Committee, Member of Governance Committee
(3) Member of Compensation Committee
(4) Member
(5)
Christopher RogersMichelle Sterling. Mr. RogersMs. Sterling joined our Board in June 2019. Since 2020, Ms. Sterling has engaged in Human Resources consulting. From 1994 to 2020 Ms. Sterling served in various capacities at Qualcomm, Inc. (“Qualcomm”) (NASDAQ: QCOM) and had been Executive Vice President of Human Resources at Qualcomm since 2015. Previously, she was SVP, Human Resources at Qualcomm. Throughout her tenure with Qualcomm, Ms. Sterling supported Qualcomm’s strategies in complex transactions including joint ventures and divestitures. Ms. Sterling had direct responsibility for more than 33,000 Qualcomm employees worldwide and served as a member of our Board since May 2012. In 2013 Mr. Rogers joined Lumia Capital asQualcomm’s executive committee. She formally served on the executive committee and board of directors of San Diego Regional Economic Development Corporation, executive committee of the Corporate Directors Forum, and previously was a partner. Previously during 2005 to 2012 he has served as Senior Vice President, Corporate Developmentboard member for Girl Scouts San Diego, chair of the board of directors of Serving Seniors, vice-chair of the board of directors and Spectrum,chair of Sprint Nextel Corporation where he evaluatedthe advisory council of Occupational Training Services, and executed strategic initiatives, including mergers, acquisitions, divestitures, equity investments and joint ventures withinchair of the mobile communication and e-commerce sectors. He also was responsiblecorporate board of directors for management and oversight of wireless spectrum licenses and Sprint Nextel’s investment portfolio of emerging technology start-ups. Prior to its merger with Sprint in 2005, Mr. Rogers was Co- Founder and Senior Vice President of Nextel Communications, Inc. as well as Co-Founder of FleetCall Communications, the predecessor to Nextel Communications, and Founder and Chairman of Dispatch Communications, Inc., which was sold to Fleet Call/Nextel in 1993. Mr. RogersSan Diego Workforce Partnership. Ms. Sterling holds a J. D.B.S. in Communications Law and has served as a director on multiple public and private company boards and as a director for several Washington, DC-based philanthropic organizations. The Board appointed Mr. Rogers to serve as a directorBusiness Management from the University of Redlands. Ms. Sterling was nominated based on the entirety of hisher experience and skills, although the Board noted specifically noted his extensive communications expertise, particularly in strategy, mergersher wide-ranging technology experience, knowledge, and acquisitionsunderstanding of global organizational structures and licensing, and as well as his deep managerial and corporate development experience.
Paul Schaeffer. Mr. Schaeffer has been a member of our Board since August 2007. He is the Vice Chairman and Chief Operating Officer of Mandalay Entertainment Group, which he co-founded with Peter Guber in 1995. Along with Peter Guber, Mr. Schaeffer is responsible for all aspects of Mandalay Entertainment Group’s motion picture and television business, focusing primarily on the corporate and business operations. Prior to forming Mandalay Entertainment Group, Mr. Schaeffer was the Executive-Vice President of Sony Pictures Entertainment (“SPE”), overseeing the worldwide corporate operations for SPE including Worldwide Administration, Financial Affairs, Human Resources, Corporate Affairs, Legal Affairs and Corporate Communications. Mr. Schaeffer is a member of the Academy of Motion Pictures, Arts, & Sciences. A veteran of 20 years of private law practice, Mr. Schaeffer joined SPE from Armstrong, Hirsch and Levine, where he was a senior partner working with corporate entertainment clients. He also spent time as an accountant with Arthur Young & Company in Philadelphia. He graduated from the University of Pennsylvania Law School and received his accounting degree from Pennsylvania State University. The Company considered Mr. Schaeffer to be a valuable resource when it selected him as a director based on his having served for more than five years as the Chairman of the Finance Committee, and a member of the Board of Trustees of Children’s Hospital Los Angeles, where he also served as chairman of its Audit Committee, and member of its Compensation Committee and Executive Committee for more than five years.
human capital management.
Required Vote
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR ” EACH OF THE ABOVE NAMED DIRECTOR NOMINEES.
| THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “ FOR “ EACH OF THE DIRECTOR NOMINEES. | | |
Each committee has
served.
Audit Committee | | | Compensation and Human Capital Management Committee | | | Nominating and Corporate Governance | |
Robert Deutschman* | | | Jeffrey Karish** | | Mohan S. Gyani** | | |
| | Mohan S. Gyani | | Robert Deutschman | | ||
| Michelle Sterling | | | Michelle Sterling | |
The charter of our Audit Committee is available on our website at
https://digitalturbine.com/ under “Company — Investors — Corporate Governance — Governance Documents”.directors.
digitalturbine.com/
under “Company — Investors — Corporate Governance — Governance Documents”.digitalturbine.com/
under “Company — Investors — Corporate Governance — Governance Documents”.Stockholder Nominations and Bylaw Procedures
The
To nominate a personrecommendations for electionother candidates. Our Bylaws require the notice of director nomination to our Board, ainclude certain specified information regarding the nominating stockholder must set forth all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934. Such notice must also contain information about the stockholder making the nomination and the beneficial owner, if any, on behalf of whom the nomination is made, including name and address, class and number of shares owned, and representations regarding the intention to make such a nomination and to solicit proxies in support of it. We may require any proposed nominee to furnish information concerning his or her eligibility to serve as an independent director or that could be material to a reasonable stockholder’s understanding of the independence of the nominee.
Deadlines to Submit Nominations
Stockholders wishing to recommend director candidates must follow the prior notice requirements as described under "2019 Stockholder Proposals" below. Stockholder nominations must be addressed to Corporate Secretary, Digital Turbine, Inc., 110 San Antonio Street, Suite #160, Austin, TX 78701.
warrant otherwise).
We maintain contact information for stockholders, both telephone and email, on our website (http://www.digitalturbine.com) under the heading “Investor Info” where
the specific board member.
NAME | | AGE | |||||
| |||||||
Barrett Garrison | | 45 | | | Executive Vice President, Chief Financial Officer | | |
Christine Collins | | | 51 | | | Chief Technology Officer | |
David Wesch | | 34 | | Chief Accounting Officer and Controller | |
25
th percentile.2021.
Our Compensation Committee may however increase base salaries of our executive officers from time to time in its discretion based on its assessment of market compensation, individual performance, retention, assuming new or additional responsibilities, and other factors our Compensation Committee deems relevant.
full allowable discretionary component.
Wesch annual cash incentive bonuses of $201,000 and $51,750, respectively.
Such stock options vest over four years, with one-fourth vesting on the first anniversary of the grant date (June 1, 2022) and the balance vesting proportionately each month during the remaining three years beginning on July 1, 2022 through June 1, 2025.
We believe that the benefits and perquisites we provide to our named executive officers are within competitive practice and customary for executives in keysimilar positions at comparable companies. Such benefits and perquisites serve our objective of offering competitive compensation that allows us to continue to attract, retain and motivate highly talented people to these critical positions, ultimately providing a substantial benefit to our stockholders.
Impact
Deduction of Executive Compensation
Section 162(m) federal tax deduction limitation.
July 29, 2021 | | | Members of the Compensation Committee | | |
| |||||
| | | Jeffrey Karish (Chairman) | ||
Mohan S. Gyani | |||||
Michelle Sterling |
Position(1) | Fiscal Year Ended March 31, | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards (2) ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
William G. Stone III (3) | 2017 | 500,000 | 100,000 | - | 193,687 | 14,772 | 808,459 | |||||||||||||||||||||
Chief Executive Officer | 2016 | 500,000 | - | - | 213,500 | 2,541 | 716,041 | |||||||||||||||||||||
2015 | 424,375 | 188,000 | - | 1,029,500 | 25,625 | 1,667,500 | ||||||||||||||||||||||
Barrett Garrison (4) | 2017 | 167,115 | - | - | 497,420 | 21,895 | 686,430 | |||||||||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||||||||||||||||
David Wesch (5) | 2017 | 142,500 | - | - | 59,354 | 4,957 | 206,811 | |||||||||||||||||||||
Acting Chief Accounting Officer | ||||||||||||||||||||||||||||
Andrew Schleimer (6) | 2017 | 183,489 | - | - | - | 33,318 | 216,807 | |||||||||||||||||||||
Former Executive Vice President and Chief Financial Officer | 2016 | 341,667 | 113,173 | - | 128,100 | 2,667 | 585,607 | |||||||||||||||||||||
2015 | 219,423 | 137,500 | - | 1,137,000 | 25,652 | 1,519,575 |
Position | | | Fiscal Year Ended March 31, | | | Salary ($) | | | Bonus ($) | | | Non-Equity Incentive Plan Compensation | | | Stock Awards ($)(1) | | | Option Awards ($)(1) | | | All Other Compensation ($) | | | Total ($) | | ||||||||||||||||||||||||
William G. Stone III(2) | | | | | 2021 | | | | | | 550,000 | | | | | | 165,000 | | | | | | 572,200 | | | | | | 500,000 | | | | | | 485,294 | | | | | | 25,376 | | | | | | 2,297,870 | | |
Chief Executive Officer | | | | | 2020 | | | | | | 550,000 | | | | | | 63,300 | | | | | | 237,800 | | | | | | 250,000 | | | | | | 330,924 | | | | | | 14,073 | | | | | | 1,446,097 | | |
| | | | | 2019 | | | | | | 500,000 | | | | | | — | | | | | | 222,700 | | | | | | 250,000 | | | | | | — | | | | | | 7,893 | | | | | | 980,593 | | |
Barrett Garrison(3) | | | | | 2021 | | | | | | 350,000 | | | | | | 70,000 | | | | | | 242,700 | | | | | | 200,000 | | | | | | 194,118 | | | | | | 24,273 | | | | | | 1,081,091 | | |
Executive Vice President | | | | | 2020 | | | | | | 335,000 | | | | | | 38,600 | | | | | | 144,900 | | | | | | 162,500 | | | | | | 165,462 | | | | | | 13,071 | | | | | | 859,433 | | |
and Chief Financial Officer | | | | | 2019 | | | | | | 325,000 | | | | | | — | | | | | | 144,800 | | | | | | 150,000 | | | | | | — | | | | | | 15,402 | | | | | | 635,202 | | |
Christine Collins(4) | | | | | 2021 | | | | | | 300,000 | | | | | | 201,000 | | | | | | — | | | | | | — | | | | | | 246,000 | | | | | | 13,078 | | | | | | 760,078 | | |
Chief Technology Officer | | | | | 2020 | | | | | | 300,000 | | | | | | 150,000 | | | | | | — | | | | | | — | | | | | | 228,438 | | | | | | 11,073 | | | | | | 689,511 | | |
| | | | | 2019 | | | | | | 275,000 | | | | | | 125,000 | | | | | | — | | | | | | — | | | | | | 100,448 | | | | | | 10,673 | | | | | | 511,121 | | |
David Wesch(5) | | | | | 2021 | | | | | | 150,000 | | | | | | 51,750 | | | | | | — | | | | | | — | | | | | | 57,000 | | | | | | 5,448 | | | | | | 264,198 | | |
Chief Accounting Officer | | | | | 2020 | | | | | | 150,000 | | | | | | 34,500 | | | | | | — | | | | | | — | | | | | | 57,110 | | | | | | 2,784 | | | | | | 244,394 | | |
| | | | | 2019 | | | | | | 150,000 | | | | | | 24,000 | | | | | | — | | | | | | — | | | | | | 40,179 | | | | | | 2,097 | | | | | | 216,276 | | |
CEO Amended Employment Agreement Amendment. On May 26, 2016, we entered into an amendment to the Stone Employment Agreement, which extendsextended the term of the Stone Employment Agreement until March 31, 2018. Mr. Stone received a one-time $100,000 signing bonus and is eligible for a performance bonus opportunities based on the following criteria:
Achievement of targets will be determined promptly after the Company's annual financial statements for the fiscal year for the applicable period have been publicly issued and certified by the Company's auditors. Any interpretative issues in reconciling adjusted EBITDA or a public earnings measure to audited numbers (a) be resolved as much as possible based on the Company's publicly filed reconciliations of the same and (b) as to any other questions will be determined in the reasonable discretion of the Compensation Committee after good faith discussion with Mr. Stone. Bonus targets that have not been achieved to the level required by the above criteria will not entitle Mr. Stone to a pro-rated bonus.
terms of the annual incentive and long term incentive plans, see the discussion under “Compensation Discussion and Analysis” in this Proxy Statement.
Forpayments for termination by the salary component,Company without cause or by Mr. Garrison receives an annual salaryfor good reason and changes the duration of $300,000. For the bonus component,severance payments to Mr. Garrison is eligible to receive an annual performancein connection with such types of terminations following a change of control.
For the equity component, Mr. Garrison was awarded stock options on September 12, 2016,Garrison’s severance arrangement under the Equity Incentive Plan to purchase 450,000 shares of the Company's common stock at the closing price on the Start Date. The options vest over a three year term as follows: 150,000 options vested on the first anniversary of his start date and 12,500 options currently vest on a monthly basis over the following two years (three year total vesting). In the event of a change of control, all unvested options will vest immediately. A change of control means the sale of all or substantially all of the assets of the Company, a merger or reorganization in which the Company’s equity holders own less than 50% of the voting power after such transaction, or upon the sale of equity securities representing 50% or more of the voting power of or economic interest in the Company.
Also pursuant to the Garrison Employment Agreement, the Company reimbursed Mr. Garrison $15,461 for expenses incurred in relocating his principal personal residence to Austin, Texas. The Garrison Employment Agreement also contains customary provisions regarding intellectual property, confidentiality, and non-solicitation and indemnification.
In the event Mr. Garrison is terminated without cause or if he were to voluntarily resign for good reason, each as defined below underemployment agreement, see “Termination Provisions &and Potential Payments Upon Termination or Change of Control,” he would be entitled to receive his salaryControl” in this Proxy Statement.
2021
Name | Grant Date | Option Awards: Number of Shares underlying options (#)(1) | Exercise price of option awards ($/Share) | Grant date Fair Value of Stock & Option Awards ($)(1) | ||||||||||
William G. Stone III | 2/2/2017 | 247,500 | (2) | 0.71 | 111,687 | |||||||||
Chief Executive Officer | 5/26/2016 | 100,000 | (3) | 1.06 | 82,300 | |||||||||
Barrett Garrison | 2/2/2017 | 135,000 | (4) | 0.71 | 60,920 | |||||||||
Executive Vice President and Chief Financial Officer | 9/12/2016 | 450,000 | (5) | 1.37 | 436,500 | |||||||||
David Wesch | 2/2/2017 | 36,675 | (6) | 0.71 | 16,550 | |||||||||
Acting Chief Accounting Officer | 1/10/2017 | 20,000 | (7) | 0.70 | 8,892 | |||||||||
11/2/2016 | 25,000 | (8) | 0.65 | 10,212 | ||||||||||
| 6/9/2016 | 30,000 | (9) | 1.04 | 23,550 |
| | | | | | | | | Estimated future payouts under non-equity incentive plan awards | | | Estimated future payouts under equity incentive plan awards | | | All other stock awards: Number of shares of stock or units (#) | | | Option Awards: Number of Shares Underlying Options (#)(1) | | | Exercise Price of Option Awards ($/Share) | | | Grant date Fair Value of Stock & Option Awards ($)(1) | | ||||||||||||||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | |||||||||||||||||||||||||||||||||||||||||||||
William G. Stone III | | | | | 6/1/2020 | | | | | | 165,000 | | | | | | 330,000(7) | | | | | | 660,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Chief Executive Officer | | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | 18,882 | | | | | | 37,764(5) | | | | | | 75,528 | | | | | | — | | | | | | — | | | | | | — | | | | | | 250,000 | | |
| | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 37,764(6) | | | | | | — | | | | | | — | | | | | | 250,000 | | |
| | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 142,315(2) | | | | | | 6.62 | | | | | | 485,294 | | |
Barrett Garrison | | | | | 6/1/2020 | | | | | | 70,000 | | | | | | 140,000(7) | | | | | | 280,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Executive Vice President and | | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,553 | | | | | | 15,106(5) | | | | | | 30,212 | | | | | | — | | | | | | — | | | | | | — | | | | | | 100,000 | | |
Chief Financial Officer | | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,106(6) | | | | | | — | | | | | | — | | | | | | 100,000 | | |
| | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 56,926(2) | | | | | | 6.62 | | | | | | 194,118 | | |
Christine Collins | | | | | 4/17/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 90,441(3) | | | | | | 5.12 | | | | | | 246,000 | | |
Chief Technology Officer | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
David Wesch | | | | | 4/17/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,956(4) | | | | | | 5.12 | | | | | | 57,000 | | |
Chief Accounting Officer | | | | | | | | | | | | |
2021
Option Awards | ||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||||||
William G. Stone III(1) | 2/2/2017 | - | 247,500 | 0.71 | 2/2/2027 | |||||||||||
Chief Executive Officer | 5/26/2016 | - | 100,000 | 1.06 | 5/26/2026 | |||||||||||
12/9/2015 | - | 175,000 | 1.43 | 12/9/2025 | ||||||||||||
9/10/2014 | 31,250 | 18,750 | 5.89 | 9/10/2024 | ||||||||||||
7/8/2014 | 133,333 | 66,667 | 4.11 | 7/8/2024 | ||||||||||||
11/25/2013 | 300,000 | - | 2.54 | 11/25/2023 | ||||||||||||
Barrett Garrison(2) | 2/2/2017 | - | 135,000 | 0.71 | 2/2/2027 | |||||||||||
Executive Vice President and Chief Financial Officer | 9/12/2016 | - | 450,000 | 1.37 | 9/12/2026 | |||||||||||
David Wesch(3) | 2/2/2017 | - | 36,675 | 0.71 | 2/2/2027 | |||||||||||
Acting Chief Accounting Officer | 1/10/2017 | 1,110 | 18,890 | 0.70 | 1/10/2027 | |||||||||||
11/2/2016 | 2,778 | 22,222 | 0.65 | 11/2/2026 | ||||||||||||
6/9/2016 | 7,500 | 22,500 | 1.04 | 6/9/2026 | ||||||||||||
12/9/2015 | - | 12,250 | 1.43 | 12/9/2025 | ||||||||||||
8/3/2015 | 5,278 | 4,722 | 2.56 | 8/3/2025 | ||||||||||||
5/29/2015 | 15,278 | 9,722 | 4.18 | 5/29/2025 |
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | 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(5) ($) | | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested | | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested(5) ($) | | |||||||||||||||||||||||||||
William G. Stone III(1) | | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 37,764 | | | | | | 3,034,715 | | | | | | — | | | | | | — | | |
Chief Executive Officer | | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 37,764 | | | | | | 3,034,715 | | |
| | | | | 6/1/2020 | | | | | | — | | | | | | 142,315 | | | | | | 6.62 | | | | | | 6/1/2030 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 6/1/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 13,815 | | | | | | 1,110,173 | | | | | | — | | | | | | — | | |
| | | | | 6/1/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 33,156 | | | | | | 2,664,416 | | |
| | | | | 6/1/2019 | | | | | | 87,503 | | | | | | 62,497 | | | | | | 3.77 | | | | | | 6/1/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 6/10/2018 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,050 | | | | | | 486,178 | | | | | | — | | | | | | — | | |
| | | | | 6/10/2018 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 72,675 | | | | | | 5,840,163 | | |
| | | | | 2/2/2017 | | | | | | 247,500 | | | | | | — | | | | | | 0.71 | | | | | | 2/2/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 5/26/2016 | | | | | | 100,000 | | | | | | — | | | | | | 1.06 | | | | | | 5/26/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 12/9/2015 | | | | | | 175,000 | | | | | | — | | | | | | 1.43 | | | | | | 12/9/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 9/10/2014 | | | | | | 50,000 | | | | | | — | | | | | | 5.89 | | | | | | 9/10/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 7/8/2014 | | | | | | 200,000 | | | | | | — | | | | | | 4.11 | | | | | | 7/8/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 11/25/2013 | | | | | | 300,000 | | | | | | — | | | | | | 2.54 | | | | | | 11/25/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Barrett Garrison(2) | | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,106 | | | | | | 1,213,918 | | | | | | — | | | | | | — | | |
Executive Vice President and | | | | | 6/1/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,106 | | | | | | 1,213,918 | | |
Chief Financial Officer | | | | | 6/1/2020 | | | | | | — | | | | | | 56,926 | | | | | | 6.62 | | | | | | 6/1/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | 6/1/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,977 | | | | | | 721,392 | | | | | | — | | | | | | — | | |
| | | | | 6/1/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,552 | | | | | | 1,731,919 | | |
| | | | | 6/1/2019 | | | | | | 43,747 | | | | | | 31,253 | | | | | | 3.77 | | | | | | 6/1/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 6/10/2018 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,639 | | | | | | 292,430 | | | | | | — | | | | | | — | | |
| | | | | 6/10/2018 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 43,605 | | | | | | 3,504,098 | | |
| | | | | 8/4/2017 | | | | | | 100,000 | | | | | | — | | | | | | 1.09 | | | | | | 8/4/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 2/2/2017 | | | | | | 135,000 | | | | | | — | | | | | | 0.71 | | | | | | 2/2/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 9/12/2016 | | | | | | 450,000 | | | | | | — | | | | | | 1.37 | | | | | | 9/12/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Christine Collins(3) | | | | | 4/17/20 | | | | | | — | | | | | | 90,441 | | | | | | 5.12 | | | | | | 4/17/2030 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Chief Technology Officer | | | | | 5/21/2019 | | | | | | 61,094 | | | | | | 38,906 | | | | | | 3.88 | | | | | | 5/21/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 6/7/2018 | | | | | | 74,418 | | | | | | 5,582 | | | | | | 1.68 | | | | | | 6/7/2028 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 3/19/2018 | | | | | | 250,000 | | | | | | — | | | | | | 2.38 | | | | | | 3/19/2028 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
David Wesch(4) | | | | | 4/17/2020 | | | | | | — | | | | | | 20,956 | | | | | | 5.12 | | | | | | 4/17/2030 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Chief Accounting Officer | | | | | 5/21/2019 | | | | | | 15,268 | | | | | | 9,732 | | | | | | 3.88 | | | | | | 5/21/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 6/7/2018 | | | | | | 36,663 | | | | | | 3,337 | | | | | | 1.68 | | | | | | 6/7/2028 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 8/4/2017 | | | | | | 50,000 | | | | | | — | | | | | | 1.09 | | | | | | 8/4/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 2/2/2017 | | | | | | 11,675 | | | | | | — | | | | | | 0.71 | | | | | | 2/2/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 1/10/2017 | | | | | | 20,000 | | | | | | — | | | | | | 0.70 | | | | | | 1/10/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 11/2/2016 | | | | | | 25,000 | | | | | | — | | | | | | 0.65 | | | | | | 11/2/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of shares or units of stock that have not vested (#) | | | Market value of shares or units of stock that have not vested(5) ($) | | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested | | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested(5) ($) | | |||||||||||||||||||||||||||
| | | | | 6/9/2016 | | | | | | 30,000 | | | | | | — | | | | | | 1.04 | | | | | | 6/9/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 12/9/2015 | | | | | | 12,250 | | | | | | — | | | | | | 1.43 | | | | | | 12/9/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 8/3/2015 | | | | | | 10,000 | | | | | | — | | | | | | 2.56 | | | | | | 8/3/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | 5/29/2015 | | | | | | 25,000 | | | | | | — | | | | | | 4.18 | | | | | | 5/29/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
None2021
Name | | | Option Awards | | | Stock Awards | | ||||||||||||||||||
| Number of Shares Acquired on Exercises (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(2) | | ||||||||||||||
William G. Stone III | | | | | — | | | | | | — | | | | | �� | 43,569 | | | | | | 1,246,842 | | |
Chief Executive Officer | | | | | | ||||||||||||||||||||
Barrett Garrison | | | | | — | | | | | | — | | | | | | 27,107 | | | | | | 768,848 | | |
Executive Vice President and Chief Financial Officer | | | | | | ||||||||||||||||||||
Christine Collins | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Chief Technology Officer | | | | | | ||||||||||||||||||||
David Wesch | | | | | 25,000 | | | | | | 2,257,000 | | | | | | — | | | | | | — | | |
Chief Accounting Officer | | | | | |
on the exercise date and the exercise price.
Payments Made Upon Termination by Us Without Cause or by the Officer for Good Reason
plan.
Name | Base Salary ($) (1) | Annual Bonus ($) (2) | Health Plan Payments ($) (3) | Accelerated Vesting of Options/Restricted Stock (4) | ||||||||||||
William G. Stone III | 500,000 | - | 14,772 | 56,925 | ||||||||||||
Chief Executive Officer | ||||||||||||||||
Barrett Garrison | 435,000 | - | 18,445 | 31,050 | ||||||||||||
Executive Vice President, Chief Financial Officer |
Name | | | Base Salary ($)(1) | | | Annual Bonus ($)(2) | | | Health Plan Payments ($)(3) | | | Accelerated Vesting of Options/ Restricted Stock(4)(5) ($) | | ||||||||||||
William G. Stone III | | | | | 550,000 | | | | | | 737,200 | | | | | | 16,139 | | | | | | 8,627,932 | | |
Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | |
Barrett Garrison | | | | | 350,000 | | | | | | 312,700 | | | | | | 15,889 | | | | | | 5,063,350 | | |
Executive Vice President, Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | | Base Salary ($)(1) | | | Annual Bonus ($)(2) | | | Health Plan Payments ($)(3) | | | Accelerated Vesting of Options/ Restricted Stock(4)(5)(6) ($) | | ||||||||||||
William G. Stone III | | | | | 825,000 | | | | | | 737,200 | | | | | | 24,208 | | | | | | 31,451,314 | | |
Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | |
Barrett Garrison | | | | | 525,000 | | | | | | 312,700 | | | | | | 23,833 | | | | | | 15,269,065 | | |
Executive Vice President, Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | |
Christine Collins | | | | | — | | | | | | — | | | | | | — | | | | | | 10,219,503 | | |
Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | | | | |
David Wesch | | | | | — | | | | | | — | | | | | | — | | | | | | 2,583,588 | | |
Chief Accounting Officer | | | | | | | | | | | | | | | | | | | | | | | | | |
$80.36.
Up
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
Robert Deutschman(2) | 79,500 | 87,000 | 166,500 | |||||||||
Chris Rogers(3) | 53,000 | 58,000 | 111,000 | |||||||||
Craig Forman(4) | 43,725 | 58,000 | 101,725 | |||||||||
Jeffrey Karish(5) | 48,000 | 55,500 | 103,500 | |||||||||
Mohan S. Gyani(6) | 48,000 | 48,000 | 96,000 | |||||||||
Paul Schaeffer(7) | 53,000 | 58,000 | 111,000 |
Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total ($) | | |||||||||
Robert Deutschman(2) | | | | | 87,250 | | | | | | 147,250 | | | | | | 234,500 | | |
Roy Chestnutt(3) | | | | | 55,000 | | | | | | 95,000 | | | | | | 150,000 | | |
Holly Hess Groos(4) | | | | | — | | | | | | — | | | | | | — | | |
Mohan S. Gyani(5) | | | | | 57,375 | | | | | | 97,375 | | | | | | 154,750 | | |
Jeffrey Karish(6) | | | | | 55,750 | | | | | | 95,750 | | | | | | 151,500 | | |
Christopher Rogers(7) | | | | | 28,938 | | | | | | 48,938 | | | | | | 77,876 | | |
Michelle Sterling(8) | | | | | 52,875 | | | | | | 92,875 | | | | | | 145,750 | | |
Annual retainers: | | | Chair | | | Member | | ||||||
Board of Directors | | | | $ | 60,000 | | | | | $ | 40,000 | | |
Audit Committee | | | | $ | 20,000 | | | | | $ | 10,000 | | |
Compensation Committee | | | | $ | 7,500 | | | | | $ | 3,750 | | |
Governance Committee | | | | $ | 5,000 | | | | | $ | 2,500 | | |
Annual equity grants: | | | | | | | | | | | | | |
Restricted stock value | | | | $ | 90,000 | | | | | $ | 60,000 | | |
Annual retainers: | | | Chair | | | Member | | ||||||
Board of Directors | | | | $ | 75,000 | | | | | $ | 50,000 | | |
Audit Committee | | | | $ | 20,000 | | | | | $ | 10,000 | | |
Compensation Committee | | | | $ | 11,500 | | | | | $ | 5,750 | | |
Governance Committee | | | | $ | 9,000 | | | | | $ | 4,500 | | |
Annual equity grants: | | | | | | | | | | | | | |
Restricted stock value | | | | $ | 135,000 | | | | | $ | 90,000 | | |
Annual retainers: | | | Chair | | | Member | | ||||||
Board of Directors | | | | $ | 75,000 | | | | | $ | 50,000 | | |
Audit Committee | | | | $ | 20,000 | | | | | $ | 10,000 | | |
Compensation Committee | | | | $ | 14,000 | | | | | $ | 6,000 | | |
Governance Committee | | | | $ | 9,000 | | | | | $ | 4,500 | | |
Annual equity grants: | | | | | | | | | | | | | |
Restricted stock value | | | | $ | 275,000 | | | | | $ | 185,000 | | |
The Company’s compensation program for the non-employee
The director compensation program also provides for an additional annual cash retainer of $5,000 (payable in quarterly installments) and annual grant of restricted common stock of the Company under the Equity Incentive Plan having a value of $5,000 on the grant date (with quarterly vesting) for non-employee members of the Audit Committee of the Board (other than the Chair) and an additional annual cash retainer of $7,500 (payable in quarterly installments) and annual grant of restricted common stock of the Company under the Equity Incentive Plan having a value of $7,500 on the grant date (with quarterly vesting) for a non-employee Chairman of the Audit Committee. The Chairman of the Board receives an additional cash retainer of $24,000 (payable in equal quarterly installments) plus an additional annual grant of restricted common stock of the Company under the Equity Incentive Plan having a value of $24,000. Effective August 1, 2016, the Chairman of the Compensation Committee receives an additional annual grant of restricted common stock of the Company un the Equity Incentive Plan having a value of $7,500.
In fiscal 2017, the Company issued an annual grant of restricted Company common stock under the 2011 Plan for the service period from August 1, 2015 to July 31, 2016 having a value of $5,000 on the grant date (with quarterly vesting) for non-employee members of the Audit Committee of the Board (other than the Chair) and an annual grant of restricted Company common stock under the 2011 Plan for the service period from August 1, 2015 to July 31, 2016 having a value of $7,500 on the grant date (with quarterly vesting) for a non-employee Chairman of the Audit Committee.
Common Stock | ||||||||
Name and Address of Beneficial Owner(1) | Number of Shares (2) | Percentage of Class | ||||||
Columbus Capital Management, L.L.C.(3) 350 California Street, 22nd Floor, San Francisco, CA 94104 | 5,967,401 | 8.3 | % | |||||
Trident Capital Management-VII, L.L.C.(4) 505 Hamilton Avenue, Suite 200 Palo Alto, CA 94301 | 5,649,864 | 7.8 | % | |||||
Venrock Management VI, LLC(5) 3340 Hillview Avenue Palo Alto, CA 94304 | 4,785,160 | 6.6 | % | |||||
Bruce Grossman(6) c/o Dillon Hill Capital LLC 200 Business Park Drive, Suite 306 Armonk, NY 10504 | 3,708,472 | 5.1 | % | |||||
William Stone III | 1,583,230 | 2.2 | % | |||||
Robert Deutschman(7) | 763,203 | 1.1 | % | |||||
Paul Schaeffer(8) | 666,240 | * | ||||||
Christopher Rogers | 290,049 | * | ||||||
Jeffrey Karish | 271,261 | * | ||||||
Mohan S. Gyani | 269,154 | * | ||||||
Barrett Garrison | 350,000 | * | ||||||
David Wesch | 68,376 | * | ||||||
All Directors and Executive Officers as a Group (8 individuals)(9) | 4,261,513 | 5.8 | % |
Name and Address of Beneficial Owner(1) | | | Common Stock | | |||||||||
| Number of Shares(2) | | | Percentage of Class | | ||||||||
FMR LLC(3) | | | | | 9,616,335 | | | | | | 10.0% | | |
245 Summer Street | | | | ||||||||||
Boston, MA 02210 | | | | ||||||||||
Blackrock, Inc.(4) | | | | | 6,257,011 | | | | | | 6.5% | | |
55 East 52nd Street | | | | ||||||||||
New York, NY 10055 | | | | ||||||||||
The Vanguard Group(5) | | | | | 6,073,744 | | | | | | 6.3% | | |
100 Vanguard Blvd. | | | | ||||||||||
Malvern, PA 19355 | | | | ||||||||||
Tennor Holding B.V.(6) | | | | | 5,757,299 | | | | | | 6.0% | | |
Schiphol Boulevard 127, G4.08 | | | | ||||||||||
1118 BG Schiphol, The Netherlands | | | | ||||||||||
Venrock Management VI, LLC(7) | | | | | 4,785,160 | | | | | | 5.0% | | |
3340 Hillview Avenue | | | | ||||||||||
Palo Alto, CA 94304 | | | | ||||||||||
William Stone III(8) | | | | | 2,265,462 | | | | | | 2.3% | | |
Robert Deutschman(9) | | | | | 718,799 | | | | | | * | | |
Jeffrey Karish | | | | | 308,600 | | | | | | * | | |
Mohan S. Gyani(10) | | | | | 448,925 | | | | | | * | | |
Roy H. Chestnutt | | | | | 104,056 | | | | | | * | | |
Michelle Sterling | | | | | 32,530 | | | | | | * | | |
Barrett Garrison(11) | | | | | 1,055,838 | | | | | | 1.1% | | |
Christine Collins(12) | | | | | 447,708 | | | | | | * | | |
David Wesch(13) | | | | | 234,235 | | | | | | * | | |
All Directors and Executive Officers as a Group (10 individuals)(14) | | | | | 5,551,077 | | | | | | 5.6% | | |
| | THE BOARD OF DIRECTORS RECOMMENDS AN ADVISORY VOTE “FOR |
| |
PROPOSAL 3
APPROVAL OF THE ISSUANCE OF SHARES OF OUR COMMON STOCK ISSUABLE UPON THE CONVERSION OF 8.75% CONVERTIBLE SENIOR NOTES DUE 2020 AND EXERCISE OF WARRANTS ISSUED IN A PRIVATE PLACEMENT TRANSACTION IN SEPTEMBER 2016, AS AMENDED AND SUPPLEMENTED IN JANUARY AND MAY 2017, IN ACCORDANCE WITH NASDAQ MARKETPLACE RULES 5635(B) AND 5635(D)
General
We are asking stockholders to approve the issuance of shares of our common stock that are issuable upon the conversion of 8.75% Convertible Senior Notes due 2020 (the “Notes”) pursuant to the terms thereof and upon the exercise of warrants, which were issued in a private placement transaction in September 2016, and amended and supplemented in January and May 2017, in accordance with NASDAQ Marketplace Rules 5635(b) and 5635(d). The Notes and Warrants were materially amended and supplemented in May 2017 as described below, which necessitates that we seek this stockholder approval.
The September 2016 Private Placement Transaction
Initial Purchaser Agreement
The offer and sale of the Notes and the accompanying warrants were made pursuant to an Initial Purchaser Agreement, dated September 23, 2016 (the “Purchase Agreement”), among the Company, certain subsidiary guarantors of the Company and BTIG, LLC, as initial purchaser. The Company sold the Notes to the initial purchaser at a purchase price of 92.75% of the principal amount thereof. The initial purchaser also received an additional 250,000 warrants (the “Initial Purchaser Warrants”) on the same terms as the warrants issued with the Notes (as detailed below under “Warrant Agreement”) and has the right to receive 2.5% of any cash consideration received by the Company in connection with a future exercise of any of the warrants issued with the Notes.
The initial purchaser offered the Notes at a price equal to 100% of the principal amount thereof and the accompanying warrants to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to a limited number of institutional accredited investors within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act.
Indenture and Convertible Notes
The Notes were issued under an Indenture, dated as of September 28, 2016 (the “Initial Indenture”), as amended and supplemented by that certain first supplemental indenture dated as of January 12, 2017 (the "First Supplemental Indenture"), and that certain second supplemental indenture dated as of May 23, 2017 (the "Second Supplemental Indenture" and with the Indenture and the First Supplemental Indenture, the "Indenture"), between the Company, certain guarantors and US Bank National Association, as trustee. The Notes are senior unsecured obligations of the Company, and bear interest at a rate of 8.75% per year, payable semiannually in arrears on September 15th and March 15th of each year, beginning on March 15, 2017. The Notes are unconditionally guaranteed by certain of the Company’s wholly-owned domestic and foreign subsidiaries, and will mature on September 23, 2020, unless converted, repurchased or redeemed in accordance with their terms prior to such date.
The Notes are convertible by the holders at their option at any time prior to the close of business on the business day immediately preceding the stated maturity date, and upon conversion, the holders will receive shares of the Company’s common stock. The initial conversion rate for the Notes is 733.14 shares per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $1.364 per share of common stock. The conversion rate and the conversion price is subject to adjustment in certain events as outlined in the Indenture.
With respect to any conversion prior to September 23, 2019, in addition to the shares deliverable upon conversion, holders of the Notes will be entitled to receive a payment equal to the remaining scheduled payments of interest that would have been made on the Notes being converted from the date of conversion until September 23, 2019 (an “Early Conversion Payment”). We may pay the Early Conversion Payment in cash or, subject to certain equity-related conditions set forth in the Indenture, in shares of our common stock.
We may redeem the Notes, for cash, in whole or in part, at any time after September 23, 2018, at a redemption price equal to $1,000 per $1,000 principal amount of the Notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, plus an additional payment (payable in cash or stock) equivalent to the amount of, and subject to equivalent terms and conditions applicable for, an Early Conversion Payment had the Notes been converted on the date of redemption, if (1) the closing price of our common shares on the NASDAQ Capital Market has exceeded 200% of the conversion price then in effect (but disregarding the effect on such price from certain anti-dilution adjustments) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending within the five trading days immediately preceding the date on which we provide the redemption notice, (2) for the 15 consecutive trading days following the last trading day on which the closing price of our common shares was equal to or greater than 200% of the conversion price in effect (but disregarding the effect on such price from certain anti-dilution adjustments) on such trading day for the purpose of the foregoing clause, the closing price of our common shares remains equal to or greater than 150% of the conversion price in effect (but disregarding the effect on such price from certain anti-dilution adjustments) on the given trading day and (3) we are in compliance with certain other equity-related conditions as set forth in the Indenture.
If we undergo a fundamental change, as described in the Indenture, holders may require us to purchase the Notes in whole or in part for cash at a price equal to 120% of the principal amount of the Notes to be purchased plus any accrued and unpaid interest, including additional interest, if any, to, but excluding, the repurchase date. Conversions that occur in connection with a fundamental changes may entitle the holder to receive an increased number of shares of common stock issuable upon such conversion, depending on the date of such fundamental change and the valuation of the Company’s common stock related thereto.
Subject to limited exceptions, the Indenture prohibits us from incurring additional indebtedness at any time while the Notes remain outstanding.
Warrants
In addition to the 250,000 warrants issued to the initial purchaser, as described above, each purchaser of the Notes also received warrants to purchase 256.60 shares of the Company's common stock for each $1,000 in Notes purchased, or up to 4,105,600 warrants in aggregate (together with the Initial Purchaser Warrants, the “Warrants”). The Warrants were issued under a Warrant Agreement, dated as of September 28, 2016 (the “Intial Warrant Agreement”), as amended by that certain First Amendment to Warrant Agreement, dated as of May 23, 2017 (the "First Amendment" and with the Initial Warrant Agreement, the "Warrant Agreement"), between Digital Turbine, Inc. and US Bank National Association, as warrant agent.
The Warrants are exercisable at an initial exercise price of $1.364 per share and will expire on September 23, 2020. The exercise price is subject to adjustment in certain events as outlined in the Warrant Agreement.
In the event of a fundamental change, as set forth in the Warrant Agreement, the holders can elect to exercise their Warrants or to receive an amount of cash under a Black-Scholes calculation of the value of such Warrants.
Use of Proceeds
The net proceeds from the offering of the Notes and Warrants were approximately $14.3 million after payment of the estimated offering expenses and the initial purchaser’s discounts and commissions. We used approximately $11 million of the net proceeds from the offering to repay secured indebtedness, consisting of approximately $3 million to Silicon Valley Bank and $8 million to North Atlantic Capital, retiring both such debts in their entirety. The remaining net proceeds were provided for general corporate purposes.
Further Information
The terms of each of the Notes, the Purchase Agreement, the Indenture, the Warrant Agreement and the related agreements, as amended and supplemented, are complex and only briefly summarized above. This summary of the terms of the offering of the Notes and Warrants and related agreements is qualified in its entirety by reference to our Current Report on Form 8-K filed with the SEC on September 29, 2016, including the exhibits attached thereto, our Current Report on Form 8-K filed with the SEC on January 23, 2017, including the exhibits attached thereto, and our Current Report on Form 8-K filed with the SEC on May 24, 2017, including the exhibits attached thereto, all of which are incorporated herein by reference. You should read this summary together with such documents.
Purpose
Our common stock is listed on the NASDAQ Capital Market (“NASDAQ”) and trades under the ticker symbol APPS. The rules governing companies with securities listed on NASDAQ require stockholder approval in connection with a transaction other than a public offering involving the sale or issuance by the issuer of common stock (or securities convertible into or exchangeable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for a price that is less than the greater of book or market value of the stock on the date the issuer enters into a binding agreement for the issuance of such securities.
This requirement is set forth in NASDAQ Marketplace Rule 5635(d). Based on the initial conversion price and exercise price of $1.364 per share, the issuance of the shares of our common stock issuable upon conversion of the Notes, including any Early Conversion Payment, and exercise of the Warrants, as applicable, may be deemed to involve the issuance of securities convertible into more than 20% of our common stock at a discount to the market value of our common stock on the date of execution of the binding agreement to issue such securities. In addition, NASDAQ Marketplace Rule 5635(b) requires us to obtain stockholder approval prior to the issuance of securities which will result in a “change of control” of the Company. In this regard, a change of control refers to an issuance of securities that will result in any investor or group owning, or having the right to acquire, 20% or more of the Company’s outstanding shares of common stock or voting power and such ownership or voting power would be the largest ownership position.
We are required to seek this approval even though, pursuant to the terms of the Initial Indenture, we received approval at our 2017 annual meeting of stockholders held January 10, 2017, because we materially amended and supplemented the Notes and Warrants in January and May 2017, and under NASDAQ Marketplace Rules 5635((b), a new stockholder approval is required after any such material amendment and supplement. Therefore, pursuant to the terms of the Second Supplemental Indenture, we are again required to seek stockholder approval, prior to January 30, 2018 at an annual or special meeting, of the issuance of shares of common stock received pursuant to conversion of Notes and shares underlying Warrants. We are requesting in this Proposal 3 that our stockholders approve the issuance of the common stock issuable upon conversion of the Notes, including any Early Conversion Payment, and exercise of the Warrants, in accordance with NASDAQ Marketplace Rule 5635(d), and any resulting change of control, as defined in NASDAQ Marketplace Rule 5635(b), which may result from the issuance of the common stock. The issuance of the shares of common stock issuable upon conversion of the Notes, including any Early Conversion Payment, and exercise of the Warrants, are intended to be exempt from the registration requirements of the Securities Act pursuant to the Regulation D “safe harbor” provisions of the Securities Act.
Impact on Current Stockholders if this Proposal is Approved
If our stockholders approve this proposal, the issuance of shares of common stock upon conversion of the Notes, including any Early Payment Conversion, and exercise of the Warrants would not be subject to the issuance limitation cap set forth in NASDAQ Marketplace Rule 5635(b) and Rule 5635(d).
The issuance of shares of our common stock issuable upon conversion of the Notes, including the Early Payment Conversion, and exercise of the Warrants would have a dilutive effect on current stockholders who did not participate in the offering in that the percentage ownership of the Company held by such current stockholders would decline as a result of the issuance of the common stock upon conversion of the Notes, including any Early Payment Conversion, and exercise of the Warrants. This means also that our current stockholders who did not participate in the offering would own a smaller interest in us as a result of the offering and therefore have less ability to influence significant corporate decisions requiring stockholder approval. Issuance of our common stock upon conversion of the Notes and exercise of the Warrants could also have a dilutive effect on book value per share and any future earnings per share. Dilution of equity interests could also cause prevailing market prices for our common stock to decline.
The Notes are initially convertible into our common stock at $1.364 per share, subject to adjustment in certain events as outlined in the Indenture. In addition, we have the option, subject to the satisfaction of specified equity conditions, to make any required Early Conversion Payment of future interest upon conversion of the Notes by issuing shares of common stock in lieu of cash payments. The number of shares of our common stock potentially issuable upon conversion of the originally-issued $16 million in principal amount of Notes at the $1.364 initial conversion price amounted to 11,730,240 potential shares. This does not include the issuance of any shares of common stock that may be issued in connection with any Early Conversion Payment, in which case the number of shares that may potentially be issued would be a higher amount. The conversion was calculated on the aggregate principal amount rather than based upon each individual investor’s purchase. Plus, if all of the Warrants are exercised at the initial exercise price of $1.364 per share, the Company would also issue an aggregate of 4,355,600 shares of common stock. In September 2017, $6 million of convertible notes (out of the original $16 million in convertible notes issued) have been converted into shares of our common stock.
Due to potential adjustments to the number of shares of common stock issuable upon conversion of the Notes, including our option to pay the Early Conversion Payment in shares of common stock, and exercise of the Warrants, the exact magnitude of the dilutive effect of the shares of our common stock issuable upon conversion of the Notes, including any Early Conversion Payment, and exercise of the Warrants cannot be conclusively determined. However, the dilutive effect may be material to current stockholders of the company.
Effect on Current Stockholders if this Proposal is not Approved
If our stockholders do not approve this proposal, we will not meet certain equity conditions under the Notes required for our optional redemption of the Notes or payment of the Early Conversion Payment in shares of common stock at our option. If approval is not obtained, unless the equity conditions are waived by the required number of holders of such Notes pursuant to their terms, we will not be able to exercise such optional redemption right and the holders may not be able to receive shares of common stock as payment for any Early Conversion Payment.
In addition, we are required to seek stockholder approval of this proposal on or prior to January 30, 2018 and every year thereafter until we receive stockholder approval of this proposal. We are not seeking the approval of our stockholders to authorize our entry into the Purchase Agreement and related transaction documents, as we have already entered into the Purchase Agreement and related transaction documents, which are binding obligations on us. The failure of our stockholders to approve the proposal will not negate the existing terms of the documents relating to the private placement. The Notes and Warrants issued at the closing of the private placement will remain outstanding and the terms of the Notes and Warrants will remain binding obligations of the Company. If we do not receive stockholder approval, the holders are entitled to receive cash for the number of shares of common stock issuable upon conversion of the Notes or exercise of the Warrants to the extent we are unable to issue shares of our common stock to satisfy such conversion or exercise.
Board Recommendation
In reaching its determination to approve this proposal, the Board, with advice from our management and legal advisors, considered a number of factors, including:
In view of the variety of factors considered in connection with the evaluation of the offering of the Notes and Warrants, the issuance of shares of our common stock issuable upon the conversion of the Notes, including any Early Conversion Payment, and exercise of the Warrants and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise attempt to assign any relative weight to the various factors considered. In addition, in considering the various factors, individual members of the Board may have assigned different weights to different factors.
After evaluating these factors, and based upon their knowledge of our business, financial condition and prospects, potential financing alternatives (or lack thereof), and the views of our management, the Board concluded that the offering of the Notes and Warrants and the issuance of shares of our common stock issuable upon conversion of the Notes, including any Early Conversion Payment, and exercise of the Warrants is in our best interest and in the best interests of our stockholders, and recommends that all stockholders vote “FOR” the approval of this proposal.
Vote Required
To be approved, this proposal must receive a "For" vote from the holders of a majority of the votes cast of shares of common stock and Preferred Stock, voting together as a single class on an as-converted to common stock basis present at the Annual Meeting in person or by proxy. Abstentions will have no effect on the outcome for this proposal. Shares represented by executed proxies that do not indicate a vote "For," "Against" or "Abstain" will be voted by the proxy holders "For" the adoption of the resolution. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal. Broker non-votes will not be counted toward the vote total for this proposal and therefore will not affect the outcome of this proposal.
PROPOSAL NO. 4
3
2022
Year March 31, | Year March 31, | |||||||
Audit fees(1) | $ | 484,273 | $ | 332,978 | ||||
Audit related fees(2) | 98,120 | 68,149 | ||||||
Tax fees(3) | 34,326 | 45,611 | ||||||
All other fees(4) | - | - | ||||||
Total | $ | 616,719 | $ | 446,738 |
| | | Year Ended March 31, 2021 | | | Year Ended March 31, 2020 | | ||||||
Audit fees(1) | | | | $ | 1,427,500 | | | | | $ | — | | |
Audit related fees(2) | | | | | — | | | | | | — | | |
Tax fees(3) | | | | | — | | | | | | — | | |
All other fees(4) | | | | | — | | | | | | — | | |
Total | | | | $ | 1,427,500 | | | | | $ | — | | |
Policy on Pre-approval of Audit and Permissible Non-audit Services of Independent Auditors
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF SINGERLEWAK AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 2018.
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 2022. | | |
The functions of our Audit Committee (references in this section to “we” and “our” mean the Audit Committee) are primarily focused on three areas:
We operate under a written charter, which has been approved by the board of directors. The Company has made the Audit Committee charter available on its website at http://ir.digitalturbine.com/governance-docs.
Grant Thornton.
July 29, 2021 | | | Members of the Audit Committee | | |
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| | | | Robert Deutschman (Chairman) | |
| | | Roy H. Chestnutt | |
| | | Holly Hess Groos | |
COMPLIANCE WITH
REPORTS
4.
2019 STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for stockholder action consistent with regulations of the SEC. In order for stockholder proposalsstatement for the fiscal year 2019 annual meeting to be eligible for inclusion in our proxy statement, our Secretary must receive them at our principal offices not later than August 29, 2018. Such proposals should be submitted, in writing, to Digital Turbine, Inc., Attn: Corporate Secretary, 110 San Antonio Street, Suite #160, Austin, TX 78701.
Stockholders wishing to submit proposals for the fiscal year 2019Fiscal Year 2023 annual meeting of stockholders, outsidesuch proposal and supporting statements, if any, must be received by us at our principal executive office no later than April 6, 2022. Any such proposal must comply with the requirements of Rule 14a-8 may do so. Under Rule 14a-4 promulgated under the Exchange Act, if14a-8.
| | | | BY ORDER OF THE BOARD OF DIRECTORS | |
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| | | | /s/ William G. Stone III | |
William G. Stone III | | ||||
| | | | Chief Executive Officer | |
July 29, 2021
MATERIAL: The Notice of Meeting, Proxy Statement, Annual Report on Form 10-K, and Proxy Card are available at http://www.astproxyportal.com/ast/18238 Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 20730300000000001000 8 091421 PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x 1. TO ELECT SEVEN (7) DIRECTORS: 2. TO APPROVE, IN A NON-BINDING ADVISORY VOTE, THE FOR AGAINST ABSTAIN NOMINEES: COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS, COMMONLY REFERRED TO AS “SAY-ON-PAY.” FOR ALL NOMINEES O Robert Deutschman FOR AGAINST ABSTAIN O Roy H. Chestnutt 3. TO RATIFY THE SELECTION OF GRANT THORNTON LLP AS THE WITHHOLD AUTHORITY O Holly Hess Groos FOR ALL NOMINEES O Mohan Gyani COMPANY'S INDEPENDENT REGISTERED
DIGITAL TURBINE, INC.
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 19, 2018
SEPTEMBER 14, 2021 The undersigned stockholder(s) of DIGITAL TURBINE, INC., a Delaware corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated December 21, 2017,July 29, 2021, and hereby appoints each of William G. Stone III and Barrett Garrison, or either of them, as proxy and attorney-in-factattorney- in-fact with full power of substitution and revocation, on behalf and in the name of the undersigned, to represent the undersigned at the Annual Meeting of Stockholders of the Company to be held on Friday, January 19, 2018Tuesday, September 14, 2021 at 1010:00 a.m., local time, at the Company's headquarters of the Companylocated at 110 San Antonio Street, #160,Suite 160, Austin, TX 78701, and at any adjournment or postponementsadjournments thereof, and to vote all shares of capital stock that the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side.
[SEE REVERSE SIDE] CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE SIDE]
[BACK OF PROXY]
DETACH HERE
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Nominees:
Instructions: To withhold authority to vote for any individual nominee, mark the “For All Nominees Except” box and write that nominee’s name in the space provided above.
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As to any other matters that may properly come before the meeting or any adjournments thereof, the proxy holders are authorized to vote in accordance with their best judgment.
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both must sign.)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED (1) FOR THE ELECTION OF THE SEVEN (7) DIRECTOR NOMINEES; (2) FOR APPROVAL OF THE ADVISORY SAY-ON-PAY PROPOSAL; FOR APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF 8.75% CONVERTIBLE SENIOR NOTES DUE 2020 AND EXERCISE OF WARRANTS ISSUED IN A PRIVATE PLACEMENT TRANSACTION IN SEPTEMBER 2016, AS AMENDED AND SUPPLEMENTED IN JANUARY AND MAY 2017, IN ACCORDANCE WITH NASDAQ MARKETPLACE RULES 5635(B) AND 5635(D); AND(3) FOR RATIFICATION OF THE APPOINTMENT OF SINGERLEWAKGRANT THORNTON LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF DIGITAL TURBINE, INC. FOR FISCAL YEAR ENDING MARCH 31, 2018.2022. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY ON THE PROXY HOLDERS TO VOTE AS TO ANY OTHER MATTERS THAT MAY BE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING.