UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
| ☐ |
Preliminary
Proxy Statement |
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| ☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| ☒ |
Definitive
Proxy Statement |
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| ☐ |
Definitive
Additional Materials |
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| ☐ |
Soliciting
Material under §240.14a-12 |
Sonim
Technologies, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check all boxes that apply):
| ☐ |
Fee
paid previously with preliminary materials |
| ☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
 |
Sonim
Technologies, Inc.
4445
Eastgate Mall, Suite 200
San
Diego, CA 92121 |
Notice
of 2024 Annual Meeting
and
Proxy Statement
| Date
and Time: |
Thursday,
June 20, 2024
9:00 a.m., Pacific Time |
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|
| Location: |
Participate
virtually at www.proxydocs.com/SONM |
|
Sonim
Technologies, Inc.
4445
Eastgate Mall, Suite 200
San
Diego, CA 92121 |
NOTICE OF 2024 ANNUAL
MEETING OF STOCKHOLDERS
| Date and Time: |
Thursday, June 20, 2024
9:00 a.m., Pacific Time |
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|
| Virtual Meeting: |
Participate online at
www.proxydocs.com/SONM |
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| Record Date: |
Close of business on
May 30, 2024 |
To
our Stockholders:
Sonim
Technologies, Inc. (“Sonim,” the “Company,” or “we”) will hold its 2024 Annual Meeting of Stockholders
(the “Annual Meeting”) on Thursday, June 20, 2024, at 9:00 a.m., Pacific Time. To provide the opportunity for participation
by a broader group of stockholders and provide a consistent and convenient experience to all stockholders regardless of location, the
Annual Meeting will be held in a virtual-only meeting format. Stockholders will not be able to physically attend the Annual Meeting.
If
you are a registered stockholder or beneficial owner of our common stock at the close of business on May 30, 2024, the record date of
our Annual Meeting, you may attend the virtual meeting, submit questions and vote your shares electronically during the meeting via live
audio webcast by visiting www.proxydocs.com/SONM and using the 12-digit control number included on your proxy card or voting instruction
form.
At
the Annual Meeting, holders of our outstanding shares of common stock will be asked to consider and vote upon the following proposals:
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1. |
To
elect the five (5) nominees as directors of the Company, each to hold office until the 2025 annual meeting of stockholders and until
his or her successor is duly elected and qualified or until his or her earlier death, resignation, or removal; |
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2. |
To
ratify the appointment of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December
31, 2024; |
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3. |
To
approve an amendment to the Sonim Technologies, Inc. 2019 Equity Incentive Plan, as amended, to increase the aggregate number of
shares of common stock authorized for issuance by 3,000,000 shares; |
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4. |
To
approve an amendment to our certificate of incorporation to effect a reverse split stock of our outstanding common stock at a ratio
of not less than 1-for-2 and not greater than 1-for-15, with the exact ratio to be set within that range at the discretion of our
board of directors and with such action to be effected at such time and date, if at all, as determined by the board of directors
prior to the one-year anniversary of the date on which the reverse stock split is approved by our stockholders at the Annual Meeting
without further approval or authorization of our stockholders (the “Reverse Stock Split Proposal”); |
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5. |
To
approve an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 100,000,000
shares to 200,000,000 shares with such action to be effected at such time and date, if at all, as determined by the board of directors
prior to the one-year anniversary of the date on which such increase is approved by our stockholders at the Annual Meeting without
further approval or authorization of our stockholders (the “Authorized Shares Proposal”); |
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6. |
To
approve an amendment to our certificate of incorporation to limit the liability of certain officers, as permitted by recent amendments
to Delaware law; |
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7. |
To
transact any other business properly brought before the Annual Meeting or any postponement or adjournment thereof. |
You
may vote on these matters virtually or by proxy. Each outstanding share of our common stock is entitled to one vote. Whether or not you
plan to virtually attend the Annual Meeting, we ask that you vote by one of the following methods to ensure that your shares will be
represented at the meeting in accordance with your wishes (see “How do I vote?” on page 3 in the accompanying
proxy statement):
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1. |
Vote
online or by telephone, by following the instructions included with the proxy card; or |
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2. |
Vote
by mail, by completing and returning the enclosed proxy card in the enclosed addressed stamped envelope. |
This
proxy statement and the form of proxy, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, were first
sent or given to stockholders on or about June 5, 2024. Additionally, on the same date, said proxy materials were made available
to our stockholders at www.proxydocs.com/SONM.
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By
Order of the Board of Directors, |
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|
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 |
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Name: |
Clay
Crolius |
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Title: |
Secretary |
San
Diego, California
June
5, 2024
TABLE
OF CONTENTS
|
Sonim
Technologies, Inc.
4445
Eastgate Mall, Suite 200
San
Diego, California 92121 |
PROXY
STATEMENT
FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS
To be held on Thursday, June 20, 2024
This
proxy statement contains information about the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Sonim Technologies,
Inc. (“Sonim,” the “Company,” or “we”) which will be held on June 20, 2024, at 9:00 a.m.,
Pacific Time. The Annual Meeting will be held virtually via live audio webcast. You will be able to virtually attend the Annual Meeting
as well as vote and submit your questions during the live audio webcast of the meeting by visiting www.proxydocs.com/SONM and entering
the control number included on your proxy card or in the instructions that accompanied your proxy materials. You will not be able
to attend the Annual Meeting physically in person. For purposes of attendance at the Annual Meeting, all references in this proxy statement
to “present in person” or “in person” shall mean virtually present at the Annual Meeting.
All
properly submitted proxies will be voted in accordance with the instructions contained in those proxies. If no instructions are specified,
the proxies will be voted in accordance with the recommendation of our Board of Directors (the “Board”) with respect to each
of the matters set forth in the accompanying notice of meeting. You may revoke your proxy at any time before it is exercised at the meeting
by one of the methods described under the title “May I change or revoke my proxy?”
The
mailing address of our principal executive offices is Sonim Technologies, Inc., 4445 Eastgate Mall, Suite 200 San Diego, California 92121.
We
are an “emerging growth company” under applicable federal securities laws and therefore permitted to comply with certain
reduced public company reporting requirements. As an emerging growth company, we provide in this proxy statement the scaled disclosure
permitted under the Jumpstart Our Business Startups Act of 2012, including the compensation disclosures required of a “smaller
reporting company,” as that term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an
advisory basis, of the compensation of our named executive officers or the frequency with which such votes must be conducted. We will
remain an emerging growth company until the earliest of:
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(1) |
the
last day of our fiscal year in which we have total annual gross revenue of $1.235 billion; |
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(2) |
December
31, 2024 (the last day of our fiscal year following the fifth anniversary of the date on which Sonim consummated its initial public
offering); |
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(3) |
the
date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period; or |
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(4) |
the
last day of the fiscal year in which we are deemed to be a “large accelerated filer,” which means the market value of
our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second
fiscal quarter. |
Even
after we are no longer an “emerging growth company,” we may remain a “smaller reporting company.”
IMPORTANT
INFORMATION REGARDING DELIVERY OF PROXY MATERIALS
Under
the SEC rules, a company may select either of the following options for making proxy materials available to its stockholders:
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the
full set delivery option; or |
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the
option often referred to as the “notice and access” option or the “notice only” option. |
A
company may use a single method for all of its stockholders or use full set delivery for some while adopting the notice only option for
others.
Full
set delivery option
Under
the full set delivery option, a company delivers all proxy materials to its stockholders by mail. In addition to delivery of proxy materials
to stockholders, a company must post all proxy materials on a publicly accessible website and provide information to stockholders about
how to access the website. In connection with the Annual Meeting, we have elected to use the full set delivery option. Accordingly,
you will receive all proxy materials by mail.
Notice
only option
Under
the notice only option, which we have elected NOT to use for the Annual Meeting, a company must post all proxy materials on a
publicly-accessible website. Instead of delivering proxy materials to its stockholders, a company may deliver a notice of Internet availability
of proxy materials, which includes, among other things:
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information
regarding the date and time of the annual meeting of stockholders as well as the items to be considered at the meeting; |
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information
regarding the website where the proxy materials are posted; and |
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various
means by which a stockholder can request paper or e-mail copies of the proxy materials. |
If
a stockholder requests paper copies of the proxy materials, these materials must be sent to the stockholder within three business days
and by first class mail.
Use
the notice and access option in the future
Although
we have elected to use the full set delivery option in connection with the Annual Meeting, we may choose to use the notice only option
in the future. By reducing the amount of materials that a company needs to print and mail, the notice and access option provides an opportunity
for cost savings as well as conservation of paper products. We will evaluate the future possible cost savings as well as the possible
impact on stockholder participation as we consider future use of the notice only option.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
proxy statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties, and other important factors that may cause the actual results,
performance, or achievements of the Company and its subsidiaries to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. The words or phrases “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,”
“will,” “would,” “could,” “should,” “potential,” “seek,” “evaluate,”
“pursue,” “continue,” “design,” “impact,” “affect,” “forecast,”
“target,” “outlook,” “initiative,” “objective,” “priorities,” “goal,”
or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking
statements contain these identifying words. These forward-looking statements include, but are not limited to statements concerning our
goals, commitments, strategies and mission, our plans and expectations regarding:
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● |
our
approach to corporate governance; |
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the
impact of the increase in the shares authorized for issuance under our equity incentive plan on our ability to retain qualified employees; |
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potential
benefits of the reverse stock split and its effect on our common stock; |
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potential
effects of the increase of authorized shares of common stock; and |
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our
ability to regain compliance with the Nasdaq Listing Rules. |
We
may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place
undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations
disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could
cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, risks related
to the reverse stock split discussed in the section of this proxy statement titled “Certain risks associated with the Reverse Stock Split” and other risks and uncertainties described in the section titled “Risk Factors” in our most recent
Annual Report on Form 10-K and documents we have filed with the SEC thereafter. Other unknown or unpredictable factors also could have
material adverse effects on our future results, performance, or achievements. In light of these risks, uncertainties, assumptions, and
factors, the forward-looking events discussed herein may not occur. You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date stated, or if no date is stated, as of the date hereof. Except as required by applicable
law, the Company does not undertake any obligation to publicly update or revise any forward-looking statements because of new information,
future events or otherwise.
WEBSITE
INFORMATION
Websites
throughout this proxy statement are provided for reference only. Websites referred to herein are not incorporated by reference into this
proxy statement.
GENERAL
INFORMATION ABOUT 2024 ANNUAL MEETING
When
are this proxy statement and the accompanying materials scheduled to be sent to stockholders?
On or about June 5, 2024,
we will begin mailing our proxy materials, including the Notice of the 2024 Annual Meeting of Stockholders, this proxy statement,
and the accompanying proxy card or, for shares held in street name (i.e., held for your account by a broker, bank, or other nominee),
a voting instruction form, and the Annual Report on Form 10-K for our fiscal year ended December 31, 2023 (the “2023 Annual Report”).
Additionally, our proxy materials will be made available to our stockholders on the Internet at www.proxydocs.com/SONM
on or about the same date.
Why
did I receive proxy materials?
We have delivered printed proxy
materials to you, because the Board is soliciting your proxy to vote at the Annual Meeting, including at any postponements or adjournments
thereof. You are invited to attend the Annual Meeting online to vote on the proposals described in this proxy statement. However, you
do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the proxy card, or follow
the instructions below to submit your proxy over the telephone or via the Internet.
Who
is soliciting my vote?
Our
Board is soliciting your vote for the Annual Meeting.
When
is the record date for the Annual Meeting?
The
record date for the determination of stockholders entitled to receive notice of and to vote at the Annual Meeting has been set as the
close of business on May 30, 2024.
How
many votes do I have?
Each
share of common stock outstanding on the record date entitles the holder thereof to one vote, without cumulation, on each matter to be
voted upon at the meeting. As of the record date for the Annual Meeting, there were 46,717,887 shares of common stock, issued,
outstanding, and entitled to vote.
How
do I vote?
If
you are a stockholder of record as of the record date, there are several ways for you to vote, or authorize a proxy to vote, your shares.
Whether
or not you plan to attend the Annual Meeting, we urge you to vote by proxy. If you vote by proxy, the individuals named on the proxy
card, or your “proxies,” will vote in the manner you indicate. If you submit a proxy but do not indicate any voting instructions,
your votes will be voted in accordance with our Board’s recommendations. Voting by proxy will not affect your right to attend the
Annual Meeting. The procedures for voting depend on whether your shares are registered in your name or are held by a bank, broker, or
other nominee who is the recordholder.
If
your shares are registered directly in your name through our stock transfer agent, or if you have stock certificates registered in your
name, you may vote:
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● |
By
Internet or by telephone. Follow the instructions included in the proxy card to vote by Internet or telephone. Telephone and
Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Pacific Time
on June 19, 2024. |
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By
mail. You may complete, sign, and return the proxy card in the postage pre-paid envelope accompanying the proxy materials
so that it is received prior to the Annual Meeting. |
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At
the meeting. If you attend the Annual Meeting, you can vote using the 12-digit control number on your proxy card or in the instructions that accompanied your proxy materials. |
If
your shares are held in “street name” (meaning the shares are held in the name of a bank, broker, or other nominee who is
the record holder), you must provide the bank, broker, or other nominee with instructions on how to vote your shares and can do so as
follows:
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● |
By
Internet or by telephone. Follow the instructions you receive from the bank, broker, or other nominee to vote by Internet or
telephone. |
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By
mail. You will receive instructions from the bank, broker, or other nominee explaining how to vote your shares. |
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At
the meeting. If you attend the Annual Meeting, you can vote using the 12-digit control number on your proxy card or in the instructions that accompanied your proxy materials. |
To
ensure that your vote is counted, please remember to submit your vote by the date and time indicated on your proxy card, voting instruction
form, or e-mail notification, as applicable.
How
does the Board recommend that I vote on the proposals?
There
are six proposals scheduled for a vote:
| Voting
Matter |
|
Board
Vote
Recommendation |
|
Page
Reference
For
More
Information |
| Proposal
1 — Election of Directors |
|
FOR
each nominee |
|
18 |
| Proposal
2 — Ratification of Appointment of Independent Registered Public Accounting Firm |
|
FOR |
|
19 |
| Proposal
3 — Increase of the Shares Available under our Equity Incentive Plan |
|
FOR |
|
21 |
| Proposal
4 — The Reverse Stock Split Proposal |
|
FOR |
|
31 |
| Proposal
5 — The Authorized Shares Proposal |
|
FOR |
|
39 |
| Proposal
6 — Approval of Amendment to Certificate of Incorporation to Limit the Liability of Certain Officers as Permitted by Delaware
Law |
|
FOR |
|
42 |
Are
there any matters to be voted on at the Annual Meeting that are not included in this proxy statement?
At
the date of this proxy statement, we did not know of any matters to be properly presented at the Annual Meeting other than those referred
to in this proxy statement. If other matters are properly presented at the meeting or any postponement or adjournment thereof for consideration,
and you are a stockholder of record and have submitted a proxy card, the persons named in your proxy card will have the discretion to
vote on those matters for you.
May
I change or revoke my proxy?
Yes.
You may change or revoke your previously submitted proxy at any time before the Annual Meeting or, if you attend the Annual Meeting virtually,
at the Annual Meeting before the polls close.
If
you hold your shares as a record holder, you may change or revoke your proxy in any one of the following ways:
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● |
By
re-voting at a subsequent time by Internet or by telephone as instructed above; |
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By
signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above; |
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By
delivering a signed revocation letter to the following address: P.O. BOX 8016, Cary, NC 27512-9903 c/o Mediant Communications; or |
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By
attending the Annual Meeting and voting virtually. Attending the Annual Meeting virtually will not in and of itself revoke a previously
submitted proxy. You must specifically request at the Annual Meeting that it be revoked by voting at the Annual Meeting. |
Your
latest-dated proxy card, Internet, or telephone vote is the one that is counted.
If
your shares are held in the name of a bank, broker, or other nominee, you may change your voting instructions by following the instructions
of your bank, broker, or other nominee.
What
if I receive more than one set of proxy materials?
You
may receive more than one set of proxy materials if you hold shares of our common
stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described under “How
do I vote?” for each account to ensure that all of your shares are voted.
How
is a quorum reached?
Our
amended and restated bylaws provide that the presence, in person, by remote communication, or by proxy of the holders of one-third of
the voting power of the outstanding shares of our common stock entitled to vote will constitute a quorum for the transaction of business
at the Annual Meeting. Thus, votes of stockholders of record who are present at the Annual Meeting virtually or by proxy, broker non-votes,
and abstentions will be counted for purposes of determining whether a quorum exists.
As
noted above, as of the record date for the Annual Meeting, there were 46,717,887 shares of common stock, issued, outstanding,
and entitled to vote, which means that 15,572,629 shares of common stock must be present in person or represented by proxy at
the Annual Meeting to establish a quorum.
Under
the General Corporation Law of the State of Delaware, shares that are voted “abstain” or “withheld” and “broker
non-votes” are counted as present for purposes of determining whether a quorum is present at the Annual Meeting. If a quorum is
not present, the meeting may be adjourned until a quorum is obtained.
What
is the effect if I fail to give voting instructions to my broker, bank, or other nominee?
If
your shares are held in “street name” by a broker, bank, or other nominee, your broker, bank, or other nominee is required
to vote your shares according to your instructions.
A
“broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because
the nominee does not have discretionary voting power with respect to that item, and has not received instructions from the beneficial
owner.
If
a proposal is routine and, therefore, a discretionary item, your broker, bank, or other nominee will be able to vote on such proposal
even if it does not receive instructions from you. If a proposal is a non-routine proposal and, therefore, a “non-discretionary”
item, in the event you do not instruct your broker how to vote with respect to such proposal, your broker, bank, or other nominee may
not vote for this proposal, and those votes will be counted as “broker non-votes.” If you do not give instructions to your
broker, bank, or other nominee, the broker, bank, or other nominee will still be able to vote your shares with respect to certain “discretionary”
items on “routine” proposals, but will not be allowed to vote your shares with respect to “non-discretionary”
items.
The
table set forth below illustrates whether each proposal is routine or non-routine.
| Voting
Matter |
|
Routine
or non-Routine |
| Proposal
1 — Election of Directors |
|
Non-routine |
| Proposal
2 — Ratification of Appointment of Independent Registered Public Accounting Firm |
|
Routine |
| Proposal
3 — Increase of the Shares Available under our Equity Incentive Plan |
|
Non-routine |
| Proposal
4 — The Reverse Stock Split Proposal |
|
Routine |
| Proposal
5 — The Authorized Shares Proposal |
|
Routine |
| Proposal
6 — Approval of Amendment to Certificate of Incorporation to Limit the Liability of Certain Officers as Permitted by Delaware
Law |
|
Non-routine |
What
are my voting options with respect to each proposal and how many votes are required to approve each proposal?
The
table set forth below illustrates the voting options, vote required, and effect of abstentions and broker non-votes for each proposal,
assuming a quorum is present at the Annual Meeting:
| Voting
Matter |
|
Voting
Options |
|
Vote
Required |
|
Broker
Discretionary Voting Allowed |
|
Effect
of Broker
Non-Votes |
|
Effect
of Abstentions |
| Proposal
1 — Election of Directors |
|
For
or withhold with respect to each nominee |
|
Plurality
of the votes cast by the holders of the shares entitled to vote on the matter (five nominees receiving the highest number of affirmative
FOR votes will be elected) |
|
No |
|
No
effect |
|
No
effect |
| Proposal
2 — Ratification of Appointment of Independent Registered Public Accounting Firm |
|
For,
against, or abstain |
|
Affirmative
vote of the holders of a majority of the voting power of the shares present in person or by proxy at the Annual Meeting and entitled
to vote on the matter |
|
Yes |
|
N/A |
|
Against |
| Proposal
3 — Increase of the Shares Available under our Equity Incentive Plan |
|
For,
against, or abstain |
|
Affirmative
vote of the holders of a majority of the voting power of the shares present in person or by proxy at the Annual Meeting and entitled
to vote on the matter |
|
No |
|
No
effect |
|
Against |
| Proposal
4 — The Reverse Stock Split Proposal |
|
For,
against, or abstain |
|
Affirmative
vote of the holders of a majority of the votes cast affirmatively or negatively (votes cast FOR the proposal must exceed votes
cast AGAINST the proposal to approve it) |
|
Yes |
|
N/A |
|
No
effect |
| Proposal
5 — The Authorized Shares Proposal |
|
For,
against, or abstain |
|
Affirmative
vote of the holders of a majority of the votes cast affirmatively or negatively (votes cast FOR the proposal must exceed votes cast
AGAINST the proposal) |
|
Yes |
|
N/A |
|
No
effect |
| Proposal
6 — Approval of Amendment to Certificate of Incorporation to Limit the Liability of Certain Officers as Permitted by Delaware
Law |
|
For,
against, or abstain |
|
Affirmative
vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of our common stock |
|
No |
|
Against |
|
Against |
What
are the costs of soliciting these proxies?
We
will pay all of the costs of soliciting these proxies. Our directors, officers, and employees may solicit proxies in person or by e-mail
or other electronic means, or by telephone. We will pay these directors, officers, and employees no additional compensation for these
services. We will ask banks, brokers, and other nominees to forward these proxy materials to their principals and to obtain authority
to execute proxies. We will then reimburse them for their reasonable, out-of-pocket expenses. The expense associated with the solicitation
of proxies will include reimbursement for postage and clerical expenses to brokerage houses and other custodians, nominees, or fiduciaries
for forwarding proxy materials and other documents to beneficial owners of stock held in their names. Additionally, we engaged Morrow Sodali LLC (“Morrow Sodali”)
to assist in the solicitation of proxies for the Annual Meeting. We agreed to pay Morrow Sodali a fee of $7,500. We will also reimburse
Morrow Sodali for reasonable and customary out-of-pocket expenses and indemnify Morrow Sodali and its affiliates against certain claims,
liabilities, losses, damages and expenses for its services as the proxy solicitor.
How
are votes counted?
Votes
will be counted by our Secretary, as the inspector of election appointed for the Annual Meeting, who will separately tabulate the votes
with respect to all proposals.
How
do I attend the Annual Meeting?
We
will host the Annual Meeting live online via audio webcast. Any stockholder as of the record date will be able to attend and participate
in the Annual Meeting online by accessing www.proxydocs.com/SONM. To join the Annual Meeting, you will need to enter your 12-digit control
number included on your proxy card or in the instructions that accompanied
your proxy materials. Beneficial owners who do not have a control number may gain access to the meeting by logging into their broker,
brokerage firm, bank, or other nominee’s website and selecting the shareholder communications mailbox to link through to the meeting.
Instructions should also be provided on the voting instruction card provided by your broker, bank, or other nominee. Even if you plan
to attend the Annual Meeting online, we recommend that you also vote by proxy as described herein so that your vote will be counted if
you decide not to attend the Annual Meeting.
The
live audio webcast of the Annual Meeting will begin promptly at 9:00 a.m., Pacific Time. Online access to the audio webcast will open
approximately 15 minutes prior to the start of the Annual Meeting to allow time for you to log in and test the computer audio system.
We encourage our stockholders to access the meeting prior to the start time.
Will
there be a question and answer session?
As
part of the Annual Meeting, we will hold a live question and answer session, during which we intend to answer pertinent questions submitted
prior to and during the meeting via the Q&A, as time permits and based on the nature of the questions. Questions and answers may
be grouped by topic, and substantially similar questions may be grouped and answered once. We may also elect to address all the questions
following the Annual Meeting in order to provide more detailed and accurate information to our stockholders.
What
if I need technical assistance?
The
virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, Safari, and Edge) and devices (desktops,
laptops, tablets, and smartphones) running the most updated version of applicable software and plugins. Beginning 15 minutes prior to
the start of and during the Annual Meeting, we will have a support team ready to assist stockholders with any technical difficulties
they may have accessing or hearing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in
or meeting time, you should call the support team listed on the virtual meeting website at www.proxydocs.com/SONM.
How
can I know the voting results?
We
plan to announce preliminary voting results at the Annual Meeting and will publish final results in a Current Report on Form 8-K to be
filed with the SEC within four business days following the Annual Meeting.
DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Board
of Directors
Our
business is managed under the direction of our Board, which is currently composed of five (5) members. Four (4) of our five (5) directors
are independent within the meaning of the independent director requirements of The Nasdaq Stock Market LLC (“Nasdaq”).
Our
Board has selected all five (5) of the incumbent directors for re-election at the Annual Meeting. Each director to be elected and qualified
will hold office until the next annual meeting of stockholders and until his or her respective successor is elected, or, if sooner, until
the director’s death, resignation, or removal. The entirety of our incumbent directors were elected at the Company’s 2023
annual meeting.
Current
composition of our Board
The
following table sets forth the names, ages as of June 20, 2024, and certain other information for each of our current directors
with terms expiring at the Annual Meeting:
| Name
and Position |
|
Year
First
Became
Director |
|
Age |
|
Independent |
|
Audit
Committee |
|
Compensation
Committee |
|
Nominating
and
Governance
Committee |
James
Cassano
Director |
|
2022 |
|
78 |
|
Yes |
|
Chairman* |
|
✔ |
|
|
Peter
Liu
Director, Chief Executive Officer |
|
2022 |
|
56 |
|
No |
|
|
|
|
|
|
Mike
Mulica
Director, Chairman of the Board |
|
2021 |
|
61 |
|
Yes |
|
✔* |
|
Chairman |
|
✔ |
Jack
Steenstra
Director |
|
2022 |
|
62 |
|
Yes |
|
✔ |
|
✔ |
|
Chairman |
Jeffrey
Wang
Director |
|
2022 |
|
31 |
|
Yes |
|
|
|
|
|
|
*
Audit Committee Financial Expert
Board
Nominees and Composition of the Board after the Annual Meeting
Upon
recommendation of our Nominating and Corporate Governance Committee, we nominated all five (5) of the incumbent directors, who, if elected
and qualified will hold office until the next annual meeting of stockholders and until his or her respective successor is elected, or,
if sooner, until the director’s death, resignation, or removal. The following table sets forth the names, ages as of June 20,
2024, and certain other information on the composition of our Board, assuming all the director nominees are elected:
| Name
and Position |
|
Year
First
Became
Director |
|
Age |
|
Independent |
|
Audit
Committee |
|
Compensation
Committee |
|
Nominating
and
Governance
Committee |
James
Cassano
Director |
|
2022 |
|
78 |
|
Yes |
|
Chairman* |
|
✔ |
|
|
Peter
Liu
Director, Chief Executive Officer |
|
2022 |
|
56 |
|
No |
|
|
|
|
|
|
Mike
Mulica
Director, Chairman of the Board |
|
2021 |
|
61 |
|
Yes |
|
✔* |
|
Chairman |
|
✔ |
Jack
Steenstra
Director |
|
2022 |
|
62 |
|
Yes |
|
✔ |
|
✔ |
|
Chairman |
Jeffrey
Wang
Director |
|
2022 |
|
31 |
|
Yes |
|
|
|
|
|
|
*
Audit Committee Financial Expert
Biographical
information of our directors
James
Cassano has served as a member of our Board since July 2022. Mr. Cassano currently is the Vice Chairman and Lead Independent
Director of Ideanomics, Inc., where he is Chairman of the Audit Committee and a member of the Compensation, Acquisition Oversight and
Risk and Disclosure Committees. Mr. Cassano has been on the Board of Directors of Ideanomics since 2008. From December 2009 through December
2021, Mr. Cassano served as a Partner & Chief Financial Officer of CoActive Health Solutions, LLC, a worldwide contract research
organization, supporting the pharmaceutical and biotechnology industries. From 2005 through 2009, Mr. Cassano was a partner in Jaguar
Capital Partners, a private equity company, which formed Jaguar Acquisition Corporation (OTCBB: JGAC), a blank check company. Mr. Cassano
served as executive vice president, chief financial officer, secretary, and director of Jaguar Acquisition Corporation. In June 1998,
Mr. Cassano founded New Forum Publishers, an electronic publisher of educational material for secondary schools, and served as its chairman
of the Board and chief executive officer until it was sold to Apex Learning, Inc., a company controlled by Warburg Pincus, in August
2003. He remained with Apex until November 2003 in transition as vice president of business development and served as a consultant to
the company through February 2004. In June 1995, Mr. Cassano co-founded Advantix, Inc., a high volume electronic ticketing software and
transaction services company which handled event related client and customer payments, that was renamed Tickets.com and went public through
an IPO in 1999. From March 1987 to June 1995, Mr. Cassano served as senior vice president and chief financial officer of the Hill Group,
Inc., a privately-held engineering and consulting organization, and from February 1986 to March 1987, Mr. Cassano served as vice president
of investments and acquisitions for Safeguard Scientifics, Inc., a public venture development company. From May 1973 to February 1986,
Mr. Cassano served as partner and director of strategic management services (Europe) for the strategic management group of Hay Associates.
Mr. Cassano received a BS in Aeronautics and Astronautics from Purdue University and an MBA from Wharton Graduate School at the University
of Pennsylvania. The Board believes that Mr. Cassano’s extensive financial and executive experience with multiple private and public
companies qualifies him to serve on our Board.
Peter
Liu has served as a member of our Board since July 2022. Mr. Liu has served as our Chief Executive Officer since April 2022.
Mr. Liu previously served as our Executive Vice President for Global Operations from September 2010 to April 2022. From 2007 to 2010,
Mr. Liu served as Global Quality Director for LOM/Perlos, an international VI supplier of mobile phones. From 2005 to 2007, Mr. Liu was
the Head of Quality for the Strategic Growth Engine business at Motorola Solutions, Inc., a multinational telecommunications company.
Mr. Liu received an M.B.A. from Lawrence Technological University and a Bachelor’s in Engineering from Tianjin University. The
Board believes that Mr. Lui’s experience as our Executive Vice President for Global Operations and his knowledge of our Company
qualifies him to serve on our Board.
Mike
Mulica has served as the Chairman of the Board since November 2023, having previously served as a Board member since April 2021.
Mr. Mulica has served as Chairman at AlefEdge, a global edge API platform company that empowers enterprises to create, customize, and
control their own private mobile network, since March 2018 and as its Chief Executive Officer since August 2021. From May 2018 to present,
Mr. Mulica has served as the Global Management Advisor at Mulica Consulting, advising public and private companies on global mobile Internet
and application platforms. From May 2016 to August 2018, Mr. Mulica served as Chief Executive Officer and President of Actility Technologies,
Inc., an IoT communications and software company. From June 2014 to May 2016, Mr. Mulica served as the President, Worldwide Sales and
Business Development at Real Networks, Inc., a content and Internet software company. From October 2011 to July 2014, Mr. Mulica served
as the Chief Executive Officer and President of Openwave Systems, Inc., a mobile Internet software company. Prior to his service at Openwave
Systems, he held various leadership positions at Motorola, Inc., a communications systems company, Synchronoss Technologies, an Internet
software and services company, FusionOne, Inc., a mobile Internet software company, BridgePort Technologies, Inc., a mobile Internet
software company, Phone.com, Inc., inventor of the mobile Internet, California Microwave, Inc., a microwave and satellite systems company,
and Tandem Computers, a fault tolerant computer manufacturer. Mr. Mulica holds a BS in Finance from Marquette University and an MBA from
the Kellogg School of Management at Northwestern University. The Board believes that Mr. Mulica’s extensive operational, executive
and board experience with numerous private and public companies at various Internet, mobile and software companies qualifies him to serve
on our Board.
Jack
Steenstra has served as a member of our Board since July 2022. Mr. Steenstra has served as the Chief Technology Officer of Meta
Technologies Inc., a software and hardware company in the wellness space, since August 2017. From November 2015 to August 2017, he was
a freelance technology consultant with various startups including VRx Medical, an immersive digital therapeutics company, contributing
to the technical, business, and product innovation of new products, services, and associated businesses developing new wireless devices.
From July 1995 to November 2015, Mr. Steenstra was Vice President of Engineering at Qualcomm, a technology company, where he led a cross-functional
department developing new products to support new business opportunities. Prior to that, he was an engineer at Abbott Laboratories, a
medical devices and healthcare company, where he developed digital surveillance systems, software, and medical devices. From January
2012 to December 2023, he served as a board member of Stepping Stone San Diego, a drug and alcohol rehabilitation and treatment program
specializing in the Gay, Lesbian, Bisexual and Transgender community. Mr. Steenstra holds a BS in Electrical and Electronics Engineering
from the University of Michigan and an MS in Electrical and Electronics Engineering from the University of Southern California. The Board
believes that Mr. Steenstra’s extensive leadership and business consulting experience qualifies him to serve on our Board.
Jeffrey
Wang has served as a member of our Board since July 2022, including his tenure as Chairman of the Board from July 2022 until
November 2023. Mr. Wang has served as a Software Engineer at Plaid Inc., a California-based financial services company, since April 2022.
Previously he was a Senior Software Engineer at Waymo LLC, Google LLC’s autonomous driving technology company, from August 2019
to April 2022 with the data warehouse team and a Senior Software Engineer with the search ads backend infrastructure at Google LLC, a
global technology company specializing in internet related services and products, from February 2015 to August 2019. Mr. Wang holds a
BA in Computer Science from the University of California, Berkeley. The Board believes that Mr. Wang’s experience at technology
companies qualifies him to serve on our Board.
Executive
officers
The
following table sets forth the name, age, and position of each of our executive officers as of June 20, 2024. Mr. Liu first became
an officer pursuant to a contractual arrangement in connection with an equity investment by a certain stockholder, owned and controlled
by a current member of the Board, Jeffrey Wang. For more information about the arrangement, please see “Certain
Relationships and Related Person Transactions.”
| Name
|
|
Year
First
Became
Officer |
|
Age |
|
Position |
| Peter
Liu |
|
2022 |
|
56 |
|
Chief
Executive Officer |
| Clay
Crolius |
|
2022 |
|
62 |
|
Chief
Financial Officer |
| Charles
Becher |
|
2023 |
|
57 |
|
Chief
Commercial Officer and General Manager of North America |
Biographical
information of our executive officers
For
information about Peter Liu, please see “Biographical information of our directors” above.
Clay
Crolius has served as our Chief Financial Officer since July 2022. From September 2021 to July 2022, he served as our Chief Accounting
Officer. From December 2016 to August 2021, Mr. Crolius served as Principal Accounting Officer and Controller for 4Front Ventures Corp.
a national manufacturer and retailer. From 2015 to 2016, Mr. Crolius was the Controller at Ethology Corporation, a digital advertising
agency startup. From 2005 to 2014, Mr. Crolius was a Senior Management Consultant with the David Lewis Company, a professional services
consulting company. He also served as Vice President of Financial Operations for Warner Bros. Studios, a division of Time Warner from
2000 to 2005. Mr. Crolius holds a BA in Economics and Business from the University of California, Los Angeles, and is a certified public
accountant in the state of California.
Chuck
Becher has served as our Chief Commercial Officer and General Manager of North America since 2022. From April 2022 to August
2022, Mr. Becher served as Senior Vice President of Carrier Solutions at Inseego Corporation, a leader in mobile hotspots and fixed wireless
devices. From June 2020 to April 2022, Mr. Becher served as Chief Commercial Officer and EVP of OnwardMobility, a startup created to
bring BlackBerry devices back to the market. From December 2016 to January 2020, Mr. Becher served as Sonim Technologies’ Chief
Sales and Marketing Officer. From 2000 to 2016, Mr. Becher also served in increasing positions of responsibility at Kyocera Communications,
Inc., a wireless phone original equipment manufacturer headquartered in Yokohama, Japan, culminating in the role of Senior Vice President
and General Manager of Sales and Marketing. Mr. Becher holds a BBA from the University of Michigan School of Business in Ann Arbor, Michigan.
Corporate
governance documents
Corporate
Governance Guidelines
Our
Board adopted Corporate Governance Guidelines, which set forth a flexible framework within which the Board, assisted by its committees,
directs the affairs of the Company. The Corporate Governance Guidelines address, among other things, the composition and functions of
the Board, director independence, compensation of directors, board membership criteria, Board leadership, and composition.
Code of Ethics
We
have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers, and
directors. The Nominating and Corporate Governance Committee of our Board is responsible for overseeing the Code of Conduct and must
approve any waivers of the Code of Conduct for employees, executive officers, and directors.
Committee
Charters
Each
standing committee of the Board is governed by a charter adopted by the Board.
Availability
of Governance Documents
The
Corporate Governance Guidelines, the Code of Conduct, and each of the Audit, Compensation, and Nominating and Corporate Governance Committee
charters are available on the Company’s investor relations website, ir.sonimtech.com. We expect that any amendments to the Code
of Conduct, or any waivers of its requirements, will be disclosed on our website to the extent required by the applicable rules of the
SEC and The Nasdaq Stock Market LLC.
Board
composition considerations
Our
selection of directors and officers is conducted on the basis of outstanding achievement in their professional careers, broad experience,
personal and professional integrity, ability to make independent and analytical inquiries, financial literacy, mature judgment, high
performance standards, familiarity with our business and industry, ability to work collegially, and, in the case of our Chief Executive
Officer, the initial selection was made based on the contractual arrangement in connection with an equity investment by a certain stockholder.
Please see “Certain Relationships and Related Person Transactions” and “Director
independence.”
Board
leadership structure
The
Board believes that having an independent Chairperson of our Board creates an environment that is more conducive to objective evaluation
and oversight of management’s performance, increasing management accountability and improving the ability of the Board to monitor
whether management’s actions are in the best interests of the Company and its stockholders. Therefore, our current policy (as set
forth in our Corporate Governance Guidelines) is that the positions of Chief Executive Officer and Chairperson be held by different individuals,
except in unusual circumstances as determined by the Board. As a result, the Board believes that having an independent Chairperson can
enhance the effectiveness of the Board as a whole. Notwithstanding the above, our Board believes that it is important to retain the flexibility
to combine or separate the responsibilities of the offices of Chairperson of our Board and Chief Executive Officer, as from time to time
it may be in our best interests to either combine or separate the roles and may amend our Corporate Governance Guidelines to that effect.
The
Board has an independent chair, Mike Mulica. As Board Chairman, Mr. Mulica has broad authority, among other things, to call and preside
over Board meetings, including meetings of the independent directors, to set meeting agendas and to determine materials to be distributed
to the Board. Accordingly, the Board Chairman has substantial ability to shape the work of the Board. Peter Liu, the Company’s
Chief Executive Officer, currently serves as our principal executive officer.
Our
Board meets regularly in executive sessions of the directors without those directors who are also our executive officers.
Role
of the Board in risk oversight
Our
Board is responsible for the oversight of risk management related to the Company’s business and accomplishes this oversight through
the regular reporting to the Board by its committees. The Audit Committee periodically reviews our accounting, reporting, and financial
practices, including the integrity of our financial statements, the surveillance of administrative and financial controls, and the Company’s
compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal, internal
audit, and information technology functions, the Audit Committee reviews and discusses all significant areas of the Company’s business
and summarizes for the Board all areas of risk and the appropriate mitigating factors. In addition, the Compensation Committee and the
Nominating and Corporate Governance Committee review and report to the Board with regard to areas of risk management that such Board
committees oversee.
Director
independence
As
required by applicable rules of Nasdaq and our Corporate Governance Guidelines, a majority of the members of our Board qualify as “independent,”
as affirmatively determined by the Board.
In
making these determinations, our Board considered certain relationships and transactions that occurred in the ordinary course of business
between the Company and entities with which some of our directors are or have been affiliated. The Board determined that such transactions
would not impair the particular director’s independence or interfere with the exercise of independent judgment in carrying out
director responsibilities.
Our
Board undertook a review of the independence of each director and considered whether any director has a material relationship that could
compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities as a director. After review
of all relevant transactions or relationships between each director, or any of his or her family members, and the Company, its senior
management and its independent registered public accounting firm, the Board affirmatively determined that all of our directors are independent
directors within the meaning of the applicable Nasdaq listing rules, except for Mr. Liu, who serves as our Chief Executive Officer.
Committees
of the Board
Our
Board directs the management of the Company’s business and affairs, as provided by Delaware law, and conducts its business through
meetings of the Board and its standing committees. We have a standing Audit Committee, Compensation Committee, and Nominating and Corporate
Governance Committee, each of which operates under a written charter.
In
addition, from time to time, special committees may be established under the direction of our Board when the Board deems it necessary
or advisable to address specific issues.
Board,
committees, and stockholders meetings
During
the fiscal year ended December 31, 2023:
| |
● |
our
Board held five (5) meetings (including regularly scheduled and special meetings); |
| |
|
|
| |
● |
our
Audit Committee held five (5) meetings; |
| |
|
|
| |
● |
our
Compensation Committee held three (3) meetings; and |
| |
|
|
| |
● |
our
Nominating and Corporate Governance Committee held one (1) meeting. |
Each
director attended at least 75% of the aggregate of (i) the total number of meetings of our Board held during the period for which he
or she served as a director and (ii) the total number of meetings held by all committees of our Board on which he or she served during
the periods that he or she served during the fiscal year ended December 31, 2023.
Although
we do not have a formal policy regarding the attendance of our annual meetings of stockholders by the members of our Board, we encourage
them to do so. Four (4) of our five (5) current directors attended our 2023 annual meeting of stockholders.
Audit
Committee
Our
Audit Committee consists of James Cassano, Mike Mulica, and Jack Steenstra, with Mr. Cassano serving as Chairman. Following the Annual
Meeting (and assuming all director nominees are elected) our Audit Committee will consist of James Cassano, Mike Mulica, and Jack Steenstra,
with Mr. Cassano serving as Chairman. Our Board has determined that Mr. Cassano and Mr. Mulica are Audit Committee financial experts,
as defined by SEC rules and regulations. Our Board has determined that each of these individuals satisfies the independence requirements
of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, Rule 10A-3 under the Exchange Act and the applicable listing
standards of the Nasdaq listing rules.
The
Audit Committee’s responsibilities include, among other things:
| |
● |
recommending
and retaining an independent registered public accounting firm to serve as independent auditor to audit our financial statements,
overseeing the independent auditor’s work and determining the independent auditor’s compensation; |
| |
|
|
| |
● |
approving
in advance all audit services and non-audit services to be provided to us by our independent auditor; |
| |
|
|
| |
● |
establishing
procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls,
auditing or compliance matters, as well as for the confidential, anonymous submission by our employees of concerns regarding questionable
accounting or auditing matters; |
| |
|
|
| |
● |
overseeing
our risk assessment and risk management processes; |
| |
|
|
| |
● |
reviewing
and ratifying all related party transactions, based on the standards set forth in our related-person transactions policy; |
| |
|
|
| |
● |
reviewing
and discussing with management and our independent auditor the results of the annual audit and the independent auditor’s review
of our quarterly financial statements; and |
| |
|
|
| |
● |
conferring
with management and our independent auditor about the scope, adequacy and effectiveness of our internal accounting controls, the objectivity
of our financial reporting and our accounting policies and practices. |
Compensation
Committee
Our
Compensation Committee consists of Mike Mulica, James Cassano, and Jack Steenstra, with Mr. Mulica serving as the Chairman. Each of these
individuals is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act. Our Board has determined that each
Compensation Committee member is “independent,” as defined under the applicable Nasdaq listing rules, including the standards
specific to members of a compensation committee.
The
Compensation Committee’s responsibilities include, among other things:
| |
● |
establishing
and approving, and making recommendations to the Board regarding, performance goals and objectives relevant to the compensation of
our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives and
setting, or recommending to the full Board for approval, the chief executive officer’s compensation, including incentive-based
and equity-based compensation, based on that evaluation; |
| |
|
|
| |
● |
setting
the compensation of our other executive officers, and may incorporate recommendations from the chief executive officer; |
| |
|
|
| |
● |
exercising
administrative authority under our equity incentive plan and employee benefit plans; |
| |
|
|
| |
● |
establishing
policies and making recommendations to our Board regarding director compensation; |
| |
|
|
| |
● |
overseeing
risks and exposures associated with executive and director compensation plans and arrangements; reviewing and discussing with management
the compensation discussion and analysis that we may be required from time to time to include in SEC filings; and |
| |
|
|
| |
● |
preparing
a compensation committee report on executive and director compensation as may be required from time to time to be included in future
annual proxy statements or annual reports on Form 10-K filed with the SEC. |
Pursuant
to the Compensation Committee’s charter, the Compensation Committee may form and delegate authority to subcommittees to the extent
permitted by applicable law, as it deems appropriate from time to time under the circumstances, pursuant to the terms set forth in the
Compensation Committee’s charter.
Independent
compensation consultant
Pursuant
to the Compensation Committee’s charter, the Compensation Committee shall have the authority to retain, obtain advice and
assistance from internal or external legal counsel, accounting or other advisors and consultants (referred to collectively as “advisors”)
it deems necessary or appropriate in carrying out its duties. The Compensation Committee has sole authority to (i) determine appropriate
compensation for any such advisor retained by the Compensation Committee, which reasonable compensation shall be funded by the Company
and (ii) retain and terminate any compensation consultant to assist in the evaluation of director, principal executive officer or senior
executive compensation, including sole authority to approve such consultant’s reasonable fees and other retention terms, which
reasonable compensation shall be funded by the Company. In 2023, our Compensation Committee engaged the services of Compensia, Inc. (“Compensia”),
a compensation consulting firm, to advise the Compensation Committee regarding, among other things, the amount and types of compensation
that we provide to our executives and directors, our compensation philosophy and how our compensation practices compare to the compensation
practices of other similar and peer companies. Compensia does not provide any services to us other than the services provided to the
Compensation Committee. The Compensation Committee believes that Compensia does not have any conflicts of interest in advising the Compensation
Committee under applicable SEC rules or Nasdaq listing standards. The Compensation Committee has assessed the independence of
Compensia pursuant to SEC rules and Nasdaq listing standards and concluded that no conflict of interest exists that would prevent
Compensia from independently representing the Compensation Committee.
Nominating
and Corporate Governance Committee
Our
Nominating and Corporate Governance Committee consists of Jack Steenstra and Mike Mulica, with Mr. Steenstra serving as the Chair. Our
Board has determined that each of these individuals is “independent” as defined under the applicable listing standards of
Nasdaq and SEC rules and regulations.
The
Nominating and Corporate Governance Committee’s responsibilities include, among other things:
| |
● |
assessing
the need for new directors and identifying individuals qualified to become directors; |
| |
|
|
| |
● |
recommending
to the Board the persons to be nominated for election as directors and to each of the Board’s committees overseeing an evaluation
of our Board and its committees; |
| |
|
|
| |
● |
assessing
individual director performance, participation and qualifications; |
| |
|
|
| |
● |
developing,
recommending, overseeing the implementation of and monitoring compliance with our corporate governance guidelines, and periodically
reviewing and recommending any necessary or appropriate changes to our corporate governance guidelines; |
| |
|
|
| |
● |
monitoring
the effectiveness of the Board and the quality of the relationship between management and the Board; and |
| |
|
|
| |
● |
overseeing
an annual evaluation of the Board’s performance. |
Director
nominations process
The
Nominating and Corporate Governance Committee is responsible for identifying and recommending candidates to serve on the Board
and its committees. To identify suitable director candidates, the Nominating and Corporate Governance Committee may solicit current
directors and executives of the Company for the names of potentially qualified candidates or ask directors and executives to pursue their
own business contacts for the names of potentially qualified candidates, or consider director candidates recommended by our stockholders.
In addition, the Nominating and Corporate Governance Committee has the authority to consult with outside advisors or retain search firms
to assist in the search for qualified candidates.
In considering whether to recommend any particular candidate to serve on the Board
or its committees or for inclusion in the Board’s slate of recommended director nominees for election at the annual meeting of
stockholders, our Nominating and Corporate Governance Committee considers the criteria set forth in the Nominating and Corporate Governance
Committee charter and our Corporate Governance Guidelines, including consideration of any potential conflicts of interest as well as
applicable independence, experience, and other requirements. Our Nominating Committee gives the same consideration to candidates recommended
by stockholders as those candidates recommended by search firms, members of our Board, and management.
The
Board considers recommendations for nominees from the Nominating and Corporate Governance Committee. The Board determined the appropriate
characteristics, skills, and experience for the Board as a whole and for its individual members. The Board will consider the minimum
general criteria set forth below, and may add any specific additional criteria with respect to specific searches, in selecting candidates
and existing directors for service on the Board. An acceptable candidate may not fully satisfy all of the criteria, but is expected to
satisfy nearly all of them. In considering candidates recommended by the Nominating and Corporate Governance Committee, the Board intends
to consider such factors as:
| |
● |
possessing
relevant expertise upon which to be able to offer advice and guidance to management, |
| |
|
|
| |
● |
having
sufficient time to devote to the affairs of Sonim; |
| |
● |
demonstrated
excellence in his or her field; |
| |
|
|
| |
● |
having
the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of our
stockholders; |
| |
|
|
| |
● |
current
composition of the Board; and |
| |
|
|
| |
● |
diversity,
age, skills, and such other factors as it deems appropriate given the current needs of the Board and Sonim to maintain a balance
of knowledge, experience, and capability. |
At
this time, the Nominating and Corporate Governance Committee does not have a policy with regard to the consideration of director candidates
recommended by stockholders. The Nominating and Corporate Governance Committee believes that it is in the best position to identify,
review, evaluate, and select qualified candidates for Board membership, based on the comprehensive criteria for Board membership approved
by the Board.
Board
diversity
The
below Board Diversity Matrix reports self-identified diversity statistics for the Board in the format required by Nasdaq’s rules.
Board
Diversity Matrix
(as of June 5, 2024) |
| Total
Number of Directors |
5 |
| |
Female |
Male |
Non-Binary |
Did
Not Disclose Gender |
| Part
I: Gender Identity |
| Directors |
|
5 |
|
|
| Part
II: Demographic Background |
| African
American or Black |
|
|
|
|
| Alaskan
Native or Native American |
|
|
|
|
| Asian |
|
2 |
|
|
| Hispanic
or Latinx |
|
|
|
|
| Native
Hawaiian or Pacific Islander |
|
|
|
|
| White |
|
3 |
|
|
| Two
or More Races or Ethnicities |
|
|
|
|
| LGBTQ+ |
|
| Did
Not Disclose Demographic Background |
|
For
our Board Diversity Matrix as of September 29, 2023, see our investor relations website.
Anti-hedging
policy
Our
Board has adopted an Insider Trading Policy, which applies to all of our directors, officers, and employees. The policy prohibits our
directors, officers, and employees from engaging in hedging transactions and all other forms of monetization transactions: no officer,
director, employee, or consultant to Sonim may engage in short sales, transactions in put or call options, hedging transactions, margin
accounts, pledges, or other inherently speculative transactions with respect to our stock at any time.
Clawback
policy (recoupment of erroneously awarded incentive-based compensation)
In
accordance with the Nasdaq Listing Rules and Rule 10D-1 under the Exchange Act, our Board has adopted a Clawback Policy For Incentive-Based
Compensation (the “Clawback Policy”) that applies to our current and former executive officers. Under the Clawback Policy,
we are required to recoup the amount of any Erroneously Awarded Compensation (as defined in the Clawback Policy) without regard to any
taxes paid within a specified lookback period in the event of any Accounting Restatement (as defined in the Clawback Policy), subject
to limited impracticability exceptions. Covered restatements include both a restatement to correct an error that is material to previously
issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left
uncorrected in the current period. The amount required to be recovered is the excess of the amount of incentive-based compensation received
over the amount that otherwise would have been received had it been determined based on the restated financial measure.
Communications
with the Board of Directors
Any
stockholder or any other interested party who desires to communicate with our Board, our non-management directors, or any specific individual
director may do so by directing such correspondence to the attention of the Secretary, Sonim Technologies, Inc. 4445 Eastgate Mall, Suite
200 San Diego, CA 92121. Following its clearance through normal security procedures, the Secretary will forward such communication to
the pertinent director or directors, as appropriate. In that regard, the Board has requested that certain items unrelated to the duties
and responsibilities of the Board should be excluded or redirected, as appropriate, such as: business solicitations or advertisements,
junk mail and mass mailings, resumes and other forms of job inquiries, spam, and surveys. In addition, material that is unduly hostile,
threatening, potentially illegal or similarly unsuitable will be excluded.
PROPOSAL
1 — ELECTION OF DIRECTORS
Our
Board is currently composed of five (5) members and will be composed of five (5) members effective as of the completion of the Annual
Meeting. Our Board is elected each year at the annual meeting of stockholders for a term of one year. Each director’s term continues
until the election and qualification of such director’s successor, or such director’s earlier death, resignation, or removal.
Nominees
Our
Board has nominated the incumbent directors, James Cassano, Peter Liu, Mike Mulica, Jack Steenstra, and Jeffery Wang to stand for re-election
to serve as directors. If elected, each of them will serve as director until the 2025 annual meeting of stockholders and until their
successors are elected and qualified, or their earlier death, resignation, or removal. For more information concerning the nominees,
see the section titled “Directors, Executive Officers, and Corporate Governance.”
The
Board anticipates that each of the nominees will serve, if elected, as a director. However, in the event that a director nominee is unable
or declines to serve as a director at the time of the Annual Meeting, the discretionary authority provided in the proxy will be exercised
by the proxy holders to vote for a substitute or substitutes nominated by the Board, or the Board, on the recommendation of the Nominating
and Corporate Governance Committee, may reduce the size of the Board and number of nominees.
Vote
required
The
election of each director nominee requires a plurality of the votes cast by the holders of the shares of our common stock present in
person or by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions (any shares voted “Withhold”) and
broker non-votes will have no effect on this proposal.
Board
recommendation
The
Board unanimously recommends a vote FOR the election of each of the director nominees as directors.
PROPOSAL
2 — RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our
Audit Committee has appointed Moss Adams LLP (Campbell, CA, PCAOB ID: 659) (“Moss Adams”) as our independent registered public
accounting firm for the fiscal year ending December 31, 2024. The Audit Committee and the Board seek to have the stockholders ratify
the Audit Committee’s appointment of Moss Adams.
Although
we are not required to seek stockholder approval of this appointment, the Board considers the selection of the independent registered
public accounting firm to be an important matter of stockholder concern and is submitting the appointment of Moss Adams for ratification
by stockholders as a matter of good corporate practice. If the appointment of Moss Adams is not ratified by the stockholders, the Audit
Committee will consider the vote of our stockholders and may appoint another independent registered public accounting firm or may decide
to maintain its appointment of Moss Adams.
Representatives
of Moss Adams will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire to do so, and to
respond to appropriate questions.
Fees
paid to the independent registered public accounting firm
The
following table presents fees for professional audit services rendered by Moss Adams for the audit of our annual financial statements
for fiscal 2023 and fiscal 2022, and fees billed for other services rendered by Moss Adams LLP during fiscal 2023 and fiscal 2022.
| Type of Fees | |
Fees for Fiscal 2023 | | |
Fees for Fiscal 2022 | |
| Audit Fees(1) | |
$ | 724,500 | | |
$ | 759,250 | |
| Audit-Related Fees(2) | |
$ | 63,000 | | |
$ | 25,750 | |
| Tax Fees(3) | |
$ | 73,816 | | |
$ | 67,580 | |
| All Other Fees | |
| — | | |
| — | |
| Total Fees | |
$ | 861,316 | | |
$ | 852,580 | |
| (1) |
Audit
Fees consist of fees for professional services rendered for the audit of our consolidated financial statements included in our annual
report, and the review of our interim consolidated financial statements included in our quarterly reports. |
| |
|
| (2) |
Services
in connection with our Registration Statements on Form S-3 and Form S-8. |
| |
|
| (3) |
Tax
Fees consist of fees for tax compliance and tax advice. |
Audit
Committee policy on pre-approval of audit and permissible non-audit services of independent registered public accounting firm
The
Audit Committee must pre-approve all audit related services and permissible non-audit services (unless in compliance with exceptions
available under applicable laws and rules related to immaterial aggregate amounts of services) provided by our independent registered
public accounting firm. However, the Audit Committee may delegate pre-approval authority to one or more committee members so long as
any such preapproval decisions are presented to the full committee at the next scheduled meeting.
All
services rendered by Moss Adams LLP, our independent registered public accounting firm, during fiscal 2023 and fiscal 2022 were pre-approved
by the Audit Committee in accordance with the audit committee’s pre-approval policy.
None
of the services described above was approved pursuant to the de minimis exception provided in Rule 2-01(c)(7)(i)(C) of Regulation S-X
promulgated by the SEC.
Vote
required
Ratification
of the appointment of Moss Adams requires the affirmative vote of the holders of a majority of the voting power of the shares of our
common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have
the effect of a vote against the proposal. No broker non-votes are expected in connection with the proposal.
Board
recommendation
The
Board unanimously recommends a vote FOR the ratification of the appointment of Moss Adams as our independent registered public accounting
firm for our fiscal year ending December 31, 2024.
AUDIT
COMMITTEE REPORT
The
information contained under this “Audit Committee Report” shall not be deemed to be “soliciting material” or
to be “filed” with the SEC, nor shall such information be incorporated by reference into any filings under the Securities
Act of 1933, as amended, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference
into any such filing.
In
the performance of its oversight function, the Audit Committee of our Board has:
| |
a. |
reviewed
and discussed with management the Company’s annual audited financial statements for the fiscal year ended December 31, 2023; |
| |
|
|
| |
b. |
discussed
with Moss Adams, our independent registered public accounting firm, the matters required to be discussed by the applicable requirements
of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC; |
| |
|
|
| |
c. |
received
from Moss Adams the written disclosures and the letter required by applicable requirements of the PCAOB regarding Moss Adams’s
communication with the Audit Committee concerning independence; and |
| |
|
|
| |
d. |
discussed
with Moss Adams its independence. |
Based
on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial
statements for the fiscal year ended December 31, 2023 be included in the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2023 for filing with the SEC.
While
the Audit Committee has the responsibilities set forth in its charter (including to monitor and oversee the audit processes), the Audit
Committee does not have the duty to plan or conduct audits or to determine that the Company’s financial statements are complete,
accurate, or in accordance with generally accepted accounting principles. The Company’s management and independent auditor have
this responsibility.
This
report is respectfully submitted by the members of the Audit Committee of the Board of Directors:
| |
James
Cassano (Chair) |
| |
|
| |
Mike
Mulica |
| |
|
| |
Jack
Steenstra |
PROPOSAL
3 — INCREASE OF THE SHARES AVAILABLE UNDER
THE SONIM TECHNOLOGIES, INC. 2019 EQUITY INCENTIVE PLAN
General
On
May 17, 2024, our Board approved an amendment to the Sonim Technologies, Inc. 2019 Equity Incentive Plan, as amended (the “EIP”
or “2019 Plan”), subject to stockholder approval, and accordingly, the Board directed that such amendment be submitted to
the stockholders for approval at the Annual Meeting. The amendment would increase the number of authorized shares of our common stock
available for issuance under the 2019 Plan as of the record date by 3,000,000 shares: from 13,248,606 shares to 16,248,606 shares. No
other changes are being made to the 2019 Plan. The proposed 2019 Plan, as amended and restated assuming this proposal is approved by
our stockholders, is included as Annex A hereto.
Stockholder
approval of the amendment to the 2019 Plan is being sought in order to (i) meet Nasdaq listing requirements and (ii) allow for incentive
stock options to meet the requirements of the Internal Revenue Code of 1986, as amended (the “Code”). For additional information
regarding our current officer and director compensation, see the section titled “Executive and Director Compensation.”
We also encourage you to review the section titled “Equity compensation plan information” for more information
with regard to all our equity compensation plans.
If
our stockholders approve this proposal, the amendment to the 2019 Plan will become effective as of the date of the Annual Meeting. We
intend to file a Registration Statement on Form S-8 to register additional shares available for issuance under the 2019 Plan as a result
of the amendment. If our stockholders fail to approve this proposal, the 2019 Plan will remain as is without any changes thereto.
As
of May 30, 2024, the record date, the number of shares of our common stock authorized for issuance but unissued under the 2019 Plan was
1,878,685. As of the record date, the Company has outstanding stock options to purchase approximately 7,288,588 shares of common
stock and 658,125 shares of common stock subject to outstanding restricted stock units, all of which were granted under the 2019 Plan
and various other prior plans.
Reasons
to vote approve the proposal
Equity awards are an important part of
our compensation philosophy
The
Board believes that it is very important that our eligible employees, consultants, and directors (collectively, “Participants”)
receive part of their compensation in the form of equity awards to foster their investment in us, reinforce the link between their financial
interests and those of our other stockholders, and maintain a competitive compensation program. Equity compensation fosters a Participant
ownership culture, motivates Participants to create stockholder value and, because the awards are typically subject to vesting and other
conditions, promotes a focus on long-term value creation. The equity incentive programs we have in place have worked to build stockholder
value by attracting and retaining extraordinarily talented employees, consultants, and directors. The Board believes we should continue
to offer competitive equity compensation packages in order to attract and motivate the talent necessary for our continued growth and
success.
We expect to expand our team and anticipate
the eventual growth of our business
The
purposes of the 2019 Plan are to attract, retain, and motivate officers and key employees (including prospective employees), directors,
consultants, and others who may perform services for the Company to compensate them for their contributions to the long-term growth and
profits of the Company and to encourage them to acquire a proprietary interest in the success of the Company. Therefore, the remaining
pool should always be sufficient if needed for new hires or other special circumstances.
The 2019 Plan combines compensation and
governance best practices designed to protect our stockholders’ interests
We
recognize that equity compensation awards dilute stockholder equity and must be used judiciously. Our equity compensation practices are
designed to be in line with industry norms, and we believe our historical share usage has been responsible and mindful of stockholder
interests. Certain provisions in the 2019 Plan are designed to protect our stockholders’ interests and to reflect corporate governance
best practices including:
Flexibility
in designing equity compensation schemes. The 2019 Plan allows us to provide a broad array of equity incentives, including traditional
stock option grants, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, performance
stock awards, and performance cash awards. By providing this flexibility we can quickly and effectively react to trends in compensation
practices and continue to offer competitive compensation arrangements to attract and retain the talent necessary for the success of our
business.
No
discounted stock options or stock appreciation rights. All stock options and stock appreciation rights granted under the 2019 Plan
must have an exercise price or strike price equal to or greater than the fair market value of our common stock on the date the stock
option or stock appreciation right is granted.
Limits
on non-employee director compensation. The maximum number of shares of common stock subject to awards granted under the 2019 Plan
or otherwise during any one calendar year to any non-employee director, taken together with any cash fees paid by us to the non-employee
director during that year for service on our Board, will not exceed $600,000 in total value (calculating the value of the awards based
on the grant date fair value for financial reporting purposes), or, with respect to the calendar year in which a non-employee director
is first appointed or elected to our Board, $1,000,000.
Awards
are subject to forfeiture/clawback. Awards granted under our 2019 Plan are subject to recoupment in accordance with any clawback
policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our
securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable
law. In addition, we may impose other clawback, recovery, or recoupment provisions in a stock award agreement, including a reacquisition
right in respect of previously acquired shares or other cash or property upon the occurrence of cause. For more information about our
clawback policy see the section of this proxy statement titled “Directors, Executive Officers, and Corporate Governance—Clawback policy (recoupment of erroneously awarded incentive-based compensation).”
No
single trigger accelerated vesting upon change in control. The 2019 Plan does not provide for any automatic mandatory vesting of
awards upon a change in control.
No
liberal change in control definition. The change in control definition in the 2019 Plan is not a “liberal” definition.
A change in control transaction must actually occur in order for the change in control provisions in the 2019 Plan to be triggered.
Termination
of stock options and stock appreciation rights on a participant’s termination for cause. If a participant’s service is
terminated for cause, as defined under the 2019 Plan (which includes the participant’s commission of any felony or any crime involving
fraud, dishonesty, or moral turpitude and the participant’s unauthorized use or disclosure of our confidential information or trade
secrets), the participant is prohibited from exercising his or her stock options and stock appreciation rights.
We manage our equity award usage carefully
The
following table provides certain additional information regarding our equity incentive plans as of the record date.
| | |
As of May
30, 2024 | |
| Total number of shares of common stock subject to outstanding stock options | |
| 7,288,588 | |
| Weighted-average exercise price of outstanding stock options | |
$ | 0.7316 | |
| Weighted-average remaining term of outstanding stock options | |
| 2.17
years | |
| Total number of shares of common stock subject to outstanding full value awards | |
| 658,125 | |
| Total number of shares of common stock available for grant under the 2019 Plan | |
| 1,878,685 | |
| Total number of shares of common stock available for grant under other equity incentive plans(1) | |
| 208,337 | |
| Total number of shares of common stock outstanding | |
| 46,717,887 | |
| Per-share closing price of common stock as reported on Nasdaq Capital Market | |
$ | 0.564 | |
| (1) | Represents
shares issuable pursuant to our 2019 ESPP. |
The
following table provides detailed information regarding the activity related to our equity incentive plans for fiscal years 2021, 2022,
and 2023.
| | |
Fiscal Year
2023 | | |
Fiscal Year
2022 | | |
Fiscal Year
2021 | |
| Total number of shares of common stock subject to stock options granted | |
| 1,803,000 | | |
| 4,414,419 | | |
| 0 | |
| Total number of shares of common stock subject to full value awards granted | |
| 445,200 | | |
| 840,983 | | |
| 220,268 | |
| Weighted-average number of shares of common stock outstanding | |
| 41,689,386 | | |
| 28,889,111 | | |
| 9,464,560 | |
| Burn Rate (1) | |
| 5 | % | |
| 18 | % | |
| 2 | % |
| (1) |
Burn
rate is the summation of the total number of stock options granted and full value awards granted divided by the weighted-average
shares outstanding. |
Description
of the 2019 Plan
The
material features of the 2019 Plan (as proposed to be amended and modified and assuming that the increase of the shares authorized under
the 2019 Plan is approved) are outlined below. This summary is qualified in its entirety by reference to the complete text of the 2019
Plan. Stockholders are encouraged to read the actual text of the 2019 Plan, which is included in this proxy statement as Annex A.
Awards.
The 2019 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”),
stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other stock awards,
or collectively, stock awards.
Eligibility.
Employees, non-employee directors, and consultants are eligible to participate in the 2019 Plan. All of our 95 employees, four non-employee
directors, and 20 consultants are currently eligible to participate in the 2019 Plan and may receive all types of stock awards, other
than ISOs, under the 2019 Plan. ISOs may be granted under the 2019 Plan only to our employees in the United States.
Authorized
Shares. If this proposal is approved, the total number of our common stock reserved for issuance under the 2019 Plan will not exceed
16,248,606, which number is the sum of:
| |
(i) |
188,503
shares that were approved in connection with the 2019 Plan’s initial adoption; |
| |
|
|
| |
(ii) |
the
number of shares subject to outstanding stock options or other stock awards that were granted under our 2012 Equity Incentive Plan,
as amended, as of the initial adoption of the 2019 Plan, to the extent such awards are forfeited, terminated, expire, or are otherwise
not issued; |
| |
|
|
| |
(iii) |
300,000
shares that were approved at our 2020 annual meeting of stockholders; |
| |
|
|
| |
(iv) |
5,000,000
shares that were approved at our 2022 annual meeting of stockholders; |
| |
|
|
| |
(v) |
2,000,000
shares that were approved at our 2023 annual meeting of stockholders; |
| |
|
|
| |
(vi) |
the
entirety of the shares added pursuant to the evergreen provision of the 2019 Plan; and |
| |
|
|
| |
(vii) |
3,000,000
shares to be added pursuant to this proposal. |
Additionally,
the number of shares of our common stock reserved for issuance under the 2019 Plan automatically increases on January 1 of each calendar
year for ten (10) years ending on and including January 1, 2029, in an amount equal to 5% of the total number of shares of our capital
stock outstanding on December 31 of the prior calendar year, unless our Board or compensation committee determines prior to the date
of increase that there will be a lesser increase or no increase.
Shares
subject to stock awards granted under our 2019 Plan that expire or terminate without being exercised in full, or that are paid out in
cash rather than in shares, do not reduce the number of shares available for issuance under our 2019 Plan. Additionally, shares become
available for future grants under our 2019 Plan if they were issued under stock awards under our 2019 Plan and we repurchase them or
they are forfeited. This includes shares used to pay the exercise price of a stock award or to satisfy the tax withholding obligations
related to a stock award.
Plan
Administration. Our Board and our Compensation Committee administer our 2019 Plan. Our Board may also delegate to one or more of
our officers the authority to (i) designate employees (other than officers) to receive specified stock awards, and (ii) determine the
number of shares subject to such stock awards. Under our 2019 Plan, our Board has the authority to determine and amend the terms of awards,
including:
| |
● |
recipients; |
| |
|
|
| |
● |
the
exercise, purchase, or strike price of stock awards, if any; |
| |
|
|
| |
● |
the
number of shares subject to each stock award; |
| |
|
|
| |
● |
the
fair market value of a share of our common stock in the event no public market exists for our common stock; |
| |
|
|
| |
● |
the
vesting schedule applicable to the awards, together with any vesting acceleration; and |
| |
|
|
| |
● |
the
form of consideration, if any, payable upon exercise or settlement of the award. |
Under
our 2019 Plan, our Board also generally has the authority to effect, with the consent of any adversely affected participant:
| |
● |
the
reduction of the exercise, purchase, or strike price of any outstanding award; |
| |
|
|
| |
● |
the
cancellation of any outstanding stock award and the grant in substitution therefor of other awards, cash, or other consideration;
or |
| |
|
|
| |
● |
any
other action that is treated as a repricing under generally accepted accounting principles. |
Non-Employee
Director Limitation. The maximum number of shares of common stock subject to awards granted under the 2019 Plan or otherwise during
any one calendar year to any non-employee director, taken together with any cash fees paid by us to the non-employee director during
that year for service on our Board, will not exceed $600,000 in total value (calculating the value of the awards based on the grant date
fair value for financial reporting purposes), or, with respect to the calendar year in which a non-employee director is first appointed
or elected to our Board, $1,000,000.
Stock
Options. ISOs and NSOs are granted pursuant to stock option agreements adopted by the plan administrator. The plan administrator
determines the exercise price for stock options, within the terms and conditions of our 2019 Plan, provided that the exercise price of
a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Options granted
under our 2019 Plan vest at the rate specified in the stock option agreement as determined by the plan administrator. The plan administrator
determines the term of stock options granted under the 2019 Plan, up to a maximum of ten years. Unless the terms of an optionholder’s
stock option agreement provide otherwise, if an optionholder’s service relationship with us, or any of our affiliates, ceases for
any reason other than disability, death, or cause, the optionholder may generally exercise any vested options for a period of three months
following the cessation of service. The option term may be extended in the event that the exercise of the option following such a termination
of service is prohibited by applicable securities laws or our insider trading policy. If an optionholder’s service relationship
with us or any of our affiliates ceases due to disability or death, or an optionholder dies within a certain period following cessation
of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 12 months in the event of disability
and 18 months in the event of death. Except as otherwise provided in the applicable stock option agreement or other written agreement
between us or any of our affiliates and the participant, options terminate immediately upon the termination of the individual’s
employment for cause. In no event may an option be exercised beyond the expiration of its term. Acceptable consideration for the purchase
of common stock issued upon the exercise of a stock option will be determined by the plan administrator and may include (1) cash, check,
bank draft, or money order, (2) a broker-assisted cashless exercise, (3) the tender of shares of our common stock previously owned by
the optionholder, (4) a net exercise of the option if it is an NSO, and (5) other legal consideration approved by the plan administrator.
Tax
Limitations on ISOs. The aggregate fair market value, determined at the time of grant, of our common stock with respect to ISOs that
are exercisable for the first time by an optionholder during any calendar year under all of our stock plans may not exceed $100,000.
Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the
time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates
unless (i) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant
and (ii) the term of the ISO does not exceed five years from the date of grant. The maximum number of shares of our common stock that
may be issued upon the exercise of ISOs under our 2019 Plan is equal to three times the aggregate number of shares reserved under the
2019 Plan.
Restricted
Stock Unit Awards. Restricted stock unit awards are granted pursuant to restricted stock unit award agreements adopted by the plan
administrator. Restricted stock unit awards may be granted in consideration for any form of legal consideration that may be acceptable
to our Board and permissible under applicable law. A restricted stock unit award may be settled by cash, delivery of stock, a combination
of cash and stock as deemed appropriate by the plan administrator, or in any other form of consideration set forth in the restricted
stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit
award. Except as otherwise provided in the applicable award agreement, restricted stock units that have not vested will be forfeited
once the participant’s continuous service ends for any reason.
Restricted
Stock Awards. Restricted stock awards are granted pursuant to restricted stock award agreements adopted by the plan administrator.
A restricted stock award may be awarded in consideration for cash, check, bank draft, or money order, past services to us, or any other
form of legal consideration (including future services) that may be acceptable to our Board and permissible under applicable law. The
plan administrator determines the terms and conditions of restricted stock awards, including vesting and forfeiture terms. If a participant’s
service relationship with us ceases for any reason, we may receive any or all of the shares of common stock held by the participant that
have not vested as of the date the participant terminates service with us through a forfeiture condition or a repurchase right.
Performance
Awards. The 2019 Plan permits the grant of performance awards. A performance award is a stock or cash award that is payable (including
that may be granted, may vest, or may be exercised) contingent upon the achievement of pre-determined performance goals during a performance
period. A performance award may require the completion of a specified period of continuous service. The length of any performance period,
the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals
have been attained will generally be determined by the plan administrator.
Performance
goals under the 2019 Plan are based on any one or more of the following performance criteria: (1) earnings (including earnings per share
and net earnings); (2) earnings before interest, taxes and depreciation; (3) earnings before interest, taxes, depreciation and amortization;
(4) total stockholder return; (5) return on equity or average stockholder’s equity; (6) return on assets, investment, or capital
employed; (7) stock price; (8) margin (including gross margin); (9) income (before or after taxes); (10) operating income; (11) operating
income after taxes; (12) pre-tax profit; (13) operating cash flow; (14) sales or revenue targets; (15) increases in revenue or product
revenue; (16) expenses and cost reduction goals; (17) improvement in or attainment of working capital levels; (18) economic value added
(or an equivalent metric); (19) market share; (20) cash flow; (21) cash flow per share; (22) share price performance; (23) debt reduction;
(24) implementation or completion of projects or processes; (25) subscriber satisfaction; (26) stockholders’ equity; (27) capital
expenditures; (28) debt levels; (29) operating profit or net operating profit; (30) workforce diversity; (31) growth of net income or
operating income; (32) billings; (33) the number of subscribers, including but not limited to unique subscribers; (34) employee retention;
and (35) other measures of performance selected by the plan administrator.
Performance
goals may be based on a company-wide basis, with respect to one or more business units, divisions, affiliates, or business segments,
and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant
indices. Unless specified otherwise by the plan administrator at the time the performance goals are established, the plan administrator
will appropriately make adjustments in the method of calculating the attainment of performance goals for a performance period as follows:
(1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes
to generally accepted accounting principles; (4) to exclude the effects of items that are “unusual” in nature or occur “infrequently”
as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures;
(7) to assume that any business divested by us achieved performance objectives at targeted levels during the balance of a performance
period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of our common stock by reason of
any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange
of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude
the effects of stock based compensation and the award of bonuses under our bonus plans; (10) to exclude costs incurred in connection
with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11)
to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting
principles.
Stock
Appreciation Rights. Stock appreciation rights are granted pursuant to stock appreciation grant agreements adopted by the plan administrator.
The plan administrator determines the purchase price or strike price for a stock appreciation right, which generally cannot be less than
100% of the fair market value of our common stock on the date of grant. A stock appreciation right granted under our 2019 Plan vests
at the rate specified in the stock appreciation right agreement as determined by the plan administrator.
Other
Stock Awards. Our plan administrator may grant other awards based in whole or in part by reference to our common stock. Our plan
administrator will set the number of shares under the stock award and all other terms and conditions of such awards.
Changes
to Capital Structure. In the event that there is a specified type of change in our capital structure, such as a stock split or recapitalization,
appropriate adjustments will be made to (i) the class and the maximum number of shares reserved for issuance under our 2019 Plan, (ii)
the class and the maximum number of shares that may be issued upon the exercise of ISOs, and (iii) the class and the number of shares
and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards.
Corporate
Transactions. Our 2019 Plan provides that in the event of certain specified significant corporate transactions including: (i) a sale
of all or substantially all of our assets, (ii) the sale or disposition of more than 50% of our outstanding securities, (iii) the consummation
of a merger or consolidation where we do not survive the transaction and (iv) the consummation of a merger or consolidation where we
do survive the transaction but the shares of our common stock outstanding prior to such transaction are converted or exchanged into other
property by virtue of the transaction, each outstanding award will be treated as the plan administrator determines unless otherwise provided
in an award agreement or other written agreement between us and the award holder. The plan administrator may take one of the following
actions with respect to such awards:
| |
● |
arrange
for the assumption, continuation, or substitution of a stock award by a successor corporation; |
| |
● |
arrange
for the assignment of any reacquisition or repurchase rights held by us to a successor corporation; |
| |
|
|
| |
● |
accelerate
the vesting, in whole or in part, of the stock award and provide for its termination prior to the transaction; |
| |
|
|
| |
● |
arrange
for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us; |
| |
|
|
| |
● |
cancel
or arrange for the cancellation of the stock award, to the extent not vested or not exercised prior to the effective time of the
transaction, in exchange for such cash consideration, if any, as the plan administrator may deem appropriate; or |
| |
|
|
| |
● |
make
a payment, in the form determined by the plan administrator, equal to the excess, if any, of the value of the property the participant
would have received on exercise of the awards before the transaction over any exercise price payable by the participant in connection
with the exercise, multiplied by the number of shares subject to the stock award. Any escrow, holdback, earnout, or similar provisions
in the definitive agreement for the transaction may apply to such payment to the holder of a stock award to the same extent and in
the same manner as such provisions apply to holders of our common stock. |
The
plan administrator is not obligated to treat all stock awards or portions of stock awards, even those that are of the same type, in the
same manner in the event of a corporate transaction.
In
the event of a change in control, awards granted under our 2019 Plan will not receive automatic acceleration of vesting and/or exercisability,
although this treatment may be provided for in an award agreement or in any other written agreement between us and the participant. Under
our 2019 Plan, a change in control generally will be deemed to occur in the event: (i) the acquisition by any person or company of more
than 50% of the combined voting power of our then outstanding stock; (ii) a merger, consolidation, or similar transaction in which our
stockholders immediately before the transaction do not own, directly or indirectly, more than 50% of the combined outstanding voting
power of the surviving entity or the parent of the surviving entity; (iii) a sale, lease, exclusive license or other disposition of all
or substantially all of our assets other than to an entity more than 50% of the combined voting power of which is owned by our stockholders;
or (iv) an unapproved change in the majority of our Board.
Transferability.
A participant generally may not transfer stock awards under our 2019 Plan other than by will, the laws of descent and distribution,
or as otherwise provided under our 2019 Plan.
Term,
Termination, and Amendment. Unless sooner terminated by our Board, the 2019 Plan will terminate on the tenth anniversary of the date
our Board originally adopted our 2019 Plan, or March 26, 2029. No award will be granted after termination
of the 2019 Plan (or if it is suspended by our Board), but awards outstanding upon termination of the 2019 Plan will remain outstanding
in accordance with their applicable terms and conditions and the terms and conditions of the 2019 Plan. Our Board has the authority to
amend, suspend, or terminate our 2019 Plan, provided that such action does not materially impair the existing rights of any participant
without such participant’s written consent. Certain material amendments also require the approval of our stockholders.
U.S.
federal income tax consequences
The
following is a summary of the principal United States federal income tax consequences to Participants and us with respect to participation
in the 2019 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state, or foreign
jurisdiction in which a participant may reside. The information is based upon current federal income tax rules and therefore is subject
to change when those rules change. Because the tax consequences to any participant may depend on his or her particular situation, each
participant should consult the participant’s tax adviser regarding the federal, state, local, and other tax consequences of the
grant or exercise of an award or the disposition of stock acquired under the 2019 Plan. The 2019 Plan is not qualified under the provisions
of Section 401(a) of the Code, and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our
ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement
of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligations.
Nonstatutory
Stock Options
Generally,
there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair market value of
the underlying stock on the grant date. Upon exercise, a participant will recognize ordinary income equal to the excess, if any, of the
fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the participant is
employed by us or one of our affiliates, that income will be subject to withholding taxes. The participant’s tax basis in those
shares will be equal to their fair market value on the date of exercise of the stock option, and the participant’s capital gain
holding period for those shares will begin on that date.
Subject
to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation,
we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the participant.
Incentive
Stock Options
The
2019 Plan provides for the grant of stock options that are intended to qualify as “incentive stock options,” as defined in
Section 422 of the Code. Under the Code, a participant generally is not subject to ordinary income tax upon the grant or exercise of
an ISO. If the participant holds a share received upon exercise of an ISO for more than two years from the date the stock option was
granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the
difference, if any, between the amount realized on a sale or other taxable disposition of that share and the participant’s tax
basis in that share will be long-term capital gain or loss.
If,
however, a participant disposes of a share acquired upon exercise of an ISO before the end of the required holding period, which is referred
to as a disqualifying disposition, the participant generally will recognize ordinary income in the year of the disqualifying disposition
equal to the excess, if any, of the fair market value of the share on the date of exercise of the stock option over the exercise price.
However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the stock option, the amount
of ordinary income recognized by the participant will not exceed the gain, if any, realized on the sale. If the amount realized on a
disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock option, that excess will be
short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.
For
purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon exercise of an ISO
exceeds the exercise price of the stock option generally will be an adjustment included in the participant’s alternative minimum
taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of the share in
the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that
share. In computing alternative minimum taxable income, the tax basis of a share acquired upon exercise of an ISO is increased by the
amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the stock option
is exercised.
We
are not allowed an income tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired upon exercise
of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we will generally be entitled
to a tax deduction equal to the taxable ordinary income realized by the participant, subject to the requirement of reasonableness and
the provisions of Section 162(m) of the Code, and provided that either the employee includes that amount in income or we timely satisfy
our reporting requirements with respect to that amount.
Restricted
Stock Awards
Generally,
the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any,
of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock
is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to
sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize
ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid
by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days
following his or her receipt of the stock award, to recognize ordinary income, as of the date the recipient receives the award, equal
to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient for
the stock.
The
recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock
award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock
becomes vested.
Subject
to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation,
we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock award.
Restricted
Stock Unit Awards
Generally,
the recipient of a restricted stock unit award structured to conform to the requirements of Section 409A of the Code or an exception
to Section 409A of the Code will recognize ordinary income at the time the stock is delivered equal to the excess, if any, of the fair
market value of the stock received over any amount paid by the recipient in exchange for the stock. To conform to the requirements of
Section 409A of the Code, the stock subject to a restricted stock unit award may generally only be delivered upon one of the following
events: a fixed calendar date (or dates), separation from service, death, disability or a change in control. If delivery occurs on another
date, unless the restricted stock unit award otherwise complies with or qualifies for an exception to the requirements of Section 409A
of the Code, in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any
taxes owed.
The
recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock
unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.
Subject
to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation,
we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock
unit award.
Stock
Appreciation Rights
Generally,
if a stock appreciation right is granted with an exercise price equal to the fair market value of the underlying stock on the grant date,
the recipient will recognize ordinary income equal to the fair market value of the stock or cash received upon such exercise. Subject
to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation,
we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation
right.
Limitation
on the Employer’s Compensation Deduction
Section
162(m) of the Code limits the deduction certain employers may take for otherwise deductible compensation payable to certain executive
officers of the employer to the extent the compensation paid to such an officer for the year exceeds $1 million.
The
discussion above is intended only as a summary and does not purport to be a complete discussion of all potential tax effects relevant
to recipients of awards under the 2019 Plan. Among other items this discussion does not address are tax consequences under the laws of
any state, locality, or foreign jurisdiction, or any tax treaties or conventions between the United States and foreign jurisdictions.
This discussion is based upon current law and interpretational authorities which are subject to change at any time.
New
plan benefits under 2019 Plan
Grants
of awards under the 2019 Plan to our executive officers, employees, and other eligible Participants are subject to the discretion of
our Board or Compensation Committee, as applicable. As of the date of this proxy statement, no awards have been granted under the 2019
Plan subject to the stockholder approval of the amendment to the 2019 Plan sought in this proposal. Therefore, it is not possible to
determine the future benefits that will be received by the participants under the 2019 Plan other than with respect to the value of RSUs
that will be received by our non-employee directors on the date of the Annual Meeting (assuming all incumbent directors are elected at
the Annual Meeting).
Accordingly,
the table below provides information solely with respect to our non-employee directors.
| Name and Position | |
Dollar value ($)(1) | | |
Number of Shares | |
| Peter Hao Liu, Chief Executive Officer | |
| — | | |
| — | |
| Clay Crolius, Chief Financial Officer | |
| — | | |
| — | |
| Charles Becher, Chief Commercial Officer and General Manager of North America | |
| — | | |
| — | |
| All executive officers as a group (three persons) | |
| — | | |
| — | |
| Non-employee directors as a group (four persons) | |
| 290,000 | (2) | |
| — | (3) |
| All employees as a group, other than executive officers | |
| — | | |
| — | |
| (1) | Represents
grant date fair value of award. |
| | |
| (2) | In
accordance with our non-employee director compensation policy, each non-employee director
who will continue to serve as a non-employee director immediately following the Annual Meeting
will automatically be granted an award of RSUs on the date of our Annual Meeting, with the
number of RSUs determined by dividing (i) $60,000 by (ii) the closing trading price of our
common stock on the grant date. Additionally, the non-executive chairman of the Board will
also be entitled to receive RSUs determined by dividing (i) $60,000 by (ii) the closing trading
price of our common stock on the grant date, the anniversary of the attainment of the status
of the non-executive chairman of the Board. |
| | |
| (3) | As
described in the footnote (2) above, for non-employee directors, the number of shares reflects
the number of restricted stock units granted following the Annual Meeting or the date of
the RSU grant to the chairman of the Board. Accordingly, the number of shares is not included
in the table. |
Consequences
of failing to approve the proposal
If
the amendment to increase the number of shares authorized under our 2019 Plan is not approved by stockholders, the 2019 Plan will continue
in full force and effect in accordance with its terms. Once the share reserve under the 2019 Plan is exhausted, we may elect to provide
compensation through other means, such as cash-settled awards or other cash compensation, to assure that Sonim and its affiliates can
attract and retain qualified personnel.
Vote
required
The
increase of the shares available for issuance under the plan requires the affirmative vote of the holders of a majority of the voting
power of the shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter.
Abstentions will have the effect of a vote against the proposal. Broker non-votes will have no effect on this proposal.
Board
recommendation
The
Board unanimously recommends a vote FOR the approval of an amendment to our equity incentive plan to increase the aggregate number of
shares of common stock authorized for issuance by 3,000,000 shares.
PROPOSAL
4 — REVERSE STOCK SPLIT
General
Our
Board approved and declared advisable, subject to stockholder approval, a certificate of amendment to our amended and restated certificate
of incorporation, as amended, (the “Certificate of Incorporation”), which would 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 at a ratio of
not less than 1-for-2 and not more than 1-for-15 (the “Reverse Stock Split”) at any time prior to the one-year anniversary
of the date on which the Reverse Stock Split is approved by our stockholders at the Annual Meeting, with the exact ratio to be set within
this range by our Board at its sole discretion. The form of the proposed certificate of amendment to our Certificate of Incorporation
to effect the Reverse Stock Split is attached as Annex B to this Proxy Statement (the “Reverse Split Amendment”).
Upon
the effectiveness of the Reverse Split Amendment, the outstanding shares of our common stock will be reclassified and combined into a
lesser number of shares such that one share of our common stock will be issued for a specified number of shares in accordance with the
ratio for the Reverse Stock Split selected by our Board. The number of shares of common stock underlying outstanding equity awards and
available for future awards under our equity incentive plans, as well as the number of shares issuable upon exercise of outstanding warrants,
would also be proportionately reduced in the same manner as a result of the Reverse Stock Split. The Reverse Split Amendment that will
be filed to effect the Reverse Stock Split will include the Reverse Stock Split ratio fixed by our Board, within the range approved by
our stockholders.
If
the Reverse Stock Split Proposal is approved by our stockholders, our Board would have the sole discretion to effect the amendment and
Reverse Stock Split at any time prior to the one-year anniversary of the date on which the Reverse Stock Split is approved by our stockholders
at the Annual Meeting, and to fix the specific ratio for the Reverse Stock Split, provided that the ratio would be not less than 1-for-2
and not more than 1-for-15. We believe that enabling our Board to fix the specific ratio of the Reverse Stock Split within the stated
range will provide us with the flexibility to implement the split in a manner designed to maximize the anticipated benefits to us and
our stockholders, as described below. The determination of the ratio of the Reverse Stock Split will be based on a number of factors,
described further below under the heading “Determination of the Reverse Stock Split ratio.”
If
the Reverse Stock Split Proposal is approved by our stockholders and our Board determines to effect the Reverse Stock Split, the Reverse
Stock Split will become effective upon the time specified in the Reverse Split Amendment, as filed with the Secretary of State of the
State of Delaware. The exact timing of the filing of the Reverse Split Amendment and the Reverse Stock Split will be determined by our
Board based on its evaluation as to when such action will be the most advantageous to us and our stockholders. Our Board reserves the
right, notwithstanding stockholder approval and without further action by our stockholders, to abandon the Reverse Split Amendment and
the Reverse Stock Split if, at any time prior to the effectiveness of the filing of the Reverse Split Amendment with the Secretary of
State of the State of Delaware, our Board, in its sole discretion, determines that it is no longer in our best interest and the best
interests of our stockholders to proceed. If our Board does not effect any Reverse Stock Split on or prior to the one-year anniversary
of the Annual Meeting, stockholder approval would again be required prior to implementing any reverse stock split.
Reasons
for the Reverse Stock Split
Regaining
Compliance with the Minimum Bid Price Rule
Our
primary objective in asking for the authority to effect the Reverse Stock Split is to raise the per share trading price of our common
stock. Our common stock is publicly traded and listed on Nasdaq Capital Market under the symbol “SONM.” To maintain listing,
Nasdaq requires, among other things, that our common stock maintain a minimum closing bid price of $1.00 per share (the “Minimum
Bid Price Rule”).
On
September 14, 2023, we received a letter from Nasdaq notifying us that, because the bid price for our common stock has fallen below $1.00
per share for 30 consecutive business days, we no longer comply with the Minimum Bid Price Rule for continued listing. In accordance
with Nasdaq Listing Rule 5810(c)(3)(A), we were provided a period of 180 calendar days, or through March 12, 2024, to regain compliance
with the Minimum Bid Price Rule. On March 13, 2024, such period was extended by an additional 180 calendar days, or through September
9, 2024. To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of ten (10) consecutive
business days as required under Nasdaq Listing Rule 5810(c)(3)(A) (unless the Nasdaq staff exercises its discretion to extend this 10-day
period pursuant to Nasdaq Listing Rule 5810(c)(3)(H) during the 180-day period). We have not regained compliance with the Minimum Bid
Price Rule as of the date of this proxy statement.
While
we intend to monitor the closing price of our common stock and consider available options depending on the trading price of our common
stock, no assurance can be made that we will in fact be able to comply with the Minimum Bid Price Rule. Reducing the number of outstanding
shares of our common stock should, absent other factors, result in an increase in the per share market price of our common stock, although
we cannot provide any assurance that our minimum bid price would, following the Reverse Stock Split, remain over any applicable minimum
bid price requirements. Accordingly, our Board believes that it is in the best interest of the Company and its stockholders that the
Board has the ability to effect, in its discretion, the Reverse Stock Split to improve the price level of our common stock so that we
are able to maintain continued compliance with the Minimum Bid Price Rule and minimize the risk of future delisting from Nasdaq.
Additional
Reasons to Effect the Reverse Stock Split
In
addition to the primary purpose for effecting the Reverse Stock Split, an increase in the per-share trading price of our common stock
is expected to:
| ● | increase
the acceptability of our common stock to long-term investors who may not find our shares
attractive at their current prices due to the trading volatility often associated with stocks
below certain prices; |
| | | |
| ● | make
our common stock eligible for investment by brokerage houses and institutional investors
that 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 or by restricting or limiting the ability to purchase such stocks on margin; and |
| | | |
| ● | make
our common stock more attractive for investors who may be dissuaded from purchasing stocks
below certain prices because the brokerage commissions, as a percentage of the total transaction
value, tend to be higher for such low-priced stocks. |
In
evaluating whether to effect the Reverse Stock Split, our Board has taken, and will take, into consideration negative factors associated
with reverse stock splits. These factors are delineated under the heading “Certain risks associated with the Reverse Stock Split.”
In approving and recommending the Reverse Stock Split Proposal, our Board determined that these potentially negative factors were significantly
outweighed by the potential benefits.
Although
we expect that the Reverse Stock Split will increase the market price of our common stock as a result of having fewer outstanding shares,
the Reverse Stock Split may not result in a permanent increase in the market price of our common stock, which will continue to be dependent
on many factors, including general economic, market, and industry conditions and other factors detailed from time to time in the reports
we file with the SEC. In addition, there can be no assurance that our common stock will not be delisted due to a failure to meet other
continued listing requirements of Nasdaq even if the market price per post-split share of our common stock remains in excess of $1.00.
Determination
of the Reverse Stock Split ratio
If
our stockholders approve the Reverse Stock Split Proposal, our Board will be authorized to proceed with the Reverse Stock Split. The
exact ratio of the Reverse Stock Split, within the 1-for-2 to 1-for-15 range, would be determined by our Board in its sole and absolute
discretion and publicly announced by us prior to the effective time of the Reverse Stock Split. In determining whether to proceed with
the Reverse Stock Split and setting the appropriate ratio for the Reverse Stock Split, our Board will consider, among other things, factors
such as:
| ● | the
historical trading prices and trading volume of our common stock; |
| | | |
| ● | the
number of shares of our common stock outstanding; |
| ● | the
then-prevailing and expected trading prices and trading volume of our common stock and the
anticipated impact of the Reverse Stock Split on the trading market for our common stock; |
| | | |
| ● | our
ability to maintain on The Nasdaq Capital Market; |
| | | |
| ● | the
anticipated impact of a particular ratio on our ability to reduce administrative and transactional
costs; |
| | | |
| ● | business
developments affecting us; and |
| | | |
| ● | prevailing
general market and economic conditions. |
Certain
risks associated with the Reverse Stock Split
Before
voting on this proposal, you should consider the following risks associated with the implementation of the Reverse Stock Split.
| ● | Although
we expect that the Reverse Stock Split will result in an increase in the market price of
our common stock, we cannot assure you that the Reverse Stock Split, if implemented, will
increase the market price of our common stock in proportion to the reduction in the number
of shares of common stock outstanding or result in a permanent increase in the market price.
The effect the Reverse Stock Split may have upon the market price of our common stock cannot
be predicted with any certainty, and the history of similar reverse stock splits for companies
in similar circumstances to ours is varied. The market price of our common stock is dependent
on many factors, including our business and financial performance, general market conditions,
prospects for future success, and other factors detailed from time to time in the reports
we file with the SEC. Accordingly, the total market capitalization of our common stock after
the proposed Reverse Stock Split may be lower than the total market capitalization before
the proposed Reverse Stock Split and, in the future, the market price of our common stock
following the Reverse Stock Split may not exceed or remain higher than the market price prior
to the proposed Reverse Stock Split. |
| | | |
| ● | If
the Reverse Stock Split is consummated, but the trading price of our common stock declines,
the percentage decline as an absolute number and as a percentage of our overall market capitalization
may be greater than would occur in the absence of the Reverse Stock Split. |
| | | |
| ● | Although
our Board believes that the decrease in the number of shares of our common stock outstanding
as a consequence of the Reverse Stock Split and the anticipated increase in the market price
of our common stock could encourage interest in our common stock and possibly promote greater
liquidity for our stockholders, such liquidity could also be adversely affected by the reduced
number of shares outstanding after the Reverse Stock Split. |
| | | |
| ● | Furthermore,
the implementation of the Reverse Stock Split would not change the total number of shares
of our common stock authorized for issuance. As a result, the number of shares of our common
stock available for issuance following the implementation of the Reverse Stock Split would
increase to the extent the Reverse Stock Split reduces the number of outstanding shares of
our common stock. Such available shares may be used for future corporate purposes, including
future acquisitions, investment opportunities, the establishment of collaboration or other
strategic agreements, capital raising transactions involving equity or convertible debt securities,
future at-the-market offerings of common stock, or issuance under current or future employee
equity plans, and the issuance of equity securities in connection with such transactions
may result in potentially significant dilution of our current stockholders’ ownership
interests in the Company. |
| ● | In
addition, although the purpose of the Reverse Stock Split is not to establish any barriers
to a change of control or acquisition of the Company, investors might consider the increased
proportion of unissued authorized shares to issued shares to have an anti-takeover effect
under certain circumstances because the proportion allows for dilutive issuances. We are
not aware of any attempt or plan to obtain control of us. We currently have no plans, proposals
or arrangements to issue any shares of common stock that would become newly available for
issuance as a result of the Reverse Stock Split. |
| | | |
| ● | The
Reverse Stock Split may result in some stockholders owning “odd lots” of fewer
than one hundred (100) shares of our common stock on a post-split basis. These odd lots may
be more difficult to sell, or require greater transaction costs per share to sell, than shares
in “round lots” of even multiples of one hundred (100) shares. |
Principal
Effects of the Reverse Stock Split
Capital
stock
After
the effective date of the Reverse Stock Split, each stockholder will own a reduced number of shares of our common stock. However, the
Reverse Stock Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests
in the Company, except to the extent that the Reverse Stock Split results in any of our stockholders owning a fractional share (as described
below). Voting rights and other rights and preferences of the holders of our common stock will not be affected by a Reverse Stock Split
(except for adjustments that may result from the treatment of fractional shares). For example, a holder of 1% of the voting power of
the outstanding shares of our common stock immediately prior to a Reverse Stock Split would continue to hold 1% (assuming there is no
impact as a result of the adjustments that may result from the treatment of fractional shares) of the voting power of the outstanding
shares of our common stock immediately after such Reverse Stock Split. The number of stockholders of record will not be affected by a
Reverse Stock Split. The Reverse Stock Split would not change the terms of our common stock.
After
the effective time of the Reverse Stock Split, our common stock will have a new Committee on Uniform Securities Identification Procedures
(“CUSIP”) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers
(if any) will need to be exchanged for stock certificates with the new CUSIP numbers.
Unless
the Authorized Shares Proposal is approved by our stockholders and implemented by our Board, as more particularly described in “Proposal 5 — Increase of Authorized Shares of Common Stock,” the number of authorized shares of our common stock will remain at
100,000,000. The number of authorized shares of our preferred stock will remain at 5,000,000.
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.
Outstanding
warrants
If
the Reverse Stock Split is approved and effected, under the terms of the warrants, the exercise price per share of such warrants will
be increased by multiplying the current exercise price by a fraction of which the numerator shall be the number of shares of our common
stock outstanding immediately before the Reverse Stock Split and of which the denominator shall be the number of shares of our common
stock outstanding immediately after the Reverse Stock Split, and the number of shares issuable upon exercise of the warrants shall be
proportionately adjusted such that the aggregate exercise price of the warrants shall remain unchanged.
Plans
and outstanding awards
We
maintain our ESP and ESPP (together, the “Plans”), which are designed primarily to provide stock-based incentives to our
employees and other individual service providers. Our Board generally has the discretion to determine the appropriate adjustments to
the Plans and outstanding awards and purchase rights under the Plans in the event of a reverse stock split. Accordingly, if the Reverse
Stock Split is implemented, the number of shares of common stock subject to outstanding options, restricted stock unit awards, and other
equity awards issued under the Plans, and the number of shares reserved for future issuance and all other share limits under the Plans
will be reduced by the same ratio as the reduction in the outstanding shares, in each case rounded down to the nearest whole share. Furthermore,
the exercise price of any outstanding options would be proportionately increased based on the Reverse Stock Split ratio selected by our
Board, and any fractional cents that may result therefrom shall be rounded up.
Illustration
of the effect of the Reverse Stock Split in a tabular form
The
following table illustrates the effects of the Reverse Stock Split at various ratios, without giving effect to any adjustments for fractional
shares of common stock, on our outstanding shares of common stock as of May 30, 2024, the record date of the Annual Meeting. We have
also demonstrated the effect on authorized shares of common stock, should the Authorized Shares Proposal be approved:
| | |
Before Reverse | | |
After Reverse Stock Split | |
| | |
Stock Split | | |
1-for-2 | | |
1-for-5 | | |
1-for-10 | |
| | |
| | |
| | |
| | |
| |
| Shares of common stock issued and outstanding | |
| 46,717,887 | | |
| 23,358,944 | | |
| 9,343,578 | | |
| 4,671,789 | |
| Shares reserved for future grants of awards under the EIP | |
| 1,878,685 | | |
| 939,343 | | |
| 375,737 | | |
| 187,869 | |
| Shares reserved for issuance upon exercise of outstanding warrants to purchase common stock | |
| 3,500,002 | | |
| 1,750,001 | | |
| 700,000 | | |
| 350,000 | |
| Total number of shares of common stock authorized to be issued (if the Authorized Shares Proposal is NOT approved) | |
| 100,000,000 | | |
| 100,000,000 | | |
| 100,000,000 | | |
| 100,000,000 | |
| Total number of shares of common stock authorized to be issued (if the Authorized Shares Proposal is approved) | |
| 200,000,000 | | |
| 200,000,000 | | |
| 200,000,000 | | |
| 200,000,000 | |
| Total number of shares of preferred stock authorized to be issued | |
| 5,000,000 | | |
| 5,000,000 | | |
| 5,000,000 | | |
| 5,000,000 | |
Procedures
for effecting a Reverse Stock Split and exchange of stock certificates
Reverse
Split Amendment
If
stockholders approve the Reverse Stock Split Proposal, and if our Board determines to effect the Reverse Stock Split (with the ratio
to be determined in the sole discretion of our Board within the parameters described), we will file the Reverse Split Amendment with
the Secretary of State of the State of Delaware, reflecting such Reverse Stock Split ratio determined by the Board. The Reverse Stock
Split will become effective at the time and on the date of filing of, or at such later time as is specified in the Reverse Split Amendment,
which we refer to as the “effective time” and the “effective date,” respectively. The effective time of the Reverse
Split Amendment and the Reverse Stock Split shall be determined in the sole discretion of our Board and in accordance with applicable
law. The text of the Reverse Split Amendment is subject to modifications 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 deems necessary and advisable to effect the Reverse Stock Split.
Registered
holders of common stock
Certain
of our registered stockholders hold some or all of their shares electronically in book-entry form with our transfer agent. These stockholders
do not hold physical 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 shares of common stock in book-entry form
with our transfer agent, no action needs to be taken to receive post-Reverse Stock Split shares.
Beneficial
owners of common stock
Upon
the Reverse Stock Split, we intend to treat stockholders holding our common stock in “street name,” through a bank, broker,
or other nominee, in the same manner as registered stockholders whose shares are registered in their names. Brokers, banks, or other
nominees will be instructed to process a reverse stock split for their beneficial holders holding our common stock in “street name.”
However, these banks, brokers, or other nominees may have different procedures than registered stockholders for processing a reverse
stock split. If you hold your shares with a bank, broker, or other nominee and if you have any questions in this regard, we encourage
you to contact your nominee.
Treatment
of fractional shares
No
fractional shares of common stock will be issued in connection with the Reverse Stock Split. If as a result of the Reverse Stock Split,
a stockholder of record would otherwise hold a fractional share, one full share of common stock will be issued in lieu of the issuance
of any such fractional share.
No
appraisal rights
No
action is proposed herein for which the laws of the State of Delaware, our Certificate of Incorporation, or our amended and restated
bylaws provide a right to our stockholders to dissent and obtain an appraisal of, or payment for, such stockholders’ common stock.
Accounting
matters
The
Reverse Stock Split would not affect the par value of our common stock per share, which would remain $0.001 par value per share, while
the number of outstanding shares of common stock would decrease, in accordance with the Reverse Stock Split ratio. As a result, as of
the effective time of the Reverse Stock Split, the stated capital attributable to common stock on our balance sheet would decrease, and
the additional paid-in capital account on our balance sheet would increase by an offsetting amount. Following the Reverse Stock Split,
the reported per-share net income or loss would be higher because there would be fewer shares of common stock outstanding and we would
adjust historical per-share amounts set forth in our future financial statements.
Reservation
of right to abandon the amendment to our Certificate of Incorporation
As
previously stated, the Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders,
to elect not to proceed with the Reverse Stock Split if, at any time prior to effectiveness of the Reverse Split Amendment, the Board,
in its sole discretion, determines that it is no longer in the best interests of the Company and its stockholders to proceed with the
Reverse Stock Split. By voting in favor of the Reverse Stock Split, you are expressly also authorizing the Board to delay or abandon
the Reverse Stock Split. If our Board does not effect any Reverse Stock Split on or prior to the one-year anniversary of the Annual Meeting,
stockholder approval would again be required prior to implementing any reverse stock split.
Material
U.S. federal income tax consequences of the Reverse Stock Split to U.S. Holders
The
following discussion summarizes certain material U.S. federal income tax considerations of the Reverse Stock Split. This discussion is
based upon the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, the final, temporary, and
proposed U.S. Treasury Regulations promulgated thereunder, and administrative rulings and judicial decisions now in effect, all of which
are subject to change at any time or subject to different interpretations (possibly with retroactive effect). This discussion does not
purport to deal with all aspects of U.S. federal income taxation that may be relevant to the Reverse Stock Split in light of a stockholder’s
personal circumstances or to certain types of stockholders that may be subject to special tax treatment, such as, but not limited to,
banks and other financial institutions, retirement plans, employee stock ownership plans, regulated investment companies or real estate
investment trusts, partnerships or other pass-through entities for U.S. federal income tax purposes (or investors in such entities),
tax-exempt entities or organizations, United States expatriates, persons that have a principal place of business or “tax home”
outside of the United States, persons subject to special rules under Section 892 of the Code, persons who receive our securities through
the exercise of employee stock options or otherwise as compensation, controlled foreign corporations, passive foreign investment companies,
corporations that accumulate earnings to avoid U.S. federal income tax, insurance companies, “S” corporations, dealers in
securities and foreign currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities,
brokers, persons who hold our securities as part of a hedge, straddle, conversion, integrated, or other risk reduction or constructive
sale transaction, persons required to report income no later than when such income is reported on an “applicable financial statement,”
“U.S. holders” (as defined below) whose functional currency is not U.S. dollars, U.S. holders that hold our stock through
non-U.S. brokers or other non-U.S. intermediaries, or persons subject to the alternative minimum tax. In addition, this summary does
not include any description of the tax laws of any state, local, or non-U.S. jurisdiction that may be applicable to a particular stockholder
and does not consider any aspects of U.S. federal tax law other than income taxation (such as estate and gift tax or Medicare contribution
tax laws). In addition, this summary does not include any description of the tax laws of any state, local, or non-U.S. jurisdiction that
may be applicable to a particular stockholder and does not consider any aspects of U.S. federal tax law other than income taxation (such
as estate and gift tax or Medicare tax). In addition, this discussion is limited to persons who hold our common stock as a “capital
asset” (generally, property held for investment) within the meaning of Section 1221 of the Code.
As
used herein, the term “U.S. holder” means a beneficial owner of common stock that is, for U.S. federal income tax purposes:
| ● | an
individual who is a citizen or resident of the United States; |
| | | |
| ● | a
corporation, or other entity taxable as a corporation for U.S. federal income tax purposes,
created or organized in or under the laws of the United States or any political subdivision
thereof; |
| | | |
| ● | a
trust if it (1) is subject to the primary supervision of a court within the United States
and one or more U.S. persons have the authority to control all substantial decisions of the
trust or (2) has a valid election in effect under applicable U.S. Treasury Regulations to
be treated as a U.S. person; or |
| | | |
| ● | an
estate the income of which is subject to U.S. federal income taxation regardless of its source. |
As
used herein, the term “non-U.S. holder” means a beneficial owner of common stock that is neither a U.S. holder nor a partnership
or an entity treated as a partnership for U.S. federal income tax purposes. If a partnership (including any entity treated as a partnership
for U.S. federal income tax purposes) is a beneficial owner of common stock, the tax treatment of a partner in the partnership generally
will depend upon the status of the partner and the activities of the partnership. A beneficial owner that is a partnership and partners
in such a partnership are urged to consult their tax advisors about the U.S. federal income tax consequences of owning our common stock.
This
discussion is not binding on the Internal Revenue Service (the “IRS”). Except as discussed herein, we have not sought, and
will not seek, any ruling from the IRS or an opinion from counsel with respect to the statements made in the following discussion. Accordingly,
there can be no assurance that the IRS will not take a position contrary to such statements or that any such contrary position taken
by the IRS would not be sustained by a court.
Stockholders
are urged to consult their own tax advisors with respect to the application of the U.S. federal income tax laws to their particular situations
as well as any tax consequences arising under the U.S. federal estate or gift or other rules or under the laws of any state, local or
foreign taxing jurisdiction or under any applicable tax treaty.
Tax
consequences to the Company
The
Reverse Stock Split is intended to be treated as a tax deferred “recapitalization” for U.S. federal income tax purposes.
If the Reverse Stock Split qualifies as a recapitalization, then the Company will not recognize gain or loss as a result of the Reverse
Stock Split.
Tax
consequences to U.S. Holders
The
Reverse Split is intended to constitute a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Code for U.S.
federal income tax purposes. Assuming that such treatment is correct, the Reverse Stock Split generally will not result in the recognition
of gain or loss for U.S. federal income tax purposes, except potentially with respect to any additional fractions of a share of our common
stock received as a result of the rounding up of any fractional shares that otherwise would be issued, as discussed below. Subject to
the following discussion regarding a stockholder’s receipt of a whole share of our common stock in lieu of a fractional share,
the adjusted basis of the new shares of common stock will be the same as the adjusted basis of the common stock exchanged for such new
shares. The holding period of the new, post-Reverse Split shares of the common stock resulting from implementation of the Reverse Split
will include the stockholder’s respective holding periods for the pre-Reverse Split shares. Stockholders who acquired their shares
of our common stock on different dates or at different prices should consult their tax advisors regarding the allocation of the tax basis
of such shares.
The
treatment of the exchange of a fractional share for a whole share in the Reverse Stock Split is not clear under current law, and a U.S.
Holder who receives one (1) whole share of our common stock in lieu of a fractional share may recognize income or gain in an amount not
to exceed the excess of the fair market value of such share over the fair market value of the fractional share to which such stockholder
was otherwise entitled. We are not making any representation as to whether the receipt of one (1) whole share in lieu of a fractional
share will result in income or gain to any stockholder, and stockholders are urged to consult their own tax advisors as to the possible
tax consequences of receiving a whole share in lieu of a fractional share in the Reverse Split.
The
preceding discussion is intended only as a summary of certain material U.S. federal income tax consequences of the Reverse Stock Split.
It is not a complete analysis or discussion of all potential tax effects that may be important to a particular holder. All holders of
our common stock should consult their own tax advisors as to the specific tax consequences of the Reverse Stock Split for them, including
record retention and tax-reporting requirements, and the applicability and effect of any federal, state, local, and non-U.S. tax laws.
Vote
required
Approval
of the Reverse Stock Split Proposal requires the affirmative vote of holders of a majority of the votes cast affirmatively or negatively
(excluding abstentions) on the proposal at the Annual Meeting. Abstentions will have no effect on the proposal. No broker non-votes are
expected in connection with the proposal.
Board
recommendation
The
Board unanimously recommends a vote FOR the Reverse Stock Split Proposal.
PROPOSAL
5 — INCREASE OF AUTHORIZED SHARES OF COMMON STOCK
General
The
Board has unanimously approved, declared advisable, and recommended that our stockholders approve, an amendment to our Certificate of
Incorporation, as amended, in substantially the form attached hereto as Annex C (the “Authorized Shares Amendment”),
to increase the number of authorized shares of our common stock from 100,000,000 to 200,000,000. The text of the Authorized Shares Amendment
is subject to modifications 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 deems necessary and advisable to effect the Authorized Shares Proposal.
Following
stockholder approval of the Authorized Shares Proposal, the increase in authorized shares of our common stock would become effective
upon the filing of the Authorized Shares Amendment with the Secretary of State of the State of Delaware, or such later effective time
as is specified in such Authorized Shares Amendment as permitted under Delaware law. The exact timing of the amendment will be determined
by our Board based on its evaluation as to when such action will be the most advantageous to us and our stockholders.
Capitalization
Common
Stock
As
of May 30, 2024, the record date, the Company was authorized to issue up to 100,000,000 shares of common stock, par value $0.001 per
share, 46,717,887 of which were issued and outstanding, 9,825,398 reserved for issuance under our equity compensation plans, and 3,500,002 reserved for issuance in connection with our outstanding warrants. Accordingly, as of May 30, 2024, the record date, there
were 39,956,713 shares of our common stock available for all other corporate purposes, such as additional capital-raising activities
or potential acquisitions, prior to the addition of the shares for which we are seeking approval pursuant to this proposal.
Preferred
Stock
In
addition to our authorized shares of common stock, we are authorized to issue up to 5,000,000 shares of preferred stock, par value of
$0.001 per share, of which none are issued and outstanding. The Authorized Shares Proposal will not change the total number of authorized
shares of our preferred stock.
The
following table illustrates the effect of the Authorized Shares Amendment on the capitalization of the Company. This table does not show
the effect of the Reverse Stock Split (if approved by the stockholders and implemented by our Board).
| | |
As of the record date | | |
Upon Effectiveness of Authorized Shares Amendment | |
| Authorized shares of common stock | |
| 100,000,000 | | |
| 200,000,000 | |
| Authorized shares of preferred stock | |
| 5,000,000 | | |
| 5,000,000 | |
| Outstanding shares of common stock | |
| 46,717,887 | | |
| 46,717,887 | |
| Shares of common stock reserved for issuance under equity compensation plans | |
| 9,825,398 | | |
| 9,825,398 | |
| Shares of common stock subject to outstanding warrants | |
| 3,500,002 | | |
| 3,500,002 | |
| Shares of common stock available for issuance | |
| 39,956,713 | | |
| 139,956,713 | |
Rationale
for the Authorized Shares Amendment
Over
the past several years, we have used shares of our common stock, among other things, to engage in financings, incentivize and compensate
employees and other service providers, to engage in a transaction that involved a change of control and transformed our business, and
for other general corporate purposes. Our Board believes that it is in the best interests of our company to increase the number of authorized
shares of common stock in order to give us greater flexibility in considering and planning for potential business needs.
The
increase in the number of authorized but unissued shares of common stock would enable us, without the expense and delay of seeking stockholder
approval, to issue shares from time to time as may be required for proper business purposes.
We
anticipate that we may issue additional shares of common stock in the future in connection with one or more of the following:
| (1) | grants
under our equity incentive plans; |
| | | |
| (2) | financing
transactions, such as public or private offerings of common stock or convertible securities; |
| | | |
| (3) | strategic
investments and transactions; and |
| | | |
| (4) | other
corporate purposes that have not yet been identified. |
At
this time, we do not have any plans, proposals, or arrangements, written or oral, to issue any of the proposed additional authorized
shares of common stock for general corporate or any other purposes. However, our Board believes that the availability of additional authorized
shares of our common stock will afford us needed flexibility in acting upon financing transactions to strengthen our financial position
or engaging in strategic activities without using cash. Unless required by applicable law or stock exchange rules, no further vote of
the holders of common stock will be required with respect to any such transaction.
Potential
effects of the Authorized Shares Amendment
General
The
additional shares of common stock for which authorization is sought would be identical in powers, privileges, and rights to the shares
of common stock that are now authorized. Holders of common stock do not have preemptive rights to subscribe to additional securities
that we may issue.
Dilutive effect
The
issuance of additional shares of common stock may, among other things, have a dilutive effect on earnings per share and on stockholders’
equity and voting rights. Furthermore, future sales of substantial amounts of our common stock, or the perception that these sales might
occur, could adversely affect the prevailing market price of our common stock or limit our ability to raise additional capital. Stockholders
should recognize that, as a result of this proposal, they will own a smaller percentage of shares relative to the total authorized shares
of the Company than they presently own.
Anti-takeover
effect
The
Authorized Shares Amendment could, under certain circumstances, have an anti-takeover effect. Our Board might be able to delay or impede
a takeover or transfer of control of our Company by causing such additional authorized but unissued shares to be issued to holders who
might side with our Board in opposing a takeover bid that the Board determines is not in the best interests of our Company and our stockholders.
The Authorized Shares Proposal could therefore have the effect of discouraging unsolicited takeover attempts. By potentially discouraging
the initiation of any such unsolicited takeover attempts, the Authorized Shares Proposal could limit the opportunity for our stockholders
to dispose of their shares at a higher price generally available in takeover attempts or that may be available under a merger proposal.
Our
Board has not proposed an increase in the number of authorized shares with the intention of discouraging tender offers or takeover attempts.
We are not aware of any attempt or plan to obtain control of us. We have no current plans or proposals to adopt other provisions or enter
into other arrangements that may have material anti-takeover consequences.
Reservation
of right to abandon the Authorized Shares Amendment
The
Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed
with the Authorized Shares Amendment if, at any time prior to effectiveness of the Authorized Shares Amendment, the Board, in its sole
discretion, determines that it is no longer in the best interests of the Company and its stockholders to proceed with the Authorized
Shares Amendment. By voting in favor of the Authorized Shares Proposal, you are expressly also authorizing the Board to delay or abandon
the Authorized Shares Amendment. If our Board does not effect any Authorized Shares Amendment on or prior to the one-year anniversary
of the Annual Meeting, stockholder approval would again be required prior to implementing any increase in the shares of our common stock
authorized for issuance.
No
Appraisal Rights
Our
stockholders are not entitled to appraisal rights under Delaware law or the Certificate of Incorporation with respect to the Authorized
Shares Amendment, and we will not independently provide our stockholders with any such right.
Vote
required
Approval
of the Authorized Shares Proposal requires the affirmative vote of holders of a majority of the votes cast affirmatively or negatively
(excluding abstentions) on the proposal at the Annual Meeting. Abstentions will have no effect on the proposal. No broker non-votes are
expected in connection with the proposal.
Board
recommendation
The
Board unanimously recommends a vote FOR the approval of an amendment to our Amended and Restated Certificate of Incorporation, as amended
to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000.
PROPOSAL
6 — APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
TO
LIMIT THE LIABILITY OF CERTAIN OFFICERS
AS
PERMITTED BY DELAWARE LAW
General
Our
Board approved and declared advisable, subject to stockholder approval, a certificate of amendment to our Certificate of Incorporation,
which would permit the exculpation of certain officers in specific circumstances, as permitted by law (the “Officer Exculpation
Amendment”). The State of Delaware, which is our state of incorporation, enacted legislation that amended Section 102(b)(7) of
the Delaware General Corporation Law (“DGCL”) to enable Delaware corporations to limit the personal liability of officers
for breaches of the duty of care in limited circumstances. Amended DGCL Section 102(b)(7) only permits exculpation for direct claims
brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate 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. Furthermore, the limitation on liability does not apply to breaches of the duty of loyalty, acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived
an improper personal benefit.
Our
Board believes it is important to provide protection from certain liabilities and expenses that may discourage prospective or current
officers from serving corporations. Without such protection, qualified officers might be deterred from serving as officers due to exposure
to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. In considering
the Officer Exculpation Amendment, our Board took into account the narrow class and type of claims that such officers would be exculpated
from liability pursuant to amended DGCL Section 102(b)(7), the limited number of officers that would be impacted, and the benefits our
Board believes would accrue to us by providing exculpation in accordance with amended DGCL Section 102(b)(7), including, without limitation,
the ability to attract and retain key officers and the potential to reduce future litigation costs associated with frivolous lawsuits.
Our
Board balanced these considerations with our Corporate Governance Guidelines and practices and determined that it is advisable and in
the best interests of the Company and our stockholders to amend the current exculpation and liability provision in our Certificate of
Incorporation, as amended, to extend exculpation protection to certain of our officers in addition to our directors.
Text
of the Officer Exculpation Amendment
Article
VI of our Certificate of Incorporation already eliminates the monetary liability of our directors to the fullest extent permitted by
law, as it currently exists or as it may be amended in the future but does not include a provision that allows to extend analogous protections
to our officers. The Officer Exculpation Amendment would amend Article VI of our Certificate of Incorporation, as amended, to read in
its entirety as follows:
ARTICLE
VI
A.
The liability of the directors and officers for monetary damages shall be eliminated to the fullest extent under applicable
law.
B.
To the fullest extent permitted by applicable law, the Company is authorized to provide indemnification of (and advancement of expenses
to) directors, officers and agents of the Company (and any other persons to which applicable law permits the Company to provide indemnification)
through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise
in excess of the indemnification and advancement otherwise permitted by such applicable law. If applicable law is amended after approval
by the stockholders of this Article VI to authorize corporate action further eliminating or limiting the personal liability of directors
or officers, then the liability of a director or officer to the Company shall be eliminated or limited to
the fullest extent permitted by applicable law as so amended.
C.
Any repeal or modification of this Article VI shall only be prospective and shall not affect the rights or protections or increase the
liability of any director or officer under this Article VI in effect at the time of the alleged occurrence of any act or
omission to act giving rise to liability or indemnification.
The
changes to our current Certificate of Incorporation are marked in bold and underlined for reference.
The
proposed certificate of amendment to the Certificate of Incorporation, as amended, reflecting the foregoing Officer Exculpation Amendment
is attached as Annex D to this proxy statement. The text of the Officer Exculpation Amendment is subject to modifications
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 deems necessary
and advisable to effect the Officer Exculpation Amendment.
Effect
of the Officer Exculpation Amendment
The
proposed Officer Exculpation Amendment would allow for the exculpation of our officers to the fullest extent permitted by the DGCL. As
described above, this means that the proposed Officer Exculpation Amendment would allow for the exculpation of covered officers only
in connection with direct claims brought by stockholders, including class actions, but would not eliminate officers’ monetary liability
for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the
Company. The Officer Exculpation Amendment would not limit the liability of officers for any breach of the duty of loyalty to the Company
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.
The
Officer Exculpation Amendment also provides that if the DGCL is further amended to eliminate or limit the liability of officers, the
liability of such officers will be limited or eliminated to the fullest extent permitted by law, as so amended.
The
proposed Officer Exculpation Amendment would not be retroactive to acts or omissions occurring prior to its effective date.
Reasons
for Adoption of the Officer Exculpation Amendment
Our
Board believes it is appropriate for public companies in states that allow exculpation of officers to have exculpation clauses in their
certificates of incorporation. The nature of the role of directors and officers often requires them to make decisions on crucial matters.
Frequently, directors and officers must make decisions in response to time-sensitive opportunities and challenges, which can create a
substantial risk of investigations, claims, actions, suits, or proceedings seeking to impose liability on the basis of hindsight, especially
in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers
to best exercise their business judgment in furtherance of stockholder interests. We observe numerous public companies incorporated in
the State of Delaware having adopted or having attempted to adopt exculpation clauses that limit the personal liability of officers in
their certificates of incorporation. Failing to adopt the proposed Officer Exculpation Amendment could impact our recruitment and retention
of exceptional officer candidates who conclude that the potential exposure to liabilities, costs of defense, and other risks of proceedings
exceeds the benefits of serving as an officer of the Company.
For
the reasons stated above, our Board unanimously determined that the proposed Officer Exculpation Amendment is advisable and in the best
interest of the Company and our stockholders and authorized and approved the proposed Officer Exculpation Amendment and directed that
it be considered at the Annual Meeting. Our Board believes the proposed Officer Exculpation Amendment would better position us to attract
top officer candidates and retain our current officers and enable the officers to exercise their business judgment in furtherance of
the interests of the stockholders without the potential for distraction posed by the risk of personal liability. Additionally, it would
align the protections for our officers with those protections currently afforded to our directors.
The
proposed Officer Exculpation Amendment is not being proposed in response to any specific resignation, threat of resignation, or refusal
to serve by any officer.
Timing
of the Amendment
If
our stockholders approve the Officer Exculpation Amendment, our Board has authorized our officers to file the Officer Exculpation Amendment
with the Delaware Secretary of State, which we anticipate doing as soon as practicable following stockholder approval of the Officer
Exculpation Amendment at the Annual Meeting, and the Officer Exculpation Amendment would become effective upon acceptance by the Delaware
Secretary of State.
If
our stockholders do not approve the Officer Exculpation Amendment, our current exculpation provisions relating to directors will remain
in place, and the Officer Exculpation Amendment will not be filed with the Delaware Secretary of State.
Vote
Required
This
proposal requires the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the outstanding shares of our common stock to approve the Officer Exculpation Amendment. Abstentions and broker non-votes
will have the same effect as a vote against this proposal.
The
Board unanimously recommends a vote FOR the approval of an amendment to our Certificate of Incorporation to limit liability of officers
as permitted by Delaware law.
EXECUTIVE
AND DIRECTOR COMPENSATION
Executive
compensation
Our
named executive officers (or “NEOs”) for the year ended December 31, 2023, consisted of three individuals:
| (i) | Peter
Liu, our current Chief Executive Officer, who served as our principal executive officer during
the year ended December 31, 2023; |
| | | |
| (ii) | Clay
Crolius, our current Chief Financial Officer, who was serving as our executive officer at
the end of the fiscal year ended December 31, 2023; and |
| | | |
| (iii) | Charles
Becher, our Chief Commercial Officer, who was serving as our executive officer at the end
of the fiscal year ended December 31, 2023. |
Summary
compensation table
The
following table sets forth information regarding compensation earned during the years ended December 31, 2023 and December 31, 2022 by
our NEOs.
| Name and Principal Position | |
Year | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($)(1) | | |
Option Awards ($)(1) | | |
All Other Compensation ($) | | |
Total ($) | |
| Peter Hao Liu | |
2023 | |
$ | 450,000 | | |
$ | 180,000 | | |
$ | — | | |
$ | — | | |
$ | 47,226 | (2) | |
$ | 677,226 | |
| Chief Executive Officer | |
2022 | |
$ | 396,250 | | |
$ | — | | |
$ | — | | |
$ | 1,501,393 | | |
$ | 89,319 | (2) | |
$ | 1,986,962 | |
| Clay Crolius | |
2023 | |
$ | 323,750 | | |
$ | 96,000 | | |
$ | — | | |
$ | 157,520 | | |
$ | — | | |
$ | 577,270 | |
| Chief Financial Officer | |
2022 | |
$ | 129,343 | | |
$ | 41,250 | | |
$ | — | | |
$ | — | | |
$ | 214,320 | (3) | |
$ | 384,913 | |
| Charles Becher | |
2023 | |
$ | 400,000 | | |
$ | 275,000 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 675,000 | |
| Chief Commercial Officer and General Manager of North America | |
2022 | |
$ | 137,990 | | |
$ | — | | |
$ | — | | |
$ | 149,600 | | |
$ | — | | |
$ | 287,590 | |
| (1) | This
column reflects the full grant date fair value for stock awards or options, respectively,
granted during the fiscal year as measured pursuant to ASC Topic 718 as stock-based compensation
in our consolidated financial statements. The grant date fair value of stock awards was based
on the closing price per share of our common stock on the applicable grant date. These amounts
do not necessarily correspond to the actual value that may be recognized from the stock options
and stock awards by the NEOs. |
| | |
| (2) | Amount
reported primarily consists of a housing and car allowance for Mr. Liu. |
| | |
| (3) | Amount
reported consists of payments to an agency and payments directly to Mr. Crolius for Mr. Crolius’
consulting services. |
Outstanding
equity awards at December 31, 2023
The
following tables provide information about outstanding equity awards held by each of our named executive officers as of December 31,
2023. Awards for the named executive officers were granted under our 2019 Equity Incentive Plan.
| | |
| |
Option Awards(1) | |
| Name | |
Grant Date | |
Number of Securities Underlying Unexercised Options Exercisable (#) | | |
Number of Securities Underlying Unexercised Options Unexercisable (#) | | |
Option Exercise Price ($) | | |
Option Expiration Date | |
| Peter Hao Liu | |
6/30/2015 | |
| 666 | | |
| — | | |
| 15.00 | | |
| 06/29/2025 | |
| | |
12/2/2019 | |
| 5,000 | | |
| — | | |
| 24.80 | | |
| 12/01/2029 | |
| | |
6/9/2020 | |
| — | | |
| — | | |
| — | | |
| — | |
| | |
11/18/2022 | |
| 505,409 | | |
| 2,509,010 | (2) | |
| 0.419 | | |
| 10/26/2032 | |
| Clay Crolius | |
1/27/2023 | |
| — | | |
| 100,000 | (3) | |
| 0.494 | | |
| 1/27/2033 | |
| | |
11/24/2023 | |
| | | |
| 200,000 | (4) | |
| 0.7 | | |
| 11/24/2033 | |
| Charles Becher | |
11/18/2022 | |
| — | | |
| 275,000 | (5) | |
| 0.419 | | |
| 10/26/2032 | |
| (1) | All
vesting is subject to the recipient’s continued service through the applicable vesting date and is subject to accelerated vesting
in certain circumstances. For additional discussion, please see “Agreements with our Named Executive Officers” and
“Potential payments upon termination or change in control.” |
| | |
| (2) | The
stock options vest in 10 equal quarterly installments beginning on January 14, 2024, and
ending on April 14, 2026. |
| | |
| (3) | The
stock options vest on January 27, 2024. |
| | |
| (4) | The
stock options vest on November 24, 2024. |
| | |
| (5) | The
stock options vest in 11 equal quarterly installments commencing on February 29, 2024, and
ending on August 29, 2026. |
| Stock
Awards(1) | |
| Name | |
Grant Date | |
Number of Shares or Units of Stock that Have Not Vested (#) | | |
Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | |
| | |
| |
| | |
| |
| Peter Hao Liu | |
6/9/2020 | |
| 2,037 | (2) | |
$ | 1,497 | (3) |
| (2) | The
shares underlying the RSUs will vest on June 9, 2024. |
| (3) | Based
on the closing price of our common stock as reported on the Nasdaq Capital Market on December
29, 2023 ($0.7349). |
Agreements
with our Named Executive Officers
Set
forth below are descriptions of our employment agreements with our named executive officers. For a discussion of the severance pay and
other benefits to be provided in connection with a potential termination of employment and/or a change in control under the arrangements
with our named executive officers who were providing services to the Company as of December 31, 2021, see “Potential payments upon termination or change in control.”
Mr.
Liu
On
December 8, 2023, the Company entered an amended and restated employment agreement with Mr. Liu (the “Liu Employment Agreement”),
which superseded his previous employment arrangements. Under the Liu Employment Agreement, Mr. Liu receives an annual base salary of
$450,000. Additionally, Mr. Liu is eligible to participate in our EIP in connection with Mr. Liu’s equity awards. Mr. Liu received
stock option grants (subject to applicable vesting periods), to purchase in the aggregate a total of 4,014,419 shares of our common stock
(the “Options”) granted pursuant to the EIP. Each Option vests over four (4) years, with one-fourth (1/4th) of the shares
underlying such Option vesting on the one-year anniversary of the date of Mr. Liu’s appointment as CEO, and one-twelfth (1/12th)
of the shares underlying such Option vesting in quarterly installments thereafter. The Options will have a maximum term of ten (10) years
from each grant date and will terminate earlier upon the termination of employment prior to the ten-year period. The Liu Employment Agreement
has no specified term and is on an at-will basis and contains, inter alia, customary confidentiality, non-disparagement, and cooperation
provisions.
Mr.
Crolius
On
December 8, 2023, the Company entered an amended and restated letter agreement with Mr. Crolius (the “Crolius Letter Agreement”),
which superseded his previous employment arrangements. The Crolius Letter Agreement delineates the terms of Mr. Crolius’s employment:
he is entitled to a base salary of $320,000 per year (the “Crolius Base Salary”), a discretionary bonus, and other benefits
generally applicable to all employees of the Company. The Crolius Letter Agreement provides for the at-will employment of Mr. Crolius,
references the Company’s policies, and contains other customary conditions. The Crolius Base Salary was conditioned to be retroactively
effective as of November 1, 2023, and Mr. Crolius is entitled to receive a lump sum payment of the difference between the Crolius Base
Salary and the base salary pursuant to his previous employment arrangements.
Mr.
Becher
On
August 23, 2022, the Company and Mr. Becher entered into a letter agreement (the “Becher Letter Agreement”), delineating
the terms of Mr. Becher’s employment: he is entitled to a guaranteed cash compensation of $400,000 per year consisting of a base
salary and a guaranteed minimum cash incentive compensation program, a discretionary bonus, and to other benefits generally applicable
to all employees of the Company. The Becher Letter Agreement provides for the at-will employment of Mr. Becher, references the Company’s
policies, and contains other customary conditions. The Becher Letter Agreement provides for a variable compensation plan and a cash bonus
plan. Accordingly, Mr. Becher may receive additional target bonuses upon attaining strategic and financial goals, as determined by our
Compensation Committee on an annual basis. In accordance with the Becher Letter Agreement, Mr. Becher received options to purchase shares
of our common stock (the “Becher Options”) as follows:
| (i) | 400,000
options to purchase shares of our common stock vesting with respect to 25% of such options
on the one-year anniversary of August 29, 2022, and the remainder vesting in equal quarterly
installments thereafter, each installment equal to 1/16 of the 400,000 options; and |
| | | |
| (ii) | 100,000
options to purchase shares of our common stock per year over a four-year period, in the event
that revenue targets are achieved, as determined by the board of directors. |
The
Becher Options are subject to the terms and conditions of the EIP.
Potential
payments upon termination or change in control
Pursuant
to the Liu Employment Agreement, if we terminate Mr. Liu’s employment without cause at any time up to the six-month anniversary
of the closing of a change in control, we must pay Mr. Liu a sum equivalent to six (6) months of his base salary in effect as of his
termination date, less required and designated payroll deductions and withholdings. Pursuant to the Crolius Letter Agreement, if we terminate
Mr. Crolius’s employment without cause at any time up to the six-month anniversary of the closing of a change in control, we must
pay Mr. Crolius a sum equivalent to six (6) months of his base salary in effect as of his termination date, less required and designated
payroll deductions and withholdings. The severance payments to Mr. Liu and Mr. Crolius are subject to customary conditions.
Pension
benefits
Our
named executive officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by
us during 2023.
Nonqualified
deferred Compensation
Our
named executive officers did not participate in, or earn any benefits under, a nonqualified deferred compensation plan sponsored by us
during 2023.
Employee
benefit plans
We
believe that our ability to grant equity-based awards is a valuable and necessary compensation tool that aligns the long-term financial
interests of our executive officers with the financial interests of our stockholders. In addition, we believe that our ability to grant
options and other equity-based awards helps us to attract, retain and motivate executive officers and encourages them to devote their
best efforts to our business and financial success. Vesting of equity awards (other than awards granted in lieu of cash salary or bonus)
is generally tied to continuous service with us and serves as an additional retention measure. Our executive officers generally are awarded
an initial new hire grant upon commencement of employment.
Each
of our named executive officers currently employed by us holds equity awards under our 2019 Equity Incentive Plan that were granted subject
to the general terms thereof and the applicable forms of award agreement thereunder. The specific vesting terms of each named executive
officer’s equity awards are described under “Outstanding equity awards at December 31, 2023.”
Prior
to our initial public offering, we granted all equity awards pursuant to our 2012 Equity Incentive Plan. We currently grant all equity
awards pursuant to our 2019 Equity Incentive Plan. All options are granted with a per share exercise price equal to no less than the
fair market value of a share of our common stock on the date of the grant. All options have a maximum term of up to 10 years from the
date of grant, subject to earlier expiration following the cessation of an executive officer’s continuous service with us.
Options
generally remain exercisable for three months following an executive officer’s termination, except in the event of a termination
for cause or due to disability or death. Restricted stock unit awards (“RSUs”) generally vest annually over 4 years (other
than awards granted in lieu of cash salary or bonus, which may be vested at grant), subject to the continued service with us through
each vesting date.
Health
and welfare benefits
We
pay premiums for medical insurance, dental insurance, and vision insurance for all full-time employees, including our named executive
officers. These benefits are available to all full-time employees, subject to applicable laws.
401(k)
Plan
We
maintain a defined contribution retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a
tax advantaged basis. Eligible employees may defer eligible compensation on a pre-tax, or after-tax, basis, up to the statutorily prescribed
annual limits on contributions under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Contributions are allocated
to each participant’s individual account and are then invested in selected investment alternatives according to the participants’
directions. Employees are immediately and fully vested in their contributions. The 401(k) plan is intended to be qualified under Section
401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified
retirement plan, contributions to the 401(k) plan are deductible by us when made, and contributions and earnings on those amounts are
not taxable to the employees until withdrawn or distributed from the 401(k) plan. We currently provide a matching contribution under
the 401(k) plan.
Director
compensation
The
following table sets forth information regarding compensation earned during the year ended December 31, 2023, by our non-employee directors
who served as directors during such year. Mr. Liu, our Chief Executive Officer, serves on our board of directors but does not receive
compensation for his service as a director and the compensation paid to Mr. Liu for his service as an employee during the year ended
December 31, 2023, is set forth in the “Summary compensation table” above. Mr. Howe and Mr. Principe each served as
a director until the 2023 annual meeting of our stockholders on September 28, 2023.
| Name | |
Fees earned or Paid in Cash ($) | | |
Stock awards(1) ($) | | |
Option awards(1) ($) | | |
Total ($) | |
| Current Directors | |
| | | |
| | | |
| | | |
| | |
| Michael Mulica(3) | |
| 63,125 | | |
| 60,000 | (2) | |
| — | | |
| 123,125 | |
| Jeffrey Wang(3) | |
| 53,750 | | |
| 60,000 | (2) | |
| — | | |
| 113,750 | |
| Jack Steenstra(3) | |
| 55,000 | | |
| 60,000 | (2) | |
| — | | |
| 115,000 | |
| James Cassano(3) | |
| 55,000 | | |
| 60,000 | (2) | |
| — | | |
| 115,000 | |
| Former Directors | |
| | | |
| | | |
| | | |
| | |
| Alan Howe | |
| 38,125 | | |
| — | | |
| — | | |
| 38,125 | |
| Jose C. Principe | |
| 26,250 | | |
| — | | |
| — | | |
| 26,250 | |
| (1) | This
column reflects the full grant date fair value for stock awards granted during the year ended
December 31, 2023 as measured pursuant to ASC Topic 718 as stock-based compensation in our
consolidated financial statements. The grant date fair value of stock awards was based on
the closing price per share of our common stock on the applicable grant date. These amounts
do not necessarily correspond to the actual value that may be recognized from the stock awards
by the non-employee directors. |
| | |
| (2) | Following
the 2023 annual meeting of the Company’s stockholders, each non-employee director was
awarded 89,525 RSUs on September 28, 2023 having a grant date fair value of $60,000. |
| | |
| (3) | As
of December 31, 2023, each non-employee director held the following number of unvested RSUs: |
| |
(i) |
Mr. Mulica — 89,525; and |
| |
(ii) |
Mr. Wang, Mr. Steenstra, and Mr. Cassano — 152,073. |
Non-employee
director compensation policy
We
maintain a non-employee director compensation policy pursuant to which our non-employee directors are eligible to receive compensation
for service on our board of directors and committees of our board of directors. Our board of directors or Compensation Committee may
amend the non-employee director compensation policy from time to time. Effective as of January 1, 2024, our board of directors amended
and restated the Non-Employee Director Compensation Policy.
Equity
Compensation
Each
new non-employee director who joins our Board of Directors is granted an initial award of RSUs under the EIP, having a grant date fair
market value of $60,000. If a non-employee director is appointed or elected to our board of directors other than in connection with an
annual meeting of stockholders, then such non-employee director shall be awarded the full initial grant upon such non-employee director’s
appointment or election, and the annual grant to be awarded to such non-employee director at the first annual meeting of stockholders
following such appointment or election shall be pro-rated for the number of months served prior to such annual meeting of stockholders.
Each
of our non-employee directors continuing to serve on the board of directors also receives an annual equity award of RSUs under the EIP.
On September 28, 2023, Messrs. Mulica, Cassano, Steenstra, and Wang each received an RSU grant of 89,525 RSUs, having a grant date fair
value of $60,000, vesting in one installment on the earlier of the first anniversary of the grant date or immediately prior to the 2024
annual meeting of stockholders.
The
non-executive chairperson of our board of directors receives an additional annual equity award of RSUs having a grant date fair market
value of $50,000 under the EIP.
Each
RSU award granted under the policy will fully vest upon a change of control or the non-employee director’s death or disability.
Cash
Compensation
Each
non-employee director receives an annual cash retainer of $35,000 for serving on our board of directors. The non-executive chairperson
of our board of directors receives an additional annual cash retainer of $50,000.
The
chairperson and members of the three principal standing committees of our board of directors are entitled to the following annual cash
retainers:
| Board Committee | |
Chairperson Fee | | |
Member Fee | |
| Audit Committee | |
$ | 15,000 | | |
$ | 7,500 | |
| Compensation Committee | |
$ | 10,000 | | |
$ | 5,000 | |
| Nominating and Corporate Governance Committee | |
$ | 7,500 | | |
$ | 3,750 | |
All
annual cash compensation amounts will be payable in equal quarterly installments in arrears, pro-rated based on the days served in the
applicable fiscal quarter.
We
also reimburse all reasonable out-of-pocket expenses incurred by non-employee directors for their attendance at meetings of our board
of directors or any committee thereof.
Equity
compensation plan information
The
following table provides certain information with respect to all of Sonim’s equity compensation plans in effect as of December
31, 2023:
| Plan Category | |
Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) | | |
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | | |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | |
| Equity compensation plans approved by security holders | |
| 5,828,228 | (1) | |
$ | 0.9267 | (2) | |
| 2,001,465 | (3) |
| Equity compensation plans not approved by security holders | |
| — | | |
| — | | |
| — | |
| Total | |
| 5,828,228 | | |
$ | 0.9267 | | |
| 2,001,465 | |
| (1) | The
aggregate number consists of the following: |
| (i) | 22,672
shares subject to options to purchase common stock issued pursuant to our 2012 Equity Incentive
Plan as of December 31, 2023, |
| | | |
| (ii) | 5,123,710
shares subject to options to purchase common stock issued pursuant to our 2019 Equity Incentive
Plan as of December 31, 2023, and |
| | | |
| (iii) | 681,846
shares issuable upon vesting of outstanding RSUs issued pursuant to our 2019 Equity Incentive
Plan as of December 31, 2023. |
| (2) | This
weighted average exercise price does not reflect shares that will be issued upon the vesting
of outstanding RSUs. |
| | |
| (3) | Includes
1,843,128 shares authorized for future issuance under our 2019 Equity Incentive Plan and
158,337 shares authorized for future issuance under our 2019 Employee Stock Purchase Plan
as of December 31, 2023. |
Under
the 2019 Employee Stock Purchase Plan, the number of shares of common stock reserved for issuance automatically increases on January
1 of each calendar year for 10 years, starting January 1, 2020, and ending on, and including, January 1, 2029, in an amount equal to
the lesser of 1% of the total number of shares of capital stock outstanding on December 31st of the prior calendar year, and (ii) 50,000
shares, unless the Board of Directors or Compensation Committee determines prior to such date that there will be a lesser increase, or
no increase. Effective January 1, 2024, 50,000 additional shares were added to the 2019 Employee Stock Purchase Plan, provided that such
shares have not been registered by means of filing a Registration Statement on Form S-8.
Under
the 2019 Equity Incentive Plan, the number of shares subject to outstanding stock options or other stock awards that were granted under
the 2012 Option Plan that are forfeited, terminated, expire, or are otherwise not issued are available for issuance. Additionally, the
number of shares of common stock reserved for issuance under the 2019 Equity Incentive Plan automatically increases on January 1 of each
calendar year for 10 years, starting January 1, 2020 and ending on and including January 1, 2029, in an amount equal to 5% of the total
number of shares of capital stock outstanding on December 31 of the prior calendar year, unless the board of directors or Compensation
Committee determines prior to the date of increase that there will be a lesser increase, or no increase. Effective January 1, 2024, 2,154,054
additional shares were added to the 2019 Equity Incentive Plan. Subject to certain express limits of the 2019 Equity Incentive Plan,
shares available for award purposes under the 2019 Equity Incentive Plan generally may be used for any type of award authorized under
that plan, including options, stock appreciation rights, restricted stock, RSUs, performance-based stock or cash awards or other similar
rights to purchase or acquire shares of our common stock.
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies
and procedures for related party transactions
We
have a written Related-Person Transactions Policy that sets forth the Company’s policies and procedures regarding the identification,
review, consideration and approval or ratification of “related-persons transactions.” For purposes of the Company’s
policy only, a “related-person transaction” is a transaction, arrangement or relationship (or any series of similar transactions,
arrangements, or relationships) in which the Company and any “related person” are participants involving an amount that exceeds
$120,000. Transactions involving compensation for services provided to the Company as an employee, director, consultant, or similar capacity
by a related person are not covered by this policy. A related person is any executive officer, director, or more than 5% stockholder
of the Company, including any of their immediate family members, and any entity owned or controlled by such persons.
Under
the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the
proposed related-person transaction to the Audit Committee (or, where Audit Committee approval would be inappropriate, to another independent
body of the board of directors) for consideration and approval or ratification. The presentation must include a description of, among
other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to the Company of the transaction
and whether any alternative transactions were available. To identify related-person transactions in advance, the Company relies on information
supplied by its executive officers, directors and certain significant stockholders. In considering related-person transactions, the Audit
Committee takes into account the relevant available facts and circumstances including, but not limited to:
| (a) | the
risks, costs and benefits to the Company; |
| | | |
| (b) | the
impact on a director’s independence in the event the related person is a director,
immediate family member of a director or an entity with which a director is affiliated; |
| | | |
| (c) | the
terms of the transaction; |
| | | |
| (d) | the
availability of other sources for comparable services or products; and |
| | | |
| (e) | the
terms available to or from, as the case may be, unrelated third parties or to or from employees
generally. |
In
the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations
and approval. The policy requires that, in determining whether to approve, ratify or reject a related-person transaction, the Audit Committee
consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, the best interests of the Company
and its stockholders, as the Audit Committee determines in the good faith exercise of its discretion.
Related
party transactions
The
following is a description of transactions since January 1, 2021, to which we have been a participant and in which (i) the amount involved
exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as of December 31, 2023, 2022 and 2021,
and (ii) any of our directors, executive officers or holders of more than 5% of our common stock, or any members of their immediate family,
had or will have a direct or indirect material interest, other than compensation arrangements which are described in the sections titled
“Executive Compensation” and “Management-Non-Employee Director Compensation.”
Subscription
Agreement and Corollary Arrangements
Subscription
Agreement
On
April 13, 2022, the Company entered into a Subscription Agreement (the “Subscription Agreement”) with AJP Holding Company,
LLC, a Delaware limited liability company (the “Purchaser”), pursuant to which the Purchaser agreed to purchase from the
Company an aggregate of 20,833,333 shares of our common stock for a purchase price of $17,500,000 (the “Purchased Shares”).
As of the date of the Subscription Agreement, Mr. Peter Liu, who then served as Sonim’s Executive VP for Global Operations and
Engineering, was appointed Chief Executive Officer of Sonim. The Subscription Agreement additionally provided for the issuance of a certain
portion of the Purchased Shares to Mr. Liu rather than the Purchaser. Mr. Wang, currently the Chairman of the board of directors of the
Company, is the sole manager and the owner of 40% of the membership interests in the Purchaser.
Insider
Voting Agreement
In
connection with the Subscription Agreement, all then-members of the board of directors of the Company and Robert Tirva, then President,
Chief Financial Officer, and Chief Operating Officer of the Company, each as stockholders of the Company, entered into a Voting and Support
Agreement, dated April 13, 2022, with the Company and Purchaser whereby such stockholders agreed, among other things, to vote the shares
of common stock of the Company owned and/or controlled by such stockholder in favor of the adoption of the Subscription Agreement and
the transactions contemplated thereby, as well as such other matters set forth in the Voting and Support Agreements. Each Voting and
Support Agreement also contained a restriction on the transfer of shares of our common stock, subject to limited exceptions. Each Voting
and Support Agreement terminated upon the First Closing, as defined in and as consummated pursuant to the Subscription Agreement on July
13, 2022.
Support
Agreements
On
June 28, 2022, the Company held its special meeting of stockholders (the “Special Meeting”), whereby the stockholders of
the Company approved the Subscription Agreement and the transactions contemplated thereby by approximately 71.98% of the votes cast.
Following the Special Meeting, on July 13, 2022, the Company and the Purchaser consummated the First Closing.
In
accordance with the terms of the Subscription Agreement, on July 13, 2022, the Company and the Purchaser entered into a support agreement
(the “Purchaser Support Agreement”), whereby the Purchaser agreed, among other things, to vote the shares of common stock
owned by Purchaser in favor of the election of Mr. Howe and Mr. Mulica, as well as such other matters set forth in the Purchaser Support
Agreement. The Purchaser Support Agreement also required, as a condition to the Purchaser transferring any shares of common stock owned
by the Purchaser, that the acquirer of such shares of common stock agree to be bound by the terms of the Purchaser Support Agreement.
In
accordance with the terms of the Subscription Agreement, on July 13, 2022, the Company and Mr. Liu entered into a support agreement (the
“Designee Support Agreement”). The terms of the Designee Support Agreement were analogous to the terms of the Purchaser Support
Agreement, provided that the Designee Support Agreement extended its requirements solely to 952,381 shares of our common stock issued
during the First Closing rather than the entirety of the shares of common stock owned by Mr. Liu.
Both
the Purchaser Support Agreement and the Designee Support Agreement were terminated at the Director End Time (as such term defined in
the Subscription Agreement) due to the formal conclusion of certain investigation relating to the Company by the SEC.
Registration
Rights Agreement
In
accordance with the terms of the Subscription Agreement, on July 13, 2022, the Company and the Purchaser entered into a registration
rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company is required
(among other things), within 30 days of the Second Closing (as defined in the Subscription Agreement), to file with the SEC a registration
statement to register the resale of all registrable securities held by Purchaser or any person that receives Registrable Securities (as
that term is defined in the Registration Rights Agreement) (each a “Holder”). The Company’s obligation to register
the Registrable Securities for sale under the Securities Act of 1933 terminates upon the first to occur of (i) the date that is five
years from the effective date of the shelf registration statement filed by the Company pursuant to the Registration Rights Agreement,
(ii) the date on which all Holders can sell shares of common stock of the Company under Rule 144 without volume restrictions, and (iii)
the date on which no registrable securities are held by any Holder.
Limitation
of Liability and Indemnification of Officers and Directors
The
Company provides indemnification for its directors and officers so that they will be free from undue concern about personal liability
in connection with their service to the Company. Under the Company’s bylaws, the Company is required to indemnify its directors
and officers to the extent not prohibited under Delaware or other applicable law. The Company has also entered into indemnity agreements
with its executive officers and directors. These agreements provide, among other things, that the Company will indemnify the officer
or director, under the circumstances and to the extent provided for in the agreement, for expenses, damages, judgments, fines and settlements
he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position
as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware law and the Company’s
bylaws.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth certain information with respect to the beneficial ownership of our common stock as of May 30, 2024, the record
date for the Annual Meeting, by:
| ● | each
of our named executive officers; |
| | | |
| ● | each
of our directors; |
| | | |
| ● | all
of our current directors and executive officers as a group; and |
| | | |
| ● | each
person known by us to be the beneficial owner of more than 5% of the outstanding shares of
our common stock. |
We
have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment
power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table
have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws
where applicable. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of
Sections 13(d) and 13(g) of the Securities Act.
We
have based our calculation of the percentage of beneficial ownership on 46,717,887 shares of our common stock outstanding as of May
30, 2024. In accordance with SEC rules, we have deemed shares of our common stock subject to stock options, warrants, or other rights
that are currently exercisable or exercisable within sixty (60) days of May 30, 2024, and shares of our common stock underlying RSUs
that are currently releasable or releasable within sixty (60) days of May 30, 2024 to be outstanding and to be beneficially owned by
the person holding the common stock options or RSUs for the purpose of computing the percentage ownership of that person. We did not
deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
Unless
otherwise indicated, the address of each beneficial owner listed in the table below is c/o Sonim Technologies, Inc., 4445 Eastgate Mall,
Suite 200, San Diego, CA 92121. The information provided in the table is based on our records, information filed with the SEC, and information
provided to us, except where otherwise noted.
| | |
Shares Beneficially Owned | |
| Beneficial Owner Name | |
Number | | |
Percentage | |
| Directors and Named Executive Officers | |
| | | |
| | |
| James Cassano(1) | |
| 199,805 | | |
| * | |
| Peter Liu(2) | |
| 3,321,607 | | |
| 6.92 | % |
| Mike Mulica(3) | |
| 318,550 | | |
| * | |
| Jack Steenstra(1) | |
| 199,805 | | |
| * | |
| Jeffrey Wang(4)(1) | |
| 19,663,257 | | |
| 41.98 | % |
| Clay Crolius(5) | |
| 186,700 | | |
| * | |
| Charles Becher(6) | |
| 283,227 | | |
| * | |
| All current executive officers and directors as a group (7 persons)(7) | |
| 24,172,951 | | |
| 49.75 | % |
| Five Percent Holders | |
| | | |
| | |
| AJP Holding Company, LLC(8) | |
| 19,463,452 | | |
| 41.66 | % |
| Jiang Liu(9) | |
| 4,796,652 | | |
| 9.99 | % |
| * |
Represents beneficial ownership of less than one percent (1%)
of the outstanding shares of our common stock. |
| |
|
| (1) | Includes
120,799 shares of common stock issuable pursuant to previously granted RSUs that will vest
within 60 days of May 30, 2024. |
| | |
| (2) | Includes
(i) options to 1,263,776 shares of common stock exercisable within 60 days of May 30, 2024
and (ii) 2,037 shares of common stock issuable pursuant to previously granted RSUs that will
vest within 60 days of May 30, 2024. |
| (3) | Includes
89,525 shares issuable pursuant to previously granted RSUs that will vest within 60 days
of May 30, 2024. |
| | |
| (4) | Includes
19,463,452 shares of common stock held by AJP Holding Company, LLC (“AJP”). Mr.
Wang is the sole manager of AJP and disclaims beneficial ownership of such shares except
to the extent of his pecuniary interest therein. |
| | |
| (5) | Includes
options to 100,000 shares of common stock exercisable within 60 days of May 30, 2024. |
| | |
| (6) | Includes
options to 50,000 shares of common stock exercisable within 60 days of May 30, 2024. |
| | |
| (7) | Includes
(i) options to 1,413,776 shares of common stock exercisable within 60 days of May 30, 2024
and (ii) 453,959 shares of common stock issuable pursuant to previously granted RSUs that
will vest within 60 days of May 30, 2024. |
| | |
| (8) | Mr.
Wang is the sole manager of AJP and disclaims beneficial ownership of such shares except
to the extent of his pecuniary interest therein. Address of AJP is P.O. Box 2729 Sunnyvale,
CA 94087. |
| | |
| (9) | Includes 1,296,652 shares of common stock issuable upon exercise of the warrants exercisable
within 60 days of May 30, 2024. Mr. Liu is the holder of (i) 3,500,000 shares of common
stock and (ii) warrants to purchase the aggregate of 3,500,000 shares of common stock. Mr.
Liu is subject to a beneficial ownership limitation, which limitation restricts him from
exercising that portion of the warrants that would result in Mr. Liu and his affiliates owning,
after such exercise a number of shares of common stock in excess of 9.99%. The amounts and
percentages in the table give effect to this beneficial ownership limitation. Address of
Mr. Liu is Unit 1507C, 15/F, Eastcore, 398 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong,
Attn.: Jiang Liu. |
Delinquent
Section 16 Reports
Section
16(a) of the Exchange Act, requires our directors and executive officers, among others, to file with the SEC an initial report of ownership
of our stock on Form 3 and reports of changes in ownership on Form 4 or Form 5. Based solely on a review of reports filed with the SEC
and on written representations from reporting individuals, we believe that all of our officers and directors filed the required reports
on a timely basis under Section 16(a) for the fiscal year 2023.
OTHER
MATTERS
Householding
of proxy materials
The
SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for notices
or proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single notice
or proxy statement and annual report addressed to those stockholders. This process is commonly referred to as “householding.”
This process benefits both stockholders and Sonim because it can significantly reduce our printing and mailing costs and eliminates unnecessary
mailings delivered to your home. It also helps the environment by conserving natural resources.
Under
this procedure, we are delivering a single copy of the proxy materials to multiple
stockholders who share the same address. Stockholders who participate in householding will continue to be able to access and receive
separate proxy cards.
Upon
written request, we will deliver promptly a separate copy of the proxy materials to any stockholder at a shared address to which we delivered
a single copy of any of these documents. To receive a separate copy of the proxy materials, stockholders may contact our Secretary by
written request to Sonim Technologies, Inc., 4445 Eastgate Mall, Suite 200, San Diego, CA 92121 or by oral request to our transfer agent at 800-937-5449. The
same phone number and addresses may be used to notify us that you wish to receive a separate set of proxy materials in the future, or
to request delivery of a single copy of our proxy materials if you are receiving multiple copies.
Stockholder
proposals for the 2025 annual meeting of stockholders
Rule
14a-8 of the Exchange Act
If
a stockholder would like us to consider including a proposal in our proxy statement for our 2025 annual meeting pursuant to Rule 14a-8
of the Exchange Act, then the proposal must be received by our Secretary at our principal executive offices on or before February 5,
2025. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals
in company-sponsored proxy materials. Proposals should be addressed to:
Sonim
Technologies, Inc.
Attention:
Secretary
4445
Eastgate Mall, Suite 200
San
Diego, CA 92121
Advance
notice procedure
Our
amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present a proposal or nominate a
director at an annual meeting, but do not seek to include the proposal or director nominee in our proxy statement. In order to be properly
brought before our 2025 annual meeting of stockholders under the advance notice provisions of our amended and restated bylaws, the stockholder
must provide timely written notice that must be received by the Secretary at the principal executive offices of the Company, and any
such proposal or nomination must constitute a proper matter for stockholder action. The written notice must contain the information specified
in our amended and restated bylaws. To be timely, a stockholder’s written notice must be received by the Secretary at the principal
executive offices of the Company:
| ● | no
earlier than the close of business, on February 20, 2025; and |
| | | |
| ● | no
later than the close of business on March 22, 2025. |
In
the event that we hold our 2025 annual meeting more than 30 days before or more than 30 days after the first anniversary of the Annual
Meeting, then written notice required by our amended and restated bylaws must be received by the Secretary at the principal executive
offices of the Company:
| ● | no
earlier than the close of business on the 120th day prior to the day of the 2025 annual
meeting of stockholders; and |
| | | |
| ● | no
later than the later of |
| (A) | the
close of business on the 90th day before the 2025 annual meeting of stockholders; or |
| | | |
| (B) | the
close of business on the 10th day following the day on which the public announcement of the
date of the 2025 annual meeting of stockholders was first made by us. |
“Public
announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press, or comparable national
news service or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
In
addition to satisfying the foregoing requirements of our bylaws, to comply with Rule 14a-19 under the Exchange Act (the universal proxy
rules), stockholders who intend to solicit proxies in support of director nominees other than our nominees for our 2025 annual meeting
of stockholders must also comply with the additional requirements of Rule 14a-19 under the Exchange Act, including providing a statement
that such stockholder intends to solicit the holders of shares representing at least 67% of the voting power of the Company’s shares
entitled to vote on the election of directors in support of director nominees other than the Company’s nominees, as required by
Rule 14a-19(b) under the Exchange Act.
ANNEX
A
Sonim
Technologies, Inc.
Amended
and Restated 2019 Equity Incentive Plan
Adopted
by the Board of Directors: March 2019
Approved
by the Stockholders: May 2019
IPO
Date/Effective Date: May 9, 2019
Amended
by the Board of Directors: May 31, 2020
Approved
by the Stockholders: September 29, 2020
Restated
to illustrate the effect of the reverse stock split: September 15, 2021
Amended
by the Board of Directors: September 15, 2022
Approved
by the Stockholders: October 26, 2022
Amended
by the Board of Directors: August 14, 2023
Approved
by the Stockholders: September 28, 2023
Amended
by the Board of Directors: May 17, 2024
Approved
by the Stockholders: June 20, 2024
1.
General.
(a)
Successor to and Continuation of Prior Plan. The Plan is the successor to and continuation of the Sonim Technologies, Inc. 2012 Equity
Incentive Plan (the “Prior Plan”). From and after 12:01 a.m. Pacific Time on the Effective Date, no additional
stock awards will be granted under the Prior Plan. All Awards granted on or after 12:01 a.m. Pacific Time on the Effective Date will
be granted under this Plan. All stock awards granted under the Prior Plan will remain subject to the terms of the Prior Plan.
(i)
Any shares that would otherwise remain available for future grants under the Prior Plan as of 12:01 a.m. Pacific Time on the Effective
Date (the “Prior Plan’s Available Reserve”) will cease to be available under the Prior Plan at such time.
Instead, that number of shares of Common Stock equal to the Prior Plan’s Available Reserve will be added to the Share Reserve (as
further described in Section 3(a) below) and will be immediately available for grants and issuance pursuant to Stock Awards hereunder,
up to the maximum number set forth in Section 3(a) below.
(ii)
In addition, from and after 12:01 a.m. Pacific Time on the Effective Date, with respect to the aggregate number of shares of Common
Stock subject, at such time, to outstanding stock awards granted under the Prior Plan that (1) expire or terminate for any reason prior
to exercise; (2) are forfeited or repurchased because of the failure to meet a contingency or condition required to vest such shares
or otherwise return to the Company; or (3) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection
with an award (such shares the “Returning Shares”) will immediately be added to the Share Reserve as shares
of Common Stock (as further described in Section 3(a) below) as and when such a share becomes a Returning Share, up to the maximum number
set forth in Section 3(a) below.
(b)
Eligible Award Recipients. Employees, Directors and Consultants are eligible to receive Awards.
(c)
Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options,
(iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii)
Performance Cash Awards, and (viii) Other Stock Awards.
(d)
Purpose. The Plan, through the grant of Awards, is intended to help the Company secure and retain the services of eligible award
recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate, and provide
a means by which the eligible recipients may benefit from increases in value of the Common Stock.
2.
Administration.
(a)
Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or
Committees, as provided in Section 2(c).
(b)
Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i)
To determine: (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted;
(D) the provisions of each Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive
cash or Common Stock under the Award; (E) the number of shares of Common Stock subject to, or the cash value of, an Award; and (F) the
Fair Market Value applicable to a Stock Award.
(ii)
To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for administration
of the Plan and Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or
in any Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it will deem necessary or expedient
to make the Plan or Award fully effective.
(iii)
To settle all controversies regarding the Plan and Awards granted under it.
(iv)
To accelerate, in whole or in part, the time at which an Award may be exercised or vest (or the time at which cash or shares of Common
Stock may be issued in settlement thereof).
(v)
To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or an Award Agreement, suspension or termination
of the Plan will not impair a Participant’s rights under the Participant’s then-outstanding Award without the Participant’s
written consent, except as provided in subsection (viii) below.
(vi)
To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating
to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to make the Plan or Awards
granted under the Plan compliant with the requirements for Incentive Stock Options or exempt from, or compliant with, the requirements
for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. If required
by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company
will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available
for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under the Plan, (C) materially
increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may
be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Awards available
for issuance under the Plan. Except as provided in the Plan (including subsection (viii) below) or an Award Agreement, no amendment of
the Plan will impair a Participant’s rights under an outstanding Award unless (1) the Company requests the consent of the affected
Participant, and (2) such Participant consents in writing.
(vii)
To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy
the requirements of (A) Section 422 of the Code regarding “incentive stock options” or (B) Rule 16b-3.
(viii)
To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not
limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to
any specified limits in the Plan that are not subject to Board discretion; provided, however, that a Participant’s rights
under any Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and
(B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have
been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially
impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of
any one or more Awards without the affected Participant’s consent (A) to maintain the qualified status of the Award as an Incentive
Stock Option under Section 422 of the Code; (B) to change the terms of an Incentive Stock Option, if such change results in impairment
of the Award solely because it impairs the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code;
(C) to clarify the manner of exemption from, or to bring the Award into compliance with, Section 409A of the Code; or (D) to comply with
other applicable laws or listing requirements.
(ix)
Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests
of the Company and that are not in conflict with the provisions of the Plan or Awards.
(x)
To adopt such rules, procedures and sub-plans related to the operation and administration of the Plan as are necessary or appropriate
under local laws and regulations to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals
or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or
any Award Agreement made to ensure or facilitate compliance with the laws or regulations of the relevant foreign jurisdiction).
(xi)
To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of
any outstanding Stock Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1)
Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash and/or (6) other valuable
consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number
of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory plan of the Company;
or (C) any other action that is treated as a repricing under generally accepted accounting principles (collectively (A) through (C),
an “Exchange Program”).
(c)
Delegation to Committee.
(i)
General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of
the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee
any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be
to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not inconsistent
with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Board may retain the authority
to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously
delegated.
(ii)
Rule 16b-3 Compliance. The Committee may consist solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
(d)
Delegation to an Officer. The Board may delegate to one (1) or more Officers the authority to do one or both of the following (i)
designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other
Stock Awards) and, to the extent permitted by applicable law, the terms of such Awards, and (ii) determine the number of shares of Common
Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such
delegation will specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and
that such Officer may not grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form of Stock Award
Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation
authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director)
to determine the Fair Market Value pursuant to Section 13(x)(iii) below.
(e)
Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not
be subject to review by any person and will be final, binding and conclusive on all persons.
3.
Shares Subject to the Plan.
(a)
Share Reserve.
(i)
Subject to Section 9(a) relating to Capitalization Adjustments, and the following sentence regarding the annual increase, the aggregate
number of shares of Common Stock that may be issued pursuant to Stock Awards will not exceed 16,248,606, which number is the sum of:
(A)
188,503 shares that were approved in connection with the initial adoption of the Plan on the Effective Date; plus
(B)
the number of shares that remained available for issuance under the Prior Plan’s Available Reserve as of the initial adoption of
the Plan on the Effective Date; plus
(C)
the Returning Shares, if any, which become available for grant under this Plan from time to time; plus
(D)
300,000 shares that were approved at the Company’s 2020 Annual Meeting of Stockholders; plus
(E)
the entirety of the evergreen increases under the Plan; plus
(F)
5,000,000 shares approved at the Company’s 2022 Annual Meeting of Stockholders; plus
(G)
2,000,000 shares approved at the Company’s 2023 Annual Meeting of Stockholders; plus
(H)
3,000,000 shares approved at the Company’s 2024 Annual Meeting of Stockholders
(such
aggregate number of shares described in (A) through (H) above, the “Share Reserve”).
In
addition, the Share Reserve will automatically increase on January 1st of each calendar year, beginning on January 1 in the calendar
year following the calendar year in which the IPO Date occurs and ending on (and including) January 1, 2029 (each, an “Evergreen
Date”) in an amount equal to five percent (5%) of the total number of shares of Capital Stock outstanding on the last day
of the preceding calendar year. Notwithstanding the foregoing, the Board may act prior to the Evergreen Date of a given year to provide
that there will be no increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser
number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.
(ii)
For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued pursuant
to the Plan. As a single share may be subject to grant more than once (e.g., if a share subject to a Stock Award is forfeited,
it may be made subject to grant again as provided in Section 3(b) below), the Share Reserve is not a limit on the number of Stock Awards
that can be granted.
(iii)
Shares may be issued in connection with a merger or acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if applicable, NYSE
Listed Company Manual Section 303A.08, AMEX Company Guide Section 711 or other applicable rule, and such issuance will not reduce the
number of shares available for issuance under the Plan.
(b)
Reversion of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires or otherwise terminates without all
of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather
than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock that
may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or
repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant
or shares of Common Stock that are surrendered to the Company pursuant to an Exchange Program, then the shares that are forfeited, repurchased
or so surrendered will again become available for issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax
withholding obligations on a Stock Award or as consideration for the exercise or purchase price of a Stock Award will again become available
for issuance under the Plan.
(c)
Incentive Stock Option Limit. Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate maximum
number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be a number of shares of
Common Stock equal to three (3) multiplied by the Share Reserve.
(d)
Limitation on Compensation of Non-Employee Directors. During any one calendar year, no Non-Employee Director may receive Stock Awards
under the Plan that, when combined with cash compensation received for service as a Non-Employee Director, exceeds $600,000 in a calendar
year, increased to $1,000,000 in the calendar year of his or her initial services as a Non-Employee Director (calculating the value of
any such Stock Awards based on the grant date fair value of such Stock Awards for financial reporting purposes). Stock Awards granted
to an individual while he or she was serving in the capacity as an Employee or Consultant but not a Non-Employee Director will not count
for purposes of the limitations set forth in this Section 3(d).
(e)
Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including
shares repurchased by the Company on the open market or otherwise.
4.
Eligibility.
(a)
Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent
corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code).
Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that
Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent”
of the Company, as such term is defined in Rule 405 of the Securities Act, unless (i) the stock underlying such Stock Awards is treated
as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to
a corporate transaction such as a spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that
such Stock Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has
determined that such Stock Awards comply with the requirements of Section 409A of the Code.
(b)
Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price of such
Option is at least 110% of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five
years from the date of grant.
5.
Provisions Relating to Options and Stock Appreciation Rights.
Each
Option or SAR will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate
or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically
designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option
fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory
Stock Option. The provisions of separate Options or SARs need not be identical; provided, however, that each Award Agreement will
conform to (through incorporation of provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of
each of the following provisions:
(a)
Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the
expiration of ten years from the date of its grant or such shorter period specified in the Award Agreement.
(b)
Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price of each
Option or SAR will be not less than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Award
is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair
Market Value of the Common Stock subject to the Award if such Award is granted pursuant to an assumption of or substitution for another
option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A
of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.
(c)
Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the
extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment
set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment (or otherwise
restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method
of payment. The permitted methods of payment are as follows:
(i)
by cash, check, bank draft or money order payable to the Company;
(ii)
pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the
stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Company from the sales proceeds;
(iii)
by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
(iv)
if an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does
not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant
to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares
to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that
(A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered
to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or
(v)
in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement.
(d)
Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company
in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such SAR. The appreciation distribution payable
on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of
the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant
is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike
price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such date. The appreciation
distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined
by the Board and contained in the Award Agreement evidencing such SAR.
(e)
Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability of Options
and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions
on the transferability of Options and SARs will apply:
(i)
Restrictions on Transfer. An Option or SAR will not be transferable except by will or by the laws of descent and distribution (or
pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant.
The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable laws or regulations. Except as explicitly
provided in the Plan, neither an Option nor a SAR may be transferred for consideration.
(ii)
Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred
pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument
as permitted by Treasury Regulations Section 1.421-1(b)(2) or comparable non-U.S. law. If an Option is an Incentive Stock Option, such
Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(iii)
Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written
notice to the Company or to any third party designated by the Company, in a form approved by the Company (or the designated broker),
designate a third party who, upon the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive
the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, upon the death of the Participant,
the executor or administrator of the Participant’s estate or the Participant’s legal heirs will be entitled to exercise the
Option or SAR and receive the Common Stock or other consideration resulting from such exercise. However, the Company may prohibit designation
of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions
of applicable laws.
(f)
Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and become exercisable in periodic
installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times when
it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board may deem
appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option
or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.
(g)
Termination of Continuous Service. Except as otherwise provided in the applicable Award Agreement or other agreement between the
Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s
death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise
such Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date which
occurs three (3) months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified
in the applicable Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If,
after termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable
time frame, the Option or SAR will terminate.
(h)
Extension of Termination Date. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant
and the Company, if the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than
for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance
of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR will terminate
on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post termination
exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would
not be in violation of such registration requirements, and (ii) the expiration of the term of the Option or SAR as set forth in the applicable
Award Agreement. In addition, unless otherwise provided in a Participant’s Award Agreement, if the sale of any Common Stock received
upon exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause) would
violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of the
period of months (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the
Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option or SAR would not
be in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in
the applicable Award Agreement.
(i)
Disability of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant
and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant
may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date
of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date which occurs 12 months
following such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration
of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant does
not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.
(j)
Death of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and
the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant
dies within the period (if any) specified in the Award Agreement for exercisability after the termination of the Participant’s
Continuous Service for a reason other than death, then the Option or SAR may be exercised (to the extent the Participant was entitled
to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise
the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death,
but only within the period ending on the earlier of (i) the date 18 months following the date of death (or such longer or shorter period
specified in the Award Agreement), and (ii) the expiration of the term of such Option or SAR as set forth in the Award Agreement. If,
after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable)
will terminate.
(k)
Termination for Cause. Except as explicitly provided otherwise in the applicable Award Agreement or other written agreement between
the Participant and the Company, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR will terminate
immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from exercising his
or her Option or SAR from and after the date of such termination of Continuous Service. If a Participant’s Continuous Service is
suspended pending an investigation of the existence of Cause, all of the Participant’s rights under the Option or SAR will also
be suspended during the investigation period.
(l)
Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the U.S. Fair Labor
Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six
months following the date of grant of the Option or SAR (although the Award may vest prior to such date). Consistent with the provisions
of the U.S. Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction
in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s
retirement (as such term may be defined in the Participant’s Award Agreement in another agreement between the Participant and the
Company, or, if no such definition, in accordance with the Company’s then current employment policies and guidelines), the vested
portion of any Options and SARs may be exercised earlier than six months following the date of grant. The foregoing provision is intended
to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be
exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the U.S. Worker Economic Opportunity
Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under
any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to
all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.
6.
Provisions of Stock Awards other than Options and SARs.
(a)
Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as
the Board will deem appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common
Stock may be (x) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted
Stock Award lapse; or (y) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board.
The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate
Restricted Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through incorporation
of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i)
Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to
the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services)
that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company in
accordance with a vesting schedule to be determined by the Board.
(iii)
Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company may receive
through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant that have not vested
as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.
(iv)
Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by the
Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine
in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the
Restricted Stock Award Agreement.
(v)
Dividends. A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same
vesting and forfeiture restrictions as apply to the shares of Common Stock subject to the Restricted Stock Award to which they relate.
(b)
Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and conditions
as the Board will deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time to time,
and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical. Each Restricted Stock Unit Award
Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of
each of the following provisions:
(i)
Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to be paid
by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to be paid
(if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal
consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the
vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii)
Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any combination
thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award Agreement.
(iv)
Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose
such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted
Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
(v)
Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock Unit
Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such
dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner
as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents
will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.
(vi)
Termination of Participant’s Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit Award
Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant’s termination
of Continuous Service.
(c)
Performance Awards.
(i)
Performance Stock Awards. A Performance Stock Award is a Stock Award that is payable (including that may be granted, may vest or
may be exercised) contingent upon the attainment during a Performance Period of certain Performance Goals. A Performance Stock Award
may but need not require the Participant’s completion of a specified period of Continuous Service. The length of any Performance
Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance
Goals have been attained will be conclusively determined by the Board or Committee, in its sole discretion. In addition, to the extent
permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance
Stock Awards.
(ii)
Performance Cash Awards. A Performance Cash Award is a cash award that is payable contingent upon the attainment during a Performance
Period of certain Performance Goals. A Performance Cash Award may also require the completion of a specified period of Continuous Service.
At the time of grant of a Performance Cash Award, the length of any Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined
by the Board or Committee, in its sole discretion. The Board may specify the form of payment of Performance Cash Awards, which may be
cash or other property, or may provide for a Participant to have the option for his or her Performance Cash Award, or such portion thereof
as the Board may specify, to be paid in whole or in part in cash or other property.
(iii)
Board Discretion. The Board retains the discretion to adjust or eliminate the compensation or economic benefit due upon attainment
of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for a Performance Period.
(d)
Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock,
including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the
Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under
Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete
authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares
of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions
of such Other Stock Awards.
7.
Covenants of the Company.
(a)
Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required to
satisfy then-outstanding Stock Awards.
(b)
Compliance with Law. The Company will seek to obtain from each regulatory commission or agency, as necessary, such authority as may
be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Stock Awards; provided,
however, that this undertaking will not require the Company to register under the Securities Act the Plan or other securities or
applicable laws, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts
and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for
the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved
from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Stock Awards unless and until such authority
is obtained. A Participant will not be eligible for the grant of an Award or the subsequent issuance of cash or Common Stock pursuant
to the Award if such grant or issuance would be in violation of any applicable law.
(c)
No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder as
to the time or manner or tax treatment of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to warn
or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be
exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.
8.
Miscellaneous.
(a)
Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will constitute
general funds of the Company.
(b)
Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant
will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument,
certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that
the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain
terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related
grant documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records
will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.
(c)
Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to,
any shares of Common Stock subject to an Award unless and until (i) such Participant has satisfied all requirements for exercise of,
or the issuance of shares of Common Stock under, the Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to
such Award has been entered into the books and records of the Company.
(d)
No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in
connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to terminate
(i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws
of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction in which the
Company or the Affiliate is domiciled or incorporated, as the case may be. Furthermore, to the extent the Company is not the employer
of a Participant, the grant of an Award will be not establish an employment or other service relationship between the Company and the
Participant.
(e)
Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services
for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company
and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after
the date of grant of any Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction
in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date
of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule
applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award
that is so reduced or extended.
(f)
Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under
all plans of the Company and any Affiliates) exceeds U.S. $100,000 (or such other limit established in the Code) or otherwise does not
comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order
in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).
(g)
Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Award,
(i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial
and business matters and that such Participant is capable of evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring
Common Stock subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise
distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative
if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Award has been registered under a then currently
effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate
in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(h)
Withholding Obligations. Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any
U.S. and non-U.S. federal, state or local tax withholding obligation relating to an Award by any of the following means or by a combination
of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common
Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that (A) no shares
of Common Stock are withheld with a value exceeding the maximum amount of tax that may be required to be withheld by law (or such other
amount as may be permitted while still avoiding classification of the Stock Award as a liability for financial accounting purposes),
and (B) with respect to a Stock Award held by any Participant who is subject to the filing requirements of Section 16 of the Exchange
Act, any such share withholding must be specifically approved by the Compensation Committee as the applicable method that must be used
to satisfy the tax withholding obligation or such share withholding procedure must otherwise satisfy the requirements for an exempt transaction
under Section 16(b) of the Exchange Act; (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any
amounts otherwise payable to the Participant; (v) by means of a “cashless exercise” pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board, or (vi) by such other method as may be set forth in the Award Agreement.
(i)
Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document
delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet
(or other shared electronic medium controlled by the Company to which the Participant has access).
(j)
Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common
Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish
programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with
Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still
an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Awards and determine when, and
in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination
of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with
applicable law.
(k)
Compliance with Section 409A of the Code. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements
will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section
409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code. If the Board determines that any Award
granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing such Award
will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the
extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award
Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if
the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation”
under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment
of any amount that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to
alternative definitions thereunder) will be issued or paid before the date that is six months following the date of such Participant’s
“separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment
can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day
after such six month period elapses, with the balance paid thereafter on the original schedule.
(l)
Exchange Program. Without prior stockholder approval, the Board may engage in an Exchange Program.
(m)
Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the
Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s
securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable
law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines
necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock
or other cash or property upon the occurrence of an event constituting Cause. No recovery of compensation under such a clawback policy
will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar
term) under any agreement with the Company or an Affiliate.
9.
Adjustments upon Changes in Common Stock; Other Corporate Events.
(a)
Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust:
(i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number
of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), and (iii) the class(es)
and number of securities and price per share of stock subject to outstanding Stock Awards. The Board will make such adjustments, and
its determination will be final, binding and conclusive.
(b)
Dissolution or Liquidation. Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation
of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not
subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such
dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture
condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous
Service; provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested,
exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated)
before the dissolution or liquidation is completed but contingent on its completion.
(c)
Corporate Transaction. The following provisions will apply to Stock Awards in the event of a Corporate Transaction unless otherwise
provided in the Stock Award Agreement or any other written agreement between the Company or any Affiliate and the Participant or unless
otherwise expressly provided by the Board at the time of grant of a Stock Award. In the event of a Corporate Transaction, then, notwithstanding
any other provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent upon
the closing or completion of the Corporate Transaction:
(i)
arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company)
to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award
to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction);
(ii)
arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant
to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);
(iii)
accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may be exercised)
to a date prior to the effective time of such Corporate Transaction as the Board determines (or, if the Board does not determine such
a date, to the date that is five days prior to the effective date of the Corporate Transaction), which exercise is contingent upon the
effectiveness of such Corporate Transaction with such Stock Award terminating if not exercised (if applicable) at or prior to the effective
time of the Corporate Transaction; provided, however, that the Board may require Participants to complete and deliver to the Company
a notice of exercise before the effective date of a Corporate Transaction
(iv)
arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Stock
Award;
(v)
cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective time
of the Corporate Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate;
and
(vi)
make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the per share amount (or value
of property per share) payable to holders of Common Stock in connection with the Corporate Transaction, over (B) the per share exercise
price under the applicable Stock Award, multiplied by the number of shares subject to the Stock Award. For clarity, this payment may
be zero (U.S. $0) if the amount per share (or value of property per share) payable to the holders of the Common Stock is equal to or
less than the exercise price of the Stock Award. In addition, any escrow, holdback, earnout or similar provisions in the definitive agreement
for the Corporate Transaction may apply to such payment to the holder of the Stock Award to the same extent and in the same manner as
such provisions apply to the holders of Common Stock.
The
Board need not take the same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants.
The Board may take different actions with respect to the vested and unvested portions of a Stock Award.
(d)
Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in
Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.
10.
Termination or Suspension of the Plan.
The
Board may suspend or terminate the Plan at any time. No Incentive Stock Options may be granted after the tenth anniversary of the earlier
of (i) the Adoption Date, or (ii) the date the Plan is approved by the stockholders of the Company. No Awards may be granted under the
Plan while the Plan is suspended or after it is terminated.
11.
Existence of the Plan; Timing of First Grant or Exercise.
The
Plan will come into existence on the Adoption Date; provided, however, no Stock Award may be granted prior to the IPO Date (that
is, the Effective Date). In addition, no Stock Award will be exercised (or, in the case of a Restricted Stock Award, Restricted Stock
Unit Award, Performance Stock Award, or Other Stock Award, will be granted) and no Performance Cash Award will be settled unless and
until the Plan has been approved by the stockholders of the Company, which approval will be within 12 months after the Adoption Date.
12.
Choice of Law.
The
law of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without
regard to that state’s conflict of laws rules.
13.
Definitions. As used in the Plan, the following
definitions will apply to the capitalized terms indicated below:
(a)
“Adoption Date” means the date the Plan is adopted by the Board.
(b)
“Affiliate” means, at the time of determination, any “parent” or “subsidiary” of
the Company as such terms are defined in Rule 405 of the Securities Act. The Board will have the authority to determine the time or times
at which “parent” or “subsidiary” status is determined within the foregoing definition.
(c)
“Award” means a Stock Award or a Performance Cash Award.
(d)
“Award Agreement” means a written agreement between the Company and a Participant evidencing the terms
and conditions of an Award.
(e)
“Board” means the Board of Directors of the Company.
(f)
“Capital Stock” means each and every class of common stock of the Company, regardless of the number of
votes per share.
(g)
“Capitalization Adjustment” means any change that is made in, or other events that occur with respect to,
the Common Stock subject to the Plan or subject to any Stock Award after the Adoption Date without the receipt of consideration by the
Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other
than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the
conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(h)
“Cause” will have the meaning ascribed to such term in any written agreement between the Participant and
the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence
of any of the following events: (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral
turpitude under the laws of the United States, any state thereof, or any applicable foreign jurisdiction; (ii) such Participant’s
attempted commission of, or participation in, a fraud or act of dishonesty against the Company or any Affiliate; (iii) such Participant’s
intentional, material violation of any contract or agreement between the Participant and the Company or any Affiliate or of any statutory
duty owed to the Company or any Affiliate; (iv) such Participant’s unauthorized use or disclosure of the Company’s or any
Affiliate’s confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that
a termination of the Participant’s Continuous Service is either for Cause or without Cause shall be made by the Company in its
sole discretion. Any determination by the Company that the Continuous Service of a Participant was terminated by reason of dismissal
without Cause for the purposes of outstanding Stock Awards held by such Participant shall have no effect upon any determination of the
rights or obligations of the Company or such Participant for any other purpose.
(i)
“Change in Control” means the occurrence, in a single transaction or in a series of related transactions,
of any one or more of the following events:
(i)
any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the
Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof
or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the
primary purpose of which is to obtain financing for the Company through the issuance of equity securities, (C) on account of the acquisition
of securities of the Company by any individual who is, on the IPO Date, either an executive officer or a Director (either, an “IPO
Investor”) and/or any entity in which an IPO Investor has a direct or indirect interest (whether in the form of voting
rights or participation in profits or capital contributions) of more than 50% (collectively, the “IPO Entities”)
or on account of the IPO Entities continuing to hold shares that come to represent more than 50% of the combined voting power of the
Company’s then outstanding securities as a result of the conversion of any class of the Company’s securities into another
class of the Company’s securities having a different number of votes per share pursuant to the conversion provisions set forth
in the Company’s Amended and Restated Certificate of Incorporation; or (D) solely because the level of Ownership held by any Exchange
Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities
as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities
by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming
the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;
(ii)
there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto
do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting
power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting
power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; provided,
however, that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition
if the outstanding voting securities representing more than 50% of the combined voting power of the surviving Entity or its parent are
owned by the IPO Entities;
(iii)
there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets
of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to an Entity, more than 50% of the combined voting power of the voting securities of which
are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such sale, lease, license or other disposition; provided, however, that a sale, lease, exclusive
license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries will not constitute
a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined
voting power of the acquiring Entity or its parent are owned by the IPO Entities; or
(iv)
individuals who, on the date the Plan is adopted by the Board, are members of the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment
or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the
Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.
Notwithstanding
the foregoing or any other provision of the Plan, the term Change in Control will not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company and the definition of Change in Control (or any analogous
term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition
with respect to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous
term is set forth in such an individual written agreement, the foregoing definition will apply. To the extent required for compliance
with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change
in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets
of” the Company as determined under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).
The Board may, in its sole discretion and without a Participant’s consent, amend the definition of “Change in Control”
to conform to the definition of “Change in Control” under Section 409A of the Code, and the regulations thereunder.
(j)
“Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance
thereunder.
(k)
“Committee” means a committee of one or more Directors to whom authority has been delegated by the Board
in accordance with Section 2(c).
(l)
“Common Stock” means, as of the IPO Date, the common stock of the Company, having one vote per share.
(m)
“Company” means Sonim Technologies, Inc., a Delaware corporation.
(n)
“Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate
to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors
of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will
not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is
treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either
the offer or the sale of the Company’s securities to such person.
(o)
“Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service
to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will
not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering
services ceases to qualify as an Affiliate, as determined by the Board, in its sole discretion, such Participant’s Continuous Service
will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example, a change in status from
an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous Service.
To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive
officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their
successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award
only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement
or policy applicable to the Participant, or as otherwise required by law. In addition, to the extent required for exemption from or compliance
with Section 409A of the Code, the determination of whether there has been a termination of Continuous Service will be made, and such
term will be construed, in a manner that is consistent with the definition of “separation from service” as defined under
Treasury Regulation Section 1.409A-1(h) (without regard to any alternative definition thereunder).
(p)
“Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions,
of any one or more of the following events:
(i)
a sale or other disposition of all or substantially all, as determined by the Board, in its sole discretion, of the consolidated
assets of the Company and its Subsidiaries;
(ii)
a sale or other disposition of more than 50% of the outstanding securities of the Company;
(iii)
a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv)
a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common
Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the
merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
If
required for compliance with Section 409A of the Code, in no event will a Corporate Transaction be deemed to have occurred if such transaction
is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial
portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative
definition thereunder).
(q)
“Director” means a member of the Board.
(r)
“Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i)
of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.
(s)
“Effective Date” means the IPO Date.
(t)
“Employee” means any person employed by the Company or an Affiliate. However, service solely as a Director,
or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.
(u)
“Entity” means a corporation, partnership, limited liability company or other entity.
(v)
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(w)
“Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section
13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary
of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities
pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly,
of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities.
(x)
“Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:
(i)
If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share
of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such exchange
or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported
in a source the Board deems reliable.
(ii)
Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then
the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists.
(iii)
In the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith and in a
manner that complies with Sections 409A and 422 of the Code.
(y)
“Incentive Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to
be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
(z)
“IPO Date” means the date of the underwriting agreement between the Company and the underwriter(s) managing
the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering.
(aa)
“Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company
or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered
as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under
Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess
an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in
a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered
a “non-employee director” for purposes of Rule 16b-3.
(bb)
“Nonstatutory Stock Option” means any Option granted pursuant to Section 5 of the Plan that does not qualify
as an Incentive Stock Option.
(cc)
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange
Act.
(dd)
“Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock
granted pursuant to the Plan.
(ee)
“Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms
and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions of the Plan.
(ff)
“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Option.
(gg)
“Other Stock Award” means an award based in whole or in part by reference to the Common Stock which is
granted pursuant to the terms and conditions of Section 6(d).
(hh)
“Other Stock Award Agreement” means a written agreement between the Company and a holder of an Other Stock
Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement will be subject to the terms
and conditions of the Plan.
(ii)
“Own,” “Owned,” “Owner,” “Ownership”
means a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have
acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such
securities.
(jj)
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with
the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after
the adoption of the Plan shall be considered a Parent commencing as of such date.
(kk)
“Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person
who holds an outstanding Stock Award.
(ll)
“Performance Cash Award” means an award of cash granted pursuant to the terms and conditions of Section
6(c)(ii).
(mm)
“Performance Criteria” means the one or more criteria that the Board or Committee (as applicable) will
select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish
such Performance Goals may be based on any one of, or combination of, the following as determined by the Board or Committee (as applicable):
(1) earnings (including earnings per share and net earnings); (2) earnings before interest, taxes and depreciation; (3) earnings before
interest, taxes, depreciation and amortization; (4) total stockholder return; (5) return on equity or average stockholder’s equity;
(6) return on assets, investment, or capital employed; (7) stock price; (8) margin (including gross margin); (9) income (before or after
taxes); (10) operating income; (11) operating income after taxes; (12) pre-tax profit; (13) operating cash flow; (14) sales or revenue
targets; (15) increases in revenue or product revenue; (16) expenses and cost reduction goals; (17) improvement in or attainment of working
capital levels; (18) economic value added (or an equivalent metric); (19) market share; (20) cash flow; (21) cash flow per share; (22)
share price performance; (23) debt reduction; (24) implementation or completion of projects or processes; (25) subscriber satisfaction;
(26) stockholders’ equity; (27) capital expenditures; (28) debt levels; (29) operating profit or net operating profit; (30) workforce
diversity; (31) growth of net income or operating income; (32) billings; (33) the number of subscribers, including but not limited to
unique subscribers; (34) employee retention; and (35) other measures of performance selected by the Board.
(nn)
“Performance Goals” means, for a Performance Period, the one or more goals established by the Board or
Committee (as applicable) for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide
basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative
to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise
by the Board or Committee (as applicable) (i) in the Award Agreement at the time the Award is granted or (ii) in such other document
setting forth the Performance Goals at the time the Performance Goals are established, the Board or Committee (as applicable) will appropriately
make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude
restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally
accepted accounting principles; (4) to exclude the effects of items that are “unusual” in nature or occur “infrequently”
as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures;
(7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance
Period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by
reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends;
(9) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude
costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting
principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally
accepted accounting principles. In addition, the Board or Committee (as applicable) retains the discretion to reduce or eliminate the
compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria
it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding
to the degree of achievement as specified in the Stock Award Agreement or the written terms of a Performance Cash Award.
(oo)
“Performance Period” means the period of time selected by the Board or Committee (as applicable) over which
the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the
payment of a Stock Award or a Performance Cash Award. Performance Periods may be of varying and overlapping duration, at the sole discretion
of the Board or Committee (as applicable).
(pp)
“Performance Stock Award” means a Stock Award granted under the terms and conditions of Section 6(c)(i).
(qq)
“Plan” means this Sonim Technologies, Inc. 2019 Equity Incentive Plan, as it may be amended from time to
time.
(rr)
“Restricted Stock Award” means an award of shares of Common Stock which is granted pursuant to the terms
and conditions of Section 6(a).
(ss)
“Restricted Stock Award Agreement” means a written agreement between the Company and a holder of a Restricted
Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject
to the terms and conditions of the Plan.
(tt)
“Restricted Stock Unit Award” means a right to receive shares of Common Stock which is granted pursuant
to the terms and conditions of Section 6(b).
(uu)
“Restricted Stock Unit Award Agreement” means a written agreement between the Company and a holder of a
Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award
Agreement will be subject to the terms and conditions of the Plan.
(vv)
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in
effect from time to time.
(ww)
“Securities Act” means the Securities Act of 1933, as amended.
(xx)
“Stock Appreciation Right” or “SAR” means a right to receive the appreciation
on Common Stock that is granted pursuant to the terms and conditions of Section 5.
(yy)
“Stock Appreciation Right Agreement” means a written agreement between the Company and a holder of a Stock
Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will
be subject to the terms and conditions of the Plan.
(zz)
“Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock
Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance
Stock Award or any Other Stock Award.
(aaa)
“Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the
terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.
(bbb)
“Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding
capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes of such corporation will have or might have voting power by reason of the happening
of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company
or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50%.
(ccc)
“Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate.
ANNEX
B
CERTIFICATE
OF AMENDMENT TO THE
AMENDED
AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
SONIM TECHNOLOGIES, INC.
Sonim
Technologies, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State
of Delaware, hereby certifies as follows:
1. This
Certificate of Amendment (the “Certificate of Amendment”) amends the provisions of the Corporation’s Amended and Restated
Certificate of Incorporation, as amended to date, filed with the Secretary of State of the State of Delaware on May 14, 2019 (the “Amended
and Restated Certificate of Incorporation”).
2. Article
IV, Paragraph A of the Amended and Restated Certificate of Incorporation is hereby amended and restated in its entirety as follows:
“A.
This Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and
“Preferred Stock.” The total number of shares which the Company is authorized to issue is 105,000,000 shares.
100,000,000 shares shall be Common Stock, having a par value per share of $0.001 and 5,000,000 shares shall be Preferred Stock, having
a par value per share of $0.001.
Effective
as of [XX] Eastern Time on [date] (the “Effective Time”), every [XX] shares of Common Stock issued and outstanding
prior to the Effective Time shall, automatically and without further action by the Corporation or the holders thereof, be
combined and converted into one (1) share of Common Stock (the “Reverse Split”); provided, however, no fractional
shares of Common Stock shall be issued in connection with the Reverse Split, and instead, the Corporation shall issue one (1)
full share of post-Reverse Split Common Stock to any stockholder who would have been entitled to receive a fractional share of Common
Stock as a result of the Reverse Split.”
3. This
amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
4. All
other provisions of the Amended and Restated Certificate of Incorporation shall remain in full force and effect.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by [●], its [●], this [date].
ANNEX
C
CERTIFICATE
OF AMENDMENT TO THE
AMENDED
AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
SONIM TECHNOLOGIES, INC.
Sonim
Technologies, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State
of Delaware, hereby certifies as follows:
1. This
Certificate of Amendment (the “Certificate of Amendment”) amends the provisions of the Corporation’s Amended and Restated
Certificate of Incorporation, as amended to date, filed with the Secretary of State of the State of Delaware on May 14, 2019 (the “Amended
and Restated Certificate of Incorporation”).
2. Article
IV, Paragraph A of the Amended and Restated Certificate of Incorporation is hereby amended and restated in its entirety as follows:
“A.
This Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and
“Preferred Stock.” The total number of shares which the Company is authorized to issue is 205,000,000 shares.
200,000,000 shares shall be Common Stock, having a par value per share of $0.001 and 5,000,000 shares shall be Preferred Stock, having
a par value per share of $0.001.”
3. This
amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
4. All
other provisions of the Amended and Restated Certificate of Incorporation shall remain in full force and effect.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by [●], its [●], this [date].
ANNEX
D
CERTIFICATE
OF AMENDMENT TO THE
AMENDED
AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
SONIM TECHNOLOGIES, INC.
Sonim
Technologies, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State
of Delaware, hereby certifies as follows:
1. This
Certificate of Amendment (the “Certificate of Amendment”) amends the provisions of the Corporation’s Amended and Restated
Certificate of Incorporation, as amended to date, filed with the Secretary of State of the State of Delaware on May 14, 2019 (the “Amended
and Restated Certificate of Incorporation”).
2. Article
VI of the Amended and Restated Certificate of Incorporation is hereby amended and restated in its entirety as follows:
ARTICLE
VI
A.
The liability of the directors and officers for monetary damages shall be eliminated to the fullest extent under applicable law.
B.
To the fullest extent permitted by applicable law, the Company is authorized to provide indemnification of (and advancement of expenses
to) directors, officers and agents of the Company (and any other persons to which applicable law permits the Company to provide indemnification)
through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise
in excess of the indemnification and advancement otherwise permitted by such applicable law. If applicable law is amended after approval
by the stockholders of this Article VI to authorize corporate action further eliminating or limiting the personal liability of directors
or officers, then the liability of a director or officer to the Company shall be eliminated or limited to the fullest extent permitted
by applicable law as so amended.
C.
Any repeal or modification of this Article VI shall only be prospective and shall not affect the rights or protections or increase the
liability of any director or officer under this Article VI in effect at the time of the alleged occurrence of any act or omission to
act giving rise to liability or indemnification.
3. This
amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
4. All
other provisions of the Amended and Restated Certificate of Incorporation shall remain in full force and effect.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by [●], its [●], this [date].
P.O.
BOX 8016, CARY, NC 27512-9903
|
Your
vote
matters! |
☒ |
|
Have
your ballot ready and please use one
of
the methods below for easy voting: |
| |
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|
Your
control number |
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|
| |
Have the
12 digit control number located in the box above available when you access the website and follow the instructions. |
| |
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| |
Scan
QR for
digital
voting |
| Sonim
Technologies, Inc. |
|
|
Internet: |
| Annual
Meeting of Stockholders |
|
 |
www.proxypush.com/SONM
● Cast
your vote online
● Have
your Proxy Card ready
● Follow
the simple instructions to record your vote |
| |
|
|
|
| For
stockholders of record as of May 30, 2024 |
|
|
Phone: |
Thursday,
June 20, 2024
9:00 AM, Pacific Time
Annual Meeting to be held live via the Internet - please visit
www.proxydocs.com/SONM for more details. |
|
 |
1-866-451-4349
● Use
any touch-tone telephone
● Have
your Proxy Card ready
● Follow
the simple recorded instructions |
| |
|
|
|
YOUR
VOTE IS IMPORTANT!
PLEASE
VOTE BY: 9:00 AM, Pacific Time, June 20, 2024. |
|
 |
Mail:
● Mark,
sign and date your Proxy Card
● Fold
and return your Proxy Card in the postage-paid envelope provided |
This
proxy is solicited by the Board of Directors
The
undersigned stockholder(s) hereby appoint(s) Peter Liu and Clayton Crolius (the “Named Proxies”), and each or either of them,
as proxies, each with the power to appoint his substitute, and hereby authorize(s) them, and each of them, to represent and to vote,
as designated on the reverse of this proxy card, all of the shares of common stock of Sonim Technologies, Inc. that the undersigned stockholder(s)
is/are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 a.m., Pacific Time on June 20, 2024 via a live
webcast at www.proxydocs.com/SONM, and any continuation, postponement, or adjournment thereof.
The
Named Proxies are authorized to vote in their discretion (i) for the election of any person to the Board of Directors if any nominee
named herein becomes unable to serve or for good cause will not serve, (ii) on any matter that the Board of Directors did not know would
be presented at the Annual Meeting of Stockholders by a reasonable time before the proxy solicitation was made, and (iii) on such other
business as may properly be brought before the Annual Meeting of Stockholders or any continuation, postponement, or adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be
voted in accordance with the Board of Directors’ recommendations.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Proxy Statement and Annual Report are available at www.proxydocs.com/SONM
Please
be sure to sign and date this proxy card and mark on the reverse side
Copyright
© 2024
BetaNXT, Inc. or its affiliates. All Rights Reserved
|
Sonim
Technologies, Inc. Annual Meeting of Stockholders |
Please
make your marks like this: ☒
The
Board of Directors recommends you vote FOR each of the following nominees and FOR Proposals 2 through 6:
| |
PROPOSAL |
YOUR
VOTE |
BOARD
OF DIRECTORS RECOMMENDS |
| 1. |
Election
of five (5) directors: |
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FOR |
WITHHOLD |
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1.01
James Cassano |
☐ |
☐ |
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FOR |
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|
| |
1.02
Peter Liu |
☐ |
☐ |
|
FOR |
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1.03
Mike Mulica |
☐ |
☐ |
|
FOR |
| |
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1.04
Jack Steenstra |
☐ |
☐ |
|
FOR |
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1.05
Jeffrey Wang |
☐ |
☐ |
|
FOR |
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|
FOR |
AGAINST |
ABSTAIN |
|
| 2. |
Ratification
of the appointment of Moss Adams LLP as our independent registered public accounting firm for fiscal year 2024. |
☐ |
☐ |
☐ |
FOR |
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| 3. |
Amendment
of our equity incentive plan to increase the number of available shares authorized for issuance by 3,000,000. |
☐ |
☐ |
☐ |
FOR |
| |
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|
|
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|
| 4. |
Amendment
of our certificate of incorporation to effect a reverse stock split of our outstanding common stock at a ratio ranging between 1-for-2
and 1-for-15, as determined by our Board of Directors in its discretion. |
☐ |
☐ |
☐ |
FOR |
| |
|
|
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|
| 5. |
Amendment
of our certificate of incorporation to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000. |
☐ |
☐ |
☐ |
FOR |
| |
|
|
|
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|
| 6. |
Amendment
of our certificate of incorporation to reflect new Delaware law provisions to permit exculpation of certain officers. |
☐ |
☐ |
☐ |
FOR |
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NOTE:
To transact any other business properly brought before the Annual Meeting or any continuation,
postponement or adjournment thereof. |
|
|
|
|
You
must register to attend the meeting online and/or participate at www.proxydocs.com/SONM
Authorized
Signatures - Must be completed for your instructions to be executed.
Please
sign exactly as your name(s) appear(s) on your account. If held in joint tenancy, all persons should sign. Trustees, administrators,
etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing
the Proxy/Vote Form.
| |
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| Signature
(and Title if applicable) |
Date |
|
Signature
(if held jointly) |
Date |
Sonim Technologies (NASDAQ:SONM)
Gráfica de Acción Histórica
De Dic 2024 a Ene 2025
Sonim Technologies (NASDAQ:SONM)
Gráfica de Acción Histórica
De Ene 2024 a Ene 2025
