WASHINGTON, D.C. 20549
TECOGEN INC.
All stockholders are cordially invited to attend the Annual Meeting of Stockholders, or the Annual Meeting. Only stockholdersAttached to this notice is a Proxy Statement relating to the proposals to be considered at the Annual Meeting. The Board of record of the Company atDirectors has fixed the close of business on April 25, 2016 are15, 2019 (5:00 p.m., U.S. Eastern Time) as the record date, or the Record Date, for the determination of stockholders entitled to receive notice of and to vote at the Annual Meeting or at any adjournment or postponement thereof. A complete list of these stockholders will be open for the examination of any stockholder of record during ordinary business hours at the Company's principal executive offices located at 45 First Avenue, Waltham, Massachusetts, 02451 for a period of ten days prior to the Annual Meeting. The list will also be available for the examination of any stockholder present at the Annual Meeting.
Your vote is important. Your prompt response will also help reduce proxy costs and will help you avoid receiving follow-up telephone calls or mailings. Please vote as soon as possible. Also,The Company will be mailing the Company has electedproxy materials to take advantage of the Securities and Exchange Commission rules that allow the Company to furnishstockholders beginning on on about April 26, 2019. The proxy materials will also be available to you and other stockholders on the Internet.
TECOGEN INC.
WHY ARE YOU MAKING THESE MATERIALS AVAILABLE OVER THE INTERNET RATHER THAN MAILING THEM?
Under the "Notice and Access Rule" that the Securities and Exchange Commission, or the SEC, has adopted, we are furnishing proxy materials to our stockholders on the Internet rather than mailing printed copies of those materials to each stockholder. This will help us conserve natural resources and it will save postage, printing and processing costs. If you received the Notice of Internet Availability of Proxy Materials, or the Notice of Internet Availability, by mail, you will not receive a printed copy of our proxy materials unless you specifically request one. Instead, the Notice of Internet Availability will instruct you about how you may (1) access and review the Company's proxy materials on the Internet and (2) access your proxy card to vote on the Internet. We anticipate that we will mail the Notice of Internet Availability to our stockholders on or about May 13, 2016.April 25, 2019.
The Proxy Materials are available at https://materials.proxyvote.com/87876P. Enter the 12-digit control number located on the Notice of Internet Availability, proxy card or proxy card.voter instruction form.
Instructions for requesting a paper copy of the proxy materials are set forth on the Notice of Internet Availability.
Stockholders who owned shares of the Company’s voting stock at the close of business on April 25, 201615, 2019, or the Record Date, are entitled to notice of and to vote at the Annual Meeting on all matters properly brought before the Annual Meeting.
Each share of Common Stock is entitled to one vote on each matter presented at the Annual Meeting.
WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
Stockholder of Record
If, on the Record Date, your shares were registered directly in your name with our transfer agent, VStock Transfer LLC, you are a “stockholder of record” who may vote at the Annual Meeting. As thea stockholder of record you have the right to direct the voting of your shares via the Internet, returningtelephone, to return a proxy card to us or votingto vote in person at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please vote via the Internet, telephone, or complete, sign, date, and signreturn a proxy card to ensure that your vote is counted.
Beneficial Owner
If, on the Record Date, your shares were held in an account at a brokerage firm or at a bank or other nominee holder, you are considered the beneficial owner of shares held “in street name.” Your broker or nominee is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct your broker, bank, or nominee how to vote your shares by using any voting instruction card supplied by them or by following their instructions for voting by telephone, online, or in person. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you receive a valid proxy from your brokerage firm, bank or other nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm, bank or other nominee holder.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
Our Board unanimously recommends that stockholders vote "FOR" all sixseven nominees for director, and "FOR" the ratification of the appointment of Wolf & Company, P.C. as our independent auditors,registered public accountants, "FOR" approval of the compensation of the Company's named executive officers disclosed in this Proxy Statement, and "FOR""THREE YEARS" in the authorization to adjournvote regarding the Annual Meeting to a later date or dates if there are insufficientfrequency of non-binding stockholder advisory votes present in person or represented by proxy aton the Annual Meeting to approvecompensation of the proposals.Company's named executive officers.
WHAT IS THE QUORUM REQUIREMENT?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the issued and outstanding shares are represented by stockholders present at the Annual Meeting or represented by proxy. On the Record Date, there were 19,065,43624,839,656 shares outstanding and entitled to vote.vote at the meeting. Thus, 9,532,71912,419,829 shares must be represented by stockholders present at the meeting or by proxy to have a quorum. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. A broker non-vote occurs when a broker holding shares for a beneficial owner votes on one proposal but does not vote on another proposal because, in respect of such other proposal, the broker does not have discretionary voting power and has not received instructions from the beneficial owner. If there is no quorum, the chairman of the meeting or a majority of the votes present at the meeting may adjourn the meeting to another date.
WHY WOULD THE ANNUAL MEETING BE ADJOURNED?
The Annual Meeting may be adjourned if a quorum is not present or to allow time for further solicitation of proxies in the event there are insufficient votes present in person or represented by proxy to approve the proposals. For purposes of determining whether the stockholders have approved matters other than the election of directors, abstentions are treated as shares present or represented and voting, so abstaining has the same effect as a negative vote. Shares held by brokers who do not have discretionary authority to vote on a particular matter and who have not received voting instructions from their customers are not counted or deemed to be present or represented for the purpose of determining whether stockholders have approved that matter, but they are counted as present for the purpose of determining the existence of a quorum at the Annual Meeting.
HOW DO I VOTE BY PROXY?
WhetherIf you hold shares directly as the stockholder of record, or beneficially in street name, you may direct how your shares are voted without attending the Annual Meeting. StockholdersSuch stockholders may deliver their proxies either:
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| (1) | Electronically over the Internet as outlined in the Notice of Internet Availability; orat www.proxyvote.com; |
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| (2) | By requesting,telephone at 1-800-690-6903; or |
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| (3) | By completing and submitting a properly signed paper proxy card as outlined in the Notice of Internet Availability.card. |
ReturningIf you are a stockholder of record, returning the proxy card will not affect your right to attend the Annual Meeting and vote in person as described elsewhere herein. If you properly fill in your proxy card and send it to us in time to vote, your proxy (one of the individuals named on your proxy card) will vote your shares as you have directed.
If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by the Board of Directors as follows:
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| 1. | FOR the election of each of our Board’sBoard's nominees for director; |
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| 2. | FOR the ratification of the appointment of Wolf & Company, P.C. as the Company's independent registered public accounting firm; andfirm. |
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| 3. | FOR the authorization to adjournapproval of the Annual Meeting to a later date or dates if there are insufficientcompensation of the Company's named executive officers. |
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| 4. | THREE YEARS for the frequency of non-binding stockholder advisory votes present in person or represented by proxy aton the Annual Meeting to approvecompensation of the proposals.Company's named executive officers. |
If any other matters are presented, your proxy will vote in accordance with his or her best judgment. At the time this Proxy Statement was finalized, we knew of no matters that needed to be acted on at the Annual Meeting other than those discussed in this Proxy Statement.
If you are a beneficial owner, you must vote your shares in the manner prescribed by your broker, bank or other nominee. You will receive a voting instruction card (not a proxy card) to use in directing the broker, bank, or other nominee how to vote your shares. You may also have the option to vote your shares via the Internet.
HOW DO I VOTE IN PERSON?
If you are a stockholder of record (i.e., you own the shares directly in your name) and plan to attend the Annual Meeting, you may attend and vote in person on June 23, 2016,6, 2019, or at a later date if the Annual Meeting is adjourned or postponed to a later date, as long as you present valid proof of identification at the Annual Meeting. We will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank or other nominee, in addition to identification, you must bring proof of beneficial ownership in order to attend the Annual Meeting, which generally can be obtained from the record holder. In that event, you must also obtain a proxy or a power of attorney executed by the broker, bank or other nominee that owns the shares of record for your benefit and authorizing you to vote the shares at the Annual Meeting.
MAY I REVOKECHANGE MY PROXY?VOTE?
If you give a proxy, you may revoke itStockholders of record my change their vote at any time before the proxy is exercised by sending a written notice of revocation or a later-dated proxy to our Secretary, which must be received prior to commencement of the Annual Meeting; by submitting a later-dated proxy via Internet or phone before 11:59 p.m. Eastern Daylight Time on June 5, 2019; or by voting in person at the Annual Meeting. Your attendance at the Annual Meeting in person will not cause your previously granted proxy to be revoked unless you file the proper documentation for it to be so revoked.
If you hold your shares through a broker, bank or other nominee in "street name", you should contact such person prior to the time such voting instructions are exercised.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD OR VOTING INSTRUCTION CARD?
If you receive more than one proxy card or voting instruction card, it means that you have multiple accounts with brokers, banks or other nominees and/or our transfer agent. Please sign and deliver, or otherwise vote, each proxy card and voting instruction card that you receive. We recommend that you contact your nominee and/or our transfer agent, as appropriate, to consolidate as many accounts as possible under the same name and address. Our transfer agent is exercised. You may revoke your proxy in three ways:Vstock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598: Telephone: 212-828-8436.
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1. | You may send in another proxy with a later date. |
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2. | You may notify the Company in writing (by you or your attorney authorized in writing, or if the stockholder is a corporation, under its corporate seal, by an officer or attorney of the corporation) at our principal executive offices before the Annual Meeting, that you are revoking your proxy. |
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3. | You may vote in person at the Annual Meeting. |
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
Proposal 1: Election of Directors. The election of directors shall be determined by a plurality of the votes cast by the stockholders. Therefore, a nominee who receives a plurality, means he has received the highest(the nominee who receives a higher number of votes “for” his or her election than any other nominee for the same director's seatseat) will be elected.
Proposal 2: Ratification of independent registered public accounting firm. The approval of the ratification of the appointment of our independent registered public accounting firm requires the affirmative vote of the holders of a majority in voting power of the votes cast by the holders of all of the shares of stock present or represented at the meeting and voting affirmatively or negativelyAnnual Meeting entitled to vote on suchthe matter.
Proposal 3: AdjournmentAdvisory vote regarding named executive officer compensation included in this Proxy Statement. Approval of the Annual Meeting. The approvalcompensation of the adjournment of the Annual Meeting,Company's named executive officers requires the affirmative vote of the holders of a majority in voting power of the votes cast by the holders of all of the shares of Common Stockstock present or represented by proxy at the Annual Meeting and entitled to vote on the matter. The vote is advisory only and the Board of Directors will determine the compensation of the executive officers of the Company taking into account the results of the advisory vote regarding compensation of the Company's named executive officers.
Proposal 4: Advisory vote regarding the frequency of the advisory vote on approval of the compensation of Company's named executive officers. This vote requires the affirmative vote of the holders of a majority in voting affirmativelypower of the votes cast by the holders of all of the shares of stock present or negativelyrepresented at the Annual Meeting and entitled to vote on suchthe matter. The vote is advisory only and the Board of Directors will take the results of these advisory votes into account in determining the frequency of advisory votes regarding the compensation of the Company's named executive officers.
HOW ARE VOTES COUNTED?
Proposal 1: You may either vote “FOR” or “WITHHOLD” authority to vote for each of the nominees for the Board of Directors. Shares present at the meeting or represented by proxy where the shareholderstockholder does not vote for a nominee or properly withholds authority to vote for such nominee and broker non-votes will not be counted toward"For" or "Against" such nominee's achievement of a plurality.
Proposal 2: You may vote “FOR,” “AGAINST” or “ABSTAIN” on the ratification of Wolf & Company, P.C. If you abstain from voting on the proposal to ratify Wolf & Company, P.C., your vote will have no effect on the outcome of the vote on the proposal. Brokers, bankers and other nominees have discretionary voting power on this routine matter and, accordingly, broker non-votes will have no effect on the vote for this proposal.
Proposal 3: You may vote “FOR,” “AGAINST” or “ABTAIN”“ABSTAIN” on the proposal to authorize adjournmentadvisory vote regarding the compensation of the Annual Meeting. If you abstain from votingCompany's named executive officers.
Proposal 4: You may vote “THREE YEARS,” “TWO YEARS, ” "ONE YEAR," or “ABSTAIN” on the proposal to authorize adjournmentadvisory vote regarding the frequency of stockholder advisory votes on the compensation of the Annual Meeting, your vote will have no effect on the outcome of the proposal. Broker non-votes will have no effect on the vote for this proposal.Company's named executive officers.
ARE THERE ANY DISSENTERS' RIGHTS OF APPRAISAL?
Our Board is not proposing any action for which the laws of the State of Delaware, the Company’s Certificate of Incorporation or the Company's Bylawsby-laws provide a right of a stockholder to dissent and obtain appraisal of or payment for such stockholder's shares.
WHO BEARS THE COST OF SOLICITING PROXIES?
The Company will bear the cost of soliciting proxies in the accompanying form and will reimburse brokerage firms and others for expenses involved in forwarding proxy materials to beneficial owners or soliciting their execution.
WHERE ARE THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES?
The Company’s principal executive offices are located at 45 First Avenue, Waltham, Massachusetts, 02451, and the Company's telephone number is (781) 466-6400.
HOW CAN I OBTAIN ADDITIONAL INFORMATION ABOUT THE COMPANY?
The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2018, or the Annual Report, has been made available on the Internetis being sent to all stockholders entitled to vote at the Annual Meeting and who received the Notice of Internet Availability. Additional copies will be furnished without charge to stockholders upon written request.along with this proxy statement. Exhibits to the Annual Report will be provided upon written request and payment of an appropriate fee. All written requests should be directed to the Secretary of the Company c/o Tecogen Inc., 45 First Avenue, Waltham, Massachusetts 02451. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Our website address is included several times in this Proxy Statement as a textual reference only and the information in the website is not incorporated by reference into this Proxy Statement.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the current members of our Board, and our executive officers. The address for our directors and officers is c/o Tecogen Inc., 45 First Avenue, Waltham, Massachusetts 02451. Mr. Maxwell and Mr. Davidson have decided not to continue to serve as directors following the 2019 Annual Meeting. Also listed below are Mr. Earl R. Lewis III and MS. Garcia Roosevelt who are being nominated for election as directors at the 2019 Annual Meeting.
| | | Name | Age | Position(s) | (1) | (2) | (3) | Age | Position(s) | (1) | (2) | (3) |
| Angelina M. Galiteva | 49 | Chairperson of the Board and Director | x |
| 52 | Chairperson of the Board and Director | x |
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| John N. Hatsopoulos | 82 | Co-Chief Executive Officer and Director | | 85 | Lead Director | |
| Benjamin M. Locke | 48 | Co-Chief Executive Officer | | 51 | Director & Chief Executive Officer | |
| Robert A. Panora | 61 | Chief Operating Officer and President | | 64 | Chief Operating Officer and President | |
| David A. Garrison | 48 | Chief Financial Officer, Treasurer and Secretary | | |
| Joseph E. Aoun | 63 | Director |
| x | |
| Bonnie Brown | | 56 | Chief Accounting Officer, Treasurer and Secretary | |
| Keith Davidson | | 68 | Director |
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| Ahmed F. Ghoniem | 64 | Director | x |
| x | 67 | Director |
| x |
| Earl R. Lewis | 72 | Director |
| x |
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| Charles T. Maxwell | 84 | Director | x |
| x | 87 | Director | x |
| x |
| | | |
| Deanna Petersen | | 57 | Director | x |
| Earl R. Lewis III | | 75 | Nominated for Election as a Director | |
| Laurence Garcia Roosevelt | | 41 | Nominated for Election as a Director | |
| (1) Member of Audit Committee | (1) Member of Audit Committee | | (1) Member of Audit Committee | |
| (2) Member of Compensation Committee | (2) Member of Compensation Committee | | (2) Member of Compensation Committee | |
| (3) Member of the Nominating and Governance Committee | (3) Member of the Nominating and Governance Committee | | (3) Member of the Nominating and Governance Committee | |
Angelina M. Galiteva, age 49,52, has been ourthe Company's Chairperson of the Boardboard of directors since 2005. SheMs. Galiteva is founder and Chair of the founder ofBoard for the Renewables 100 Policy Institute.Institute, a non-profit entity dedicated to the global advancements of renewable energy solutions since 2008. She is also serves as the Chairperson forat the World Council for Renewable Energy. Both organizations are dedicatedEnergy (WCRE), which focuses on the development of legislative and policy initiatives to facilitate the successful deploymentintroduction and growth of renewable energy technologies andsince 2003. Since 2011, she has served on the policies that support the transition to a carbon free grid on a global scale.
In 2011 Ms. Galiteva was appointed by California’s Governor and confirmed by the State Senate to the 5 member Board of Governors of the California Independent System Operator Corporation. She was reappointed by the Governor(CA ISO), providing direction and again reconfirmed by the Senate in 2014. The Independent System Operator is responsibleoversight for the reliable operation ofCA ISO which operates the power grid in the state of California and for the efficient operation of the electricity market, includinggrid. Also, she is a principal at New Energy Options, Inc., a company focusing on advancing the integration of renewablesustainable energy projects as mandated by State Law.
In addition Ms. Galiteva, issolutions since 2006. She has also been a Principal at NEOptions, Inc., a renewable energystrategic consultant with Renewable Energy Policy and new technology product design and project development firm. Her industry experience includes serving as Executive Director of the Los Angeles Department of Water and Power and head of its Green LA, Environmental Affairs and New Product Development Organization. While at the largest municipal utility in the Western US, she was responsible for strategic positioning and the environmental compliance departments. Her career also includes working with the New York Power Authority as well as advising numerous renewable energy, energy efficiency, and new product development firms. Ms. Galiteva enjoys working to structure and advance the implementation of cutting edge energy policies and programs that reflect the increasing role of renewable energy, storage, mobility and distributed energy technologies worldwide.
Strategy Consulting since 2004. Ms. Galiteva holds a Master’s degreeM.S in Environmental and Energy Law, and a law degreeJ.D. from Pace University School of Law, and a bachelor’s degreeB.S. from Sofia University in Bulgaria. Ms. Galiteva is currently serving a one-year term as the Company's Chairperson and as a director. Ms. Galiteva is also a member of Tecogen's Audit Committee and a member of Tecogen's Compensation Committee.
OurTecogen's Board has determined that Ms. Galiteva’s prior experience in the energy field qualifies her to be a member of the Board in light of the Company’s business and structure.
John N. Hatsopoulos, age 82, has been the Chief Executive Officer of the Company since the organization of the Company in 2000, and has shared the role as Co-Chief Executive Officer since the fall of 2014. He85, has been a member of the BoardCompany's board of directors since its founding.founding in 2000 (other than the period between June 6, 2018 and February 1, 2019) and was Tecogen's Co-Chief Executive Officer until March 29, 2018. He has also beenwas the Co-Chief Executive Officer of American DG Energy Inc., (NYSE MKT: ADGE), or American DG Energy, a publicly traded companyADGE, until ADGE merged with the Company in May of 2017, or the On-Site Utility business since 2000,ADGE Merger, and was on the board of directors of ADGE until March 29, 2018. Mr. Hatsopoulos was the Chairman of EuroSite Power Inc., or Eurosite Power, a subsidiaryformer affiliate of American DG Energy Inc. since 2009.the Company, from 2009 until 2016. Mr. Hatsopoulos is a co-founder of Thermo Electron Corporation, which is now Thermo Fisher Scientific (NYSE: TMO), and isScientific. He was formerly the retired President and Vice Chairman of the Board of Directors of that company. He is a member of the Board of Directors of Ilios Inc., and is a former Member of the Corporation of Northeastern University. The Company, American DG Energy, and EuroSite Power are affiliated companies by virtue of common ownership. Mr. HatsopoulosHe graduated from Athens College in Greece and holds a bachelor’s degreeB.S. in history and mathematics from Northeastern University, as well as honorary doctorates in business administration from Boston College and Northeastern University.
On February 1, 2019 Mr. Hatsopoulos was reappointed by the Board as a director and he is currently serving as Lead Director to identify and evaluate financing alternatives for the Company’s Co-Chief Executive Officer and is also the Co-Chief Executive Officer of American DG Energy and the Chairman of Eurosite Power. On average, Mr. Hatsopoulos spends approximately 50% of his business time on the affairs of the Company; however such amount varies widely depending on the needs of the business and is expected to increase as the business of the Company develops.
Our Board has determined that Mr. Hatsopoulos’ prior experience as co-founder, president and Chief Financial Officer of Thermo Electron Corporation, where he demonstrated leadership capability and gained extensive expertise involving complex financial matters, and his extensive knowledge of complex financial and operational issues qualify him to be a member of our Board in light of the Company’s business and structure.
Company.
Benjamin M. Locke, age 48,51, has been oura member of the Company's board of directors since June 2018. Mr. Locke has been the Company's Co-Chief Executive Officer since 2014.2014 and as of March 29, 2018 he became the sole Chief Executive Officer of Tecogen. Mr. Locke joined the Company in June, 2013 aswas the Director of Corporate Strategy for Tecogen and was promoted to General Manager prior to his appointment as Co-CEO.Co-Chief Executive Officer of Tecogen. In October of 2014, Mr. Locke began serving as Co-Chief Executive Officer of American DG Energy. He splits his time betweenADGE and continued to serve as Co-Chief Executive Officer until the two companies.completion of the ADGE Merger. Previously, Mr. Locke was the Director of Business Development and Government Affairs at Metabolix, (NASDAQ:MBLX), a bioplastics technology development
and commercialization company. In that role, he was responsible for developing and executing plans for partnerships, joint ventures, acquisitions, and other strategic arrangements for commercializing profitable clean energy technologies. Prior to joining Metabolix in 2001, Mr. Locke was Vice President of Research at Innovative Imaging Systems, or IISI, a high-technology R&D company. At IISI, he drove the development and implementation of growth strategies for the funding of specialty electronic systems for the United States Government. Mr. Locke has a B.S. in Physics from the University of Massachusetts, ana M.S. in Electrical Engineering from Tufts University, and an M.B.A. in Corporate Finance from Boston University.
Tecogen's Board has determined that Mr. Locke's prior experience and education qualify him to be a member of our Board in light of the Company's business and structure.
Robert A. Panora, age 61,64, has been ourthe Company's Chief Operating Officer and President since the organization of the Company in 2000 and the Chief Operating Officer of Ilios since its inception in 2009.2000. In August of 2015, Mr. Panora began serving as Director of Operations of American DG Energy. He splits his time betweenEnergy and continued to serve as Director of Operations until the two companies.completion of the ADGE Merger. On March 29, 2018, Mr. Panora was appointed as the sole director of ADGE. Before this role, since 1990, he had been General Manager of the Company’s Product Group while a division of Thermo Electron Corporation since 1990, and Manager of Product Development, Engineering Manager, and Operations Manager since 1984. Over his 31-year tenure with the Company and its predecessors, Mr. Panora has been responsible for sales and marketing, engineering, service, and manufacturing. Mr. Panora contributed to the development of Tecogen’s first product, the CM-60 cogeneration system, and was Program Manager for the cogeneration and chiller projects that followed. Mr. Panora has had considerable influence on many aspects of the business, from building the employee team, to conceptualizing product designs and authoring many of the original business documents, sales tools, and product literature pieces. Mr. Panora has a bachelor’sB.S. and master’s degreesM.S. in Chemical Engineering from Tufts University.
David A. GarrisonBonnie Brown, age 48,56, has been ourthe Company's Chief FinancialAccounting Officer, Treasurer and Secretary since May of 2017, becoming a member of the management team after the ADGE Merger. Previously, Ms. Brown served as ADGE's Chief Financial Officer from September 2015 until completion of the ADGE Merger. She also served as EuroSite Power Inc's Chief Financial Officer from September of 2015 until January 20, 2017. Ms. Brown was a Financial Advisor at Barker Financial Group, a strategic wealth management advisory company, from July 2014 to September 2015. She joined Tecogen as its Controller in 2005 and became the Chief Financial Officer in 2007 and remained in that position until December 2014. She served from its inception in 2009 to December 2014 as the Chief Financial Officer of Ilios since 2014.Inc. Prior to joining Tecogen, Ms. Brown was a partner at Sullivan Bille PC, a regional accounting firm, for 15 years where she provided financial, accounting, audit, tax, and business consulting services for mid-sized companies. Ms. Brown has also worked at Enterprise Bank and Trust as project manager for special assignments including branch acquisitions and information systems transitions in the Company, Mr. Garrison was Executive Vice Presidenttrust department eventually serving as Internal Audit Director, establishing an in-house audit function. She has also provided independent contractor services for a wide variety of publicly traded and Chief Financial Officer of Arrhythmia Research Technology, Inc. (NYSE:HRT)closely held companies, including consulting, internal control and its subsidiary Micron Products, Inc. since 2002. Leading the finance department of Arrhythmia Research Technology, Inc., Mr. Garrison oversaw all aspects of SECSarbanes-Oxley compliance internal controlsservices. Ms. Brown is a CPA and raising capital through debt in a capital intensive medical device manufacturing business. Prior to Arrhythmia, Mr. Garrison spent nine years as Controller and Chief Financial Officer of H & R 1871, Inc., a privately held manufacturer of consumer products. Mr. Garrison holds a B.S. in FinanceAccountancy from Miami UniversityBentley College and a M.B.A.M.S. in Computer Information Systems from Boston University.University
Joseph E. AounKeith Davidson, age 63,68, has been a member of our Board since 2011. He has been President of Northeastern University since 2006. President Aoun is recognized as a leader in higher education policy and served on the Company's board of directors since 2016. Mr. Davidson is President of DE Solutions Inc., a consulting and engineering firm serving the distributed energy markets. With over 25 years of experience in the energy industry, Mr. Davidson has focused on environmental technology development, feasibility studies, product commercialization, application engineering, economic analysis and market development. Prior to joining DE Solutions, Mr. Davidson was President of Energy Nexus Group and Senior Vice President of Onsite Energy Corp. He served as a Director of the Gas Research Institute for over a decade, was past President of the American Council on EducationCogeneration Association, served as well as the Boston Private Industry Council, Jobs for Mass, and the New England Council. He is a memberChair of the ExecutiveNational Association of Energy Service Companies' Distribution Generation Committee, of the Greater Boston Chamber of Commerce, a member of the Massachusetts Business Roundtable, and serves as co-chair of the City to City Boston initiative. Dr. Aoun is the recipient of numerous honorsseveral industry honors. Mr. Davidson is currently active in the California Clean DG Coalition and awardsthe US Combined Heat and is an internationally known scholar in linguistics. Dr. AounPower Association. He holds a master’s degreeM.S in Oriental LanguagesMechanical Engineering from Stanford University and Literaturea B.S. from Saint Joseph University, Beirut, Lebanon, a Diploma of Advanced Study in General and Theoretical Linguistics, fromthe University of Paris VIII, Paris, France,Missouri, Rolla. Mr. Davidson has a long history with Tecogen, actively supporting new business initiatives as well as being instrumental in securing utility and government funding to support product development, including the Ultera technology. Mr. Davidson is currently serving a Ph.D. in Linguistics and Philosophy from MIT.one year term as a Tecogen director, but has decided not to continue to serve as a Tecogen director following the 2019 Annual Meeting of Stockholders.
OurTecogen's Board has determined that Dr. Aoun’s prior experience as the President of Northeastern University and hisMr. Davidson's prior experience in the energy sector and prior associations in the energy industry qualify him to be a member of our Board of Directors in light of the Company's business and structure.
Ahmed F. Ghoniem, age 64,67, has been a member of our Boardthe Company's board of directors since 2008. HeDr. Ghoniem is the Ronald C. Crane Professor of Mechanical Engineering at MIT. He is also the directorDirector of the Center for 21st Century Energy, and Propulsion Researchthe head of Energy Science and Engineering at MIT, where he plays a leadership role in many energy-related activities, initiatives and programs. Mr. GhoniemHe joined MIT as an assistant professorAssistant Professor in 1983. He is an associate fellow of the American Institute of Aeronautics and Astronautics, and Fellow of American Society of Mechanical Engineers. Recently, heHe was recently granted the KAUST Investigator Award. He is a member of the Boards of Directors of EuroSite Power, and Ilios, which are affiliated companies by virtue of common ownership. Mr.Dr. Ghoniem holds a Ph.D. in Mechanical Engineering from the University of California, Berkeley, and ana M.S. and B.S. in Mechanical Engineering from Cairo University. Dr. Ghoniem is currently serving a one year term as a Tecogen director. Dr. Ghoniem is also a member of Tecogen's Nominating and Governance Committee.
Our
Tecogen's Board has determined that Mr. Ghoniem’s prior experience as a Professor of Mechanical Engineering at MIT and his prior experience in the energy sector qualify him to be a member of the Board of Directors in light of the Company's business and structure.
Earl R. Lewis, age 72, has been a member of our Board since 2014. He presently serves as Chairman of the Board of Harvard Bio Science. From 2000 to 2013, Mr. Lewis served as Chairman, CEO and President of FLIR Systems Inc., a company Forbes several times rated in The Top 200 Best Small Companies. He continues to serve as Chairman of the Board of FLIR Systems Inc. Mr. Lewis served for many years as a top level executive at Thermo Electron Inc. companies, including Thermo Instrument Systems, Thermo Optek Corp. and Thermo Jarrell Ash Corp. Mr. Lewis is a Trustee of Clarkson University. Mr. Lewis holds a B.S. in Technology from Clarkson College and has studied Management at Harvard University and Northeastern University.
Our Board has determined that Mr. Lewis’s prior success managing technology companies and his experience serving as a chairman or director on the boards of several companies qualify him to be a member of our Board in light of the Company's business and structure.
Charles T. Maxwell, age 84,87, has been a member of our Boardthe Company's board of directors since 2001. HeMr. Maxwell is a widely recognized expert in the energy sector, with over 40 years of experience with major oil companies and investment banking firms. From 1999 until his retirement in 2012, Mr. Maxwell was a Senior Energy Analyst with Weeden & Co. of Greenwich, Connecticut, where he developed strategic data and forecasts on oil, gas, and power markets. Mr. Maxwell iswas a member of the Board of Directors of American DG Energy, an affiliated company by virtueADGE until the completion of common ownership.the ADGE Merger. Mr. Maxwell holds a bachelor’s degreeB.S. in political sciencePolitical Science from Princeton University and holds a B.A. from Oxford University as a Marshall Scholar in Middle East literature and history. Mr. Maxwell is currently serving a one-year term as a Tecogen director, but has decided not to continue to serve as a Tecogen director following the 2019 Annual Meeting of Stockholders. Mr. Maxwell is also a member of Tecogen's Audit Committee and a member of its Nominating and Governance Committee.
OurTecogen's Board has determined that Mr. Maxwell’s prior experience in the energy sector and his extensive experience as a director of public companies qualifies him to be a member of our Board in light of the Company’s business and structure.
Deanna Petersen, age 57, has been a member of the Company's board of directors since 2017. Ms. Petersen has been Chief Business Officer at AvroBio since January of 2016. She was Vice President of Business Development for Shire Human Genetic Therapies from 2009 until 2015, where she initiated and managed partnering, licensing and merger and acquisition activities worldwide. From 2002 to 2009, Ms. Petersen was Vice President of Business Development for Agenus Inc., and from 1998 to 2002 she was Vice President and Executive Director of Business Development at Coley Pharmaceutical Group, Inc. Ms. Petersen was on the board of ADGE until completion of the ADGE Merger. Ms. Petersen is on the board of directors for the Massachusetts Biotechnology Association and was previously the Treasurer of the board of directors for the Healthcare Business Women’s Association, Boston Chapter. Ms. Petersen holds a B.S. in Biology from Iowa State University and a M.B.A. from the University of Iowa. Ms. Petersen is currently serving a one year term as a director of Tecogen. Ms. Petersen is also a member of Tecogen's Audit Committee and Compensation Committee.
Tecogen's Board has determined that Ms. Petersen’s prior experience in senior operating positions at various companies, where she demonstrated leadership capability and garnered extensive expertise involving complex financial matters, qualify her to be a member of the Board in light of the Company’s business and structure.
Earl R. Lewis III, age 75, has served as Chairman of the Board and as Chief Executive Officer and President of FLIR Systems from 2000 through May 2013, and since May 2013 as Chairman of the Board and as a senior consultant to FLIR Systems. Mr. Lewis also served as Chairman of the Board of Harvard Bio Science from 2013 through June 2018, as CEO and President of Thermo Instrument Systems from 1998 to 2000, as President in 1997, and as COO in 1996. Mr. Lewis also served as CEO and President of Thermo Optek Corporation from 1994 to 1996, as President of Thermo Jarrell Ash Corporation from 1988 to 1994, and in senior operations and manufacturing roles at Thermo Jarrell Ash since 1984 and at other companies in previous years. Mr. Lewis holds a B.S. from Clarkson College of Technology.
Tecogen's Board has determined that Mr. Lewis' extensive leadership experience in senior positions at FLIR Systems, Harvard Bio Science, Thermo Instrument Systems, Thermo Optek Corporation, Thermo Jarrell Ash, and elsewhere qualifies him to be a member of the Board.
Laurence E. de Armada Garcia Roosevelt, age 41, has two decades of experience in strategic marketing, communications and business development. Ms. Garcia Roosevelt currently serves as the Managing Director of the Centennial Office and member of the President’s Cabinet at Babson College. She has significant experience in investor relations and working with companies on capital raising, including initial public offerings (IPOs), and mergers and acquisitions. She previously served as Vice President, Head of Marketing & Communications and a Relationship Manager at Deltec Bank & Trust Limited, at Deltec, where she was Vice President at Weber Shandwick, one of the world’s leading public relations firms where she lead global programs that strengthened reputation and delivered new business for clients, and as the Director of Marketing & Communications for WHERE, Inc. (now PayPal Media Network). Ms. Garcia Roosevelt holds a B.S. in political science from Davidson College, an M.S. in Education, magna cum laude from Hunter College, and an MBA with honors from Simmons College School of Management.
Tecogen's Board has determined that Ms. Garcia Roosevelt’s prior experience in senior positions where she demonstrated leadership capability and garnered extensive expertise involving strategic marketing, business development, fundraising, and investor relations matters qualify her to be a member of the Board in light of the Company’s business and structure.
Each executive officer is elected or appointed by and serves at the discretion of our Board. The elected officers of the Company will hold office until their successors are duly elected and qualified, or until their earlier resignation or removal.
There are no arrangements or understandings between any of Tecogen's directors or officers and any other individuals regarding why that Tecogen director or officer was selected to serve as a director.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial Owners of at Least Five Percent of our Common Stock
The following table shows,sets forth, as of April 15, 2019, certain information with respect to the bestbeneficial ownership of Tecogen's shares of common stock by (1) any person (including any “group” as set forth in Section 13(d)(3) of the Exchange Act) known by us to be the beneficial owner of more than five percent (5%) of any class of Tecogen's voting securities, (2) each director, (3) each of the named executive officers and (4) all of our knowledge, all persons we know to be beneficial ownerscurrent directors and executive officers as a group. The percentages in the following table are based on 24,839,656 shares of five percent or more of the voting securities of the Companycommon stock issued and outstanding as of the Record Date.April 15, 2019.
|
| | | | | |
| Name and Address of Beneficial Owner | | Common Stock Beneficially Owned(1) | | Percent of Class(1) |
John N. Hatsopoulos (2) | | 3,846,165 |
| | 20.2% |
George N. Hatsopoulos (3) | | 3,605,541 |
| | 18.9% |
Michaelson Capital Special Finance Fund LP(4) | | 1,197,536 |
| | 6.3% |
|
| | | | | |
Name and address of beneficial owner(1) | Number of Shares Beneficially Owned(2) | | % of Shares Beneficially Owned |
| 5% Stockholders: | | | |
George N. Hatsopoulos and Mrs. Daphne Hatsopoulos(3) | 2,744,385 |
| | 11.04 | % |
John N. Hatsopoulos(4) | 2,322,596 |
| | 9.35 | % |
The Hatsopoulos 2012 Family Trust(5) | 2,250,000 |
| | 9.06 | % |
The John N. Hatsopoulos 1989 Family Trust(6) | 1,620,664 |
| | 6.52 | % |
Tryfon Natsis and Despina Pantopoulou Natsis(7) | 1,616,673 |
| | 6.51 | % |
| | | | |
| Directors (& Nominees) & Officers: | | | |
John N. Hatsopoulos(4) | 2,322,596 |
| | 9.35 | % |
Benjamin Locke(8) | 290,218 |
| | 1.2 | % |
Robert Panora(9) | 276,573 |
| | 1.1 | % |
Charles T. Maxwell(10) | 249,590 |
| | 1.1 | % |
Keith Davidson(11) | 84,044 |
| | *% |
|
Angelina M. Galiteva(12) | 75,000 |
| | *% |
|
Ahmed Ghoniem(13) | 62,723 |
| | *% |
|
Bonnie Brown(14) | 25,962 |
| | *% |
|
Deanna Petersen(15) | 9,200 |
| | *% |
|
Earl R. Lewis III(16) | — |
| | |
Laurence Garcia Roosevelt(16) | — |
| | |
| All executive officers and directors as a group (11 persons) | 3,395,906 |
| | 13.3 | % |
* represents less than 1%
| |
(1) | The address of the executive officers and directors listed in the table above is: c/o Tecogen Inc., 45 First Avenue, Waltham, Massachusetts, 02451. |
| |
(2) | Unless otherwise noted in these footnotes, the Company believes that all shares referenced in this table are owned of record by each person named as beneficial owner and that each person has sole voting and dispositive power with respect to the shares of Common Stock owned by each of them. |
| |
(2)
| This information is as of April 25, 2016. It is based on a Schedule 13G filed by John N. Hatsopoulos with the SEC on February 16, 2016, or the "John Hatsopoulos Schedule 13G", and on a Form 4 filed by John N. Hatsopoulos on April 25, 2016, or the "John Hatsopoulos Form 4". In accordance with the disclosures set forth in the John Hatsopoulos Schedule 13G, and John Hatsopoulos Form 4, Mr. John Hatsopoulos reports sole voting power over 2,262,436 shares, sole dispositive power over 2,262,436 shares, shared voting power over 1,583,729 shares and shared dispositive power over 1,583,129 shares. The percent owned is based on the shares listed above and a calculation using the total outstanding shares on April 25, 2016. Based on the information provided in the John Hatsopoulos Schedule 13G, the address of John Hatsopoulos is c/o Tecogen Inc., 45 First Avenue, Waltham, MA 02451. |
| |
(3)
| This information is as of April 25, 2016. It is based on a Schedule 13G filed by George N. Hatsopoulos with the SEC on February 18, 2015, or the "George Hatsopoulos Schedule 13G" and on a Form 4 filed by George N. Hatsopoulos on April 25, 2016, or the "George Hatsopoulos Form 4". In accordance with the disclosures set forth in the George Hatsopoulos Schedule 13G and George Hatsopoulos From 4, Mr. George Hatsopoulos reports sole voting power over 2,300,890 shares, sole dispositive power over 2,300,890 shares, shared voting power over 1,304,651 shares and shared dispositive power over 1,304,651 shares. The percent owned is based on the shares listed above and a calculation using the total outstanding shares on April 25, 2016. Based on the information provided in the George Hatsopoulos Schedule 13G, the address of George Hatsopoulos is c/o Tecogen Inc., 45 First Avenue, Waltham, MA 02451. |
| |
(4)
| This information is as of December 31, 2015 and is based solely on a Schedule 13G filed by Michaelson Capital Special Finance Fund LP with the SEC on February 19, 2016, or the “Michaelson Schedule 13G". In accordance with the disclosures set forth in the Michaelson Schedule 13G, Michaelson Capital Special Finance Fund LP reports shared voting power over 1,197,536 shares and shared dispositive power over 1,197,536 shares. The percent owned is based on the shares listed above and a calculation using the total outstanding shares on April 25, 2016. Based on the information provided in the Michaelson Schedule 13G, the address of Michaelson Capital Special Finance Fund LP is 509 Madison Avenue, Suite 2210, New York, NY 10022. |
Security Ownership of Directors and Executive Officers
The following table shows the amount of our Common Stock owned by each director and director nominee, the Named Executive Officers as defined below, and by all of the present executive officers and directors as a group as of the Record Date.
|
| | | | | | |
Name and address of beneficial owner(1) | | Amount and Nature of Beneficial Ownership(2) | | Percent of Class(3) |
John N. Hatsopoulos (4) | | 3,846,165 |
| | 20.2 | % |
Robert A. Panora (5) | | 288,350 |
| | 1.5 | % |
Charles T. Maxwell (6) | | 100,000 |
| | *% |
|
Angelina M. Galiteva (7) | | 75,000 |
| | *% |
|
Ahmed F. Ghoniem (8) | | 50,000 |
| | *% |
|
David A. Garrison (9) | | 33,500 |
| | *% |
|
Benjamin Locke (10) | | 68,750 |
| | *% |
|
Joseph E. Aoun (11) | | 12,500 |
| | *% |
|
Earl Lewis (12) | | 6,250 |
| | *% |
|
| All executive officers and directors as a group (8 persons) | | 4,474,265 |
| | 23.1 | % |
| |
* | Designates less than 1% of beneficial ownership. |
| |
(1)
| Unless otherwise specified, the address of each of our directors, nominees for directors, Named Executive Officers and executive officers is c/o Tecogen Inc., 45 First Avenue, Waltham, MA 02451. |
| |
(2)
| In accordance with Rule 13d-3 under the Exchange Act, each person’sperson's percentage ownership is determined by assuming that the options and warrants to purchase common stock that are held by that person, and which are exercisable within 60 days, have been exercised. |
| |
(3) | NumberBased solely upon the Schedule 13G/A filed by Dr. George Hatsopoulos and Mrs. Daphne Hatsopoulos on May 16, 2018. (Dr. Hatsopoulos died on or about September 20, 2018.) The Schedule 13G/A states the beneficial ownership of outstandingDr. Hatsopoulos as the following: (1) 1,812,468 shares of common stock held directly by Dr. Hatsopoulos; (2) 154,760 shares of common stock held by Dr. Hatsopoulos and his wife Daphne Hatsopoulos as joint tenants; (3) 320,179 shares of Common Stock held in The Hatsopoulos 1994 Family Trust for the Benefit of Nicholas Hatsopoulos, of which Mrs. Hatsopoulos and Mr. Joseph Comeau are trustees, and (4) 456,978 shares of Common Stock held in The Hatsopoulos 1994 Family Trust for the Benefit of Marina Hatsopoulos, of which Mrs. Hatsopoulos and Mr. Michael Bass are trustees. The address of the Record Date and used in the calculation of percent of classholder is 19,065,436.
233 Tower Road, Lincoln, MA 01773. |
| |
(4) | Includes:Based solely upon: (a) 2,135,210 shares of Common Stock heldthe Schedule 13G/A filed by J&P Enterprises LLC for the benefit of: (1)Mr. John N. Hatsopoulos on March 26, 2019 and (2) Patricia L. Hatsopoulos. John N.the Form 4/A filed by Mr. Hatsopoulos on April 11, 2018. Based on the Schedule 13G/A and Form 4/A the beneficial ownership of Mr. Hatsopoulos is the Executive Member of J&P Enterprises LLC and has voting and investment power; (b) 593,770 shares of Common Stock held by John N. Hatsopoulos and his wife, Patricia L. Hatsopoulos, as joint tenants with rights of survivorship, each of whom share voting and investment power; (c) 989,859 shares of Common Stock held by The John N. Hatsopoulos Family Trust 2007 for the benefit of:following: (1) Patricia L. Hatsopoulos, (2) Alexander J. Hatsopoulos, and (3) Nia Marie Hatsopoulos, for which George N. Hatsopoulos and Patricia L. Hatsopoulos are the trustees; (d) 100 shares of Common Stock held by Patricia L. Hatsopoulos, John N. Hatsopoulos's wife; and (e) 127,226155,351 shares of common stock that Johnheld directly by Mr. Hatsopoulos; (2) 1,039,480 shares of common stock held by the Nia M. Hatsopoulos owns directly in his name.Jephson 2011 Irrevocable Trust, for which Mr. Hatsopoulos is the |
trustee; (3) 1,039,480 shares of common stock held by the Alexander J. Hatsopoulos 2011 Irrevocable Trust, for which Patricia Hatsopoulos, Mr. Hatsopoulos' wife, is the trustee; (4) 3,325 shares of common stock held in an individual retirement account for Mrs. Hatsopoulos; (5) 44,012 shares held in Pat Ltd., a joint account maintained by Mr. Hatsopoulos and Mrs. Hatsopoulos; (6) 28,225 shares of common stock held by Mrs. Hatsopoulos; and (7) options to purchase 12,723 shares of common stock held directly by Mr. Hatsopoulos. Does not include the following shares with respect to which Mr. Hatsopoulos disclaims beneficial ownership: (1) 808,339 shares of Common stock held in The John N. Hatsopoulos 1989 Family Trust for the benefit of Nia Maria Hatsopoulos, of which Ann Marie Pacheco is the sole trustee, (2) 812,325 shares of common stock held in The John N. Hatsopoulos 1989 Family Trust for the benefit of Alexander J. Hatsopoulos, or which Ms. Ann Marie Pacheco is the sole trustee, and (3) 579,749 shares of common stock held in The John N. Hatsopoulos Family Trust 2007, of which Mr. Yiannis Monovoukas is the sole trustee.
| |
(5) | Includes: (a) 163,350Based solely upon the Schedule 13G filed by Mr. Joseph Comeau on behalf of The Hatsopoulos 2012 Family Trust on May 22, 2018. The Schedule 13G states the beneficial ownership consists of 2,250,000 shares of Common Stock, directlycommon stock held by The Hatsopoulos 2012 Family Trust, of which Mr. Panora, and (b) options to purchase 125,000 sharesComeau is the sole trustee. The address of Common Stock exercisable within 60 days of April 27, 2016.the holder is Oliver St. Tower, 125 High St., Boston, MA 02110. |
| |
(6) | Based solely upon Schedule 13G filed by Mr. John N. Hatsopoulos on March 26, 2019. The Schedule 13G states the beneficial ownership of The John N. Hatsopoulos 1989 Family Trust consists of 1,620,646 shares of common stock, including 808,339 shares held for the benefit of Nia Marie Hatsopoulos, and 812,325 shares held for the benefit of Alexander J. Hatsopoulos. Ms. Ann Marie Pacheco is the sole trustee of the John N. Hatsopoulos 1989 Family Trust. The address of the holder is 45 First Ave., Waltham, MA 02451. Mr. John Hatsopoulos disclaims beneficial ownership of all shares held by the trust. |
| |
(7) | Based solely upon the Schedule 13G filed by Tryfon Natsis and Despina Pantopoulou Natsis on February 1, 2017. The Schedule 13G states the beneficial ownership as the following: 1,616,673 shares of common stock owned jointly by Tryfon Natsis and Despina Pantopoulou Natsis as spouses and joint tenants with the right of survivorship. The address for each holder is 36 Chemin Du Milieu, Collonge-Bellerive, Geneva, Switzerland 1245. |
| |
(8) | Includes: (a) 75,0003,418 shares of Common Stock, directly held by Mr. Benjamin Locke; and (b) 286,800 options to purchase Common Stock. |
| |
(9) | Includes: (a) 138,850 shares of Common Stock, directly held by Mr. Robert Panora; and (b) options to purchase 137,723 shares of Common Stock. |
| |
(10) | Includes: (a) 224,590 shares of Common Stock, directly held by Mr. Charles Maxwell, and (b) options to purchase 25,000 shares of Common Stock exercisable within 60 days of April 27, 2016.Stock. |
| |
(7)(11)
| Includes: (a) 9,044 shares of Common Stock, directly held by Mr. Keith Davidson; and (b) options to purchase 75,000 shares of Common Stock. |
| |
(12) | Includes: (a) 50,000 shares of Common Stock, directly held by Ms. Angelina Galiteva and (b) options to purchase 25,000 shares of Common Stock exercisable within 60 days of April 27, 2016.Stock. |
| |
(8)(13)
| Includes: (a) 25,000 shares of Common Stock, directly held by Mr. Ghoniem,Ahmed Ghoniem; and (b) options to purchase 25,00037,723 shares of Common Stock exercisable within 60 days of April 27, 2016.Stock. |
| |
(9)(14)
| Includes: (a) 8,5001,762 shares of Common Stock, held directly held by Mr. Garrison,Ms. Bonnie Brown; and (b) options to purchase 25,00024,200 shares of Common Stock exercisable within 60 days of April 27, 2016.Stock. |
| |
(10)(15)
| Includes:Includes options to purchase 68,7509,200 shares of Common Stock exercisable within 60 days of April 27, 2016.Stock. |
| |
(11)(16)
| Includes:Mr. Lewis and Ms. Garcia Roosevelt are nominees for election to the Tecogen Board of Directors. Based on Director and Officer Questionnaires signed by Mr. Lewis and Ms. Garcia Roosevelt, neither Mr. Lewis nor Ms. Garcia Roosevelt hold any Tecogen shares or options to purchase 12,500 shares of Common Stock exercisable within 60 days of April 27, 2016.acquire Tecogen shares. |
| |
(12)
| Includes: options to purchase 6,250 shares of Common Stock exercisable within 60 days of April 27, 2016. |
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2015,2018, regarding Common Stock that may be issued under the Company’s equity compensation plans.
|
| | | | | | | | | | |
| | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in second column) |
| Equity compensation plans approved by security holders | | 1,268,200 |
| | $ | 3.06 |
| | 1,614,533 |
|
| Equity compensation plans not approved by security holders | | — |
| | — |
| | — |
|
| Total | | 1,268,200 |
| | $ | 3.06 |
| | 1,614,533 |
|
This 2006 Stock Incentive Plan, or Plan, as amended, to date,or the Plan.
|
| | | | | | | | | | |
| | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) |
| Equity compensation plans approved by security holders | | 1,292,589 |
| | $ | 3.52 |
| | 1,990,980 |
|
| Equity compensation plans not approved by security holders | | — |
| | — |
| | — |
|
| Total | | 1,292,589 |
| | $ | 3.52 |
| | 1,990,980 |
|
The Plan is intended to provide incentives to theCompany officers, directors, employees, and consultants by providing such individuals with opportunities to purchase stock in the Company pursuant to options granted hereunder which do not qualify as ISOs ("Non-Qualified Option"). The Board administers“Incentive Stock Options,” or “ISO” or “ISOs,” under Section 422(b) of the Plan, but allows for a single executive, currently Co-CEO John N. Hatsopoulos, to grant a limited numberInternal Revenue Code of 1986, as amended, or the “Code;” such options onbeing an annual basis.“NSO” or “NSOs”.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers and directors, and persons who own more than fiveten percent of any publicly tradeda registered class of the Company's equity securities, to file reports of ownership and changes in ownership of equity securities of the Company with the SEC and the NASDAQ. Officers, directors, and greater-than-five-percentgreater-than-ten-percent stockholders are required by the SEC's regulations to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely upon a review of Forms 3 and Forms 4 furnishedinformation provided to the Company during the most recent fiscal year, and Forms 5 with respect to its most recent fiscal year,from reporting persons, the Company believes that all such formsis not aware of any failure on the part of any reporting person to timely file reports required to be filed pursuant to Section 16(a) of the Exchange Act were timely filed, as necessary, by the executive officers, directors, and security holders requiredwith respect to file the same during the fiscal year ended December 31, 2015.2018 other than one Form 4 filed by Ms. Brown on June 1, 2018 which included an option grant dated January 15, 2018 as well as an option grant dated May 31, 2018.
CORPORATE GOVERNANCE
The Board of Directors
The number of directors of the Company is established by the Board in accordance with the Company's Bylaws. The exact number of directors is currently set at six by resolution of the Board.By-laws. The directors are elected to serve for one year terms, with the term of directors expiring each year at the annual meeting of stockholders; provided further, that the term of each director shall continuestockholders or until the election and qualification of a successor and be subject toor such director’s earlier death, resignation or removal.
The Company's Certificate of Incorporation and BylawsBy-laws provide that the authorized number of directors may be changed onlyestablished by resolution of the Board, and also provide that our directors may be removed only for cause by the affirmative vote of the holders of at least two thirds of the votes that all our stockholders would be entitled to cast in an annual election of directors, and that any vacancy on ourthe Board, including a vacancy resulting from an enlargement of our Boardincrease in the number of Directors, may be filled only by vote of a majority of our directors then in office.
Members of the Board discussed various business matters informally on numerous occasions throughout the year. There waswere three formal Boardboard meetings in person and two formal Board meetings by teleconference during 2015.2018. All current directors attended at least 75% of theall Board meetings, of our Board.except for Mr. Charlie Maxwell and Mr. Keith Davidson who missed one formal meeting, and Mr. Ahmed Ghoniem who missed two formal meetings. Independent directors endeavor to meet on a regular basis as often as necessary to fulfill their responsibilities, including at least twice annually in executive sessionsessions without the presence of non-independent directors and management.
Director Independence
The Company's common stock is listed on the NASDAQ stock exchange. The Board considers the status of its members pursuant to the independence requirements set forth in the applicable NASDAQ rules and applicable federal securities laws. Under these requirements, the Board undertakes a review at least annually of director independence. During this review, the Board considers transactions and relationships between each director or any member of his immediate family and the Company and its affiliates, if any. The purpose of this review is to determine whether any such relationships or transactions exist that are inconsistent with a determination that the director is independent. The following current directors, Ms. Galiteva, Dr. Aoun, Dr. Ghoniem and
Mr. Lewis are “independent” in each case as defined in the applicable NASDAQ rules. As of December 31, 2015, the members of the Compensation Committee, Audit Committee and Nominating and Governance Committee are also “independent” for purposes of Section 10A-3 of the Exchange Act and NASDAQ listing requirements. The Board bases these determinations primarily on a review of the responses of the directors and executive officers to questions regarding employment and transaction history, affiliations and family and other relationships and on discussions with the directors.
Board Leadership Structure and Role in Risk Oversight
The Company separates the roles of Co-ChiefChief Executive OfficersOfficer and ChairmanChairperson in recognition of the differences between the two roles. Our Co-ChiefChief Executive Officers areOfficer is responsible for setting the strategic direction for the Company and the overall leadership and performance of the Company. Our ChairmanChairperson provides guidance to the Co-ChiefChief Executive Officers,Officer, sets the agenda for Board meetings, presides over meetings of the full Board and leads all executive meetings of the independent directors. We are a small company with a small management team, and we feel the separation of these roles enhances high-level attention to our business. Our Board has no lead independent director.
Our Board oversees our risk management processes directly and through its committees. Our management is responsible for risk management on a day-to-day basis. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and discusses policies with respect to risk assessment and risk management, including guidelines and policies to govern the process by which the Company’s exposure to risk is handled. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Nominating and Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our directors, and corporate governance.
Committees of the Board of Directors
Our Board directs the management of our business and affairs and conducts its business through meetings of the Board and the following standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee.
Audit Committee.Committee. The Audit Committee is presently composed of three members of the Board: Mr. Charles T. Maxwell (Chairman), Ms. Angelina M. Galiteva and Dr. Ahmed F. Ghoniem.Ms. Deanna Petersen. The Audit Committee assists the Board in the oversight of the audit of the Company’s financial statements and the quality and integrity of its accounting, auditing and financial reporting processes. The Audit Committee also has the responsibility of reviewing the qualifications, independence and performance of the Company’s independent registered public accounting firm and is responsible for the appointment, retention, oversight and, where appropriate, termination of the independent registered public accounting firm. During fiscal year 2015,2018, the Audit Committee held four meetings. The Board has determined that each of the members of the Audit Committee meets the criteria for independence under the applicable listing standards of NASDAQ, Section 10A-3 of the NASDAQ,Exchange Act, and that Mr. Maxwell also qualifies as an “audit committee financial expert,” as defined by the rules adopted by the SEC. The Board has adopted a written charter for the Audit Committee, which is reviewed annually by the Audit Committee. The current Audit Committee Charter is available on the Company’s web site,
http://investors.tecogen.com/audit-committee-charter.
Compensation Committee. The Compensation Committee is presently composed of threetwo members of the Board: Mr. Earl R. Lewis (Chairman), Ms. Angelina M. Galiteva (Chairwoman) and Dr. Joseph E. Aoun.Ms. Deanna Petersen. The principal functions of the Compensation Committee are reviewing with management cash and other compensation policies for employees, making recommendations to the Board regarding compensation matters and determining compensation for the Executive Officers. Our Co-ChiefChief Executive Officers have been instrumental in the design and recommendation to the Compensation Committee of compensation plans and awards for our directors and executive officers including our President and Chief Operating Officer and Chief FinancialAccounting Officer. All compensation
decisions for the Chief Executive Officers and all other executive officers are reviewed and approved by the Compensation Committee and can be subject to ratification by the Board of Directors. The Compensation Committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the Compensation Committee. In 2015,2018, no compensation consultant was engaged for employee or executive compensation.During fiscal year 2015,2018, the Compensation Committee held no formal meetings. The Board has determined that each of the members of the Compensation Committee meets the criteria for independence under the applicable NASDAQ listing standards. The current Compensation Committee Charter is available on the Company’s web site at http://investors.tecogen.com/compensation-committee-charter.
Nominating and Governance Committee. The Nominating and Governance Committee is presently composed of three members of the Board: Mr. Ahmed F. Ghoniem (Chairman), Mr. Charles T. Maxwell and Dr. Joseph E. Aoun,Ms. Deanna Petersen, each of whom is an independent director as independence is defined by the NASDAQ rules and regulations. The Nominating and Governance Committee functions are to identify persons qualified to serve as members of the Board, to recommend to the Board of Directors persons to be nominated by the Board for election as directors at the annual meeting of stockholders and persons to be elected by the boardBoard to fill any vacancies and recommend to the Board persons to be appointed to each of its committees. Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing composition of our Board. However, minimum qualifications include high level leadership experience in business activities, breadth of knowledge about issues affecting the Company, experience on other boards of directors, preferably public company boards, and time available for meetings and consultation on Company matters. In addition, the
Nominating and Governance Committee is responsible for developing and recommending to the Board a set of corporate governance guidelines applicable to the Company (as well as reviewing and reassessing the adequacy of such guidelines as it deems appropriate from time to time) and overseeing the annual self-evaluation of the Board. The committee held no formal meetings in 2015.2018. The charter of the Nominating and Governance Committee is available on the Company’s website at http://investors.tecogen.com/nominating-and-governance-committee-charter.
Nominations and Proposals of Stockholders
The Company’s Nominating and Governance Committee identifies new director candidates through recommendations from members of the Committee, other Board members and executive officers of the Company and will consider candidates who are recommended by security holders, as described below. Although the Board does not have a formal diversity policy, the Committee and the Board will consider such factors as it deems appropriate to assist in developing a Board and committees that are diverse in nature and comprised of experienced and seasoned advisors. These factors focus on skills, expertise or background and may include decision-making ability, judgment, personal integrity and reputation, experience with businesses and other organizations of comparable size, experience as an executive with a publicly traded company, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board.
A stockholder who, in accordance with Rule 14a-8, or Rule 14a-8, under the Securities Exchange Act of 1934, as amended, or the Exchange Act, wants to present a proposal for inclusion in the Company's 20162019 Proxy Statement and proxy card relating to the 20162019 Annual Meeting of Stockholders must submit the proposal by January 1, 2016.December 20, 2018. In order for the proposal to be included in the Proxy Statement, the stockholder submitting the proposal must meet certain eligibility standards and comply with certain regulations established by the SEC.
Stockholders who wish to present a business proposal or nominate persons for election as directors at the Company's 20162020 Annual Meeting of Stockholders must provide a notice of the business proposal or nomination in accordance with Section 1.11 of our Bylaws,By-laws, in the case of business proposals, or Section 1.10 of our Bylaws,By-laws, in the case of director nominations. In order to be properly brought before the 20162020 Annual Meeting of Stockholders, Sections 1.10 and 1.11 of our BylawsBy-laws require that a notice of the business proposal the stockholder wishes to present (other than a matter brought pursuant to Rule 14a-8), or the person or persons the stockholder wishes to nominate as a director, must be received at our principal executive office not less than 90 days, and not more than 120 days, prior to the first anniversary of the Company's prior year's annual meeting. Therefore, any notice intended to be given by a stockholder with respect to the Company's 20162020 Annual Meeting of Stockholders pursuant to our BylawsBy-laws must be received at our principal executive office no earlier than February 12, 20166, 2019 and no later than March 13, 2016.8, 2019. However, if the date of our 20162019 Annual Meeting of Stockholders occurs more than 3020 days before or 3060 days after June 11, 2016,6, 2019, the anniversary of the 20152018 Annual Meeting of Stockholders, a stockholder notice will be timely if it is received at our principal executive office by the later of (1) the 120th day prior to such annual meeting or (2) the close of business on the tenth day following the day on which public disclosure of the date of the meeting was made. To be in proper form, a stockholder's notice must include the specified information concerning the stockholder and the business proposal or nominee, as described in Sections 1.10 and 1.11 of our Bylaws.By-laws.
All proposals must be mailed to the Company's principal executive office, at the address stated herein, and should be directed to the attention of the Secretary of the Company.
The Nominating and Corporate Governance Committee will evaluate new director candidates in view of the criteria described above, as well as other factors the Committee deems to be relevant, through reviews of biographical and other information, input from others, including members of the Board and executive officers of the Company, and personal discussions with the candidate when warranted by the results of these other assessments. The Committee will evaluate any director candidates recommended by security holders under the same process. In determining whether to recommend to the Board the nomination of a director who is a member of the Board, the Committee will review the Board performance of such director and solicit feedback about the director from other Board members.
Code of Conduct and Ethics
The Company has adopted a code of business conduct and ethics that applies to the Company’s directors, officers and employees. The Company’s code of business conduct and ethics is intended to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the SEC and in other public communications made by the Company; compliance with applicable governmental laws, rules and regulations; prompt internal reporting of violations of the code of business conduct and ethics to an appropriate person or persons identified in the code of business conduct and ethics; and accountability for adherence to the code of business conduct and ethics. The Company’s code of business conduct and ethics is available on the Company’s website at http://investors.tecogen.com/code-of-business-conduct-and-ethics.ir.tecogen.com/governance-docs. A printed copy of the Company's code of business conduct and ethics is also available free of charge to any person who requests a copy by writing to our Secretary, Tecogen Inc., 45 First Avenue, Waltham, MA 02451.
REPORT OF THE AUDIT COMMITTEE
The information contained in this Proxy Statement with respect to the Audit Committee Report and charter and the independence of the members of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the “Securities Act”“Securities Act”, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference in such filing.
The Company has an Audit Committee that is comprised of independent Directors. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the accounting firm that is engaged as the Company’s independent registered public accounting firm. The Company’s management is responsible for the Company’s internal controls, disclosure controls and financial reporting process. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States.
In the performance of the Audit Committee’s oversight function, we have reviewed and discussed with management the Company’s audited financial consolidated statements of the Company for the fiscal year ended December 31, 20152018 and management’s assessment of the effectiveness of the Company’s internal control over financial reporting. We have also discussed with the Company’s independent registered public accounting firm the matters requiring discussion pursuant to Statement on Auditing Standards No. 61, as amended (Communications with Audit Committees) and as adopted by the Public Company Accounting Oversight Board in Rule 3200T and such other matters as we have deemed to be appropriate. We have also discussed with the Company’s independent registered public accounting firm matters relating to its independence and have received the written disclosures and letter from it required by the applicable requirements of the Public Company Accounting Oversight Board.
On the basis of the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements for the year ended December 31, 20152018 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20152018 for filing with the Securities and Exchange Commission.
By the Members of the Audit Committee,
Mr. Charles T. Maxwell, its Chair
Ms. Angelina M. Galiteva
Dr. Ahmed F. GhoniemMs. Deanna Petersen
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth information regarding annual and long-term compensation with respect to the compensationfiscal years ended December 31, 2018 and 2017, paid or accrued by the Company to or on behalf of ourthose persons who were, during the fiscal year ended December 31, 2018, the Company's Chief Executive Officer, Chief Accounting Officer and the Company's most highly compensated executive officers for the Company's last two completed fiscal years:serving as such as of December 31, 2018 whose compensation was in excess of $100,000 (the "Named Executive Officers").
| | | Name and principal position | Year | Salary ($) | Bonus ($) | Stock awards ($) | Option awards ($)(1) | All other compensation ($) | Total ($) | Year | Salary ($) | Bonus ($) | Stock awards ($) | Option awards ($)(1) | All other compensation ($) | Total ($) |
| John N. Hatsopoulos | 2015 | 1 |
| — |
| — |
| — |
| — |
| 1 |
| 2018 | 1 |
| — |
| — |
| — |
| — |
| 1 |
|
| Co-Chief Executive Officer | 2014 | 1 |
| — |
| — |
| — |
| — |
| 1 |
| |
| Co-Chief Executive Officer until March 29, 2018 | | 2017 | 1 |
| — |
| — |
| — |
| — |
| 1 |
|
| (Principal Executive Officer) | | | | |
| | | | | |
Benjamin Locke (2) | 2015 | 108,116 |
| — |
| — |
|
| — |
| 108,116 |
| |
| Co-Chief Executive Officer | 2014 | 150,000 |
| — |
| — |
| 323,751 |
| — |
| 473,751 |
| |
Benjamin M. Locke (2) | | 2018 | 210,000 |
| — |
| — |
| 204,400 |
|
| 414,400 |
|
| Chief Executive Officer | | 2017 | 210,000 |
| — |
| — |
| — |
| 630 |
| 210,630 |
|
| (Principal Executive Officer) | | | | |
| | | | | |
Robert A. Panora (3) | 2015 | 131,963 |
|
| — |
| — |
| — |
| 131,963 |
| 2018 | 200,000 |
| — |
| — |
| — |
| 648 |
| 200,648 |
|
| Chief Operating Officer and President | 2014 | 163,770 |
| 50,000 |
| — |
| — |
| — |
| 213,770 |
| 2017 | 200,000 |
| 50,000 |
| — |
| — |
| 2,772 |
| 252,772 |
|
| | | | | |
| David A. Garrison | 2015 | 186,923 |
| — |
| — |
| — |
| — |
| 186,923 |
| |
| Chief Financial Officer, Treasurer and Secretary | 2014 | 118,400 |
| — |
| — |
| 85,387 |
| — |
| 203,787 |
| |
Bonnie J. Brown(4) | | 2018 | 180,000 |
| — |
| — |
| 53,840 |
| — |
| 233,840 |
|
| Chief Accounting Officer, Treasurer and Secretary | | 2017 | 110,769 |
| — |
| — |
| — |
| — |
| 110,769 |
|
| (Principal Financial Officer) | | | | |
| | | | | |
Bonnie J. Brown (4) | 2014 | 120,840 |
| — |
| — |
| — |
| 21,800 |
| 142,640 |
| |
David A. Garrison(4) | | 2018 | — |
| — |
| — |
| — |
|
| — |
|
| Former Chief Financial Officer, Treasurer and Secretary |
|
| 2017 | 93,201 |
| — |
| — |
| — |
| — |
| 93,201 |
|
______________________________________________________
| |
(1) | The amounts in the “Stock Option Awards” column reflect the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. The assumptions used by us with respect to the valuation of stock and option awards are set forth in Note 10"Note 12 – Stockholders’ equityequity" to our 20152018 Annual Report reported on Form 10-K.10-K filed with the Securities and Exchange Commission on March 29, 2019. |
| |
(2) | Mr. Locke became the Company's Co-Chief Executive Officer on October 30, 2014. He is also2014 and became the Co-CEO of American DG Energy Inc., and devotes part of his business time to the affairs of American DG Energy. In 2015, $108,115 his salary was reimbursed by the American DG Energy according to the requirements of the business in a given week at a fully burdened rate. On average, Mr. Locke spends approximately 50% of his business timesole Chief Executive Officer on the affairs of the Company, but such amount varies widely depending on the needs of the business.March 29, 2018. |
| |
(3) | Mr. Panora becameThe $50,000 bonus was awarded by Ultra Emissions Ltd., but was paid by the Director of Operations of American DG Energy Inc. in August 2015. He devotes part of his business time to the affairs of American DG Energy. In 2015, $74,615 his salaryCompany which was then reimbursed by the American DG Energy according to the requirements of the business in a given week at a fully burdened rate. On average, Mr. Panora spends approximately 50% of his business time on the affairs of the Company, but such amount varies widely depending on the needs of the business.Ultra Emissions Ltd. |
| |
(4) | Ms. Brown resigned asbecame the Company's Chief FinancialAccounting Officer Treasurer, and Secretaryupon completion of the Company effective August 15, 2014,Merger and the resignation of Mr. Garrison in conjunction with an agreed consulting arrangement severanceMay of $21,800 was paid.2017. |
See "Employment Contracts and Termination of Employment and Change in Control Arrangements" below for the terms of certain agreements and change-in-control provisions.
Executive Officer Outstanding Equity Awards at Fiscal Year-EndFiscal-Year End
The following table sets forth information with respect to outstanding equity awards held by ourTecogen's executive officers as of December 31, 2015:2018.
|
| | | | | | | | | | | | | | | | | |
| | | Option awards | | Stock awards |
| Name | | Number of
securities
underlying
unexercised
options (#)exercisable | | Number of
securities
underlying
unexercised
options (#)unexercisable | | Option
exercise price ($) | | Option
expiration date | | Number of
shares
of stock
that have not vested (#) | | Market value
of shares
of stock
that have not vested ($)(1) |
| John N. Hatsopoulos | | — |
| | — |
| | — |
| |
| | — |
| | — |
|
Benjamin M. Locke (2)(3)(4) | | 18,750 |
| | 18,750 |
| | 3.20 |
| | 6/3/2023 | |
|
| |
|
| | | 15,625 |
| | 46,875 |
| | 4.96 |
| | 12/18/2024 | |
|
| |
|
|
| | | 25,000 |
| | 75,000 |
| | 4.96 |
| | 12/18/2024 | |
|
| |
|
|
Robert A. Panora (5) | | 125,000 |
| | — |
| | 2.60 |
| | 2/14/2021 | | 138,350 |
| | 484,225 |
|
David A. Garrison (6) | | 12,500 |
| | 37,500 |
| | 4.50 |
| | 4/24/2024 | |
|
| |
|
|
|
| | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock awards |
| Name | | Number of securities underlying unexercised options (#) exercisable | | Number of securities underlying unexercised options (#) unexercisable | | Option exercise price ($) | | Option expiration date | | Number of shares of stock that have not vested (#) | | Market value of shares of stock that have not vested ($) |
| John N. Hatsopoulos | | 12,723(1) | | — |
| | 3.93 |
| | 5/12/2026 | | — |
| | — |
|
| Benjamin Locke | | 37,500(2) | | — |
| | 3.20 |
| | 6/3/2023 | | — |
| | — |
|
| | | 62,500 (3) | | — |
| | 4.96 |
| | 12/17/2024 | | — |
| | — |
|
| | | 100,000(4) | | — |
| | 4.96 |
| | 12/17/2024 | | — |
| | — |
|
| | | 9,200(5) | | — |
| | 10.33 |
| | 11/19/2024 | | — |
| | — |
|
| | | 18,400(6) | | — |
| | 5.65 |
| | 12/11/2024 | | — |
| | — |
|
| | | 9,200(7) | | — |
| | 5.65 |
| | 6/10/2025 | | — |
| | — |
|
| | | | | 200,000(8) |
| | 3.68 |
| | 5/31/2028 | | | | |
| Robert A. Panora | | 125,000(9) | | — |
| | 2.60 |
| | 2/14/2021 | | — |
| | — |
|
| | | 12,723(10) | | — |
| | 0.79 |
| | 2/12/2026 | | — |
| | — |
|
| Bonnie Brown | | 9,200(11) | | — |
| | 3.15 |
| | 9/2/2025 | | — |
| | — |
|
| | | 5,000(12) | | 15,000 |
| | 2.39 |
| | 1/15/2028 | | | | |
| | | | | 40,000(13) |
| | 3.68 |
| | 5/31/2028 | | | | |
______________________________________________________
| |
(1)This grant includes stock option award granted May 12, 2016 in connection with the Ilios Merger. Upon completion of the Ilios Merger, all Ilios Inc. options were exchanged for fully vested options of the Company according to an exchange ratio, where every 7.86 options of Ilios Inc., were exchanged for 1 fully vested option of the Company. (2) Includes stock option award granted on June 3, 2013, with 25% of the options vesting on June 3, 2014 and then an additional 25% of the options vesting on each of the subsequent three anniversaries, subject to Mr. Locke's continued employment and subject to acceleration of vesting upon a change in control. (3) Includes stock option award granted on December 18, 2014, with 25% of the options vesting on December 18, 2015 and then an additional 25% of the options vesting on each of the subsequent three anniversaries, subject to Mr. Locke's continued employment and subject to acceleration of vesting upon a change in control. (4) Includes stock option award granted on December 18, 2014, with the options vesting if the Company achieves a positive adjusted EBITDA for the year ended 2015, modified in December 2015 to provide that 25% of the options vest on December 18, 2015 and an additional 25% of the options vest on each of the subsequent three anniversaries, subject to Mr. Locke's continued employment and subject to acceleration of vesting upon a change in control. (5) Includes stock option award granted November 19, 2014 in connection with Mr. Locke's service with ADGE. Upon completion of the ADGE Merger, all ADGE options were exchanged for fully vested options of the Company according to an exchange ratio. The exchange ratio affected the number of Company options received. (6) Includes stock option award granted December 11, 2014 in connection with Mr. Locke's service with ADGE. Upon completion of the ADGE Merger, all ADGE options were exchanged for fully vested options of the Company according to an exchange ratio. The exchange ratio affected the number of Company options received. (7) Includes stock option award granted June 6, 2015 in connection with Mr. Locke's service with ADGE. Upon completion of the ADGE Merger, all ADGE options were exchanged for fully vested options of the Company according to an exchange ratio. The exchange ratio affected the number of Company options received. (8) Includes stock option award granted May 31, 2018 in connection with Mr. Locke's service with the Company, with 25% of the options vesting on May 31, 2019 and then an additional 25% of the options vesting on each of the subsequent three anniversaries, subject to Mr. Locke's continued employment and subject to acceleration of vesting upon a change in control. | Market value of shares of stock that have not vested is computed based on the closing price of the Company’s Common Stock on December 31, 2015, which was $3.50 per share. |
| |
(2)
| Includes stock option award granted on June 3, 2013, with 25% of the shares vesting on June 3, 2014 and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, subject to Mr. Locke’s continued employment and subject to acceleration of vesting upon a change in control. |
| |
(3)
| Includes stock option award granted on December 18, 2014, with 25% of the shares vesting on December 18, 2015 and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, subject to Mr. Locke’s continued employment and subject to acceleration of vesting upon a change in control. |
| |
(4)
| Includes stock option award granted on December 18, 2014, with the shares vesting if the Company achieves a positive adjusted EBITDA for the year ended 2015, subject to Mr. Locke’s continued employment and subject to acceleration of vesting upon a change in control. |
| |
(5)
| Includes stock option award granted on February 15, 2011, with 25% of the shares vesting on February 15, 2012 and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, subject to Mr. Panora’s continued employment and subject to acceleration of vesting upon a change in control. Includes 138,350 shares of restricted Common Stock at a purchase price of $.001 per share granted on December 4, 2006, 25% shares vesting starting May 20, 2016, subject to acceleration of vesting upon a change in control prior to a termination event. |
| |
(6)
| Includes stock option award granted on April 25, 2014, with 25% of the shares vesting on April 25, 2015 and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, subject to Ms. Garrison’s continued employment and subject to acceleration of vesting upon a change in control. |
(9) Includes stock option award granted on February 15, 2011, with 25% of options vesting on February 15, 2012 and an additional 25% of the options vesting on each of the subsequent three anniversaries, subject to Mr. Panora's continued employment and subject to acceleration of vesting upon a change in control.
(10) Includes stock option award granted May 12, 2016 in connection with the Ilios Merger. Upon completion of the Ilios Merger all option holders of Ilios Inc. received fully vested options of the Company according to an exchange ratio, where every 7.86 options of Ilios Inc., were exchanged for 1 fully vested option of the Company.
(11) Includes stock option award granted September 2, 2015 in connection with Ms. Brown's service with ADGE. Upon completion of ADGE Merger, all ADGE options were exchanged for fully vested options of the Company according to an exchange ratio. The exchange ratio affected the number of Company options received.
(12) Includes stock option award granted January 15, 2018 in connection with Ms. Brown's service with the Company, with 25% of the options vesting on January 15, 2019 and then an additional 25% of the options vesting on each of the subsequent three anniversaries, subject to Ms. Brown's continued employment and subject to acceleration of vesting upon a change in control.
(13) Includes stock option award granted May 31, 2018 in connection with Ms. Brown's service with the Company,with 25% of the options vesting on May 31, 2019 and then an additional 25% of the options vesting on each of the subsequent three anniversaries, subject to Ms. Brown's continued employment and subject to acceleration of vesting upon a change in control.
Director Compensation
Each director who is not also one of our employees willis entitled to receive a fee of $500 per day for service on those days that our Board and/or each of the Audit, Compensation or Nominating and Governance Committees holds meetings, or otherwise conducts business.a committee on which such director served meets. Non-employee directors also will be eligible to receive stock or option awards under our equity incentive plan. We reimburse all of our non-employee directors for reasonable travel and other expenses incurred in attending Board and committee meetings. Any director who is also one of our employees receives no additional compensation for serving as a director.
The following table sets forth information with respect to the fiscal year 20152018 compensation of our directors who were not executive officers during the year ended December 31, 2015:2018:
|
| | | | | | | | | | |
| Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | All other compensation ($) | Total ($) |
| Angelina M. Galiteva | 4,500 |
| — |
| — |
| — |
| 4,500 |
|
| Joseph E. Aoun | 1,500 |
| — |
| — |
| — |
| 1,500 |
|
| Ahmed F. Ghoniem | 3,000 |
| — |
| — |
| — |
| 3,000 |
|
| Charles T. Maxwell | 4,500 |
| — |
| — |
| — |
| 4,500 |
|
| Earl R. Lewis | 2,500 |
| — |
| — |
| — |
| 2,500 |
|
|
| | | | | | | | | | |
| Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | All other compensation ($) | Total ($) |
| Angelina M. Galiteva | 1,500 |
| — |
| — |
| — |
| 1,500 |
|
| Keith Davidson | 1,000 |
| — |
| — |
| — |
| 1,000 |
|
| Ahmed F. Ghoniem | 500 |
| — |
| — |
| — |
| 500 |
|
| Charles T. Maxwell | 1,000 |
| — |
| — |
| — |
| 1,000 |
|
| Deanna Petersen | 1,500 |
| — |
| — |
| — |
| 1,500 |
|
Outstanding Equity Awards of Directors at Fiscal Year-End Table
The following table summarizes the outstanding equity awards held by each Tecogen director who werewas not an executive officersofficer during the year ended December 31, 2015:2018.
|
| | | | | | | | | | | | | | | | | |
| | | Option awards | | Stock awards |
| Name | | Number of
securities
underlying
unexercised
options (#)exercisable | | Number of securities underlying unexercised options (#) unexercisable | | Option
exercise price ($) | |
Option
expiration date | | Number of
shares
of stock
that have not vested (#) | | Market value
of shares
of stock
that have not vested ($) |
Angelina M. Galiteva (1) | | 25,000 |
| | — |
| | 2.60 |
| | 2/14/2021 | | 25,000 |
| | 87,500 |
|
Joseph E. Aoun (2) | | 12,500 |
| | 12,500 |
| | 4.50 |
| | 12/31/2023 | |
|
| |
|
|
Ahmed F. Ghoniem (3) | | 25,000 |
| | — |
| | 2.60 |
| | 2/14/2021 | |
|
| |
|
|
Earl Lewis (4) | | 6,250 |
| | 18,750 |
| | 4.96 |
| | 12/18/2024 | |
|
| |
|
|
Charles T. Maxwell (5) | | 25,000 |
| | — |
| | 2.60 |
| | 2/14/2021 | |
|
| |
|
|
|
| | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock awards |
| Name | | Number of securities underlying unexercised options (#) exercisable | | Number of securities underlying unexercised options (#) unexercisable | | Option exercise price ($) | | Option expiration date | | Number of shares of stock that have not vested (#) | | Market value of shares of stock that have not vested ($) |
Angelina M. Galiteva(1) | | 25,000 |
| | — |
| | 2.60 | | 2/14/2021 | | — |
| | — |
|
Ahmed F. Ghoniem(2) | | 25,000 |
| | — |
| | 2.60 | | 2/14/2021 | | — |
| | — |
|
Ahmed F. Ghoniem(3) | | 12,723 |
| | — |
| | 0.79 | | 5/12/2026 | | — |
| | — |
|
Charles T. Maxwell(4) | | 25,000 |
| | — |
| | 2.60 | | 2/14/2021 | | — |
| | — |
|
Keith Davidson(5) | | 25,000 |
| | — |
| | 5.39 | | 9/7/2024 | | — |
| | — |
|
Keith Davidson(6) | | 50,000 |
| | 50,000 |
| | 4.27 | | 9/2/2026 | | — |
| | — |
|
Deanna Peterson(7) | | 9,200 |
| | — |
| | 3.48 | | 4/5/2026 | | — |
| | — |
|
______________________________________________________
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(1)
(1) Includes stock option award granted on February 15, 2011, with 25% of the options vesting on February 14, 2012, and an additional 25% of the options vesting on each of the subsequent three anniversaries provided that Ms. Galiteva continues to serve as a director or consultant to the Company. (2) Includes stock option award granted on February 15, 2011, with 25% of the options vesting on February 14, 2012, and an additional 25% of the options vesting on each of the subsequent three anniversaries provided that Dr. Ghoniem continues to serve as a director or consultant to the Company. (3) Includes stock option award granted May 12, 2016 in connection with the Ilios Merger. Upon completion of the Ilios Merger all option holders of Ilios Inc. were given fully vested options of the Company according to an exchange ratio, where every 7.86 options of Ilios Inc., were exchanged for 1 fully vested option of the Company. (4) Includes stock option award granted on February 15, 2011, with 25% of the options vesting on February 14, 2012, and an additional 25% of the options vesting on each of the subsequent three anniversaries provided that Mr. Maxwell continues to serve as a director or consultant to the Company. (5) Includes stock option award granted on September 8, 2014, with 25% of the options vesting on September 7, 2015, and an additional 25% of the options vesting on each of the subsequent three anniversaries provided that Mr. Davidson continues to serve as a director or consultant to the Company. (6) Includes stock option award granted on September 2, 2016, with 25% of the options vesting on September 2, 2017, and an additional 25% of the options vesting on each of the subsequent three anniversaries provided that Mr. Davidson continues to serve as a director or consultant to the Company. (7) Includes stock option award granted April 5, 2016 in connection with Ms. Petersen's service on ADGE's board of directors. Upon completion of the ADGE Merger, all ADGE options were exchanged for fully vested options of the Company according to an exchange ratio. The exchange ratio affected the number of Company options received. | Includes stock option award granted on February 15, 2011, with 25% of the shares vesting on February 15, 2012, and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, provided that Ms. Galiteva serves as a director or consultant to the Company. Includes 25,000 shares of restricted Common Stock at a purchase price of $.004 per share granted on December 13, 2006, with 100% of the shares vesting on May 20, 2016. |
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(2)
| Includes stock option award granted on December 31, 2013, with 25% of the shares vesting on December 31, 2014, and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, provided that Dr. Aoun serves as a director or consultant to the Company. |
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(3)
| Includes stock option award granted on February 15, 2011, with 25% of the shares vesting on February 15, 2012, and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, provided that Mr. Ghoniem serves as a director or consultant to the Company. |
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(4)
| Includes stock option award granted on December 18, 2014, with 25% of the shares vesting on December 18, 2015, and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, provided that Mr. Lewis serves as a director or consultant to the Company. |
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(5)
| Includes stock option award granted on February 15, 2011, with 25% of the shares vesting on February 15, 2012, and then an additional 25% of the shares vesting on each of the subsequent three anniversaries, provided that Mr. Maxwell serves as a director or consultant to the Company. |
Compensation Committee Interlocks and Insider Participation
NoneDuring fiscal year 2018, none of our executive officers serveserved as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our Board or Compensation Committee. None of the current members of the Compensation Committee of our Board has ever been an employee of the Company.
Employment Contracts and Termination of Employment and Change-in-Control Arrangements
None of ourTecogen's executive officers, other than Mr. John Hatsopoulos, has an employment contract or change-in-control arrangement, other than stock and option awards that contain certain change-in-control provisions such as accelerated vesting due to acquisition. In the event that an acquisition that is not a private transaction occurs while the optionee maintains a business relationship with the Company and the option has not fully vested, the option will become exercisable for 100% of the then number of shares as to which it has not vested with such vesting to occur immediately prior to the closing of the acquisition.
The stock and option awards that would vest for each named executive officer if a change-in-control were to occur are disclosed under our Outstanding Equity Awards at Fiscal Year-End TableTable. . Our stock and option awards contain certain change-in-control provisions. Descriptions of those provisions are set forth below:
Stock AwardsAwards: Change-in-Control Definition
For the purposes of our stock awards, change-in-control shall mean (a) the acquisition in a transaction or series of transactions by anya person (such term to include anyone deemed a person under Section 13(d)(3) of the Exchange Act), other than the Company or any of its subsidiaries, or any employee benefit plan or related trust of the Company or any of its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors or (b) the sale or other disposition of all or substantially all of the assets of the Company in one transaction or series of related transactions.
Option Awards Change-in-Control Definition
For the purposes of our option awards, change-in-control shall mean merger (or reverse merger), consolidation, or other similar event or the sale or lease of all or substantially all of the Company’sCompany's assets. Upon a change-in-control,while the optionee maintains a business relationship with the Company and the option has not fully vested, the option shall become exercisable for 100% of the then number of shares as to which it has not vested, such vesting to occur immediately prior to the closing of the acquisition.
Advisory Agreement
On January 3, 2018 the Company entered into an Advisory Agreement with John N. Hatsopoulos, a member of the Board of Directors. The Advisory Agreement provides that Mr. Hatsopoulos will resign as a member of the Board of Directors at the Company's 2018 Annual Meeting of Stockholders or June 30, 2018, whichever comes first. Pursuant to the Advisory Agreement, Mr. Hatsopoulos will remain an advisor to the Company's Board of Directors and an employee of the Company in the Company's Investors Relations Department. He will be paid a salary of $1.00 annually and receive the same benefits as other similarly situated employees as well as administrative support for the duration of the agreement. Mr. Hatsopoulos was not nominated for election as a director at the June 6, 2018 Annual Meeting of Stockholders. On February 1, 2019 Mr. Hatsopoulos was reappointed by the Company's Board of Directors to serve as a director of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The Company has three affiliated companies, namely American DG Energy, EuroSite Power, and Ilios. These companies are affiliates because severalExcept as set forth below since the beginning of the major stockholderslast completed fiscal year we have not been a party to any transaction in which the amount involved exceeded or will exceed the lesser of those companies,$120,000 or one percent of the average of our total assets as at the year-end for the last two completed fiscal years and in which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a significant ownership position indirect or indirect material interest.
Director Loan
In connection with the Company. TheADGE Merger, the Company does not own any shares of American DG Energy, and EuroSite Power.
American DG Energy, EuroSite Power and Ilios are affiliated companies by virtue of common ownership. The common stockholders include:
assumed a loan from John N. Hatsopoulos, the Company’sCompany's former Co-Chief Executive Officer who is also: (a) the Chief Executive Officer and a director of American DG Energy and as of December 31, 2015 holds approximately 3.2% of American DG Energy’s common stock; (b) the Chairman of EuroSite Power and as of December 31, 2015 holds approximately 4.8% of EuroSite Power’s common stock; and (c) a director of Ilios and as of December 31, 2015 holds 7.2% of Ilios’s common stock.
Dr. George N. Hatsopoulos, who is John N. Hatsopoulos’ brother, and is also: (a) an investor of American DG Energy and as of December 31, 2015 holds approximately 13% of American DG Energy’s common stock; (b) an investor in Eurosite Power and as of December 31, 2015 holds less than %1 of EuroSite Power’s common stock; (c) an investor in Ilios and as of December 31, 2015 holds 3.1% of Ilios's common stock; and (d)Company Director. The loan was a director of the Company until June 25, 2014.
American DG Energy has sales representation rights to the Company’s products and services in New England. Revenue from sales of cogeneration and chiller systems, parts and service to American DG Energy and EuroSite Power during the years ended December 31, 2015 amounted to $1,903,427.
John N. Hatsopoulos’ salary is $1.00 per year. On average, Mr. Hatsopoulos spends approximately 50% of his business time on the affairs of the Company; however such amount varies widely depending on the needs of the business and is expected to increase as the business of the Company develops.
On January 1, 2006 the Company signed a Facilities and Support Services Agreement with American DG Energy for a period of one year, renewable annually, on January 1st, by mutual agreement. Various versions of this agreement have been renewed each year between the Company and American DG Energy. Under these agreements, the Company provides American DG Energy with certain office and business support services and also provides pricing based on a volume discount depending on the level of American DG Energy purchases of cogeneration and chiller products. For certain sites, American DG Energy hires the Company to service its chiller and cogeneration products. The Company also provides office space and certain utilities to American DG Energy based on a monthly rate set at the beginning of each year. Also, under this agreement, American DG Energy has sales representation rights to the Company's products and services in New England.
The Company subleases portions of its corporate offices and manufacturing facility to sub-tenants under annual sublease agreements. For the year ended December 31, 2015, the Company received $78,468 from American DG Energy and Eurosite. In addition, for the year ended December 31, 2015 the Company received from American DG Energy, $36,672 to offset common operating expenses incurred in the administrationamount of $850,000, with interest at 6%, payable quarterly, and maintenancehad a maturity date of its corporate office and warehouse facility. In addition, the Company pays certain operating expenses, including benefits and insurance,May 25, 2018. The loan, together with interest thereon, was repaid in full on behalf of American DG Energy. The Company was reimbursed for these costs. As of December 31, 2015, the total amount due from American DG Energy was $1,177,261.
May 4, 2018.
Director Independence
The Company’s policyCompany's common stock is that a majoritylisted on the NASDAQ stock exchange. The Board considers the status of our Board shall be “independent”its members pursuant to the independence requirements set forth in accordance withthe applicable NASDAQ rules including,and applicable federal securities laws. Under these requirements, the Board undertakes a review at least annually of director independence. During this review, the Board considers transactions and relationships between each director or any member of his immediate family and the Company and its affiliates, if any. The purpose of this review is to determine whether any such relationship or transactions exist that are inconsistent with a determination that the director is independent. The following current directors, Ms. Galiteva, Dr. Ghoniem, Mr. Maxwell, Mr. Davidson, and Ms. Petersen are "independent" in each case as defined in the judgmentapplicable NASDAQ rules. As of December 31, 2018, the Board, the requirement that such directors have no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). The Board has adopted the following standards to assist it in determining whether a director has a material relationship with the Company. Under these standards, a director will not be considered to have a material relationship with the Company if he or she is not:
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(a) | a director who is, or during the past three years was, employed by the Company, other than prior employment as an interim executive officer (provided the interim employment did not last longer than one year); |
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(b) | a director who accepted or has an immediate family member who accepted any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following: |
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(i) | compensation for board or board committee service; |
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(ii) | compensation paid to an immediate family member who is an employee (other than an executive officer) of the Company; |
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(iii) | compensation received for former service as an interim executive officer (provided the interim employment did not last longer than one year); or |
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(iv) | benefits under a tax-qualified retirement plan, or non-discretionary compensation; |
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(c) | a director who is an immediate family member of an individual who is, or at any time during the past three years was, employed by the Company as an executive officer; |
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(d) | a director who is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments (other than those arising solely from investments in the Company's securities or payments under non-discretionary charitable contribution matching programs) that exceed 5% of the organization's consolidated gross revenues for that year, or $200,000, whichever is more, in any of the most recent three fiscal years; |
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(e) | a director who is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the most recent three fiscal years any of the issuer's executive officers serve on the compensation committee of such other entity; or |
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(f) | a director who is, or has an immediate family member who is, a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years. |
Ownership of a significant amount of the Company’s stock, by itself, does not constitute a material relationship. For relationships not covered by these standards, the determination of whether a material relationship exists shall be made by the other members of the Board who are independent (as defined above).
CHANGES IN INDEPENDENT REGISTERD ACCOUNTING FIRM
On August 15, 2014, theCompensation Committee, Audit Committee approvedand Nominating and Governance Committee are also "independent" for purposes of Rule 10A-3 under the engagementExchange Act and NASDAQ listing requirements. The Board bases these determinations primarily on a review of Wolf & Company, P.C., or Wolf, as the Company's independent registered public accounting firm. McGladrey LLP, or McGladrey,responses of the Company's former independent registered public accounting firm was dismissed bydirectors and executive officers to questions regarding employment and transaction history, affiliations and family and other relationships and on discussions with the Audit Committee.directors.
In decidingassessing the independence of Dr. Ahmed F. Ghoniem, the Board considered Dr. Ghoniem's position as a consultant for Ultra Emissions Technology Ltd., a joint venture that Company was part of ("Ultratek"). Pursuant to select Wolf, the Audit Committee reviewed auditor independence issuesConsulting Agreement dated December 8, 2015, as amended, between Dr. Ghoniem and existing commercial relationships with Wolf and concluded that Wolf has no commercial relationship with the Company, Dr. Ghoniem was engaged to provide consulting services for Ultratek related to the development and manufacturing of automobile emissions control technology. As amended, the Consulting Agreement automatically renews for six month periods unless terminated according to its terms. It was agreed that aggregate fees of $240,000 annually would impair its independencebe paid in monthly installments of $20,000. Tecogen paid the monthly installments to Dr. Ghoniem, and then Tecogen was reimbursed from Ultratek. Dr. Ghoniem's Consulting Agreement terminated on October 28, 2017, when the Company and the Ultratek investors decided to dissolve Ultratek. The Board determined that, because Dr. Ghoniem did not work directly for the fiscal year ended December 31, 2014. During the Company's two most recent fiscal yearsCompany and the subsequent interim period through August 15, 2014, the Company did not consult Wolfcontrol Ultratek, his consulting relationship would not interfere with Dr. Ghoniem's independence.
In assessing the independence of Mr. Keith Davidson, the Board considered the position of Mr. Davidson's company, DE Solutions, Inc. ("DE Solutions"), as a consultant for Ultratek. Pursuant to the Consulting Agreement dated December 1, 2015, as amended, between DE Solutions and the Company, DE Solutions was engaged to provide consulting services for Ultratek related to the development and policies of automobile emissions control technology. As amended the agreement provides for $7,500 a month in exchange for services. The DE Solutions' Consulting Agreement was also terminated when Ultratek decided to dissolve on October 28, 2017. The Board determined that, because DE Solutions did not work directly for the Company and the Company did not control Ultratek, this consulting relationship would not interfere with Mr. Davidson's independence.
In assessing the independence of Mr. Davidson, the Board considered certain transactions involving Ilios, Inc., a Delaware corporation ("Ilios"). In 2009, the Company created Ilios to develop and distribute a line of high-efficiency heating products, starting with a water heater. Beginning on April 11, 2016 through its conclusion on May 12, 2016, the Company entered into numerous private placement share exchange agreements ("Share Exchange Agreements") with shareholders of Ilios ("Exchanging Shareholders"), including Mr. Davidson. Pursuant to the Share Exchange Agreements, the Exchanging Shareholders agreed to exchange every 7.86 of their restricted Ilios shares of common stock for one share of the Company's restricted common stock. In addition, the Company granted each Exchanging Shareholder registration rights with respect to any of the matters or events listedCompany's common stock received in Regulation S-K Item 304(a)(2).
The reports of McGladrey onexchange for their Ilios shares. Pursuant to the financial statements ofRegistration Rights Agreement, the Company for the years ended December 31, 2013 and 2012 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. During the fiscal years ended December 31, 2013 and 2012 and through August 15, 2014, there were no (i) disagreements between the Company and McGladrey on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of McGladrey, would have caused them to make reference to the subject matter of the disagreement(s) in connection with its reports on the financial statements for such years; or (ii) “reportable events,” as that term is described in Item 304(a)(1)(v) of Regulation S-K.filed a registration
statement covering the resale of the shares. Upon execution of the exchange agreements for 100% of the shares of Ilios, the Company no longer had a non-controlling interest in its subsidiary. The Board determined that, because Mr. Davidson only owned 10,000 shares of Ilios common stock, this immaterial investment would not interfere with Mr. Davidson's independence.
CHANGES IN INDEPENDENT REGISTERED ACCOUNTING FIRM
None.
AUDIT FEES SUMMARY
Fees billed by Wolf & Company P.C. ("Wolf") for services rendered in connection with the fiscal years ended 20152018 and 20142017 are set forth below. All fees earned by Wolf were pre-approved by the Audit Committee.
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| | 2015 | 2014 |
| Audit fees | $141,500 | $107,100 |
| Audit-related fees | 12,000 |
| — |
|
| Tax fees | — |
| — |
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| All other fees | — |
| — |
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| Total | $153,500 | $107,100 |
The following table summarizes fees billed to the Company by McGladrey for professional services rendered for the years ended 2015 and 2014:
| | | | | 2015 | | 2014 | 2018 | 2017 |
| Audit fees | | $0 | | $90,400 | $244,800 | $258,900 |
Audit-related fees (1) | | 45,000 |
| | 120,600 |
| — |
| 18,200 |
|
| Tax fees | | — |
| | — |
| — |
| — |
|
| All other fees | | — |
| | — |
| — |
| — |
|
| Total | | $45,000 | | $211,000 | $244,800 | $277,000 |
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF WOLF & COMPANY P.C.
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019
The Audit Committee has engagedselected Wolf & Company, P.C., or “Wolf” to serve as the Company's independent registered public accounting firm in connection with the audit for the fiscal year ended December 31, 2016,2019, and the review of the Company's financial statements for the quarters ended March 31, 2016,2019, June 30, 2016,2019, and September 30, 2016.2019. Wolf has served as the Company's independent registered public accounting firm since September 15, 2014.
Although ratification is not required, the Board is submitting the selection of Wolf to its stockholders for ratification as a matter of good corporate practice. If the selection is not ratified by stockholders, the Audit Committee will consider the results in connection with its selection of auditors for the balance of 2016.2019. Notwithstanding the ratification of the selection, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time if it determines that such a change would be in the Company's best interest and the best interestinterests of its stockholders.
The Audit Committee, prior to engaging Wolf, considered the qualifications of that firm, its reputation for integrity, competence in the fields of accounting and auditing, and its independence.
The Company has been informed that neither Wolf nor any of its partners have any direct financial interest or any material indirect financial interest in the Company nor have any of them had any connection during the past three years with the Company in the capacity of promoter, underwriter, voting trustee, director, officer or employee. A representative of Wolf is expected to be present at the Annual Meeting, to make a statement if so desired, and to be available to respond to any appropriate questions.
Recommendation and Vote Required for Approval
To be approved, the ratification of the appointment of Wolf requires the affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy at the Annual Meeting and entitled to vote thereon.
The Board recommends that stockholders vote FOR the ratification of the appointment of Wolf & Company P.C. as the Company's independent registered public accounting firm.
PROPOSAL 3
ADVISORY VOTE REGARDING APPROVAL OF THE
COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS
As required by Section 14A of the Exchange Act, and in view of the fact that the Company ceased to be an "Emerging Growth Company" as of December 31, 2018, the Company is required to submit to stockholders at least once every three years the opportunity to cast a non-binding stockholder advisory vote to approve the compensation of the Company named executive officers as disclosed in its Proxy Statement. Accordingly, the Company is hereby providing its stockholders the opportunity to cast a non-binding advisory vote "For" or "Against" the compensation paid to the Company's named executive officers in 2018 as disclosed and described in the "Compensation of Directors and Executive Officers" section of this Proxy Statement, including the compensation table and narrative disclosures that accompany the compensation tables. The Board will consider the results of the advisory vote in connection with the determination of the compensation of the Company's named executive officers.
This proposal 3 gives Company stockholders the opportunity to vote for or against the following resolution:
RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed under the section entitled "Compensation of Directors and Executive Officers, " including the compensation tables and narrative discussion related thereto, is hereby approved.
Vote required for Approval
To be approved, the non-binding advisory vote on the compensation of the Company's named executive officers requires the affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy at the Annual Meeting and entitled to vote thereon.
The Board recommends that stockholders vote FOR the approval of the compensation of the Company's named executive officers.
PROPOSAL 4
NON-BINDING ADVISORY VOTE REGARDING FREQUENCY OF STOCKHOLDER VOTES
ON APPROVAL OF THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS
In additoin to the non-binding advisory vote to approve 2018 executive compensation as described in Proposal 3 above, SEC rules require that stockholders of the Company have an opportunity at least every six years to vote on the frequency of a non-binding advisory stockholder vote on executive compensation. Accordingly, te advisory vote on the frequency of stockholder votes regarding approval of the compensation of the Company's named executive officers is being submitted for a vote by stockholders of the Company. The Board will consider the results of the non-binding advisory vote in connection with the determination of the frequency of stockholder votes on approval of the compensation of the Company's named executive officers.
The Company's stockholders are being requested to indicate by their vote on this proposal whether the non-binding advisory stockholder vote on executive compensation should occur every year, every two years, or every three years.
Vote Required for Approval
To be approved, the non-binding advisory vote on the frequency of stockholder votes on the approval of the compensation of the Company's named executive officers requires the affirmative vote of the holders of a majority in voting power of the votes cast by the holders of all of the shares of stock present or representedrepresenteed at the meetingAnnual Meeting and voting affirmatively or negativelyentitled to vote on suchthe matter. The results of the non-binding advisory vote regarding the frequency of stockholder votes on the approval of the compensation of the Company's named executive officers will be taken into account by the Board in determining the frequency of stockholder votes on approval of the compensation of the Company's named executive officers.
The Board recommends that stockholders vote FORselect THREE YEARS as the ratificationfrequency of stockholder votes on approval of the appointmentcompensation of Wolf & Company P.C. as the Company's independent registered public accounting firm.
named executive officers.
PROPOSAL 3
AUTHORIZATION TO ADJOURN THE ANNUAL MEETING
If, at the Annual Meeting, the number of shares of common stock, present in person or by proxy, is insufficient to constitute a quorum or the number or shares of common stock voting in favor is insufficient to approve any of the proposals, management may determine to move to adjourn the Annual Meeting to a later date or dates, if necessary, in order to enable the Board of Directors to solicit additional proxies. In that event, we will ask our stockholders to vote only upon the adjournment proposal and not the remaining proposals. Among other things, approval of the adjournment proposal could mean that, even if we had received proxies representing a sufficient number of votes against any of the proposals to defeat the proposal, we could adjourn the Annual Meeting without a vote on the matter and seek to convince the holders of those shares to change their votes in favor of the proposals. Generally, if the Annual Meeting is adjourned, no notice of the adjourned meeting is required to be given to stockholders, other than announcement at the Annual Meeting of the place, date and time to which the meeting is adjourned. However, the Company’s ByLaws provide that if the adjournment or adjournments are for more than 30 days, or if after adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the adjourned meeting.
Recommendation and Vote
To be approved, the adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast by the holders of all of the shares of stock present or represented at the meeting and voting affirmatively or negatively on such matter.
The Board of Directors recommends that stockholders vote FOR the proposal to authorize the Board of Directors to adjourn the Annual Meeting of stockholders to allow time for the further solicitation of proxies.
ADDITIONAL INFORMATION
No Incorporation by Reference
In the Company’s filings with the Securities and Exchange Commission, or SEC, information is sometimes “incorporated by reference.” This means that we are referring you to information that has previously been filed with the SEC and the information should be considered as part of the filing. Based on SEC regulations, the “Audit Committee Report” and the “Compensation Committee Procedures,” specifically are not incorporated by reference into any other filings by the Company with the SEC. In addition, this Proxy Statement includes website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this Proxy Statement.
Stockholder Communication with the Board
A stockholder that desires to communicate directly with the Board or one or more of its members concerning the affairs of the Company shall direct the communication in writing to Tecogen Inc., attention Corporate Secretary, 45 First Avenue, Waltham, Massachusetts, 02451. If such communication is intended for some but notor all of the members of the Board, the mailing envelope must contain a clear notation indicating that the enclosed letter is a “Shareholder-Board“Stockholder-Board Communication”. The Corporate Secretary has been authorized to screen commercial solicitations and materials which pose security risks, are unrelated to the business or governance of the Company or are otherwise inappropriate. All such letters must identify the author as a shareholderstockholder and clearly state whether the intended recipients are all or individual members of the Board. The Corporate Secretary will make copies of all such letters and circulate them to the appropriate director or directors.
Householding of Proxy Statements
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual report or Notice of Internet Availability of proxy materials with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report or Notice of Internet Availability of proxy materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A number of brokers with account holders who are our stockholders may “household” our proxy materials. In that event, a single Proxy Statementproxy statement and annual report will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate Proxy Statementproxy statement and annual report, or Notice of Internet Availability of proxy materials, please notify your broker and the Company's Secretary in writing at 45 First Ave, Waltham, MA 02451 or by telephone at (781) 466-6400. You can also obtain a copy at https://materials.proxyvote.com/87876P. The Company will promptly deliver, without charge, an additional copy of any such Proxy Statement and annual report or Notice of Internet Availability upon request. Stockholders who currently receive multiple copies of the proxy materials at their address and would like to request householding of their communications should contact their broker.
Other Proposed Action
The Board does not intend to bring any other matters before the Annual Meeting, nor does the Board know of any matters which other persons intend to bring before the Annual Meeting. If, however, other matters not mentioned in this Proxy Statement properly come before the Annual Meeting, the persons named in the accompanying form of proxy will vote thereon in accordance with the recommendation of the Board.
By Order of the Board of Directors
TECOGEN INC.
/s/ David A. GarrisonBonnie J. Brown
David A. GarrisonBonnie J. Brown
Secretary of the Corporation
TECOGEN INC.
Annual Meeting of Stockholders
June 23, 2016 at 1:30 p.m.
This proxy card is valid only when signed and dated
The Board of Directors recommends a vote FOR ALL NOMINEES on Proposal 1, FOR Proposals 2 and 3. To vote in accordance with the Board of Directors recommendations, just sign below no boxes need to be checked.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
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1. | To elect six (6) directors of the Board of Directors of the Company to hold office for one (1) year until the 2017 annual meeting or until their successors are duly elected and qualified: |
Nominees:
Angelina M. Galiteva o
John N. Hatsopoulos o
Charles T. Maxwell o
Ahmed F. Ghoniem o
Earl R. Lewis o
Joseph E. Aoun o
Nominees:
FOR ALL NOMINEES o
WITHHOLD AUTHORITY FOR ALL NOMINEES o
FOR ALL EXCEPT (see instructions below) o
Instruction: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and mark the box next to each nominee you wish to withhold.
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2. | To ratify the selection by the Audit Committee of our Board of Directors of the firm of Wolf and Co., as our independent registered public accounting firm for the fiscal year ending December 31, 2016. |
FOR o
AGAINST o
ABSTAIN o
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3. | To approve the non-binding advisory proposal regarding executive compensation. |
FOR o
AGAINST o
ABSTAIN o
Please indicate if you plan to attend this meeting YES o NO o
Name __________________ Signature ________________________ Date: ___________________, 2016
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
TECOGEN INC.
Annual Meeting of Stockholders
June 23, 2016 at 1:30 p.m.
This proxy is solicited by the Board of Directors
The undersigned hereby constitutes and appoints John N. Hatsopoulos, Benjamin M. Locke and David A. Garrison, or any one of them (with full power to act alone), as Proxies of the undersigned, with full power of substitution, to vote all of the common stock of Tecogen, Inc which the undersigned has the full power to vote at the Annual Meeting of stockholders of Tecogen, Inc to be held at the corporate headquarters of Tecogen, Inc at 45 First Avenue, Waltham, Massachusetts 02451, on Thursday, June 23, 2016 at 1:30 p.m., and at any adjournments thereof, in the transaction of any business which may come before said meeting, with all the powers the undersigned would possess if personally present and particularly to vote each matter set forth on the reverse side, all as in accordance with the Notice of Annual Meeting and Proxy Statement furnished with this proxy.
Unless otherwise specified by the undersigned, this proxy will be voted FOR ALL NOMINEES on Proposal 1, FOR Proposals 2 and 3, and also will be voted by the proxy holders at their discretion as to any other matters properly transacted at the Annual Meeting or any postponement or adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
