PROPOSAL TWO: APPROVAL OF AN AMENDMENT TO FEMASYS’ CERTIFICATE OF
INCORPORATION TO PROVIDE FOR THE EXCULPATION OF OFFICERS AS PERMITTED BY
THE DELAWARE GENERAL CORPORATION LAW
Our Certificate of Incorporation currently provides for Femasys to limit the monetary liability of directors in certain circumstances pursuant to and consistent with Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”). Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit a corporation’s certificate of incorporation to include a provision eliminating or limiting monetary liability for certain senior corporate officers for breach of the duty of care, subject to certain exceptions. The board has determined that it is advisable and in the best interests of Femasys to approve an amendment (the “Proposed Amendment”) to our Certificate of Incorporation to provide for exculpation of our officers as now permitted by the DGCL, and has directed that the Proposed Amendment be submitted for adoption and approval by the stockholders at the Annual Meeting. The full text of the Proposed Amendment is set forth in Appendix A to this Proxy Statement.
Summary of Principal Changes
If this proposal is adopted, Article VII of our Certificate of Incorporation will be amended to add officers to the exculpation provision and provide officers with similar protections to those currently afforded members of the board, subject to the additional limitations of the DGCL. The board believes that the Proposed Amendment is necessary in order to continue to attract and retain experienced and qualified officers.
As amended, effective August 1, 2022, Section 102(b)(7) of the DGCL provides that only certain officers may be entitled to exculpation; namely: (i) a corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer; (ii) an individual identified in public filings as one of the most highly compensated officers of Femasys; and (iii) an individual who, by written agreement with Femasys, has consented to be identified as an officer for purposes of Delaware’s long-arm jurisdiction statute.
Similar to the existing exculpation provided members of the board under Femasys’ current Certificate of Incorporation, the Proposed Amendment would not limit the liability of officers for any breach of the duty of loyalty to the corporation or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, or any transaction from which the officer derived an improper personal benefit. Furthermore, pursuant to Section 102(b)(7) of the DGCL, the Proposed Amendment would allow for the exculpation of the officers specified above only in connection with direct claims brought by stockholders, including class actions, but would not eliminate such officers’ monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation.
This description of the Proposed Amendment is only a summary of those amendments and is qualified in its entirety by reference to, and should be read in conjunction with, the full text of Article VII of our Certificate of Incorporation a copy of which is attached to this proxy statement as Appendix A. Other than the amendment of the existing Article VII by the Proposed Amendment, the remainder of the Certificate of Incorporation will remain unchanged. If the Proposed Amendment is approved by the stockholders, the Proposed Amendment will become effective upon filing of the Certificate of Amendment of Certificate of Incorporation with the Delaware Secretary of State, which Femasys intends to file promptly following the Annual Meeting if the requisite votes are obtained.
Vote Required and Recommendation of the Board of Directors
The approval of Proposal 2 requires the affirmative sixty-six and two thirds (66 2/3rds) of the outstanding shares of our common stock. Broker non-votes and abstentions will have the effect of votes against the proposal.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL TWO.