(Amendment (Amendment No. )
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Preliminary Proxy Statement—Subject to Completion
26, 2024
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12, 2024
To elect three members of the Board of Directors (Proposal 1);
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To approve an amendment and restatement of our Employee Stock Purchase Plan (“ESPP”) that will increase the total number of shares of common stock available for issuance thereunder, as described further herein (Proposal 5);
To approve an amendment to our second amended and restated certificate of incorporation, as amended, to effect a reverse stock split by a ratio not to exceed 1-for-20; (Proposal 6)•
To approve, if and only if Proposal 6 is approved and implemented, an amendment to our second amended and restated certificate of incorporation, as amended, to effectively increase the number of authorized shares of common stock (Proposal 7); and
To transact such other business as may properly come before the meeting and any adjournments or postponements thereof.
By Order of the Board of Directors, |
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Our
These materials include:
the Notice of Annual Meeting of Stockholders;
the Proxy Statement for the Annual Meeting; and
the 2022 Annual Report to Stockholders, which consists of our Annual Report on Form 10-K for the year ended December 31, 2022.
If you received a paper copy of these materials by mail, the proxy materials also include a proxy card, or a voting instruction form for the Annual Meeting. If you received a “Notice of Internet Availability of Proxy Materials” (described below) instead of a paper copy of the proxy materials, see the section titled “Voting Information” below for information regarding how you can vote your shares.
What items will be voted on at the Annual Meeting?
There are seven proposals scheduleddoes it mean to be voted on at the Annual Meeting:
to elect six director nominees nominated by our Boarda “stockholder of Directors;
to ratify the appointment of Marcum LLP (“Marcum”) as our independent registered public accounting firm for the fiscal year ending December 31, 2023;
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to approve, by a non-binding advisory vote, the compensation paid by us to our named executive officers;
to approve an amendment and restatement of our 2013 Equity Incentive Plan that will increase the total number of shares of common stock available for issuance thereunder, as described further herein;
to approve an amendment and restatement of our ESPP that will increase the total number of shares of common stock available for issuance thereunder, as described further herein;
to approve an amendment to our second amended and restated certificate of incorporation, as amended (“certificate of incorporation”), to effect a reverse stock split by a ratio not to exceed 1-for-20; and
to approve, if and only if the reverse stock split amendment is approved and implemented, an amendment to our certificate of incorporation to effectively increase the number of authorized shares of common stock.
The Board is not aware of any other matters to be brought before the Annual Meeting. If, other matters are properly raised at the meeting, the proxy holders are authorized to vote in their discretion any shares that they represent by proxy.
What are the Board’s voting recommendations?
The Board recommends that you vote your shares:
FOR each of the nominees to the Board of Directors presented in this proxy statement (Proposal 1);
FOR the ratification of the appointment of Marcum as our independent registered public accounting firm for the fiscal year ending December 31, 2023 (Proposal 2);
FOR the approval, on a non-binding advisory basis, of the compensation paid by us to our named executive officers (Proposal 3);
FOR the approval of an amendment and restatement of our 2013 Plan that will increase the total number of shares of common stock available for issuance thereunder, as described further herein (Proposal 4);
• FOR the approval of an amendment and restatement of our ESPP that will increase the total number of shares of common stock available for issuance thereunder, as described further herein (Proposal 5);
• FOR the approval of an amendment to our certificate of incorporation to effect a reverse stock split by a ratio not to exceed 1-for-20 (Proposal 6); and
• FOR the approval of an amendment to our certificate of incorporation to effect an effective increase in the number of authorized shares of common stock (Proposal 7).
No director, nominee for election as a director, or executive officer of the Company has any substantial interest in any matter to be voted upon, other than (i) with respect to Proposal 1, each of the nominees named therein has an interest with respect to his or her respective election to office, (ii) with respect to Proposal 4, the directors, nominees and executive officers have an interest by virtue of their being eligible to receive equity grants under the 2013 Plan, (iii) with respect to Proposal 5, the executive officers have an interest by virtue of their being eligible to purchase shares under the ESPP, and (iv) with respect to Proposal 6, the directors, nominees and executive officers have an interest to the extent of their ownership in shares of our common stock and securities convertible or exercisable for common stock.
Who may participate in the Annual Meeting?
This year’s Annual Meeting will take place virtually. We believe that holding the Annual Meeting virtually is an important step to enhancing accessibility to the meeting and reducing the carbon footprint of our activities. We have designed the format of the Annual Meeting to ensure that our stockholders who attend the Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You are entitled to attend and participate in the Annual Meeting only if you were a stockholder of record as of the close of business on April 17, 2023, if you hold a valid proxy for the meeting, or if you are our invited guest. To be admitted to the Annual
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Meeting at www.virtualshareholdermeeting.com/WATT2023, you must enter the 16-digit control number found on your proxy card or other proxy materials. If you do not have a control number, please contact the brokerage firm, bank, dealer, or other similar organization that holds your account as soon as possible so that you can be provided with a control number.
When is the record date, and who is entitled to vote?
The Board of Directors set April 17, 2023 as the record date for the Annual Meeting. All record holdersyour shares of Energous common stock were registered directly in your name with our transfer agent, EQ Shareowner Services, you are a stockholder of record. As the stockholder of record, you have the right to vote at the Annual Meeting. You may also vote by Internet, telephone or mail, as described in the notice and below under the heading “How do I vote?”
What is a stockholder of record?
A stockholder of record, or registered stockholder, is a person whoseyour beneficial ownership, of Energous stock is reflected directly on the books and records of our transfer agent, EQ Shareowner Services. such as an account statement.
How do
If you are a stockholder of record, you may votecontact for more information or submit a proxy by any of the following methods:
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Before the Annual Meeting—You may authorize the voting of your shares by following the “Vote by Internet” instructions set forth on the Notice or proxy card through 8:59 p.m. Pacific Time on June 13, 2023. You must specify how you want your shares voted or your vote will not be completed, and you will receive an error message.
During the Annual Meeting—You may vote online during the Annual Meeting. You may cast your vote electronically during the Annual Meeting using the 16-digit control number found on your proxy card or other proxy materials and following the instructions at www.virtualshareholdermeeting.com/WATT2023.
2. By Telephone— You may vote by proxy, by phone, by following the instructions included on the Notice or proxy card through 8:59 p.m. Pacific Time on June 13, 2023.
3. By Mail— Stockholders of record may vote by signing and returning the proxy card included in the postage-paid envelope we have provided and returning it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
If you are a beneficial owner holding shares in street name, you must also obtain a valid proxy from the stockholder of record authorizing you to vote your shares and vote by following the voting instructions provided to you by your bank or broker.
For questions about your stock ownership or the Annual Meeting, you may contact us through our website at http://www.energous.com/contact/ or, if you are a registered holder,stockholder of record, you may contact our
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How can I change or revoke my vote?
Stockholders of record.Record — You may change or revoke your vote by submitting a written notice of revocation to Energous Corporation, c/o Chief Financial Officer,Secretary, at 3590 North First Street, Suite 210, San Jose, California 95134 at or before 10:00 am Pacific Time, on June 9, 2023,7, 2024, by submittingdelivering another properly completed proxy card with a later date before the electronic polls close at the Annual Meeting, by granting a subsequent proxy by telephone or through the Internet prior to the deadlines described under “How do I vote?” above, or by voting online during the Annual Meeting. Your most current proxy card or telephone or Internet proxy is the one that is counted.
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proposal.
Proposal 1, Election of directors. The sixthree nominees receiving the highest number of votes will be elected as members of our Board.
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Proposal 2, Ratification of appointment of independent registered public accounting firm. The ratification of the Audit Committee’s appointment of MarcumBPM as our independent registered public
Proposal 3, Approval of, by a non-binding advisory vote, the compensation paid by us to our named executive officers. The compensation paid by us to our named executive officerswill be approved, on a non-binding advisory basis, if the number of votes cast “FOR” the proposal at the Annual Meeting exceeds the number of votes cast “AGAINST” the proposal.
Proposal 4,3, Approval of an amendment and restatement of our 2013the 2024 Plan that will increase the total number of shares of common stock available for issuance thereunder, and effect certain other changes, as described further herein. . The amendment of the 20132024 Plan will be approved if the number of votes cast “FOR” the proposal at the Annual Meeting exceeds the number of votes cast “AGAINST” the proposal.
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Proposal 7, Approval, if and only if the reverse stock split amendment is approved and implemented, an amendment to the Company’s certificate of incorporation to effectively increase the number of authorized shares of common stock. The affirmative vote of the holders of a majority of the shares of outstanding common stock, virtually or by proxy, is required to approve the amendment to our certificate of incorporation to effect an increase in the number of authorized shares of common stock.
None of the proposals, if approved, entitle stockholders to appraisal rights under Delaware law or our charter.
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Stockholders?
Stockholders.
Name | | | Year First Became Director | | | Position with Energous | |
Rahul Patel | | | 2019 | | | Director | |
J. Michael Dodson | | | 2022 | | | Director | |
David Roberson | | | 2022 | | | Director; Chairman of the Board | |
| | OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES | | |
director due to his former service as an executive officer of the Company.
Board Diversity Matrix (As of April 26, 2024) | | |||||||||||||||
Total Number of Directors | | | 4 | | ||||||||||||
| | | Female | | | Male | | | Did Not Disclose Gender | | ||||||
Part I: Gender Identity | | |||||||||||||||
Directors | | | | | | | | 2 | | | | | | 2 | | |
Part II: Demographic Background | | |||||||||||||||
Asian | | | | | | | | 1 | | | | | | | | |
White | | | | | | | | 1 | | | | | | | | |
Did Not Disclose Demographic Background | | | | | | | | | | | | | | 2 | | |
Board Diversity Matrix (As of April 10, 2023)
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Total Number of Directors | 5 | ||
| Female | Male | Did Not Disclose Gender |
Part I: Gender Identity
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Directors | 2 | 2 | 1 |
Part II: Demographic Background
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African American or Black | 1 |
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Asian | 1 | 1 |
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White |
| 1 |
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Did Not Disclose Demographic Background |
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Board Leadership Structure
Effective March 24, 2023, the Board also established an Office of the Chair, currently composed of Mr. Roberson, and Ms. Burak. The Office of the Chair oversees strategic planning and direction of the Company, working closely with the Board, the senior leadership team, and other stakeholders to deliver the strategic mission of the Company.
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the name and address of the stockholder making the recommendation, as they appear on our books and records, and of such record holder’s beneficial owner, if any;
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honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
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California 95134, attention: Investor Relations. We intend to disclose any amendments to or waivers of a provision of the Code of Ethics by posting such information on our website available at www.energous.com and/or in our public filings with the SEC.
During 2022, our Board met ten times, our Audit Committee met eight times, our Compensation Committee met three times, and our Corporate Governance and Nominating Committee met twice. All of our directors attended at least 75% of the aggregate meetings held by the Board of the Directors and the Board committees on which they serve.
Name | |
| Audit |
| | Compensation | | | Corporate Governance and Nominating | |
| | | X |
| | Chair | | | X | |
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J. Michael Dodson | |
| Chair | | | X | | | X | |
David Roberson | |
| X | | | X | ||||
| | Chair | |
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system of internal control over financial reporting, (2) has the ultimate authority to select, evaluate and replace the independent auditor and is the ultimate authority to which the independent auditors are accountable,
in 2023.
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PROPOSAL 1—ELECTION OF DIRECTORS
Our
Shares represented by all proxies received and not marked to withhold authority to vote for any individual nominee will be voted FOR the election of each of the nominees named below. Each nominee has agreed to serve if elected andindependent auditors.
Nominees
The following table sets forth the nominees for election to the Board at the Annual Meeting, alongCompany’s financial statements and meeting with the year such director was first elected as a member of our Board, if applicable, and the positions with us held by each director.
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Information about Director Nominees
Set forth below is background information about each director nominee, as well as information about the experience, qualifications, attributes or skills that led the Board to conclude that such person should serve on the Board.
Reynette Au, age 60, joined our Board in August 2019. Since April 2021, Ms. Au has served as a a Director of Strategy and Operations, Core TechnologyCompany’s independent auditors at Google. From September 2017 to April 2021, Ms. Au served as a Vice President of Marketing, Global Marketing, at Intel Corporation, a technology manufacturing company. From April 2013 to September 2015, Ms. Au was a Vice President of marketing for the mobile business unit of Micron Technology Inc., a memory and storage solutions provider. From February 2012 to April 2013, she served as the Chief Marketing Officer and Vice President at Phoenix Technologies, a company that designs, develops and supports core system software. From January 2011 to February 2012, she served as an Executive Director and Co-Founder at GTIA, a market strategy and investment company. From October 2008 to December 2010, she served as the Vice President of Marketing and Alliances at Atheros Communications, a company that designed, developed and supported WIFI, Ethernet and Bluetooth silicon. From April 2005 to September 2008, she served as a vice president in the mobile business unit at NVIDIA Corporation. From January 2002 to February 2004, she served as the CEO and president at Triscend Corporation, a company providing configurable system-on-chip devices and customizable microcontrollers. Ms. Au holds a B.S. in Computer Science from University of Denver. Our Board believes that Ms. Au’s extensive executive and managerial experience and in-depth knowledge of the semiconductor and software industry qualify her to serve as a member of our Board of Directors.
Rahul Patel, age 53, joined our Board in August 2019. Since May 2015, Mr. Patel has served as Senior Vice President and General Manager, Connectivity, Cloud & Networking Business Unit, at Qualcomm Technologies, Inc., a creator of semiconductors, software and services related to wireless technology. From August 2002 to May 2015, Mr. Patel worked at Broadcom Corporation Inc., a developer, manufacturer and global supplier of semiconductor and infrastructure software products, where his last role was Senior Vice President and General Manager for the Wireless Connectivity business. From 2000 to 2002, Mr. Patel was a business line manager at HiFn, Inc., a security processor
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company. From 1998 to 2000, Mr. Patel was a Senior Marketing Manager, SystemLSI at Samsung Semiconductor, a subsidiary of Samsung Electronics. From 1996 to 1998, Mr. Patel was Senior Marketing Manager at Tritech Microelectronics, Inc., a semiconductor company. From 1993 to 1996, Mr. Patel served in various Integrated Circuit Design Engineering and Marketing roles at EPSON/S-MOS Systems, a semiconductor company. Mr. Patel holds an M.B.A. from Santa Clara University, an M.S. in Computer Science and Engineering from Arizona State University, and a B. Tech in Electronics and Communications Engineering from National Institute of Technology, Warangal, India. Our Board believes that Mr. Patel’s extensive executive, managerial, marketing and engineering experience and in-depth knowledge of the semiconductor, consumer, mobile and telecommunications industries qualify him to serve as a member of our Board of Directors.
Sheryl Wilkerson, age 61, joined our Board in October 2020. From August 2014 to March 2023, Ms. Wilkerson served as Vice President, Government Affairs at Michelin North America, Inc, a tire manufacturing company. From January 2018 to August 2020, she served on our advisory board. From June 2009 to August 2014, Ms. Wilkerson served as the President of Willow, LLC, a consulting company, where she advised global wireless, telematic and automotive companies on government affairs. From April 2005 to March 2009, Ms. Wilkerson served as Senior Vice President, Strategic Planning and Corporate Services at Ygomi, LLC a company which develops software for automated driving and ADAS. Ms. Wilkerson holds a B.A. in Telecommunications, Afro-American Studies and Spanish from Indiana University and a J.D. from Georgetown University Law Center. Our Board believes that Ms. Wilkerson’s legal and extensive executive and in-depth knowledge of the government affairs and strategic planning of wireless, telematics and automotive technologies qualify her to serve as a member of our Board of Directors.
J. Michael Dodson, age 62, joined our board in August 2022. Mr. Dodson served as the Chief Financial Officer of Quantum Corporation ("Quantum"), a data storage and management company, from May 2018 through January 2023. He also served as the interim Chief Executive Officer of Quantum from May 2018 to June 2018, a position he held until a full-time Chief Executive Officer was appointed. From August 2017 to May 2018, Mr. Dodson served as the Chief Financial Officer of Greenwave Systems ("Greenwave"), a software-defined network solutions provider. Prior to joining Greenwave, Mr. Dodson served as the Chief Operating Officer and Chief Financial Officer at Mattson Technology, Inc. ("Mattson"), a semiconductor equipment manufacturer and supplier, from 2012 to 2017. He joined Mattson as Executive Vice President, Chief Financial Officer and Secretary in 2011. Prior to joining Mattson, Mr. Dodson served as Chief Financial Officer at four global public technology companies and as Chief Accounting Officer for an S&P 500 company. Mr. Dodson started his career with Ernst & Young LLP. From May 2020 to April 2021, Mr. Dodson served on the board of directors of A10 Networks, Inc., an application security company, including as Chair of the Audit Committee. From 2013 to 2020, he served on the Board of Directors of Sigma Designs, Inc., a provider of system-on chip solutions for the home entertainment market, including as Lead Independent Director from 2014 and Chairmanregularly scheduled meetings of the Audit Committee, from 2015. to review their reports on the adequacy and effectiveness of our internal control systems and discusses with management the Company’s major financial risks and exposures and the steps management has taken to monitor and control such risks and exposures.
David Robersonlong-term strategic goals.
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Golden Gate University School of Law. Our Board believes that Mr. Roberson’s vast industry knowledge and extensive public company board service qualify him to serve as a member of our Board.
Cesar Johnston, age 59, joined Energous in July 2014 and has served as the Company’s Chief Executive Officer since December 2021. Prior to his current role, he acted as Acting Chief Executive Officer of the Company from July 2021 to December 2021, and as Chief Operating Officer and Executive Vice President of Engineering of the Company from July 2014 to December 2021. Prior to joining the Company, from March 2006 to September 2013, Mr. Johnston was Vice President of Engineering for Wireless Connectivity at Marvell Technology, Inc., a developer and producer of semiconductors and related technology, where he was responsible for R&D and development of all Wi-Fi, Bluetooth, FM, and NFC products. From 2004 to 2006, Mr. Johnston was a Senior Director at Broadcom Inc., a developer, manufacturer and global supplier of semiconductor and infrastructure software products, where he was responsible for Wi-Fi VLSI and Systems Hardware development, including 802.11g and 802.11n products. Mr. Johnston is a recognized pioneer in the technology development of multiple first-of generations of SISO and MIMO wireless products. Mr. Johnston received both B.S. and M.S. degrees in Electrical Engineering from the NYU Tandon School of Engineering and holds a Certificate of Business Excellence (COBE) from the University of California, Berkeley. He is an IEEE Senior Member, and he has written over 40 conference and journal papers and holds 29 patents. Our Board believes that Mr. Johnston’s experience in leadership roles relating to engineering and wireless technology qualify him to serve as a member of our Board.
Director Compensation
Mr. Johnston did not receive any compensation as a director in 2023 because of his service as President and Chief Executive Officer.
| Chair of the Board | | | | $ | 25,000 | | |
| Lead Independent Director (if applicable) | | | | $ | 25,000 | | |
| Audit Committee Chair | | | | $ | 20,000 | | |
| Audit Committee Member | | | | $ | 10,000 | | |
| Compensation Committee Chair | | | | $ | 15,000 | | |
| Compensation Committee Member | | | | $ | 5,000 | | |
| Corporate Governance and Nominating Committee Chair | | | | $ | 10,000 | | |
| Corporate Governance and Nominating Committee Member | | | | $ | 5,000 | | |
Chair of the Board |
| $ | 25,000 |
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Lead Independent Director |
| $ | 25,000 |
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Audit Committee Chair |
| $ | 20,000 |
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Audit Committee Member |
| $ | 10,000 |
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Compensation Committee Chair |
| $ | 15,000 |
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Compensation Committee Member |
| $ | 5,000 |
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Corporate Governance and Nominating Committee Chair |
| $ | 10,000 |
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Corporate Governance and Nominating Committee Member |
| $ | 5,000 |
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Each non-employee director receives equity compensation in the form of restricted stock units (“RSUs”) for shares of our common stock. Upon first appointment or election to the Board, each such director receives an initial RSU award covering a number of shares equal to $100,000 divided by the fair market value of our common stock, vesting in three equal annual installments. Each year, the director receives a refresh RSU award covering a number of shares equal to $50,000 divided by the fair market value of our common stock, vesting on the first anniversary of the grant date. The refresh RSU awards are limited to 1,250 shares per year. In addition, the Chair of the Board receives an RSU award covering 20,000 shares that vests after one year, and the Chair Emeritus receives an RSU award covering 5,0001,000 shares that vests after one year. Equity compensation for directors accelerates upon a change of control. Equity awards under our non-employee director compensation policy are granted pursuant to our Non-Employee Equity Compensation Plan. Fair market value of our common stock is determined by averaging the closing trading prices of our common stock for the 30 consecutive trading days prior to the grant date.
The following table sets forth information about the compensation of each non-employee director who served on our Board during 2022:
Name | | | Fees Earned or Paid in Cash | | | Stock Awards(1) | | | Total | | |||||||||
Reynette Au(2) | | | | $ | 70,000 | | | | | $ | 37,350 | | | | | $ | 107,350 | | |
Rahul Patel | | | | $ | 60,000 | | | | | $ | 20,750 | | | | | $ | 80,750 | | |
Sheryl Wilkerson(3) | | | | $ | 25,000 | | | | | $ | 20,750 | | | | | $ | 45,750 | | |
J. Michael Dodson | | | | $ | 57,364 | | | | | $ | 8,084 | | | | | $ | 65,448 | | |
David Roberson | | | | $ | 52,364 | | | | | $ | 8,084 | | | | | $ | 60,448 | | |
Name |
| Fees Earned or Paid in Cash |
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| Stock Awards(1) |
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Reynette Au |
| $ | 60,694 |
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| $ | 48,123 |
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| $ | 108,817 |
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Rahul Patel |
| $ | 60,000 |
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| $ | 33,000 |
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| $ | 93,000 |
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Sheryl Wilkerson |
| $ | 50,000 |
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| $ | 33,000 |
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| $ | 83,000 |
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J. Michael Dodson (2) |
| $ | 18,614 |
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| $ | 69,000 |
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| $ | 87,614 |
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David Roberson (3) |
| $ | 17,989 |
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| $ | 69,000 |
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| $ | 86,989 |
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Kathleen Bayless (4) |
| $ | 48,426 |
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| $ | 14,647 |
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| $ | 63,073 |
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Daniel Fairfax (5) |
| $ | 32,115 |
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| $ | 59,400 |
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| $ | 91,515 |
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Name | | | Shares Subject to Outstanding Stock Awards(1) | | | Shares Subject to Outstanding Stock Option Awards | | ||||||
Reynette Au(2) | | |
| | 2,250 | |
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Rahul Patel | | |
| | 1,250 | |
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Sheryl Wilkerson(3) | | |
| | — | |
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J. Michael Dodson | | |
| | 2,154 | |
| | | | — | | |
David Roberson | | |
| | 2,154 | |
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OUR BOARD
Marcum audited our financial statements for 2022.independent registered public accounting firm since April 2024. Representatives of Marcum, who will be attendingBPM are expected to attend the Annual Meeting, will have the opportunity to make a statement ifwhere they desire to do so and are expected towill be available to respond to appropriate questions as applicable.
Vote Required for Approval
and, if they desire, to make a statement.
Company.
We regularly review the
The following table sets forth the aggregate fees billed or expected to be2023. Fees billed by Marcum forin fiscal years 2022 and 2023 were as follows:’
Fee Category | | | 2023 | | | 2022 | | ||||||
Audit Fees(1) | | | | $ | 283,168 | | | | | $ | 259,309 | | |
Audit-Related Fees | | | | | — | | | | | | — | | |
Tax Fees | | | | | — | | | | | | — | | |
All Other Fees | | | | | — | | | | | | — | | |
Total | | | | $ | 283,168 | | | | | $ | 259,309 | | |
Fee Category |
| 2022 |
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| 2021 |
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Audit Fees (1) |
| $ | 259,309 |
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| $ | 221,629 |
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Audit-Related Fees |
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Tax Fees |
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All Other Fees |
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Total |
| $ | 259,309 |
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| $ | 221,629 |
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OUR BOARD OF DIRECTORS RECOMMENDS A VOTE
PROPOSAL 3 – ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Pursuant to Schedule 14A of the Exchange Act, we are providing stockholders with an opportunity to make a non-binding, advisory vote on the compensation of our named executive officers. This non-binding advisory vote is commonly referred to as a “say on pay” vote. The non-binding advisory vote on the compensation of our named executive officers, as disclosed in this Proxy Statement, will be determined by the vote of a majority of the shares of common stock present or represented at the Annual Meeting and voting affirmatively or negatively on the proposal.
Stockholders are urged to read the “Executive Compensation” section of this Proxy Statement, which discusses how our executive compensation policies and procedures implement our compensation philosophy and contains tabular information and narrative discussion about the compensation of our named executive officers. The Compensation Committee and the board of directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving our goals. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of the named executive officers, as disclosed in the Proxy Statement pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion and the other related disclosures.”
As an advisory vote, this proposal is not binding. However, our Board and Compensation Committee, which is responsible for designing and administering our executive compensation program, value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
Vote Required for Approval
year.
| | OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF BPM LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2024. | | |
PROPOSAL 4—APPROVAL OF AMENDMENT AND RESTATEMENT OF THE 2013 ENERGOUS CORPORATION 2024
EQUITY INCENTIVE PLAN
We“Prior Plans”).
Overview
Under the 2013 Plan, the Company reserves shares of common stock for issuance to employees, officers, non-employee directors, consultantsterminated and advisors of the Company, or of any affiliate, as the Compensation Committee may determine and designate from time to time,no further awards will be made under those plans. However, awards currently outstanding under those plans will remain outstanding in the form of incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), RSUs, restricted stock and other types of equity and cash incentive grants.
accordance with their terms.
In orderof April 15, 2024, 21,579 shares were subject to increaseoutstanding RSUs under all the poolother Prior Plans and 15,000 shares were subject to outstanding stock options under the other Prior Plans. As of April 15, 2024, 83,617 shares availableare subject to outstanding RSUs under the Inducement Plan. Only options and RSUs are outstanding under the Prior Plans.
The 2013 Plan, as amended and restated, became effective on June 16, 2021, the date of our 2021 Annual Meeting and will remain in effect until May 16, 2028, unless terminated earlier by the Compensation Committee.
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Company to meet its anticipated needs based on the remaining share reserves under those plans.
| • Clawback. Plan awards are subject to clawback under any Company clawback policy and all applicable laws requiring the clawback of compensation. • Limited Re-Use of Shares. Both shares tendered or withheld to pay the exercise price or purchase price of awards (including under stock-settled stock appreciation rights) and shares withheld to pay taxes under awards are not eligible for re-use under the 2024 Plan. • Forfeiture upon Cause Termination. All plan awards held by a participant may be annulled by the Company upon the participant’s termination for cause. • No Discounted Stock Options or Discounted Stock Appreciation Rights (“SARs”). Stock options and SARs may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date (with a limited exception for options or SARs we assume or substitute in acquisition transactions). • No Repricing without Stockholder Approval. Other than in connection with a change in the Company’s capitalization, the Company will not, without stockholder approval, reduce the exercise price of a stock option or SAR and will not exchange such stock option or SAR for a new award with a lower (or no) purchase price or for cash. • No Transferability. Awards generally may not be transferred, except by will or the laws of descent and distribution, unless approved by the Compensation Committee. • No Evergreen Provision. The plan does not contain an “evergreen” feature pursuant to which the shares authorized for issuance will be automatically replenished. • No Automatic Grants. The plan does not provide for automatic grants to any participant. • No Tax Gross-Ups. The plan does not provide for any tax gross-ups. • Multiple Award Types. The plan permits the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock units, restricted and unrestricted stock awards, performance share units and other types of equity and cash grants, subject to the share limits of the 19 Plan. This breadth of award types will enable the Compensation Committee to tailor awards in light of the accounting, tax and other standards applicable at the time of grant. Historically, these standards have changed over time. • Dividends. No dividends or dividend equivalents paid on stock options, SARs or unearned RSUs or performance shares. • Independent Oversight. The plan is administered by a committee of independent Board members. • Director and Other Limits. The plan contains annual limits on the amount of awards that may be granted to non-employee directors and other participants. |
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Material Features of the 20132024 Plan as Amended
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2024 Plan.
The Compensation Committee is also authorized to interpret and construe the Plan and award agreements issued thereunder and to establish such rules and regulations as it determines appropriate for the proper administration of the 2024 Plan.
2024 Plan.
Directors; Other Limits
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that such awards are for new shares. In thesuch event, of any such amendment, the number of shares subject to, and the option exercise price, SAR exercise price or purchase price per share of, the outstanding awards will be adjusted in a fair and equitable manner as determined by the Compensation Committee. The Compensation Committee may also make such adjustments in the terms of any award to reflect or related to, such changes in our capital structure or distributions as it deems appropriate.
| • Stock Options. Stock options entitle the holder to purchase a specified number of shares of common stock at a specified price (the exercise price), subject to the terms and conditions of the stock option grant. The Compensation Committee may grant either incentive stock options, which must comply with Section 422 of the U.S. Internal Revenue Code (“Code”), or nonqualified stock options. The Compensation Committee sets exercise prices and terms and conditions, except that stock options must be granted with an exercise price not less than 100% of the fair market value of our common stock on the date of grant (excluding stock options granted in connection with assuming or substituting stock options in acquisition transactions). Unless the Compensation Committee 21 determines otherwise, fair market value means, as of a given date, the closing price of our common stock. At the time of grant, the Compensation Committee determines the terms and conditions of stock options, including the quantity, exercise price, vesting periods, term (which cannot exceed 10 years) and other conditions on exercise. • Stock Appreciation Rights. The Compensation Committee may grant SARs, as a right in tandem with the number of shares underlying stock options granted under the 2024 Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive payment per share in stock or cash, or in a combination of stock and cash, equal to the excess of the share’s fair market value on the date of exercise over the grant price of the SAR. The grant price of a tandem SAR is equal to the exercise price of the related stock option and the grant price for a freestanding SAR is determined by the Compensation Committee in accordance with the procedures described above for stock options. Exercise of a SAR issued in tandem with a stock option will reduce the number of shares underlying the related stock option to the extent of the SAR exercised. The term of a freestanding SAR cannot exceed 10 years, and the term of a tandem SAR cannot exceed the term of the related stock option. • Stock Awards, Restricted Stock, Restricted Stock Units and Other Stock-Based Awards. The Compensation Committee may grant awards of stock, restricted stock, which are shares of common stock subject to specified restrictions, and restricted stock units, which represent the right to receive shares of our common stock in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions at the Compensation Committee’s discretion. The restrictions may be based on continuous service with the Company or the attainment of specified performance goals, as determined by the Compensation Committee. Stock units may be paid in stock or cash or a combination of stock and cash, as determined by the Compensation Committee. • Performance Awards, Including Performance Share Units. The Compensation Committee may grant performance awards, including performance share units, which entitle participants to receive a payment from the Company, the amount of which is based on the attainment of performance goals established by the Compensation Committee over a specified award period of at least one year. Performance awards may be denominated in shares of common stock or in cash and may be paid in stock or cash or a combination of stock and cash, as determined by the Compensation Committee. Performance goals applicable to performance awards may be based on the attainment of specified levels of one, or any combination, of selected performance criteria for the Company on a consolidated basis, and/or specified subsidiaries or business units, as reported or calculated by the Company, including, but not limited to, one or more performance goals based on (i) cash flow; (ii) earnings per share; (iii) earnings measures (including EBIT and EBITDA); (iv) total or relative stockholder return; (v) share price performance; (vi) revenue; and (vii) other metrics capable of measurement by the Compensation Committee. The Compensation Committee may determine at the time that the performance goals are established the extent to which the measurement of performance goals may exclude the impact of charges for restructuring, discontinued operations, extraordinary items, debt redemption or retirement, asset write downs, litigation or claim judgments or settlements, acquisitions or divestitures, foreign exchange gains and losses and other extraordinary, unusual or non-recurring items, and the cumulative effects of tax or accounting changes (each as defined by generally accepted accounting principles and as identified in the Company’s financial statements or other SEC filings). • Other Share-based Awards. The Compensation Committee may also grant other types of equity or equity-based awards subject to the terms and conditions of the 2024 Plan and any other terms and conditions determined by the Compensation Committee. |
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No Repricing
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restricted stock, RSUs or other equity award, unless the cancellation and exchange occur in connection with a change in capitalization or other similar change.
change permitted under the 2024 Plan.
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Performance-Based Compensation
Performance Goals
Regardless of the loss of deduction under Code Section 162(m),Board’s or the Compensation Committee intends to retainCommittee’s discretion. Therefore, the ability to award performance based compensationbenefits and amounts that will be received or allocated under the 20132024 Plan based on the performance goals selected by the Compensation Committee, which may be based on the attainment of specified levels of one, or any combination, of the following performance criteria for the Company on a consolidated basis, and/or specified subsidiaries or business units, as reported or calculated by the Company (except with respect to the total stockholder return and earnings per share criteria):
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The Compensation Committee can also select any derivations of these business criteria (e.g., income will include pre-tax income, net income, operating income).
Performance goals may, in the discretion of the Compensation Committee, be established on a Company-wide basis, or with respect to one or more business units, divisions, subsidiaries or business segments, as applicable. Performance goals may be absolute or relative to the performance of one or more comparable companies or indices.
The Compensation Committee may determine at the time that the performance goals are established the extent to which measurement of performance goals may exclude the impact of charges for restructuring, discontinued operations, extraordinary items, debt redemption or retirement, asset write downs, litigation or claim judgments or settlements, acquisitions or divestitures, foreign exchange gains and losses and other extraordinary, unusual or non-recurring items, and the cumulative effects of tax or accounting changes (each as defined by generally accepted accounting principles and as identified in the Company’s financial statements or other SEC filings).
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New Plan Benefits
Amounts that may be awarded under the 2013 Plan in the future are discretionary and are not determinable at this time. The following table lists amounts awarded in 2022 for (i) each of our named executive officers, (ii) all of our named executive officers and current executive officers as a group, (iii) all of our eligible non-employee directors as a group, and (iv) all other current employees who are not executive officers as a group. Note that these share numbers do not reflect any reverse stock splits and will be adjusted automatically if the reverse stock split proposal set forth as Proposal 6 is approved by stockholders.
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Federal Income Tax Information
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participant’s gain on a disqualifying disposition, if any, generally will be taxed as capital gain, and such capital gain or loss will be long-term capital gain or loss if the participant’s holding period in the shares was more than one year. Long-term capital gains of non-corporate taxpayers are generally taxed at preferred rates. The deductibility of capital losses is subject to limitations.
The amendment to our 2013 EIP
proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
| | OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE ENERGOUS CORPORATION 2024 EQUITY INCENTIVE PLAN. | | |
PROPOSAL 5—APPROVAL OF AMENDMENT AND RESTATEMENT TOOF THE ENERGOUS CORPORATION EMPLOYEE STOCK PURCHASE PLAN
at our 2021 and 2023 annual meetings.
Reverse Stock Split. Under the current ESPP, 201,619as of April 15, 2024, 14,716 shares of our common stock areremained available for purchase by our employees (note that this share number does not reflect any reverse stock splits and will be adjusted automatically if the reverse stock split proposal set forth as Proposal 6 is approved by stockholders). The ESPP will terminate on June 16, 2031.
employees.
We currently anticipate that if
Material Features
Plan each participant is deemed to have been granted an “option” to purchase shares of our common stock at the beginning of an offering period, subject to the terms of the ESPP.
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if, immediately after the applicable grant date, the employee would be deemed to own 5% or more of the total combined voting power or value of all classes of stock of the Company or of any parent corporation or subsidiary corporation;
•
•
As of March 31, 2023, 44 employees would have been eligible to receive options under the ESPP.
ESPP.
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Name and Position | | | Number of Shares Purchased | | |||
Named executive officers and current executive officers as a group | | | | | — | | |
Non-executive employees as a group | | | | | 20,366 | | |
The amounts deducted from a participant’s pay under the ESPP will be included in his or her compensation that is subject to federal income taxes, and the Company will withhold taxes on these amounts. Generally, a participant will not recognize any taxable income (1) when options are granted pursuant to the ESPP, (2) when the shares of our common stock are purchased under the ESPP or (3) at the beginning or end of any offering period.
limitations.
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difference between the fair market value on the date of such transfer and the participant’s tax basis in the common stock as increased by the amount of any ordinary income recognized pursuant to the previous sentence.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 5
PROPOSAL 6—APPROVAL OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT BY A RATIO NOT TO EXCEED 1-FOR-20
General
We are seeking stockholder approval of an amendment to our certificate of incorporation to effect a reverse stock split of our outstanding common stock by combining outstanding shares of common stock into a lesser number of outstanding shares of common stock by a ratio of not more than 1-for-20, at any time prior to our 2024 annual meeting of stockholders, with the exact ratio to be set by our Board of Directors at its sole discretion. Accordingly, the Board of Directors may elect to abandon the proposed amendmentproposal. Abstentions and not effect the reverse stock split authorized by stockholders, in its sole discretion. However, a reverse stock split is currently necessary to regain compliance with The Nasdaq Stock Market LLC’s (“Nasdaq”) minimum bid requirement and maintain our listing on The Nasdaq Capital Market, and therefore, our Board of Directors currently believes the reverse stock split is in the best interest of our company and our stockholders. If the reverse stock split is approved and our Board of Directors determines it is in our and our stockholders’ best interests to implement the reverse stock split, upon the effectiveness of the amendment to our certificate of incorporation effecting the reverse stock split, the outstanding shares of our common stock would be reclassified and combined into a lesser number of shares such that one share of our common stockbroker non-votes will be issued for a specified number of shares. The Board of Directors’ decision to implement the reverse stock split will be based on a number of factors, including market conditions, existing and expected trading prices for our common stock and the listing requirements of The Nasdaq Capital Market.
On January 20, 2023, we received written notice from the staff of the Listing Qualifications Department of Nasdaq indicating that we were not in compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market. We have until July 19, 2023 to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days. If we are not in compliance by July 19, 2023, we may be afforded a second 180-calendar day period to regain compliance. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the minimum bid price requirement. In addition, we would be required to notify Nasdaq of our intent to cure the minimum bid price deficiency, which may, if necessary, include implementing the reverse stock split. Our Board of Directors currently intends to cure our minimum bid price deficiency by implementing the reverse stock split, if approved by our stockholders.
If this proposal is approved by our stockholders as proposed, our Board of Directors would have the sole discretion to effect the amendment and reverse stock split at any time prior to our 2024 annual meeting of stockholders, and to fix the specific ratio for the reverse stock split, provided that the ratio would not exceed 1-for-20. We believe that enabling our Board of Directors to fix the specific ratio of the reverse stock split not to exceed more than 1-for-20 will provide us with the flexibility to implement the split, if at all, in a manner designed to maximize the anticipated benefits for our stockholders. The determination of the ratio of the reverse stock split will be based on a number of factors, described further below under the heading “Criteria to be Used by Board in Deciding Whether to Apply the Reverse Stock Split.”
The reverse stock split, if approved by our stockholders and implemented by our Board of Directors, would become effective upon the filing of an amendment to our certificate of incorporation with the Secretary of State of the State of Delaware, or at the later time set forth in the amendment. If our Board of Directors decides to implement the reverse stock split, the exact timing of the amendment would be determined by our Board of Directors based on its evaluation as to when such action will be the most advantageous to us and our stockholders, but will not occur after our 2024 annual meeting of stockholders. In addition, our Board of Directors reserves the right, notwithstanding stockholder approval and without further action by our stockholders, to abandon the amendment and the reverse stock split if, at any time prior to the effectiveness of the filing of the amendment with the Secretary of State of the State of Delaware, our Board of Directors, in its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders to proceed. Our Board of Directors currently believes it is in the best interest of our Company and our stockholders to effect a reverse stock split to maintain our listing on The Nasdaq Capital Market.
In connection with the reverse stock split proposal, the Company’s Board of Directors is also recommending, if and only if the reverse stock split proposal is approved, that the Company’s stockholders approve an amendment to the Company’s certificate of incorporation to effectively increase the number of authorized shares of common stock after
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giving effect to the reverse stock split. The proposed amendment to the Company’s certificate of incorporation provides that the number of shares of authorized common stock shall be the number that is calculated as the current authorized common share amount multiplied by 2x (two times) the final reverse stock split ratio. If the proposed amendment to effectively increase the number of authorized shares of common stock is not approved or implemented by the Board of Directors, the total number of shares of capital stock that we are authorized to issue will not be affected by the reverse stock split and will remain 210,000,000 shares, consisting of 200,000,000 shares of common stock and 10,000,000 shares of preferred stock. Please see “Proposal 7—Approval of an Amendment to the Company’s Certificate of Incorporation to Effect an Effective Increase in the Number of Authorized Shares of Common Stock” for additional information.
Purpose
If implemented, the primary purpose for effecting the reverse stock split would be to increase the per share trading price of our common stock so as to maintain the listing of our common stock on The Nasdaq Capital Market. A failure to maintain our listing on the Nasdaq Capital Market would result in delisting from The Nasdaq Capital Market, which would negatively impact the value and liquidity of our common stock, adversely affect our ability to raise additional financing through the public or private sale of equity securities and significantly reduce the ability of investors to trade our securities. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.
Other potential benefits of an increase to the per share trading price of our common stock that results from the reverse stock split include:
• broadening the pool of investors that may be interested in investing in our Company by attracting new investors who would prefer not to invest in shares that trade at lower share prices;
• making our common stock a more attractive investment to institutional investors; and
• better enabling us to raise funds to finance planned operations.
An increased stock price may encourage investor interest and improve the marketability of our common stock to a broader range of investors, and thus improve liquidity and lower average transaction costs. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. A higher market price may enable institutional investors and brokerage firms with policies and practices such as those described above to invest in our common stock.
In evaluating the reverse stock split, our Board of Directors will also take into consideration negative factors associated with reverse stock splits. These factors include the negative perception of reverse stock splits held by many investors, analysts and other stock market participants, as well as the fact that the stock price of some companies that have effected reverse stock splits has subsequently declined back to pre-reverse stock split levels. Our Board of Directors plans to implement the reverse stock split if it determines that these potential negative factors are outweighed by the potential benefits, and believes that increasing the per share market price of our common stock as a result of the reverse stock split may encourage greater interest in our common stock and enhance the acceptability and marketability of our common stock to the financial community and investing public as well as promote greater liquidity for our stockholders. In addition, if this proposal is approved, and the proposal to amend the certificate of incorporation to effectively increase the number of authorized shares of common stock is approved and the reverse stock split is implemented, our Board of Directors currently intends to effect the amendment to the certificate of incorporation to effectively increase the total number of shares of common stock to a number that is calculated as the current authorized common share amount multiplied by 2x (two times) times the final reverse stock split ratio. This will allow the Company to (i) maintain alignment with market expectations regarding the number of authorized shares of our common stock in comparison to the number of shares issued or reserved for issuance following any reverse stock split and ensure that we do not have what certain stockholders might view as an unreasonably high number of authorized shares which are not issued or reserved for issuance, (ii) provide us with the ability to pursue financing and corporate opportunities involving our common stock, which may include private or public offerings of our equity securities, and (iii) provide us with the ability to grant appropriate equity incentives for our employees over time. At present, our Board of Directors has no immediate plans, arrangements or understandings to issue the additional shares of common stock.
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The form of the proposed amendment to our certificate of incorporation to effect the reverse stock split, if implemented, is attached as Appendix C to this proxy statement. Any amendment to our certificate of incorporation to effect the reverse stock split will include the reverse stock split ratio fixed by our Board of Directors, which shall not exceed 1-for-20.
Criteria to be Used by Board in Deciding Whether to Apply the Reverse Stock Split
If our stockholders approve the reverse stock split, our Board of Directors will be authorized to proceed with the reverse split. In determining whether to proceed with the reverse split and setting the exact split ratio, if any, our Board of Directors will consider a number of factors, including market conditions and existing and expected trading prices of our common stock, as well as those factors described above.
Effect of the Reverse Stock Split
The reverse stock split would be effected simultaneously for all outstanding shares of our common stock. The reverse stock split would affect all of our stockholders uniformly and would not affect any stockholder’s percentage ownership interest in our Company, except to the extent that the reverse stock split resulted in any of our stockholders owning a fractional share. The reverse stock split would not change the terms of our common stock. After the reverse stock split, the shares of common stock would have the same voting rights and rights to dividends and distributions and would be identical in all other respects to the common stock now authorized, which is not entitled to preemptive or subscription rights, and is not subject to conversion, redemption or sinking fund provisions. The post-reverse stock split common stock would remain fully paid and non-assessable. The reverse stock split is not intended as, and would not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act. Following the reverse stock split, we would continue to be subject to the periodic reporting requirements of the Exchange Act.
As of the effective time of the reverse stock split, we would adjust and proportionately increase the number of shares of our common stock reserved for issuance upon exercise of, and adjust and proportionately increase the exercise price of, all options and warrants and other rights to acquire our common stock. In addition, as of the effective time of the reverse stock split, we would adjust and proportionately increase the total number of shares of our common stock that may be the subject of the future grants under our stock plans.
As of the effective time of the reverse stock split, the conversion ratio by which shares of our outstanding preferred stock, if any, convert to common stock would also be automatically adjusted such that the number of shares of common stock issuable upon conversion of our preferred stock would be proportionally reduced. The reverse stock split would not change the number of authorized shares of our preferred stock.
Assumes Reverse Stock Split and Effective Increase of Shares of Authorized Common Stock
The following table contains approximate information, based on share information as of March 31, 2023, relating to our outstanding common stock based on the proposed reverse stock split ratios and information regarding our authorized shares assuming the reverse stock split and the amendment to effectively increase the number of shares of authorized common stock are approved and implemented, assuming reverse stock split ratios of 1-for-5, 1-for-10 and 1-for-20, which reflect a low, middle and high end of the not to exceed reverse split ratio that our stockholders are being asked to approve, respectively:
|
| Number of Shares of Common Stock Authorized |
| Number of Shares of Common Stock Issued and Outstanding |
| Number of Shares of Common Stock Reserved for Future Issuance |
| Number of Shares of Common Stock Authorized but Not Outstanding or Reserved |
Pre-Reverse Stock Split |
| 200,000,000 |
| 91,032,030 |
| 19,553,983 |
| 89,413,987 |
Reverse Stock Split Ratio of 1-for-5 |
| 80,000,000 |
| 18,206,406 |
| 3,910,797 |
| 57,882,797 |
Reverse Stock Split Ratio of 1-for-10 |
| 40,000,000 |
| 9,103,203 |
| 1,9555,398 |
| 28,941,399 |
Reverse Stock Split Ratio of 1-for-20 |
| 20,000,000 |
| 4,551,602 |
| 977,699 |
| 14,470,699 |
Assumes Reverse Stock Split Only
The following table contains approximate information, based on share information as of March 31, 2023, relating to our outstanding common stock based on the proposed reverse stock split ratios and information regarding our authorized shares assuming that the amendment to effectively increase the number of shares of authorized common stock is not approved, assuming reverse stock split ratios of 1-for-5, 1-for-10 and 1-for-20, which reflect a low, middle and high end of the not to exceed reverse split ratio that our stockholders are being asked to approve, respectively:
Status |
| Number of Shares of Common Stock Authorized |
| Number of Shares of Common Stock Issued and Outstanding |
| Number of Shares of Common Stock Reserved for Future Issuance |
| Number of Shares of Common Stock Authorized but Not Outstanding or Reserved |
Pre-Reverse Stock Split |
| 200,000,000 |
| 91,032,030 |
| 19,553,983 |
| 89,413,987 |
Reverse Stock Split Ratio of 1-for-5 |
| 200,000,000 |
| 18,206,406 |
| 3,910,797 |
| 177,882,797 |
Reverse Stock Split Ratio of 1-for-10 |
| 200,000,000 |
| 9,103,203 |
| 1,955,398 |
| 188,941,399 |
Reverse Stock Split Ratio of 1-for-20 |
| 200,000,000 |
| 4,551,602 |
| 977,699 |
| 194,470,699 |
If this proposal is approved and our Board of Directors elects to effect the reverse stock split, the number of outstanding shares of common stock would be reduced in proportion to the ratio of the split chosen by our Board of Directors. Accordingly, if a reverse stock split is effected, and the proposal to amend the certificate of incorporation to effectively increase the number of authorized shares of common stock is approved, our Board of Directors expects to file an amendment to our certificate of incorporation to effectively increase the number of authorized shares of common stock, after giving effect to the reverse stock split. At present, our Board of Directors has no immediate plans, arrangements or understandings to issue the additional shares of common stock. If the proposed amendment to effectively increase the number of authorized shares of common stock is not approved or implemented by the Board of Directors, the total number of shares of capital stock that we are authorized to issue will not be affected by the reverse stock split and will remain 210,000,000 shares, consisting of 200,000,000 shares of common stock and 10,000,000 shares of preferred stock.
Additionally, if this proposal is approved and our Board of Directors elects to effect the reverse stock split, we would communicate to the public, prior to the effective date of the stock split, additional details regarding the reverse split, including the specific ratio selected by our Board of Directors. If the Board of Directors does not implement the reverse stock split by the date of our 2024 annual meeting of stockholders, the authority granted in this proposal to implement the reverse stock split will terminate.
Certain Risks and Potential Disadvantages Associated with the Reverse Stock Split
The effect of the reverse stock split upon the market prices for our common stock cannot be accurately predicted, and the history of similar stock split combinations for companies in like circumstances is varied. If the reverse stock split is implemented, the post-split market price of our common stock may be less than the pre-split price multiplied by the reverse stock split ratio.
In addition, a reduction in number of shares outstanding may impair the liquidity for our common stock, which may reduce the value of our common stock. Also, some stockholders may consequently own less than one hundred shares of our common stock. A purchase or sale of less than one hundred shares may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own less than one hundred shares following the reverse stock split may be required to pay modestly higher transaction costs should they then determine to sell their shares.
Procedure for Effecting the Reverse Stock Split and Exchange of Stock Certificates
If our stockholders approve the proposal to effect the reverse stock split, and if our Board of Directors still believes that a reverse stock split is in the best interests of us and our stockholders, our Board of Directors will determine the ratio of the reverse stock split to be implemented and we will file the certificate of amendment with the Secretary of State of the State of Delaware. As soon as practicable after the effective date of the reverse stock split, stockholders will be notified that the reverse stock split has been effected.
Beneficial Owners of Common Stock. Upon the implementation of the reverse stock split, we intend to treat shares held by stockholders in “street name” (i.e., through a bank, broker, custodian or other nominee) in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers, custodians or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding our common stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing the reverse stock split and making payment for fractional shares. If a stockholder holds shares of our common stock with a bank, broker, custodian or other nominee and has any questions in this regard, stockholders are encouraged to contact their bank, broker, custodian or other nominee.
Registered Holders of Common Stock. Certain of our registered holders of common stock hold some or all of their shares electronically in book-entry form with our transfer agent, EQ Shareowner Services. These stockholders do not hold physical stock certificates evidencing their ownership of our common stock. However, they are provided with a statement reflecting the number of shares of our common stock registered in their accounts. If a stockholder holds registered shares in book-entry form with our transfer agent, no action needs to be taken to receive post-reverse stock split shares or payment in lieu of fractional shares, if applicable. If a stockholder is entitled to post-reverse stock split shares, a transaction statement will automatically be sent to the stockholder’s address of record indicating the number of shares of our common stock held following the reverse stock split.
Holders of Certificated Shares of Common Stock. As of the date of this proxy statement, certain of our shares of common stock were held in certificated form. Stockholders of record at the time of the reverse stock split who hold shares of our common stock in certificated form will be sent a transmittal letter by the transfer agent after the effective time that will contain the necessary materials and instructions on how a stockholder should surrender his, her or its certificates, if any, representing shares of our common stock to the transfer agent.
Fractional Shares
We would not issue fractional shares in connection with the reverse stock split. Instead, stockholders who otherwise would be entitled to receive fractional shares because they hold a number of shares not evenly divisible by the reverse stock split ratio will be entitled, upon surrender to the exchange agent of certificates representing such shares, to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing price of the common stock, as reported on The Nasdaq Capital Market, on the last trading day prior to the effective date of the split. The ownership of a fractional interest will not give the holder thereof any voting, dividend or other rights except to receive payment therefor as described herein.
No Appraisal Rights
No action is proposed herein for which the laws of the State of Delaware, or our certification of incorporation or bylaws, provide a right to our stockholders to dissent and obtain appraisal of, or payment for, such stockholders’ capital stock.
Accounting Consequences
The reverse stock split would not affect total assets, liabilities or shareholders’ equity. However, the per share net income or loss and net book value of the common stock would be retroactively increased for each period because there would be fewer shares of common stock outstanding.
Federal Income Tax Consequences
The following is a brief summary of certain U.S. federal income tax consequences of a reverse stock split to us and to stockholders that hold shares of our common stock as capital assets for U.S. federal income tax purposes (generally, property held for investment). The summary is based on the Code, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the dateoutcome of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws.
This summary does not address all aspects of U.S. federal income taxation that may be relevant to stockholders in light of their particular circumstances or to stockholders who may be subject to special tax treatment under the Code, including, without limitation, dealers in securities, commodities or foreign currency, persons who are treated as non-U.S. persons for U.S. federal income tax purposes, certain former citizens or long-term residents of the United States, insurance companies, tax-exempt organizations, banks, financial institutions, small business investment companies, regulated investment companies, real estate investment trusts, retirement plans, persons whose functional currency is not the U.S. dollar, traders that mark-to-market their securities, persons subject to the alternative minimum tax or Medicare contribution tax on net investment income, persons who hold their shares of our common stock as part of a hedge, straddle, conversion or other risk reduction transaction, persons who hold their shares of our common stock as “qualified small business stock” under Section 1045 and/or 1202 of the Code, or who acquired their shares of our common stock pursuant to the exercise of compensatory stock options, the vesting of previously restricted shares of stock or otherwise as compensation.
The state and local tax consequences of a reverse split may vary as to each stockholder, depending on the jurisdiction in which such stockholder resides, and any state or local tax considerations are beyond the scope of this discussion. This discussion should not be considered as tax or investment advice, and the tax consequences of a reverse stock split may not be the same for all stockholders. Stockholders should consult their own tax advisors to understand their individual federal, state, local and foreign tax consequences.
Tax Consequences to the Company. proposal.
| |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE | | |
General
Our certificate of incorporation currently authorizes the Company to issue a total of 210,000,000 shares of capital stock, consisting of 200,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of preferred stock, par value $0.00001 per share.
Subject to stockholder approval, the Board of Directors approved an amendment to our certificate of incorporation to, at the discretion of the Board of Directors, and subject to our stockholders approving Proposal 6 and the implementation of the reverse stock split, revise the total number of shares of common stock that the Company is authorized to issue from 200,000,000 to a number that is calculated as the current authorized common share amount multiplied by 2x (two times) the final reverse stock split ratio. The effective increase in authorized shares will not change the number of authorized shares of preferred stock, which currently consists of 10,000,000 shares.
The primary purpose of the increase in authorized shares is to effectively increase the number of authorized shares of common stock, after giving effect to the reverse stock split. This effective increase would allow us to (i) maintain alignment with market expectations regarding the number of authorized shares of our common stock in comparison to the number of shares issued or reserved for issuance following any reverse stock split and ensure that we do not have what certain stockholders might view as an unreasonably high number of authorized shares which are not issued or reserved for issuance, (ii) provide us with the ability to pursue financing and corporate opportunities involving our common stock, which may include private or public offerings of our equity securities, and (iii) provide us with the ability to grant appropriate equity incentives for our employees over time. Accordingly, the implementation of the effective increase in authorized shares is expressly conditioned on stockholder approval of the reverse stock split proposal and the implementation of the reverse stock split.
The actual timing for implementation of the effective increase in authorized shares would be determined by the Board of Directors, following or concurrent with the implementation of the reverse stock split, and based upon its evaluation as to when such action would be most advantageous to the Company and its stockholders. Notwithstanding approval of the proposal to effectively increase the number of authorized shares of common stock and the proposal to effect a reverse stock split by our stockholders and the implementation of the reverse stock split, the Board of Directors will have the sole authority to elect whether or not and when to amend our certificate of incorporation to effect the effective increase in authorized shares. If the proposal to effectively increase the authorized shares of common stock and the proposal to effect a reverse stock split are approved by our stockholders and the reverse stock split is implemented, the Board of Directors will make a determination as to whether effecting the effective increase in authorized shares of common stock is in the best interests of the Company and our stockholders in light of, among other things, the Company’s anticipated needs for future equity issuances. For additional information concerning the factors the Board of Directors will consider in deciding whether to effect the effective increase in authorized shares of common stock, see “Board Discretion to Effect the Effective Increase of Authorized Shares.”
The text of the proposed amendment to the Company’s certificate of incorporation to effect the effective increase in authorized shares of common stock is included in Appendix C to this proxy statement (the “Authorized Share Charter Amendment”). If the proposal to effectively increase the number of authorized shares of common stock and the proposal to effect a reverse stock split are approved by the Company’s stockholders and the reverse stock split is implemented, the Company will have the authority to file the Authorized Share Charter Amendment with the Secretary of State of the State of Delaware, which will become effective upon its filing; provided, however, that the Authorized Share Charter Amendment is subject to revision to include such changes as may be required by the office of the Secretary of State of the State of Delaware and as the Board of Directors deems necessary and advisable. If the proposal to effectively increase the number of authorized shares of common stock is not approved the Company’s stockholders but the proposal to effect a reverse stock split is approved by the Company’s stockholders and the reverse split is implemented, the portion of the Appendix C constituting the Authorized Share Charter Amendment will be removed from Appendix C and will not be filed.
Purpose
The primary purpose of the effective increase in authorized shares of common stock is to effectively increase the total number of shares that we are authorized to issue to (i) maintain alignment with market expectations regarding the number of authorized shares of our common stock in comparison to the number of shares issued or reserved for issuance following any reverse stock split and ensure that we do not have what certain stockholders might view as an unreasonably high number of authorized shares which are not issued or reserved for issuance, (ii) provide us with the ability to pursue financing and corporate opportunities involving our common stock, which may include private or public offerings of our equity securities, and (iii) provide us with the ability to grant appropriate equity incentives for our employees over time. Accordingly, the implementation of the effective increase in authorized shares of common stock is expressly conditioned on the approval of the proposal to effect a reverse stock split and the implementation of the reverse stock split. In addition, the effective increase in authorized shares of common stock is anticipated to decrease the amount of annual franchise taxes that the Company may be required to pay to the State of Delaware following the reverse stock split.
Effect of the Effective Increase of Authorized Shares; Risks Associated with the Effective Increase of Authorized Shares
If the effective increase in authorized shares of common stock is implemented, it will revise the total number of shares of common stock that we are authorized to issue from 200,000,000 to a number that is calculated as the current authorized common share amount multiplied by 2x (two times) the final reverse stock split ratio. The effective increase in authorized shares of common stock would not have any effect on the rights of existing stockholders and the par value per share of common stock will remain $0.00001. The effective increase in authorized shares of common stock would not have any impact on the total number of shares of preferred stock that the Company is authorized to issue, which will remain at 10,000,000 shares. If the reverse stock split proposal is approved and implemented by the Board of Directors, but the proposed amendment to effectively increase the number of authorized shares of common stock is not approved or implemented by the Board of Directors, the total number of shares of capital stock that we are authorized to issue will not be affected by the reverse stock split and will remain 210,000,000 shares, consisting of 200,000,000 shares of common stock and 10,000,000 shares of preferred stock.
The effective increase in the number of authorized shares of common stock would result in an effectively greater number of shares of authorized but unissued common stock being available for future issuance for various purposes, including raising capital or making acquisitions. We currently expect that the amount of authorized but unissued shares of common stock available for future issuances following the reverse stock split and effective increase in authorized shares of common stock will be sufficient for our future needs.
The effective increase in authorized shares of common stock is conditioned on the approval of the proposal to effect a reverse stock split and the implementation of the reverse stock split, and will be effected to revise the number of authorized shares of common stock to a number that is calculated as the current authorized common share amount multiplied by 2x (two times) times the final reverse stock split ratio.
Conditioned on Reverse Stock Split
The Board of Directors intends to proceed with the effective increase in authorized shares of common stock only if and when the proposal to effect a reverse stock split is approved by our stockholders and the reverse stock split is implemented. Accordingly, if we do not receive approval of the proposal to effect a reverse stock split or the Board of Directors determines not to proceed with the reverse stock split, then we will not implement the effective increase in authorized shares of common stock.
The implementation of the reverse stock split, however, is not conditioned on the approval of the proposal to effectively increase the number of authorized shares of common stock or the implementation of the effective increase of authorized shares of common stock. Even if the proposal to effectively increase the authorized shares of common stock is not approved by our stockholders or if the Board of Directors determines not to implement the effective increase in
43
authorized shares of common stock, the Board of Directors will retain the option to implement the reverse stock split, subject to the approval of the proposal to effect a reverse stock split by our stockholders.
Board Discretion to Effect the Effective Increase of Authorized Shares
If the proposal to effectively increase the authorized shares of common stock and the proposal to effect a reverse stock split are approved by our stockholders and the reverse stock split is implemented, the effective increase in authorized shares of common stock will only be effected upon a determination by the Board of Directors, in its sole discretion, that filing the Authorized Share Charter Amendment to effect the effective increase in authorized shares of common stock is in the best interests of the Company and its stockholders. In making its determination, the Board of Directors will consider, among other things, whether the effective increase in authorized shares of common stock is in the best interests of the Company’s stockholders in light of the Company’s anticipated needs to reserve authorized shares of common stock for:
• raising capital through the sale of equity securities;
• entering into strategic business combinations;
• providing equity incentives to officers, directors and employees; and
• other corporate purposes.
In addition, whether the Board of Directors determines to implement the effective increase in authorized shares of common stock will depend on the ratio that the Board of Directors selects for the reverse stock split and the number of shares of common stock that are issued and outstanding following the reverse stock split.
Effective Time of the Effective Increase of Authorized Shares
If the proposal to effectively increase the authorized shares of common stock and the proposal to effect a reverse stock split are approved by our stockholders and the reverse stock split is implemented, the effective increase in authorized shares of common stock would become effective, if at all, when the Authorized Share Amendment is accepted and recorded by the office of the Secretary of State of the State of Delaware. However, notwithstanding approval of the proposal to effectively increase the authorized shares of common stock and the proposal to effect a reverse stock split by our stockholders and the implementation of the reverse stock split, the Board of Directors will have the sole authority to elect whether or not and when to amend our certificate of incorporation to effect the effective increase in authorized shares of common stock.
Vote Required
The affirmative vote of the holders of a majority of our outstanding shares of common stock as of the record date will be required to approve the proposal to amend the Company’s certificate of incorporation to effectively increase the number of authorized shares of common stock.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 7
44
Plan Category | | | 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 plan (excluding securities outstanding) | | |||||||||
Equity compensation plans approved by security holders | | | | | 38,025(1) | | | | | $ | 25.40(2) | | | | | | 256,911(3) | | |
Equity compensation plans not approved by security holders | | | | | 48,709(4) | | | | | $ | —(2) | | | | | | 51,084(5) | | |
Total | | | | | 86,734 | | | | | $ | 25.40(2) | | | | | | 307,995 | | |
Plan Category |
| 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 plan (excluding securities outstanding) |
|
| |||
Equity compensation plans approved by security holders |
|
| 1,807,811 |
| (1) |
| $ | 1.27 |
| (2) |
|
| 4,217,637 |
| (3) |
Equity compensation plans not approved by security holders |
|
| 657,583 |
| (4) |
| $ | — |
| (2) |
|
| 1,566,170 |
| (5) |
Total |
|
| 2,465,394 |
|
|
| $ | 1.27 |
| (2) |
|
| 5,783,807 |
|
|
|
|
|
|
|
|
|
|
|
|
45
each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;
•
•
•
Name and Address of Beneficial Owner | | | Number of Shares Beneficially Owned | | | Percentage of Class | | ||||||
Current Directors and Executive Officers | | | | | | | | | | | | | |
Rahul Patel | | | | | 3,659 | | | | | | * | | |
J. Michael Dodson | | | | | 4,236 | | | | | | * | | |
David Roberson | | | | | 4,236 | | | | | | * | | |
Cesar Johnston(1) | | | | | 94,668(4) | | | | | | 1.6% | | |
Mallorie Burak | | | | | — | | | | | | * | | |
Former Executive Officers | | | | | | | | | | | | | |
William Mannina(2) | | | | | 9,093 | | | | | | * | | |
Susan Kim-van Dongen(3) | | | | | — | | | | | | * | | |
All current directors and all executive officers as a group (5 persons) | | | | | 106,799 | | | | | | 1.8% | | |
Five Percent Stockholders | | | | | | | | | | | | | |
None | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner |
| Number of Shares Beneficially Owned |
|
| Percentage of Class |
| ||
Directors and Executive Officers |
|
|
|
|
|
|
|
|
Reynette Au (1) |
|
| 112,337 |
|
| * |
| |
Rahul Patel (2) |
|
| 36,680 |
|
| * |
| |
Sheryl Wilkerson (3) |
|
| 60,473 |
|
| * |
| |
J. Michael Dodson (4) |
|
| — |
|
| * |
| |
David Roberson (5) |
|
| — |
|
|
| * |
|
Cesar Johnston (6) |
|
| 637,030 |
|
| * |
| |
William Mannina (7) |
|
| 65,709 |
|
| * |
| |
All current directors and all executive officers as a group (7 persons) (8) |
|
| 912,229 |
|
|
| 1.0 | % |
Five Percent Stockholders |
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|
|
|
|
|
|
|
None |
|
|
|
|
|
|
|
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|
Name | |
| Age | | | Position | |
| |
| 53 |
| |||
| |
|
| |
Cesar Johnston’s biography is included above under the section titled “Proposal No. 1: Election of Directors” with the biographies of the other nominees for election to the Board. The biography for our other NEOs are below.
William Mannina officer.
2023.
Name and Principal Position | | | Year | | | Salary | | | Bonus(1) | | | Stock Awards ($)(2) | | | Stock Option Awards ($)(3) | | | All Other Compensation(4) | | | TOTAL | | |||||||||||||||||||||
Cesar Johnston Former Chief Executive Officer(4) | | | | | 2023 | | | | | $ | 400,000 | | | | | $ | 186,750 | | | | | $ | 15,500 | | | | | | — | | | | | $ | — | | | | | $ | 602,500 | | |
| | | 2022 | | | | | $ | 400,000 | | | | | $ | 480,000 | | | | | $ | 381,240 | | | | | $ | 308,460 | | | | | | — | | | | | $ | 1,569,700 | | | ||
William Mannina Former Acting Chief Financial Officer(5) | | | | | 2023 | | | | | $ | 192,805 | | | | | $ | 69,580 | | | | | $ | — | | | | | | — | | | | | $ | 259,257 | | | | | $ | 521,642 | | |
| | | 2022 | | | | | $ | 253,267 | | | | | $ | 202,901 | | | | | $ | 92,700 | | | | | $ | — | | | | | | — | | | | | $ | 548,868 | | | ||
Susan Kim-van Dongen Former Acting Chief Financial Officer(6) | | | | | 2023 | | | | | $ | 291,200 | | | | | $ | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | 291,200 | | |
| | | 2022 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
Name and Principal Position |
| Year |
| Salary |
|
| Non-Equity Incentive Plan Compensation |
|
|
| Stock Awards ($)(1) |
|
|
| Stock Option Awards ($)(2) |
|
| All Other Compensation |
|
| TOTAL |
|
| ||||||
Cesar Johnston |
| 2022 |
| $ | 400,000 |
|
| $ | 480,000 |
| (3) |
| $ | 381,240 |
| (10) |
| $ | 308,460 |
| (16) |
| — |
|
| $ | 1,569,700 |
|
|
Chief Executive Officer |
| 2021 |
| $ | 358,517 |
|
| $ | 339,269 |
| (4) |
| $ | 1,611,492 |
| (11) |
| $ | — |
|
|
| — |
|
| $ | 2,309,278 |
|
|
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|
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|
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|
William Mannina |
| 2022 |
| $ | 253,267 |
|
| $ | 202,901 |
| (5) |
| $ | 92,700 |
| (12) |
| $ | — |
|
|
| — |
|
| $ | 548,868 |
|
|
Acting Chief Financial Officer |
| 2021 |
| $ | 245,173 |
|
| $ | 90,625 |
| (6) |
| $ | 465,525 |
| (13) |
| $ | — |
|
|
| — |
|
| $ | 801,323 |
|
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|
|
|
|
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|
Neeraj Sahejpal |
| 2022 |
| $ | 117,227 |
|
| $ | 102,867 |
| (8) |
| $ | — |
| (14) |
| $ | — |
|
| $ | 545,782 |
| (17) | $ | 765,876 |
|
|
Former Sr. Vice President of Marketing and Business Development (7) |
| 2021 |
| $ | 261,250 |
|
| $ | 241,656 |
| (9) |
| $ | 1,293,529 |
| (15) |
| $ | — |
|
| $ | — |
|
| $ | 1,796,435 |
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48
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2023
| | | Options Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||
Name | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock that Have Not Vested (#) | | | Market Value of Shares or Units of Stock that Have Not Vested ($)(1) | | ||||||||||||||||||
Cesar Johnston | | | | | 7,500 | | | | | | 7,500(2) | | | | | $ | 25.40 | | | | | | 12/5/2031 | | | | | | 1,142(3) | | | | | $ | 2,090 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,875(4) | | | | | | 3,431 | | |
William Mannina | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Susan Kim-van Dongen | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
| Options Awards |
|
| Stock Awards |
|
| ||||||||||||||||||
Name |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
|
| Option Exercise Price ($) |
|
| Option Expiration Date |
|
| Number of Shares or Units of Stock that Have Not Vested (#)(1) |
|
| Market Value of Shares or Units of Stock that Have Not Vested ($)(2) |
|
| ||||||
Cesar Johnston |
|
| — |
|
|
| 300,000 |
| (3) | $ | 1.27 |
|
|
| 12/5/2031 |
|
|
| 34,198 |
| (4) | $ | 28,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 79,916 |
| (5) |
| 66,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 100,000 |
| (6) |
| 83,000 |
|
|
William Mannina |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7,500 |
| (4) |
| 6,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 35,000 |
| (5) |
| 29,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 25,000 |
| (7) |
| 20,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 90,000 |
| (8) |
| 74,700 |
|
|
Neeraj Sahejpal (9) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
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The Johnston A&R CIC Agreement additionally provides that, in the event of (a) a change-in-control qualifying termination, Mr. Johnston is entitled to (a) a one-time lump sum payment by the Company in an amount equal to 18 months of his monthly base salary plus an amount equal to 150%100% of his target bonus plus, if agreed by the Compensation Committee, a prorateddiscretionary bonus for the year in which the termination occurs, (b) any outstanding unvested equity awards held by Mr. Johnston (includingthat would vest in the next 18 months of continuing employment (other than any equity awards that vest upon satisfaction of performance criteria) will accelerate in
50
fullandbecomeand become vested and (c)(c) ifMr.JohnstontimelyelectscontinuedcoverageunderCOBRA,theCompanyoritssuccessorwillpaythefullamountofMr.Johnston’s COBRApremiumsonhisbehalffor18months.
Mr. Johnston is also eligible to receive all customary and usual benefits generally available to senior executivestimely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of the Company.
Neeraj Sahejpal. In July 2020,1985, as amended (“COBRA”), the Company and Mr. Sahejpal entered into an amendment and restatement of his then existing severance and change of control agreement withor its successor will pay the Company (as amended and restated, the “Sahejpal Severance Agreement”). Under the terms of the Sahejpal Severance Agreement, the Company agreed that if Mr. Sahejpal was terminated in a Qualifying CiC Termination (as defined therein), he would receive a lump sum equal to 12 months of his monthly base salary, anfull amount equal to 100% of his target bonus, and a prorated bonus for the year in which the termination occurred. In addition, to the extent allowable, 100% of Mr. Sahejpal’s equity awards would accelerate and become vested. If Mr. Sahejpal were to be terminated in a Qualifying Non-CiC Termination (as defined therein), he would receive a lump sum equal to 12 months of his monthly base salary and 100% of his annual target bonus, and if agreed by the Compensation Committee he may receive a prorated discretionary bonus for the year in which the termination occurs. In addition, the equity awards that would have vested in the 12 months following the termination would have accelerated and become vested. Finally, in both a Qualifying CiC Termination and a Qualifying Non-CiC Termination, if Mr. Sahejpal so elected, the Company would be required to pay 12 months ofJohnston’s COBRA premiums based on his behalf for 18 months. Mr. Johnston will receive the termsamounts set forth above in connection with his termination of the Company’s group health plan.service as Chief Executive Officer in March 2024.
Mr. Sahejpal departed the Company on April 30, 2022, and such termination was deemed a Qualifying Non-CiC Termination.
Year(1) | | | Summary Compensation Table Total for Cesar Johnston ($) | | | Summary Compensation Table Total for Stephen R. Rizzone ($) | | | Compensation Actually Paid for Cesar Johnston ($)(2) | | | Compensation Actually Paid for Stephen R. Rizzone ($)(2) | | | Average Summary Compensation Table Total for Non-PEO NEOs ($) | | | Average Compensation Actually Paid to Non-PEO NEOs ($)(2) | | | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($) | | | Net Loss ($) | | ||||||||||||||||||||||||
2023 | | | | | 565,500 | | | | | | — | | | | | | 583,450 | | | | | | — | | | | | | 812,842 | | | | | | 826,227 | | | | | | 5.08 | | | | | | (19,366,763) | | |
2022 | | | | | 1,569,700 | | | | | | — | | | | | | 1,267,331 | | | | | | — | | | | | | 986,059 | | | | | | 873,418 | | | | | | 46.44 | | | | | | (26,275,260) | | |
2021 | | | | | 1,154,639 | | | | | | 4,059,578 | | | | | | 807,465 | | | | | | 4,205,821 | | | | | | 2,085,394 | | | | | | 1,336,448 | | | | | | 69.44 | | | | | | (41,427,293) | | |
Year (1) | Summary Compensation Table Total for Cesar Johnston ($) | Summary Compensation Table Total for Stephen R. Rizzone ($) | Compensation Actually Paid to Cesar Johnston ($) (2) | Compensation Actually Paid to Stephen R. Rizzone ($) (2) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) (2) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($) | Net Loss ($) |
2022 | 1,569,700 | - | 1,267,331 | - | 986,059 | 873,418 | 46.44 | (26,275,260) |
2021 | 1,154,639 | 4,059,578 | 807,465 | 4,205,821 | 2,085,394 | 1,336,448 | 69.44 | (41,427,293) |
1.
Year | | | PEOs | | | Non-PEO NEOs | |
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| Cesar Johnston | | | William Mannina, Susan Kim-van Dongen | |
2022 | | | Cesar Johnston | | | William Mannina, Neeraj Sahejpal | |
2021 | | | Cesar Johnston, Stephen R. Rizzone | | | William Mannina, Neeraj Sahejpal, Brian Sereda | |
Year | | | Summary compensation table total for Cesar Johnston ($) | | | Reported value of equity awards for Cesar Johnston(1) ($) | | | Fair value as of year- end for awards granted during the year ($) | | | Fair value year-over- year increase or decrease in unvested awards granted in prior years ($) | | | Fair value of awards granted and vested during the year ($) | | | Fair value increase or decrease from prior year end for awards that vested during the year ($) | | | Fair value of awards granted in prior years that are determined to fail to meet the applicable vesting conditions (forfeited awards) ($) | | | Compensation actually paid to Cesar Johnston ($) | | ||||||||||||||||||||||||
2023 | | | | | 565,500 | | | | | | (15,500) | | | | | | — | | | | | | 10,113 | | | | | | 2,059 | | | | | | 21,278 | | | | | | — | | | | | | 583,450 | | |
2022 | | | | | 1,569,700 | | | | | | (689,700) | | | | | | 278,600 | | | | | | (47,243) | | | | | | 162,341 | | | | | | 2,633 | | | | | | — | | | | | | 1,276,331 | | |
2021 | | | | | 1,154,639 | | | | | | (805,746) | | | | | | 135,497 | | | | | | (11,178) | | | | | | 246,311 | | | | | | 87,942 | | | | | | — | | | | | | 807,465 | | |
Year |
| Summary compensation table total for Cesar Johnston ($) |
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| Reported value of equity awards for Cesar Johnston (1) ($) |
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| Fair value as of year-end for awards granted during the year ($) |
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| Fair value year-over-year increase or decrease in unvested awards granted in prior years ($) |
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| Fair value of awards granted and vested during the year ($) |
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| Fair value increase or decrease from prior year end for awards that vested during the year ($) |
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| Compensation actually paid to Cesar Johnston ($) |
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2022 |
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| 1,569,700 |
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| (689,700) |
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| 278,600 |
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| (47,243) |
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| 162,341 |
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| 2,633 |
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| 1,276,331 |
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2021 |
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| 1,154,639 |
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| (805,746) |
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| 135,497 |
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| (11,178) |
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| 246,311 |
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| 87,942 |
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| 807,465 |
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1.
Year | | | Summary compensation table total for Stephen R. Rizzone ($) | | | Reported value of equity awards for Stephen R. Rizzone(1) ($) | | | Fair value as of year-end for awards granted during the year ($) | | | Fair value year-over- year increase or decrease in unvested awards granted in prior years ($) | | | Fair value of awards granted and vested during the year ($) | | | Fair value increase or decrease from prior year end for awards that vested during the year ($) | | | Compensation actually paid to Stephen R. Rizzone ($) | | |||||||||||||||||||||
2023 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
2022 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
2021 | | | | | 4,059,578 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 146,243 | | | | | | 4,205,821 | | |
Year |
| Summary compensation table total for Stephen R. Rizzone ($) |
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| Reported value of equity awards for Stephen R. Rizzone (1) ($) |
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| Fair value as of year-end for awards granted during the year ($) |
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| Fair value year-over-year increase or decrease in unvested awards granted in prior years ($) |
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| Fair value of awards granted and vested during the year ($) |
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| Fair value increase or decrease from prior year end for awards that vested during the year ($) |
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| Compensation actually paid to Stephen R. Rizzone ($) |
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2022 |
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| - |
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| - |
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| - |
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| - |
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| �� | - |
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| - |
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| - |
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2021 |
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| 4,059,578 |
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| - |
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| - |
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| - |
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| - |
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| 146,243 |
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| 4,205,821 |
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1.
Year | | | Average summary compensation table total for Non-PEO NEOs ($) | | | Reported value of equity awards for NEOs(1) ($) | | | Fair value as of year- end for awards granted during the year ($) | | | Fair value year-over- year increase or decrease in unvested awards granted in prior years ($) | | | Fair value of awards granted and vested during the year ($) | | | Fair value increase or decrease from prior year end for awards that vested during the year ($) | | | Fair value of awards granted in prior years that are determined to fail to meet the applicable vesting conditions (forfeited awards) ($) | | | Average compensation actually paid to NEOs ($) | | ||||||||||||||||||||||||
2023 | | | | | 812,842 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 16,102 | | | | | | (2,717) | | | | | | 826,227 | | |
2022 | | | | | 986,059 | | | | | | (69,525) | | | | | | 56,430 | | | | | | (20,959) | | | | | | — | | | | | | (78,587) | | | | | | — | | | | | | 873,418 | | |
2021 | | | | | 2,085,394 | | | | | | (1,464,494) | | | | | | 198,364 | | | | | | (12,933) | | | | | | 415,205 | | | | | | 114,912 | | | | | | — | | | | | | 1,336,448 | | |
Year |
| Average summary compensation table total for Non-PEO NEOs ($) |
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| Reported value of equity awards for NEOs (1) ($) |
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| Fair value as of year-end for awards granted during the year ($) |
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| Fair value year-over-year increase or decrease in unvested awards granted in prior years ($) |
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| Fair value of awards granted and vested during the year ($) |
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| Fair value increase or decrease from prior year end for awards that vested during the year ($) |
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| Average compensation actually paid to NEOs ($) |
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2022 |
|
| 986,059 |
|
|
| (69,525) |
|
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| 56,430 |
|
|
| (20,959) |
|
|
| - |
|
|
| (78,587) |
|
|
| 873,418 |
|
2021 |
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| 2,085,394 |
|
|
| (1,464,494) |
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| 198,364 |
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|
| (12,933) |
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| 415,205 |
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| 114,912 |
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| 1,336,448 |
|
1.
THE AUDIT COMMITTEE: |
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Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10 percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all such filings. Based solely on our review of the copies of the reports that we received and written representations that no other reports were required, we believe that our executive officers, directors and greater-than 10% stockholders complied with all applicable filing requirements on a timely basis during 2022, except the following: one report covering a total of one transaction, that was filed late by Mr. Johnston; two reports covering a total of two transactions that were filed late by Mr. Mannina; one report covering a total of one transaction, that was filed late by Mr. Sahejpal, a former executive officer; one report covering a total of one transaction, that was filed late by Ms. Au; two reports covering a total of two transactions, that were filed late by Mr. Patel; one report covering a total of one transaction, that was filed late by Ms. Wilkerson; one report covering a total of one transaction, that was filed late by Kathleen Bayless, a former Board member; and one report covering a total of two transactions, that was filed late by Daniel Fairfax, a former Board member.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on June 14, 2023
The proxy statement and 2022 annual report to stockholders are available at www.proxyvote.com.
A copy of the Company’s 2022 Annual Report to Stockholders, which consists of our 2022 Annual Report on Form 10-K for the year ended December 31, 2022, is available without charge upon written request to: Chief Financial Officer, Energous Corporation, 3590 North First Street, Suite 210, San Jose, California 95134.
“Householding” - Stockholders Sharing the Same Address
(408) 963-0269.
58
2013
(AS AMENDED AND RESTATED JUNE 14, 2023)
1.PURPOSE
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2.2 “Acquiror” shall have the meaning set forth in Section 15.2.
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| 2.4 “Award” means a grant of an Option, SAR, RSU, Restricted Stock, Stock Award, Performance Award (including a Performance Share Unit), Other Share-based Award or cash award under the Plan. |
| 2.5 “Award Agreement” means a written (including electronic) agreement between the Company and a Grantee, or notice from the Company or an Affiliate to a Grantee that evidences and sets out the terms and conditions of an Award. |
| 2.6 “Board” means the Board of Directors of the Company. |
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| 2.8 “Cause” shall be defined as that term is defined in the Grantee’s offer letter or other applicable employment agreement, or, if there is no such definition, “Cause” means, unless otherwise provided in the applicable Award Agreement: (i) the commission of any act by the Grantee constituting financial dishonesty against the Company or its Affiliates (which act would be chargeable as a crime under applicable law); (ii) the Grantee’s engaging in any other act of dishonesty, fraud, intentional misrepresentation, moral turpitude, illegality or harassment that would (a) materially adversely affect the business or the reputation of the Company or any of its Affiliates with their respective current or prospective customers, suppliers, lenders or other third parties with whom such entity does or might do business or (b) expose the Company or any of its Affiliates to a risk of civil or criminal legal damages, liabilities or penalties or reputational harm; (iii) the repeated failure by the Grantee to follow the directives of the Chief Executive Officer of the Company or any of its Affiliates or the Board or other person to whom the Grantee directly reports; or (iv) any material misconduct, violation of the Company’s or Affiliates’ policies or agreement to which the Grantee is subject, or willful and deliberate non-performance of duty by the Grantee in connection with the business affairs of the Company or its Affiliates. |
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| 2.9 “Change in Control” shall have the meaning set forth in Section 15.2 |
| 2.10 “Code” means the United States Internal Revenue Code of 1986. |
| 2.11 “Committee” means the Compensation Committee of the Board or any committee or other person or persons designated by the Board to administer the Plan. The Board will cause the Committee to satisfy the applicable requirements of any securities exchange on which the Common Stock may then be listed. For purposes of Awards to Grantees who are subject to Section 16 of the Exchange Act, Committee means all of the members of the Committee who are “non-employee directors” within the meaning of Rule 16b-3 adopted under the Exchange Act. |
| 2.12 “Company” means Energous Corporation, a Delaware Corporation, or any successor corporation. |
| 2.13 “Common Stock” means the common stock of the Company. |
| 2.14 “Consultant” means a consultant or advisor that provides bona fide services to the Company or any Affiliate and who qualifies as a consultant or advisor under Form S-8. |
| 2.15 “Disability” shall be defined as that term is defined in the Grantee’s offer letter or other applicable employment agreement, or, if there is no such definition, “Disability” means, unless otherwise provided in the applicable Award Agreement, the Grantee is unable to perform each of the essential duties of such Grantee’s position by reason of a medically determinable physical or mental impairment that is potentially permanent in character or that can be expected to last for a continuous period of not less than 12 months; provided, however, that, with respect to rules regarding expiration of an Incentive Stock Option following termination of the Grantee’s Service, “Disability” means “permanent and total disability” as set forth in Code Section 22(e)(3). |
| 2.16 “Effective Date” means the date the Plan was most recently approved by the Stockholders. |
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| “Exchange Act” means the United States Securities Exchange Act of 1934. |
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| 2.19 “Fair Market Value” of a Share as of a particular date means (i) if the Common Stock is listed on a national securities exchange, the closing or last price of the Common Stock on the composite tape or other comparable reporting system for the applicable date, or if the applicable date is not a trading day, the trading day immediately preceding the applicable date, or (ii) if the Common Stock is not then listed on a national securities exchange, the closing or last price of the Common Stock quoted by an established quotation service for over-the-counter securities, or (iii) if the Common Stock is not then listed on a national securities exchange or quoted by an established quotation service for over-the-counter securities, or the value of the Common Stock is not otherwise determinable, such value as determined by the Committee. |
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| 2.21 “Grant Date” means the latest to occur of (i) the date as of which the Committee approves an Award, (ii) the date on which the recipient of an Award first becomes eligible to receive an Award under Section 6 or (iii) such other date as may be specified by the Committee in the Award Agreement. |
| 2.22 “Grantee” means a person who receives or holds an Award. |
| 2.23 “Incentive Stock Option” means an “incentive stock option” within the meaning of Code Section 422. |
| 2.24 “Incumbent Directors” shall have the meaning set forth in Section 15.2 |
| 2.25 “Inducement Plan” shall have the meaning set forth in Section 1.2. |
| 2.26 “Non-Employee Director” means a member of the Board or the board of directors of an Affiliate, in each case who is not an officer or employee of the Company or any Affiliate. |
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| 2.27 “Non-qualified Stock Option” means an Option that is not an Incentive Stock Option. |
| 2.28 “Option” means an option to purchase one or more Shares pursuant to the Plan. |
| 2.29 “Option Price” means the exercise price for each Share subject to an Option. |
| 2.30 “Other Share-based Awards” means Awards consisting of Share units, or other Awards, valued in whole or in part by reference to, or otherwise based on, Common Stock, other than Options, SARs, RSUs, Restricted Stock, Stock Awards, or Performance Share Units. |
| 2.31 “Performance Award” means an Award made subject to the attainment of performance goals (as described in Section 12) over a performance period of at least one year established by the Committee, and includes an Annual Incentive Award and Performance Share Units. |
| 2.32 “Performance Share Unit” means a bookkeeping entry reflecting the right to receive Shares or their cash equivalent subject to the satisfaction of specified terms and conditions, including performance terms, awarded to a Grantee pursuant to Section 12. |
| 2.33 “Person” means an individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act. |
| 2.34 “Plan” means this Energous Corporation 2024 Equity Incentive Plan. |
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| 2.36 “Purchase Price” means the purchase price for each Share pursuant to a grant of Restricted Stock or a Stock Award. |
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3.1General
64
the Board. Except as specifically provided in Section 14 or as otherwise may be required by applicable law, regulatory requirement or the certificate of incorporation or the bylaws of the Company, the Board shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and conditions of the Plan that the Board deems to be necessary or appropriate to the administration of the Plan. The Committee shall administer the Plan; provided that, the Board shall retain the right to exercise the authority of the Committee to the extent consistent with applicable law and the applicable requirements of any securities exchange on which the Common Stock may
custom; and
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terms of an Option or SAR to lower its Option Price or SAR Exercise Price; (ii) any other action that is treated as a “repricing” under generally accepted accounting principles; and (iii) repurchasing for cash or canceling an Option or SAR at a time when its Option Price or SAR Exercise Price is greater than the Fair Market Value of the underlying Shares in exchange for another award, unless the cancellation and exchange occurs in connection with a change in capitalization or similar change under Section 15. A cancellation and exchange under clause (iii) would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Grantee.
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| 4. STOCK SUBJECT TO THE PLAN 4.1 Authorized Number of Shares |
Subject to adjustment under Section 15, the aggregate number of Shares authorized to be issued under the Plan is:
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| 4.2 Share Counting 4.2.1. General |
Each Share granted in connection with an Award shall be counted as one Share against the limit in Section 4.1, subject to the provisions of this Section 4.2.
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| 4.2.4. Payment of Option Price or Tax Withholding in Shares |
If Shares issuable upon exercise, vesting or settlement of an Award, or Shares owned by a Grantee (which are not subject to any pledge or other security interest) are surrendered or tendered to the Company in payment of the Option Price or Purchase Price of an Award or any taxes required to be withheld in respect of an Award, in each case, in accordance with the terms and conditions of the Plan and any applicable Award Agreement, such surrendered or tendered Shares shall not again be available for the grant of Awards. For a stock-settled SAR, only the netgross number of Shares actually issued upon exercise offor which the SAR is exercised shall be counted against the limit in Section 4.1.
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| 4.3 Award Limits 4.3.1. Incentive Stock Options |
Subject to adjustment under Section 15, 9,785,967Shares456,000 Shares available for issuance under the Plan shall be available for issuance as Incentive Stock Options.
| 4.3.2. Individual Award Limits for Share-Based Awards |
Subject to adjustment under Section 15, the maximum number of Shares subject to each type of Award (other than cash-based Performance Awards) intended to qualify as “performance-based compensation” under Section 162(m)that may be granted to any Grantee in any calendar year shall not exceed the following number of Shares: (i) Options and SARs: 2,000,00075,000 Shares; and (ii) all other share-based Performance Awards (including Restricted Stock, RSUs, Stock Awards, Performance Share Units and Other Share-based Awards that are Performance Awards): 2,000,000 Shares.
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| A-7 4.3.4. Limits on Awards to Non-Employee Directors |
The maximum value of Awards granted during any calendar year to any Non-Employee Director, taken together with any cash fees paid to such Non-Employee Director during the calendar year and the value of awards granted to the Non-Employee Director under any other equity compensation plan of the Company or an Affiliate during the calendar year, shall not exceed the following in total value: (i) $500,000 for the Chair of the Board and (ii) $300,000 for each Non-Employee Director other than the Chair of the Board; provided, however, that awards granted to Non-Employee Directors upon their initial election to the Board or the board of directors of an Affiliate shall not be counted towards the limit under this Section 4.3.4. Any Awards or other equity compensation plan awards that are scheduled to vest over a period of more than one calendar year shall be applied pro rata for purposes of the limit under this Section 4.3.4 based on the number of years over which such awards are scheduled to vest. For purposes of this Section 4.3.4, the value of any Awards shall be calculated based on the average of the closing trading prices of the Common Stock on the principal stock exchange for such Common Stock during the 30 consecutive trading days immediately preceding the date the Award is granted.
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| 5. EFFECTIVE DATE, DURATION AND AMENDMENTS 5.1 Term |
The Plan shall be effective as of the Effective Date, provided that it has been approved by the Stockholders. The Plan shall terminate automatically on May 16, 2028the Termination Date and may be terminated on any earlier date as provided in Section 5.2.
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| 6. AWARD ELIGIBILITY AND LIMITATIONS 6.1 Service Providers |
Subject to this Section 6.1, Awards may be made to any Service Provider as the Committee may determine and designate from time to time.
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Non-qualified Stock Options or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-qualified Stock Options.
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| 8. TERMS AND CONDITIONS OF OPTIONS 8.1 Option Price |
The Option Price of each Option shall be fixed by the Committee and stated in the related Award Agreement. The Option Price of each Option (except those that constitute Substitute Awards) shall be at least the Fair Market Value on the Grant Date; provided, however, that in the event that a Grantee is a Ten Percent Stockholder as of the Grant Date, the Option Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than 110% of the Fair Market Value on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a Share.
| 8.2 Vesting |
Subject to Section 8.3, each Option shall become exercisable at such times and under such conditions (including performance requirements) as stated in the Award Agreement.
| 8.3 Term |
Each Option shall terminate, and all rights to purchase Shares thereunder shall cease 10 years from the Grant Date, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the related Award Agreement; provided, however, that in the event that the Grantee is a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option at the Grant Date shall not be exercisable after the expiration of five years from its Grant Date.
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70
provided in Section 15 or the related Award Agreement, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance.
| 8.7 Delivery of Stock Certificates |
Subject to Section 3.6, promptly after the exercise of an Option by a Grantee and the payment in full of the Option Price and applicable tax withholding, such Grantee shall be entitled to the issuance of a stock certificate or certificates evidencing his or her ownership of the Shares subject to the Option.
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| 9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS 9.1 Right to Payment |
A SAR shall confer on the Grantee a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value on the date of exercise over (ii) the SAR Exercise Price, as determined by the Committee. The Award Agreement for a SAR (except those that constitute Substitute Awards) shall specify the SAR Exercise Price, which shall be fixed on the Grant Date as not less than the Fair Market Value on that date. SARs may be granted alone or in conjunction with all or part of an Option or at any subsequent time during the term of such Option or in conjunction with all or part of any other Award. A SAR granted in tandem with an outstanding Option following the Grant Date of such Option shall have a grant price that is equal to the Option Price; provided, however, that the SAR’s grant price may not be less than the Fair Market Value on the Grant Date of the SAR to the extent required by Section 409A.
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| 9.3 Term of SARs |
The term of a SAR shall be determined by the Committee; provided, however, that such term shall not exceed 10 years.
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| 10.2 Restricted Stock Certificates |
The Company shall issue Shares, in the name of each Grantee to whom a Stock Award or Restricted Stock has been granted, stock certificates or other evidence of ownership representing the total number of Shares of Restricted Stockunder the Award granted to the Grantee, as soon as reasonably practicable after the Grant Date. The Committee may provide in an Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the Grantee’s benefit until such time as the Restricted Stock is forfeited to the Company or the restrictions lapse, or (ii) such certificates shall be delivered to the Grantee; provided, however, that such certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and make appropriate reference to the restrictions imposed under the Plan and the Award Agreement.
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A holder
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The Grantee shall be required, to the extent required by applicable law, to purchase theShares under a Stock Award or an Award of Restricted Stock from the Company at a Purchase Price equal to the greater of (i) the aggregate par value of the Shares represented bysubject to such Restricted StockAward or (ii) the Purchase Price, if any, specified in the related Award Agreement. If specified in the Award Agreement, the Purchase Price may be deemed paid by Services already rendered. The Purchase Price shall be payable in a form described in Section 11 or, if so determined by the Committee, in consideration for past Services rendered.
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| 11. FORM OF PAYMENT FOR OPTIONS, STOCK AWARDS AND RESTRICTED STOCK 11.1 General Rule |
Payment of the Option Price for the Shares purchased pursuant to the exercise of an Option or the Purchase Price for a Stock Award or Restricted Stock shall be made in cash or in cash equivalents acceptable to the Company, except as provided in this Section 11.
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| 11.3 Cashless Exercise |
With respect to an Option only (and not with respect to Restricted Stock), to the extent permitted by law and to the extent the Award Agreement so provides, payment of the Option Price may be made all or in part by delivery (on a form acceptable to the Company) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of the Option Price and any withholding taxes described in Section 17.3.
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| 12.2 |
If and to the extent that the Committee determines that a Performance Award to be granted to a Grantee who is designated by the Committee as likely to be a Covered Employee should qualify as “performance-based compensation” for purposes of Section 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement of pre-established performance goals and other terms and conditions set forth in this Goals Generally
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The performance goals for Performance Share Units and other Performance Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 12.2. Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m), including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain.” The Committee may determine that Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of the Performance Share Awards and other Performance Awards. Performance goals may be established on a Company-wide basis, or with respect to one or more business units, divisions, Affiliates or business segments, as
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applicable. Performance goals may be absolute or relative (to the performance of one or more comparable companies or indices). To the extent consistent with the requirements of Section 162(m), theThe Committee may determine at the time that goals under this Section 12 are established the extent to which measurement of performance goals may exclude the impact of
| Business Criteria |
One or more of the following business criteria for the Company, on a consolidated basis, and/or specified Affiliates or business units of the Company (except with respect to the total stockholder return and earnings per share criteria), shallmay be used exclusively by the Committee in establishing performance goals for Performance Awards: (i) cash flow; (ii) earnings per share, as adjusted for any stock split, stock dividend or other recapitalization; (iii) earnings measures (including EBIT and EBITDA)); (iv) return on equity; (v) total stockholder return; (vi) share price performance, as adjusted for any stock split, stock dividend or other recapitalization; (vii) return on capital; (viii) revenue; (ix) income; (x) profit margin; (xi) return on operating revenue; (xii) brand recognition or acceptance; (xiii) customer metrics (including customer satisfaction, customer retention, customer profitability or customer contract terms); (xiv) productivity; (xv) expense targets; (xvi) market share; (xvii) cost control measures; (xviii) balance sheet metrics; (xix) strategic initiatives; (xx) implementation, completion or attainment of measurable objectives with respect to recruitment or retention of personnel or employee satisfaction; (xxi) return on assets; (xxii) growth in net sales; (xxiii) the ratio of net sales to net working capital; (xxiv) stockholder value added; (xxv) improvement in management of working capital items (inventory, accounts receivable or accounts payable); (xxvi) sales from newly-introduced products; (xxvii) successful completion of, or achievement of milestones or objectives related to, financing or capital raising transactions, strategic acquisitions or divestitures, joint ventures, partnerships, collaborations or other transactions; (xxviii) product quality, safety, productivity, yield or reliability (on time and complete orders); (xxix) funds from operations; (xxx) regulatory body approval for commercialization of a product; (xxxi) debt levels or reduction or debt ratios; (xxxii) economic value; (xxxiii) operating efficiency; (xxxiv) research and development achievements; (xxxvi) any other metric that is capable of measurement by the Committee; or (xxxv) any combination of the forgoing business criteria; provided, however, that such business criteria shall include any derivations of business criteria listed above (e.g., income shall include pre-tax income, net income and operating income).
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It is the intent of the Company that Performance Awards under Section 12.2 granted to persons who are designated by the Committee as likely to be Covered Employees within the meaning of Section 162(m) shall, if so designated by the Committee, qualify as “performance-based compensation” within the meaning of Section 162(m). Accordingly, the terms and conditions of Section 12.2, including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Section 162(m). The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Grantee will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee, at the time of grant of Performance Awards, as likely to be a Covered Employee with respect to that fiscal year or any subsequent fiscal year. If any provision of the Plan or any agreement relating to such Performance Awards does not comply or is inconsistent with the requirements of Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.
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| 13.2 Terms of Other Share-based Awards |
Any Common Stock subject to Awards made under this Section 13 may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the Shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.
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The Plan is intended to comply with Section 25102(o) of the California Corporations Code. In that regard, to the extent required by Section 25102(o), (i) the terms of any Options or SARs, to the extent vested and exercisable upon a Grantee’s Separation from Service, shall include any minimum exercise periods following Separation from Service specified by Section 25102(o), and (ii) any repurchase right of the Company with respect to Shares issued under the Plan shall include a minimum 90-day notice requirement. Any provision of the Plan that is inconsistent with Section 25102(o) shall, without further act or amendment by the Company, be reformed to comply with the requirements of Section 25102(o).
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| Rule 16b-3 |
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to such canceled Award in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per Share in the Change in Control, reduced by the exercise or purchase price per share, if any, under such Award. If any portion of such consideration may be received by Stockholders pursuant to the Change in Control on a contingent or delayed basis, the Committee may determine such Fair Market Value as of the time of the Change in Control on the basis of the Committee’s good faith estimate of the present value of the probable future payment of such consideration. In the event such determination is made by the Committee, the amount of such payment (reduced by applicable withholding taxes, if any) shall be paid to Grantees in respect of the vested portions of their canceled Awards as soon as practicable following the date of the Change in Control and in respect of the unvested portions of their canceled Awards in accordance with the vesting schedules applicable to such Awards. For avoidance of doubt, if the amount determined pursuant to this Section 15.2 for an Option or SAR is zero or less, the affected Option or SAR may be cancelled without any payment therefore.
| The Committee need not take the same action in connection with the Change in Control with respect to all Awards or portions thereof, all Grantees, or the vested and unvested portions of an Award. The Committee may provide that payments may be subject to the same terms and conditions as the payment of consideration to the Stockholders in connection with the Change in Control, including any delay as a result of escrows, earn outs, holdbacks or other contingencies. The Committee may also provide that payments made over time will remain subject to substantially the same vesting schedule as the Award, including any performance-based vesting metrics that applied to the Award immediately prior to the closing of the Change in Control. 15.2.2. Payment Conditions By accepting an Award under the Plan, each Grantee agrees that if an Award is to be terminated in connection with a Change in Control in exchange for a payment in cash, securities or other property, the Committee may require, as condition to receipt of any such payment, that the Grantee execute an Award termination agreement providing for, among other things, (i) the Grantee’s agreement and consent to (x) the amount of such consideration to be paid in respect of the Award and (y) the termination of the Award in exchange for such consideration, (ii) the Grantee’s agreement to be bound by any applicable provisions contained in the definitive agreements relating to the Change inf Control that are applicable to Stockholders generally, (iii) a customary release of any and all claims the Grantee may have, whether known, unknown or otherwise, arising from or relating to the Award and ownership of Company securities, (iv) the Grantee’s agreement to keep all non-public information provided in connection with the Change in Control transaction confidential, and (v) other customary provisions. 15.2.3. Change in Control Defined |
Unless otherwise provided in the applicable Award Agreement, a “Change in Control” means the consummation of any of the following events:
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| 15.3 Adjustments |
Adjustments under this Section 15 related to Shares or securities of the Company shall be made by the Committee. No fractional Shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole Share.
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| 17.3 Withholding Taxes |
The Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state or local taxes of any kind required by law to be withheld (i) with respect to the vesting of or other lapse of restrictions applicable to an Award, (ii) upon the issuance of any Shares upon the exercise of an Option or SAR or (iii) otherwise due in connection with an Award. At the time of such vesting, lapse or exercise, the Grantee shall pay to the Company or the Affiliate, as the case may be, any amount that the Company or the Affiliate may reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Committee, the Grantee may elect to satisfy such obligations, or the Company may require such obligations to be satisfied, in whole or in part, (i) by causing the Company or the Affiliate to withhold the minimum required number of Shares otherwise issuable to the Grantee as may be necessary to satisfy such withholding obligation or (ii) by delivering to the Company or the Affiliate Shares already owned by the Grantee. The Shares so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value used to satisfy such withholding obligation shall be determined by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant to this Section 17.3 may satisfy his or her withholding obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.
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to share options, share appreciation rights and certain other equity-based compensation under Treasury Regulation Section 1.409A-1(b)(5) or 1.409A-1(b)(6), or otherwise. The Committee shall use best efforts to interpret, operate and administer the Plan is intended toand any Award granted under the Plan in a manner consistent with this intention. However, the Committee makes no representations that Awards granted under the Plan shall be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to Awards granted under the Plan.
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would otherwise be payable and benefits that would otherwise be provided pursuant tounder the Plan or any Award granted under the Plan during the six-month period immediately following the Grantee’s Separation“separation from Service shallservice” will not be paid to the Grantee during such period, but will instead be accumulated and paid to the Grantee (or, in the event of the Grantee’s death, the Grantee’s estate) in a lump sum on the first payroll datebusiness day after the six-month anniversaryearlier of the date that is six months following the Grantee’s Separationseparation from Service (orservice or the Grantee’s death, if earlier). Notwithstandingunless the foregoing, neitheramounts can be paid in another manner that complies with Section 409A.
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| 17.9 Transferability of Awards 17.9.1. Transfers in General |
Except as provided in Section 17.9.2, no Award shall be assignable or transferable by the Grantee, other than by will or the laws of descent and distribution, and, during the lifetime of the Grantee, only the Grantee personally (or the Grantee’s personal representative) may exercise rights under the Plan.
| 17.9.2. Family Transfers |
If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or part of an Award (other than Incentive Stock Options) to any Family Member. For the purpose of this Section 17.9.2, a “not for value” transfer is a transfer that is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights or (iii) a transfer to an entity in which more than 50% of the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following a transfer under this Section 17.9.2, any such Award shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Awards are prohibited except to Family Members of the original Grantee in accordance with this Section 17.9.2 or by will or the laws of descent and distribution.
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dividends or dividend equivalents on any Award that is subject to the achievement of performance criteria be payable before the Award has become earned and payable.
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AMENDED AND RESTATED EMPLOYEE
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in death or that has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
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3.1General.
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and such decisions shall be final and binding on all persons. All expenses of administering this Plan shall be borne by the Company. The Board may take any action under this Plan that would otherwise be the responsibility of the Committee.
3.2 Delegation.
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Committee, a written designation of beneficiary who is to receive any cash withheld through payroll deductions and credited to the Participant’s notional account in the event of the Participant’s death before the Purchase Date of an Offering Period.
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CERTIFICATE OF AMENDMENT OF
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, OF ENERGOUS CORPORATION
Energous Corporation, a corporation organized and existing under the General Corporation Law (the “DGCL”) of the State of Delaware (the shall govern all questions concerning the construction, validity, and interpretation of this Plan, without regard to such state’s conflict of law rules.
FIRST: The name. This Plan shall be subject to approval by the stockholders of the corporationCompany within twelve (12) months before or after the date this Plan is Energous Corporation. The Corporation’s original Certificate of Incorporation was filed withadopted by the Secretary of State of Delaware on October 30, 2012,Board.
SECOND: The terms and provisionsCode Section 423. Any provision of this CertificatePlan that is inconsistent with Code Section 423 shall be reformed to comply with Code Section 423.
“Contingent and effective as of [ ] on [ ] (the “Effective Time”), each [ ] ([ ]) shares of the Corporation’s Common Stock, par value $0.00001 per share (the “Common Stock”), issued and outstanding prior to the Effective Time shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) share of Common Stock, par value $0.00001 per share, of the Corporation (the “Reverse Split”). No fractional share shall be issued in connection with the foregoing combination of the shares pursuant to the Reverse Split. The Corporation will pay in each case the fair value of such fractional shares, without interest and as determined in good faith by the Board of Directors recommends you vote FOR proposals 2-4. 2. To ratify the appointment of BPM LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024. 3. To approve the Energous Corporation 2024 Equity Incentive Plan. 4. To approve an amendment and restatement of the Energous Corporation when those entitledEmployee Stock Purchase Plan to receive such fractional shares are determined.
The Reverse Split shall occur automatically without any further action byincrease the holders of Common Stock, and whether or not the certificates representing such shares have been surrendered to the Corporation; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable as a result of the Reverse Split unless the existing certificates evidencing the applicable shares of stock prior to the Reverse Split are either delivered to the Corporation, or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed, and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates.”
THIRD: Article IV of the Certificate shall be and hereby is amended by replacing the first paragraph thereof in its entirety as follows:
“The aggregatetotal number of shares of all classes ofcommon stock whichavailable for issuance thereunder by 6,200 shares. NOTE: To transact such other business as may properly come before the Corporation shall haveannual meeting and any adjournments or postponements thereof. ! ! ! For All Withhold All For All Except For Against Abstain ! ! ! ENERGOUS CORPORATION To withhold authority to issue is [ ] shares, consisting of (i) [ ] shares of Common Stock, par value $0.00001 per share,vote for any individual nominee(s), mark "For All Except" and (ii) 10,000,000 shares of Preferred Stock, par value $0.00001 per share.”
FOURTH: This Certificate of Amendment so adopted (i) shall be effective as of [ ] on [ ], (ii) reads in full as set forth above and (iii) is hereby incorporated intowrite the Certificate by this reference. All other provisionsnumber(s) of the Certificate remain in full force and effect.
IN WITNESS WHEREOF,nominee(s) on the Corporation has caused this Certificate of Amendment to be signed by its duly authorized officer as of this [ ] day of [ ].
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us SCAN TO VIEW MATERIALS & VOTEline below. ENERGOUS CORPORATION 3590 NORTH FIRST STREET, SUITE 210 SAN JOSE, CA 95134 01) Rahul Patel 02) J. Michael Dodson 03) David Roberson 1. Election of Directors Nominees: The Board of Directors recommends you vote FOR ALL of the following: 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. ! ! ! ! ! ! VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 8:59 p.m. Pacific Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/WATT2022WATT2024 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 8:59 p.m. Pacific Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SCAN TO VIEW MATERIALS & VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D85724-P73484 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. ENERGOUS CORPORATION 3590 NORTH FIRST STREET, SUITE 210 SAN JOSE, CA 95134 ENERGOUS CORPORATION To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR ALL of the following 1. Election of Directors Nominees: 01) Kathleen Bayless 02) Sheryl Wilkerson 03) Rahul Patel 04) Reynette Au For All Withhold All For All Except The Board of Directors recommends you vote FOR proposal 2. 2. To ratify the appointment of Marcum LLP as our independent registered public accounting firm for 2022. NOTE: To transact such other business as may properly come before the annual meeting and any adjournments or postponements thereof. Abstain Against For 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. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date